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University of Mumbai, Kes' Shroff College of Arts and Commerce

The document discusses the three stages of company formation: 1. Promotion stage, which involves identifying business opportunities and organizing funds, property, and management to exploit the opportunities. 2. Incorporation stage, which registers the company as a legal entity and involves deciding the company name, obtaining necessary licenses, listing directors, and more. 3. Administration stage, where a private company can start business after incorporation, but a public company needs a certificate of commencement of business, which requires minimum share subscription and bank confirmation of application money. Proper formation allows a company to operate as a distinct legal person separate from its owners.

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Poojan Karia
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56 views6 pages

University of Mumbai, Kes' Shroff College of Arts and Commerce

The document discusses the three stages of company formation: 1. Promotion stage, which involves identifying business opportunities and organizing funds, property, and management to exploit the opportunities. 2. Incorporation stage, which registers the company as a legal entity and involves deciding the company name, obtaining necessary licenses, listing directors, and more. 3. Administration stage, where a private company can start business after incorporation, but a public company needs a certificate of commencement of business, which requires minimum share subscription and bank confirmation of application money. Proper formation allows a company to operate as a distinct legal person separate from its owners.

Uploaded by

Poojan Karia
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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UNIVERSITY OF MUMBAI,

KES’ SHROFF COLLEGE OF ARTS AND COMMERCE

Project Entitled,

“PROMOTION , INCORPORATION AND ADMINISTRATION OF


COMPANY”

Submitted by –

PARITA MEHTA
ROLL NO. 21

Under the supervision of

Second year

B.F.M
SEM V

(As per the case)


2020-21
Introduction

What do you mean by Formation of a company ?


A company comes into existence when a group of people come
together with a view of forming an association to exploit the business
opportunities by bringing together, men , material , money and
management.
Company formation is the process of incorporating (registering) a business
as a limited company. When this happens, the business becomes a distinct
legal entity; an individual ‘person’ in the eyes of the law. Essentially, this
means that the company is completely separate from its owners in terms of
finances, liabilities, contractual agreements, and ownership of property and
assets.
Formation of a Company is a procedure of incorporation of a company. It
includes various factors and legal documents for the purpose of
incorporation. At the time of establishment, there are two documents play
a very important role. Those documents are Memorandum of Association
(MoA) and Articles of Association (AOA).
The MoA of the company contains the fundamental conditions upon which
alone the company has been incorporated. Every registered company
should have a MoA which is the company’s charter. In general the MoA
regulates the company’s external affairs while the articles of association
regulate its internal structure.
When this happens, the business becomes a distinct legal entity; an
individual ‘person’ in the eyes of the law. Essentially, this means that the
company is completely separate from its owners in terms of finances,
liabilities, contractual agreements, and ownership of property and assets.
3 STAGES OF BUSINESS MANAGEMENT

 Promotion Stage:

Promotion is the first stage in the formation of a company. The term


‘Promotion’ refers to the aggregate of activities designed to bring
into being an enterprise to operate a business. It presupposes the
technical processing of a commercial proposition with reference to
its potential profitability. The meaning of promotion and the steps to
be taken in promoting a business are discussed in brief here.

Promotion of a company refers to the sum total of the activities of all


those who participate in the building of the enterprise up to
the organisation of the company and completion of the plan to
exploit the idea. It begins with the serious consideration given to the
ideas on which the business is to be based.
According to C.W. Grestembeg, “Promotion may be defined as the
discovery of business opportunities and the subsequent organisation
of funds, property and managerial ability into a business concern for
the purpose of making profits therefrom.”

According to H.E. Heagland, “Promotion is the process of creating a


specific business enterprise. Its scope is very broad, and numerous
individuals are frequently asked to make their contributions to the
programme. Promotion begins when someone gives serious
consideration to the formulation of the ideas upon which the
business in question is to be based. When the corporation is
organised and ready for operation, the major function of promotion
comes to an end.”

According to Guthmann and Dougall, “Promotion starts with the


conception of the idea from which the business is to evolve and
continues down to the point at which the business is full, ready to
begin operations in a going concern.”
 Incorporation Stage:

Incorporation or registration is the second stage in the formation of a


company. It is the registration that brings a company into existence.
A company is properly constituted only when it is duly registered
under the Act and a Certificate of Incorporation has been obtained
from the Registrar of Companies.

-STEPS FOR INCORPORATION


1. To decide the name of the company
2. Licence under Industries Development and Regulation Act, 1951
3. List of directors
4. Written consent of directors
5. Statutory declaration
 Administration Stage

After getting the certificate of incorporation, a private company can


start its business. A public company can start its business only after
getting a’ certificate of commencement of business’.

A public company issues a prospectus of inviting the public to subscribe to


its share capital,
A minimum subscription is fixed, and The company is required to sell a
minimum number of shares mentioned in the prospectus.
After making the sale of the required number of shares a certificate is sent
to the Registrar stating this fact, along-with a letter from the banks, that it
has received application money for such shares.
The Registrar scrutinizes the documents. If he is satisfied, then issues a
certificate known as Certificate of Commencement of Business. This is the
conclusive evidence of the commencement of the business.
CONCLUSION

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