FORMATI ON OF A COMPAN Y

Formation of a company is a
complex activity involving completion of a lot of
legal formalities and procedures . To fully
understand the process one can divide the
formalities into four distinct stages, which are; (i)
promotion ; (ii) incorporation ; (iii) subscription of
capital ; & (iv) commencement of business.

PROMOTION OF A COMPANY

Promotion is the first stage in the formation of a

company . It involves conceiving a business
opportunity & taking an initiative to form a
company so that practical shape can be given to
exploiting the available business opportunity.

FUNCTIONS OF A PROMOTER
(i)

Identification of business opportunity

(ii) Feasibility studies
(a) Technical feasibility
(b) Financial feasibility
(c) Economic feasibility
(iii) Name approval
(iv) Fixing up Signatories to the Memorandum of
Association
(v) Appointment of professionals
(vi) preparation of necessary document

DOCUMENT REQUIRED TO BE SUBMITTED

1. Memorandum of association
(i) The name clause
(ii) Registered office clause
(iii) objects clause
(a) The main object
(b) other objects
(iv) liability clause
(v) capital clause
(vi) association clause
2. Articles of association
3. constant of proposed directors
4.Agreement
5. Statutory declaration
6. Payment of fee

POSITION OF PROMOTER
Promoters undertakes various activities
to get a company registered and get it
to the position of commencement of
business.
Promoters of a company enjoys a
fiduciary position with the company,
which they must not misuse.
Promoters are not legally entitled to
claim the expense incurred in the
promotion of the comopany.

Perform for Statutory Declaration

FORM NO. 1
The companies Act .1956
Declaration of compliance with requirements of the companies Act, 1956 on
Application for Registration of a company.
PURSUANT TO SECTION 33 (2)
NAME OF THE COMPANY
:
M/S
PRESENTED BY
:
SUSHIL KR.
CHARTERED ACCOUNTANT.
(NAME OF CA).partner of(NAME OF CA FIRM& ITS ADDRESS) ...,do
solemnly and sincerely declare that I am a CA in whole time practice in
India ,who is engaged in the formation of the company M/S, -----------PRIVATE LIMITED
And that all the requirements of the companies Act, 1956 and the rules there
under in respect of matter precedent to the registration of the said
company& incidental thereto have been complied with& I make this
solemn declaration conscientiously believing the same to be true.
PLACE : NEW DELHI
(NAME OF CA )
DATED :
CHARTERED ACCOUNTANTS

INCORPORATION
1. The memorandum of association duly stamped,
signed & witnessed. In case of a public company, at last
seven members must signed it. For a private company
however the signature of two members are sufficient.
The signatories must also give information about their
address, occupation and the number of share
subscribed by them.
2.The articles of Association duly stamped and
witnessed as in case of the Memorandum. However, as
stated earlier, a public company may adopt table A,
which is a model set of Articles, given in the companies
Act. In that case a statement in lieu of the prospectus is
submitted, instead of Article of Association.

3. Written consent of the proposed directors to act as director and

an undertaking to purchase qualification shares.
4. The agreement, if any, with the proposed Managing Director,
Manager or whole time director.
5. A copy of the Registrars letter approving the name of the
company.
6. A statutory declaration affirming that all legal requirements for
registration have been compiled with. This must be signed by an
advocate of a high court or supreme court or a signatory to the
Memorandum of Association or a Chartered Accountant or
company secretary in whole time practice in India.
7. Documentary evidence of payment of registration fees.

SPECIMEN OF CERTIFICATE OF
INCORPORATION
I hereby certify that (name of the company)
is this day incorporated under the companies Act 1956,
and that the company is limited.
Given under my hand at Delhi, this seventh day of
November, two thousand and five.
Fees: Deed Stamp
Rs.
.
Stamp Duty on Capital
Rs.
..
Sd/SEAL
Registrar of
companies
Delhi
Corporate Identity Number
of company : 1352 of 2005

EFFECT OF THE CERTIFICATE OF

INCROPORATION
A company is legally born on the date printed on the certificate
of Incorporation . It becomes a legal entity with perpetual
succession on such date. Some interesting examples showing
the impact of the conclusiveness of the certificate of
Incorporation are as under:
(a) Documents for registration were filed on 16th January.
Certificate of Incorporation was issued on 8th January But the
date mentioned on the certificate was 6th January . It was
decided that the company was in existence and the contracts
signed on 6th January were considered valid.

(b) A person forged the signatures of other on the

Memorandum. The Incorporation was still considered
valid.

CAPITAL SUBSCRIPTION
(i) SEBI Approval
(ii) Filling of prospectus
(iii) Appointment of Bankers, Brokers , Underwriters
(iv) Minimum subscription
(v) Application to stock Exchange
(vi) Allotment of shares

COMMENCEMENT OF BUSINESS
For commencement of business these following
documents are required
1. A declaration that share payable in cash
have been subscribed for and allotted up to the
minimum subscription mentioned in the
prospectus;
2. A declaration that every director has paid in
cash, the application and allotment money on
his shares in the same proportion as others;
3. A declaration that no money is payable or
liable to become payable to the applicants
because of the company to either apply for or
obtain permission to deal in its security on
stock exchange;

OF BUSINESS
(specimen)
I hereby certify that ltd. Of
which was incorporated under The companies
Act, 1956, on the day of
.200.and which has this day filed a
statutory declaration in the prescribed form that
the conditions of commence business .
Given under my hand atthis day
of. Two thousand
SEAL

Registrar
Companies

Joint Stock
.