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

PROMOTION OF A COMPANYPROMOTION OF A COMPANYPromotion is the first stage in the formation of a Promotion is the first stage in the formation of a company . It involves conceiving a business company . It involves conceiving a business opportunity & taking an initiative to form a opportunity & taking an initiative to form a company so that practical shape can be given to company so that practical shape can be given to exploiting the available business opportunity.exploiting the available business opportunity.

FUNCTIONS OF A PROMOTERFUNCTIONS OF A PROMOTER((i) Identification of business opportunityi) Identification of business opportunity(ii) Feasibility studies (ii) Feasibility studies (a) (a) Technical feasibility Technical feasibility (b) (b) Financial feasibilityFinancial feasibility (c) (c) Economic feasibilityEconomic feasibility(iii) Name approval (iii) Name approval (iv)(iv) Fixing up Signatories to the Memorandum of Fixing up Signatories to the Memorandum of AssociationAssociation(v) Appointment of professionals(v) Appointment of professionals(vi) preparation of necessary document(vi) preparation of necessary document

DOCUMENT REQUIRED TO BE SUBMITTEDDOCUMENT REQUIRED TO BE SUBMITTED11. . Memorandum of associationMemorandum of association(i) The name clause(i) The name clause(ii) Registered office clause(ii) Registered office clause(iii) objects clause (iii) objects clause (a) The main object (a) The main object (b) other objects(b) other objects(iv) liability clause(iv) liability clause(v) capital clause(v) capital clause(vi) association clause (vi) association clause 22.. Articles of association Articles of association33.. constant of proposed directors constant of proposed directors44..AgreementAgreement55.. Statutory declaration Statutory declaration66.. Payment of fee Payment of fee

POSITION OF PROMOTERPOSITION OF PROMOTER

Promoters undertakes various activities Promoters undertakes various activities to get a company registered and get it to get a company registered and get it to the position of commencement of to the position of commencement of business.business.

Promoters of a company enjoys a Promoters of a company enjoys a fiduciary position with the company, fiduciary position with the company, which they must not misuse.which they must not misuse.

Promoters are not legally entitled to Promoters are not legally entitled to claim the expense incurred in the claim the expense incurred in the promotion of the comopany. 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

INCORPORATION1. 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 3. Written consent of the proposed directors to act as director and an undertaking to purchase qualification shares.an undertaking to purchase qualification shares.4. The agreement, if any, with the proposed Managing Director, 4. The agreement, if any, with the proposed Managing Director, Manager or whole –time director.Manager or whole –time director.5. A copy of the Registrar’s letter approving the name of the 5. A copy of the Registrar’s letter approving the name of the company.company.6. A statutory declaration affirming that all legal requirements for 6. A statutory declaration affirming that all legal requirements for registration have been compiled with. This must be signed by an registration have been compiled with. This must be signed by an advocate of a high court or supreme court or a signatory to the advocate of a high court or supreme court or a signatory to the Memorandum of Association or a Chartered Accountant or Memorandum of Association or a Chartered Accountant or company secretary in whole time practice in India.company secretary in whole time practice in India.7. Documentary evidence of payment of registration fees.7. Documentary evidence of payment of registration fees.

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

Registrar of Registrar of companiescompanies Delhi Delhi Corporate Identity Number Corporate Identity Number of company : 1352 of 2005 of company : 1352 of 2005

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EFFECT OF THE CERTIFICATE OF INCROPORATIONA 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 (b) A person forged the signatures of other on the Memorandum. The Incorporation was still considered Memorandum. The Incorporation was still considered valid.valid.

CAPITAL SUBSCRIPTIONCAPITAL SUBSCRIPTION

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

COMMENCEMENT OF BUSINESSCOMMENCEMENT OF BUSINESSFor commencement of business these following For commencement of business these following documents are required documents are required 1. A declaration that share payable in cash 1. A declaration that share payable in cash have been subscribed for and allotted up to the have been subscribed for and allotted up to the minimum subscription mentioned in the minimum subscription mentioned in the prospectus;prospectus;2. A declaration that every director has paid in 2. A declaration that every director has paid in cash, the application and allotment money on cash, the application and allotment money on his shares in the same proportion as others;his shares in the same proportion as others;3. A declaration that no money is payable or 3. A declaration that no money is payable or liable to become payable to the applicants liable to become payable to the applicants because of the company to either apply for or because of the company to either apply for or obtain permission to deal in its security on obtain permission to deal in its security on stock exchange;stock exchange;4. A statutory declaration that the above 4. A statutory declaration that the above requirements have been compiled with.requirements have been compiled with.

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

Registrar Joint Stock Registrar Joint Stock CompaniesCompanies ………………. ……………….(state) (state)

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