Step-by-Step Guide to Company Formation Process
Formation of a Company:
Introduction:
Company may be formed either to carry on new
business or to take over an existing business.
Formation divided into 3 stage:
1.
Promotion stage
2.
Incorporation or Registration stage.
3.
Commencement of business stage.
Promotion Stage:
Promotion is the process of organizing and planning the finances of
a business enterprise under the corporate form”
Meaning of Promoter:
One who moots the idea of forming a company is known as a
promoter. He is the person who think of forming a company and take
necessary steps in the formation of the company.
Definition of Promoter: Section 2(69) of
companies Act 2013 defines.
Who has been named as such in a prospectus or is identified by the
company in the annual return referred to in section 92.
or
Who has control over the affairs of the company, directly or
indirectly whether as a shareholder, director.
or
In accordance with whose advice, directions or instructions the
Board of Directors of the company is accustomed to act.
Steps involved in the Promotion Stage
1.
Discovery of a business project or idea.
2.
Detailed investigation of the business project.
3.
Assembling the requirements of the project.
4.
Financing the business project.
Function of promoters:
1.
To originate an idea of starting in the form of a company.
2.
To investigate the idea and know whether the formation of the company
is possible, feasible and profitable.
3.
To collect the requisite/minimum number of persons necessary for the
formation of the company, and to find out the first directors.
4.
To select decide the name of the company.
5.
To settle the details of the ‘memorandum’ and ‘articles of association’ of the
company and get these documents drafted and printed, and to arrange for
the incorporation or registration of the company.
6.
To arrange for the preparation of the prospectus and its issue
7. To enter into preliminary contracts.
8. To pay preliminary expenses.
9. To arrange for the loan etc., from various financial institution.
10. To perform such other functions as are necessary for the formation
of the company.
11. To conduct the negotiations for the purchase of business where it is
intended to purchase an existing business
Legal status or position of a Promoter
1)
A Promoter is neither a Trustee nor
an Agent
2)
Fiduciary relations with the
company
Remuneration of Promoters:
1)
He may sell his property to the company at a higher value or
high price.
2)
He may purchase shares at par or at lower price.
3)
He may take a commission on the shares
4)
He may take some shares of the company.
5)
He may be paid lump sum by the company
6)
He may be paid the commission on the purchase price of the
business or property acquires by the company through him
Slide Note
In this comprehensive visual guide, you will explore the formation of a company from start to finish. The images depict each stage of the process, from initial planning to final registration. Follow along to gain insights into the critical steps involved in establishing a company successfully.
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