Company Formation Stages

Kunal Upadhyay

Kunal B. Upadhyay

Topic we cover

• Formation Stages of company– Promotion– Incorporation– Capital subscription– Trading certificate

• Memorandum of Association

• Articles of Association

Kunal B. Upadhyay

FORMATION STAGES

• Promotion

• Incorporation

• Capital subscription

• Trading certificate

Kunal B. Upadhyay

PROMOTION

• Discovery of Idea• Investigation• Verification• Financing• Assembling• Presentation of the plan

Kunal B. Upadhyay

FUNCTION OF PROMOTERS• Conception of business idea• Preliminary contracts– Location, building, machinery

• Statutory Requirements– Getting approval, financial plans,

directors name, prospectus, bank• Lawful purpose– It must consist of a particular number of

persons and be association for lawful purpose

• Name

Kunal B. Upadhyay

Types of Promoter• Professional Promoters:

– Special agencies and promotions is their whole time occupation

• Accidental Promoters:– They promote their own firms as entrepreneurs

• Financial Promoters– Provide finance to new firms

• Technical Promoters– Ex. consultants

• Government – State govt. as well as Central govt. promote the business

Kunal B. Upadhyay

INCORPORATION• Filling Registration Form– Memorandum of Association– Article of Association– Understanding from persons to act s directors– Directors buy qualification shares – Notice of the registered address of company– Declaration that all formalities are complete

• payment of filling fee, stamp duty and registration fee

Kunal B. Upadhyay

Cont…

• Nature of the company• Selection & approval of name• Preparation of Memorandum & Articles of

Associations• Written consent• Contract & Prospectus• Filing documents with the registrar• Subscribing the names

Kunal B. Upadhyay

CERTIFICATE OF INCORPORATION

I hereby certify that______ (name of company)._______ is this day incorporated under the companies act,1956. Given under my hand at______(place) this______

(date) ______ day of the_______ (month) _______ two thousand_________

seal REGISTRAR OF.

CO.

STATE___________

Kunal B. Upadhyay

CAPITAL SUBSCRIPTION

• First board meeting is conducted• Prospects approved• Application money are collected• Method of allotment is finalized by B.O.D• Allotment and letter are sent• Share certificate are sent to share holders

Kunal B. Upadhyay

TRADING CERTIFICATE

• Following declaration are filed with the register– Declaration that minimum subscription amount is

received– Declaration that directors have purchased

qualification share– Declaration that all formalities for formation are

OVER• Filing fee, stamp fee, and registration fee is paid• Trading certificate collected from registrar

Kunal B. Upadhyay

TRADING CERTIFICATEI hereby certify that (name of company) Limited of (Address and Place), which was incorporated under the Indian Companies Act, 1956, on the ______(date of incorporation)and which this day filed a statutory declaration in the prescribed form that the conditions of Sec.149 have been complied with, is entitled to commence the business.

given under my hand at (place) this (date) of (month) and (year)seal

Registrar of companiesstate

Kunal B. Upadhyay

MEMORANDUM OF ASSOCIATION

• The memorandum of association of a company is its charter and defines the limitations of the power of a company.”

Kunal B. Upadhyay

FORM OF MEMORANDUMTABEL A Prescribed Article of Association TABLE B Prescribed for a company limited by

sharesTABLE C Prescribed for a company limited by

guarantee and not having shares capitalTABLE D Prescribed for a company limited by

guarantee and having share capitalTABLE E Prescribed for unlimited company

Kunal B. Upadhyay

PURPOSE OF MEMORANDUM

• Memorandum gives protection to shareholders. It is a protection for person who deals with company

Kunal B. Upadhyay

CONTENT OF MEMORANDUM

• Name Clause - “private” or “Public Limited”

• Situation Clause - Head office address • Object Clause - The purposes of the

company• Liability Clause - Liability of the members• Capital Clause - Authorized capital, equity

shares & preference shares• Association Clause – Numbers of the

members

Kunal B. Upadhyay

ALTRATION OF MEMORANDUM

• Name clause – conversation from private to public & Public to private

• Registered office – From one place to another place in same town– From one town to another town in same state– From one state to another state

Kunal B. Upadhyay

Cont…• Objective clause

– To carry on its business more efficiency– For new innovation– To enlarge or change its local area or operation

• Liability clause

– To increase authorized capital– Divide share into stock– To cancel those unissued shares so as to reduce its capital

Kunal B. Upadhyay

ARTICLES OF ASSOCIATION

• ” The Articles of Association is a document regulating the rights of members of the company among themselves, and the manner in which the business of the company shall be conducted.”

Kunal B. Upadhyay

CONTENTS OF ARTICLES

• Rules regarding allotment of shares.• Fixation of minimum subscription.• Dividends and reserves.• Rules regarding the call on shares.• Accounts and audit.• Rights, duties and liabilities of directors.• Common seal.

Kunal B. Upadhyay

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