l Describe how to winding-up a company12.2 Formation of a CompanyThe whole process of formation of a company may be roughly divided, for convenience,into three parts. These are: (i) Promotion; (ii) Registration and (iii) Floatation.12.2.1 PromotionPromotion is a term of wide import denoting the preliminary steps taken for the purposeof registration and floatation of the company. The persons who assume the task of promotion are called promoters. The promoter may be an individual, syndicate,association, partnership or company.
Who is a promoter?
This term has not been defined under the Act, although the term isused expressly in Secs.62, 69, 76, 478 and 5220.127.116.11 Registration (Secs.12 and 33)
Secs.12 states that, “any seven or more persons or where the company to be formed will
be a private company, two or more persons, associated for any lawful purpose may, bysubscribing their names to a memorandum of association and otherwise complying withthe requirements of this Act in respect of registration form an incorporated company, withor without l
12.2.3 Availability of nameSec.20 states that a company cannot be registered by a name, which in the opinion of theCentral Government is undesirable. Therefore, it is advisable that promoters find out theavailability of the proposed name of the company from the Registrar of Companies. Forthe purpose, three names in order of priority should be filed.The following two documents, though not required to be filed for the purpose of registration, are usually delivered along with the aforesaid documents.(i) The address of the registered office of the company (Sec.146).(ii) Particulars regarding directors, manager and secretary, if any (Sec.303).These two documents are required to be submitted within thirty days of registration of thecompany.12.2.4 FloatationWhen a company has been registered and has received its certificate of incorporation, it is
ready for „floatation‟, that is to say, it can go ahead with raising capital sufficient to
commence business and to carry it on satisfactorily.Sec.70 makes it obligatory for every public company to take either of the following twosteps: (i) Issue a prospectus in case public is to be invited to subscribe to its capital, or (ii)
Submit a „statement in lieu of prospectus‟ in case capital has b
een arranged privately. Itmust be done at least 3 days before allotment.Self Assessment Questions1. The persons who assume the task of promotion is known as __________(a) Acceptors(b) Motivators