The process of formation of a company can be divided into the following stages:
At the first stage of formation, the promoters of the company play an important role. A business does not come into existence automatically; it first takes the shape of an idea, which is then molded into reality to form a business. The promoters are not the trustee or agent of the company because they come into play even before the company comes into existence. They help in setting up the company. The promoters help in financing, establishing the business, arrange the required resources, etc.
The process of business promotion includes convincing people to join in hands. The promoters promote the basic idea of business to the necessary individuals which form an association to conduct the business.
The second stage is the registration of a company. When all the individuals come together to form an association to conduct the business, the business needs to be registered. Registration provides legal identity to the business under the law. Registration of business requires the drafting of the essential documents such as:
These are the essential documents that are required to be submitted while getting a company registered. All the documents must be drafted carefully especially the memorandum of association and article of association and they act like the rules and regulations for the company beyond which the company cannot function. All these documents are submitted to the Registrar of Company (ROC). After analyzing the documents the ROC issues the Certificate of Incorporation
In the case of certain companies, for example, a private company, the business can commence as soon as the Registrar of Company issues the Certification of Incorporation, however, in the case of a public company, they require the certificate of commencement of business. After the certificate of incorporation is issued a public company is allowed to issue the prospectus for inviting the public to subscribe to its share capital.
Thus, these are the stages of the formation of a company. The process starts with the promoters, which then form a group or association, incorporates and registers the business which grants a spate legal identity and existence to the business. The registration and incorporation of a company under the companies act is essential as it grants the company its separate legal entity and corporate personality.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.
