Important Stages in the formation of a company
Complete procedure involves 4 major steps:
1. Promotion of a Company:- A business enterprise does not come into existence on its own. It comes into existence because of the efforts of an individual or group of people or an institution. That is, it has to be promoted by some person or persons. The process of business promotion begins with the conceiving of an idea and ends when that idea is translated into action.
Types of Promoters:- Promoters are different types such as professional promoters, occasional promoters, promoter companies, financial promoters, entrepreneurs, lawyers and engineers.
2. Registration of a Company:-Registration is the first step of any process. A company is properly formed only when it is duly registered under the Companies Act.
Procedure of Registration:- In order to get the company registered, the important documents required to be filed with the Registrar of Companies are as follows.
When the required documents have been filed with the Registrar along with the prescribed fee, the Registrar scrutinizes the documents. If the Registrar is satisfied, the name of the company is entered in the register. Then the Registrar issues a certificate known as Certificate of Incorporation.
Certificate of Incorporation:- On the registration of Memorandum of Association, Articles of Association and other documents, the Registrar will issue a certificate known as the 'Certificate of Incorporation'. The issue of certificate is the evidence of the fact that the company is incorporated and the requirements of the Companies Act have been complied with.
Certificate of Commencement of Business:- As soon as a private company gets the certification of incorporation, it can commence its business. A public company can start its business only after getting the 'certificate of commencement of business'. After the company gets the certificate of incorporation, a public company issues a prospectus for inviting the public to subscribe to its share capital. It fixes the minimum subscription. Then it is required to sell the minimum number of shares mentioned in the prospectus.
After completing the sale of the required number of shares, a certificate is sent to the Registrar along with a letter from the bank stating that all the money is received.
The Registrar then scrutinizes the documents. If he is satisfied he issues a certificate known as 'Certificate of Commencement of Business'. This is the conclusive evidence for the Commencement of Business.