Promotion & Formation of a Company
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Transcript of Promotion & Formation of a Company
Activities required to establish a New Business Unit for
Manufacturing/ Distribution of any Products/ Services
Role & Importance of Promoter
“A promoter can be defined as a person or group of persons who conceive the idea of setting up a new business, assess its feasibility and take necessary steps to arrange the basic requirements and establish a business unit say, a Company and put into operation.”
Types of Promoters
• Professional Promoters• Financial Promoters• Technical Promoters• Entrepreneurial Promoters• Specialised Institutions• Government
Process of Promotion
• Discovery of a Business Idea• Investigation & verification• Assembling• Financing the Proposition
Fill in the “Name Availability Form” with Name ending with ‘Limited’ or
‘Private Limited’
Approval of Name
Filing of Documents
• MoA (Memorandum of Association)
• AoA (Articles of Association)
• List of Proposed Directors with Addresses• Written Consent of Directors• Notice about the Registered Office of the Company• Copy of Name Approval Letter• Statutory Declaration of compliance with the Companies Act
Registration Fees
Necessary ‘Filing Fees’ and ‘Registration Fees’ at the
prescribed rates are also to be paid
Funds from
Members, Banks & Other
Sources
Funds from
Public,Banks & Other
Sources
(Private Company) (Public Company)
Raising of Capital
• Preparation of Draft Prospectus (inspected by SEBI)• Filing of Copy of Prospectus with the ROC• Issue of Prospectus to the Public• If Minimum Subscription received, Allot Shares
under SEBI Guidelines• Listing of Shares in recognised Stock Exchange
• That a Prospectus has been filed with the ROC
• That the Shares have been allotted up to the amount of the Minimum Subscription
• That the Directors have taken up or purchased the Minimum Number of shares required to
qualify themselves to be Director
• That no Money is liable to become refundable to
the Applicants by reason of failure to obtain permission for Shares to be traded in a recognised Stock Exchange
• A Statutory Declaration by a Director or the Secretary of the Company stating that the
requirements relating to the Commencement of Business have been duly complied with
Memorandum of Association
• Principle Document• Charter of the Company• Defines the Limitations of Powers of Company• Defines relationship of Company with Outside
World (External Document)
Clauses of MoA• Name Clause• Registered Office Clause• Object Clause• Liability Clause• Capital Clause• Association Clause
Articles of Association
• Bye-Laws of the Company
• Contain Rights, Duties & Powers of the Management
• Defines relationship of Company with its Members
• Choice to Register own AoA or Adopt the Table A (Schedule I of Companies Act)
Prospectus“Any document described or issued as a prospectus and includes any notice, circular, advertisement or other document, inviting deposits from the public or inviting offers from the public for the subscription or
purchase of shares or debentures of a company or
body corporate”- Companies Act
Objectives of Prospectus
• To inform the public about the company
• To induce people to invest in the shares or
debentures of the company
• To provide an authentic information about the
company and the terms and conditions of issue of
shares and debentures
Contents of Prospectus• General Information (name, office of the company, stock exchange where shares
are to be listed)
• Capital Structure of the Company• Terms of Payment & Application Procedure• Company Management & Project Report• Other Listed Companies under the Same Management• Outstanding Litigations & Defaults• Management Perception of Risk factors