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    Steps in Formation of A Company

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    Kshamaa Kshamaa
    The formation of a company involves 4 main stages: 1. Promotion stage where the business idea is developed and feasibility is assessed. 2. Registration stage where legal documents like the Memorandum of Association and Articles of Association are submitted to register the company. 3. Incorporation stage where a Certificate of Incorporation is issued to validate the company's establishment on record. 4. Commencement of business stage where a public company obtains a Certificate of Commencement of Business to legally start business operations.

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    Steps in Formation of A Company

    Uploaded by

    Kshamaa Kshamaa
    567 views2 pages
    The formation of a company involves 4 main stages: 1. Promotion stage where the business idea is developed and feasibility is assessed. 2. Registration stage where legal documents like the Memorandum of Association and Articles of Association are submitted to register the company. 3. Incorporation stage where a Certificate of Incorporation is issued to validate the company's establishment on record. 4. Commencement of business stage where a public company obtains a Certificate of Commencement of Business to legally start business operations.

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    Steps in Formation of a Company

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    The formation of a company involves 4 main stages: 1. Promotion stage where the business idea is developed and feasibility is assessed. 2. Registration stage where legal documents like the Memorandum of Association and Articles of Association are submitted to register the company. 3. Incorporation stage where a Certificate of Incorporation is issued to validate the company's establishment on record. 4. Commencement of business stage where a public company obtains a Certificate of Commencement of Business to legally start business operations.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    567 views2 pages

    Steps in Formation of A Company

    Uploaded by

    Kshamaa Kshamaa
    The formation of a company involves 4 main stages: 1. Promotion stage where the business idea is developed and feasibility is assessed. 2. Registration stage where legal documents like the Memorandum of Association and Articles of Association are submitted to register the company. 3. Incorporation stage where a Certificate of Incorporation is issued to validate the company's establishment on record. 4. Commencement of business stage where a public company obtains a Certificate of Commencement of Business to legally start business operations.

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    Steps in Formation of a Company

    The formation of a company goes through a number of steps, starting from idea generation to
    commencing of the business. This whole process can be broken down into 4 major phases or
    steps, which we will be discussing in the lines below.
    The major steps in formation of a company are as follows:

    1. Promotion stage
    2. Registration stage
    3. Incorporation stage
    4. Commencement of Business stage

    Also see: Kinds Of Companies


    Let us discuss these steps in detail.
    Promotion Stage: Promotion is the first step in the formation of a company. In this phase, the
    idea of starting a business is converted into reality with the help of promoters of the business
    idea.
    In this stage the ideas are executed. The promotion stage consists of the following steps:

    1. Identify the business opportunity and decide on the type of business that needs to be
    done.
    2. Perform a feasibility study and determine the economic, technical and legal aspect of
    executing the business.
    3. Interest shown by promoters towards the business idea and supply of capital and other
    necessary procedures to start the business.

    Registration stage: Registration stage is the second part of the formation process. In this stage,
    the company gets registered, which brings the company into existence.
    A company is said to be in existence, if it is registered as per the Companies Act, 2013. In order
    to get a company registered, some documents need to be provided to the Registrar of Companies.
    There are several steps involved in the registration phase, and are as follows:

    1. Memorandum of Association: A memorandum of association (MoA) must be signed by


    the founders of the company. A minimum of 7 members are required in case of a public
    company and 2 in case of a private company. The MoA must be properly registered and
    stamped.
    2. Article of Association: Article of Association (AoA) is also required to be signed and
    submitted. All members who previously signed MoA, should also be signing the AoA.
    3. The next step is preparing a list of directors which should be filed with the Registrar of
    Companies.
    4. Directors of the company should provide a written consent agreeing to be directors,
    should be filed with the Registrar of Companies (RoC).
    5. The notice of address of the office needs to be filed.
    6. A statutory declaration should be made by any advocate of either the High Court or
    Supreme Court, or a person of the capacity of Director, Secretary or Managing Director.
    This declaration shall be filed with the RoC.

    Certificate of Incorporation: Certificate of incorporation is issued when the registrar is


    satisfied with the documents provided. This certificate validates the establishment of the
    company in the records.
    Certificate of commencement of business: Certificate of commencement of business is
    required for a public company to start doing business, while a private company can start business
    once it has received the certificate of incorporation.
    Public companies receiving the certificate of incorporation can issue prospectus in order to make
    the public subscribe to the share for raising capital. Once all the minimum number of required
    shares have been subscribed, a letter should be sent to the registrar along with a bank document
    stating the receiving of the money.
    The registrar will issue a certificate upon finding the provided documents satisfactory. This
    certificate is known as certificate of commencement of business. The company can start business
    activities from the date of issue of the certificate and the business shall be done as per rules laid
    down in the MoA (Memorandum of Association)

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