How to start a company | steps for formation of a company , incorporation of a company

 FORMATION OF A COMPANY 

The term formation refers to the starting of the join stock company which includes 4 stages.

• Promotion
• Incorporation / registration
• Capital subscription
• Business commencement certificate

 

PRAMOTIONAL STAGE

This is considering as the very first and foremost stage for the formation of the company. In the stage the establishment of the company / starting of the business will be made.
 
Promoter – promoter is a person / group of individual who undertake the responsibility to bring the company into existence.

 

FUNCTIONS OF PRAMOTERS

• Discovery of idea
• Detained investigation
• Assembling
• Financing

 

RIGHTS OF PRAMOTERS

• Right to receive remuneration

• Right to receive preliminary expenses

 

DUTIES OF PRAMOTER

    Not to make secretes profits

    To maintain the secretes

    Doing good to the company

    Not to misuse his position

    Not to use the company assets

 

INCORPORATION / REGISTRATION STAGE

Incorporation stage is a compulsory for every join stock company. A company comes into existence only when it gets registration certificate from the registrar of the company.

 

FOLLOWING STEPS INVOLVE IN REGISTRATION

• Approval of the name
• Preparation of MOA and AOA
• File of documents
•             MOA
•             AOA
•             PROSPECTUS
• Payments of registration fee
• Obtaining certificate of incorporation

 
MOA

Memorandum of association is a compulsory document, main document for the company registration.

CLAUSES OF MOA

    Name clause

    Domicile clause

    Objective clause

    Liability clause

    Capital clause

    Subscription clause / association clause
 
 

AOA

An article of association is a secondary document, subordinate document to MOA of the company. It contains various rules and regulations and explain about the internal activities of the company.

SOME CONTENTS OF AOA

• Nature of business
• Amount of share capital
• Division of equity and preference shares with their fair value
• Rights of the shareholders
• Riles for allotment of share
• Rules about calls on shares
• Transfer and transmission of shares
• Forfeiture of shares
• Voting system to appoint the people
• Various methods of auditing
• Rules related to liquidation of the company

 

CAPITAL SUBSCRIPTION STAGE

After the company is incorporated the registrar of the company will issue registration certificate, private company can start the business immediately after getting certificate but public company should go for the collection of the capital by issuing the shares. This is called as capital subscription stage.

 

PROSPECTUS

Prospectus is a notice, circular, invitation, information and advertisement about the company which is issue for subscription of shares by the general public.

 
SOME CONTENTS OF PROSPECTUS

• The purpose of the company
• The name and address of the directors, promoters
• The name and address of the company along with registration number
• Details about the signatories of MOA and AOA
• The name and address of secretory and the auditor
• Details about the capital collected
• Types of shares issued
• Details about under writers

 

BUSINESS COMMENCEMENT STAGE

This is the 4^th stage in the formation of the company where the registrar will check whether the minimum subscription is collected and all the documents are properly field by the promoters.
The directors are also responsible for signing MOA and AOA. The registration of the company will collect the required amount from the promoters and scansion the final document called BCC BUSINESS COMMENCEMENT CERTIFICATE.
 
 
        Thus these are the some basic knowledge about the formation of the company 

 
 
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