Formation & Promotionof a

Company

Formation

• Promotion• Incorporation• Raising of Capital• Commencement of Business

Promotion

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

Incorporation

A Company comes into existence only when it is Registered with the ROC

(Registrar of Companies)

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

Certificateof

Incorporation(or Birth Certificate)

Raising of Capital

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

Underwriting

Popularly known as a “Safety Valve” to the “Minimum Subscription” requirement

Commencementof Business

File a Statement with the following

Declarations to the ROC

• 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

Certificateof

Commencementof Business

Some ImportantDocuments

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

Thank You