Inter - I Year - Commerce - Unit 7 - Incorporation of a Company - Meaning of Formation of a Company - Stages in the formation of a company

1. UNIT 7
COMPANY INCORPORATION
Dr. THULASI KRISHNA. K, Ph.D.
AP Model School & Junior College, KANEKAL,
ANANATHAPUR (Dt.),
A.P., INDIA
• tkk2007@gmail.com

2. INTRODUCTION
Formation of a Company
• A Company comes into existence when a group of people
come together with a view of forming an association to
exploit the business opportunities by bringing together;
men, material, money and management
• A Company comes into existence by the process of
incorporation.
• There are many legal steps to be completed. This process is
known as formation of a company.

3. STAGES OF FORMATION
OF A COMPANY
▪ Promotion Stage
▪ Selection of Name
▪ Incorporation (Registration Stage)
▪ Raising the Share Capital Stage
• Commencement of Business

4. 1. PROMOTION STAGE
Promotion is the first stage in the formation of a
company. It involves the following:
▪ Discovery of Business opportunities (SWOT
Analysis)
▪ Detailed Investigation (Study of factors of
production)
▪ Assembling necessary requirements
▪ Financing of proposition (Debt-Equity
Composition)

5. 2. SELECTING COMPANY NAME
1. To be identified for legal and
business purpose (i.e. “Ltd.” or
“Pvt. Ltd.” ). The name should
not be similar to the existing.

6. 3. INCORPORATION STAGE
▪ A company is said to be incorporated when it fulfills the
formalities of registration and obtain “CERTIFICATE
OF INCORPORATION” by submitting the MoA,
AoA and written consent of all the directors.
▪ A public company to commence business, should raise
the required capital and obtain the “CERTIFICATE
OF COMMENCEMENT OF BUSINESS”

7. Sample Certificate of Incorporation

8. Sample Certificate of Commencement of Business of VISWASGOLD INFRASTRUCTURES

9. 4. RAISING OF SHARE CAPITAL
▪ Entering onto an agreement with underwriters.
▪ Applying to the stock exchange for listing of shares.
▪ Issue of prospectus inviting public to subscribe.
▪ Allotting shares.

10. 5. COMMENCEMENT OF BUSINESS
• A Private Company can start its business as soon
as it receives the certificate of incorporation.
• But a Public Company can start its business after
obtaining the certificate of commencement of business. It will be issued by the registrar of
companies once the company is successful to procure the required capital.

11. IMPORTANT
DOCUMENTS FOR
INCORPORATION OF
A COMPANY
▪ Memorandum of Association(MoA)
▪ Article of Association (AoA)
▪ Prospectus of Association

12. THANK YOU