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discuss the stage of formation of company
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Preeti Dabral 3 months ago

The various stages involved in the formation of a company are:

  1. Promotion: Promotion is the first stage in the formation of a company. Both a Private company and a Public company has to go through this stage. It involves conceiving a business opportunity and taking an initiative to form a company so that practical shape can be given to exploiting the available business opportunity. The main functions of a promoter are the identification of business opportunities, conducting feasibility studies, filing name approval form, fixing up Signatories to the Memorandum of Association, the appointment of professionals and preparation of necessary documents.
  2. Incorporation: Incorporation is the second stage in the formation of a company. Incorporation means the registration of the company under the Companies Act, 2013 or any previous Company Law. After the registrar approves the name, the promoter can proceed with the following steps for the incorporation of the Company:
    1. Filing of Documents
    2. Payment of Fees
    3. Certificate of Incorporation
  3. Capital Subscription: Capital Subscription is the third stage in the formation of a company. Only a Public company has to go through this stage. The steps included are:
    1. SEBI Approval
    2. Filing of Prospectus or Statement in Lieu of Prospectus
    3. Appointment of Bankers, Brokers, and Underwriters
    4. Minimum Subscription
    5. Application of Stock Exchange
    6. Allotment of Shares
  4. Commencement of Business: Commencement of Business is the fourth and last stage in the formation of a company. Only a Public company has to go through this stage. After the amount of minimum subscription is raised through the new issue of shares, a public company applies to the Registrar of Companies for the issue of Certificate of Commencement of Business to legally start doing business.

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