FORMATION OF A COMPANY

NARENDRA MISHRA MBA 1st SEM ROLL NO. 23

CONTENT OF PRESENTATION
qConcept of company qCharacteristics of a company qClassification of a company qIncorporation of a company

q

CONCEPT OF A COMPANY
Company is a voluntary association of persons

formed for the purpose of doing business having a distinct name and limited liability. It is a juristic person having a separate legal entity distinct from the members who constitute it, capable of rights and duties of its own and endowed with the potential of perpetual succession.

CHARACTERISTICS OF A COMPANY

1. Incorporated association A company is formed and registered by complying with the prescribed formalities prescribed under the act.

2. Artificial Person A company is an artificial person but not a fictitious person.

3. Separate legal entity A company is a legal entity separate from its owners.It is a person distinct from who owns it.

4. Perpetual succession

5. Limited liability  Liability of the members of the company are limited  6. Common seal  Common seal is the official signature of the company. Any document on which common seal is affixed is deemed to be signed by the company.  7. Transferability of shares  Shares are movable property transferable in the manner provided in articles. But in case of public company shares are freely transferable.

8. Right to sue  A company is a legal person. A company acts in its own name, and not as an agent of its members. A company can sue others and can be sued on its own name.  9. Right to enter in to contracts  Since a company is a legal person, it has the right to enter into a contract on its own name.  10. Separation of ownership from management  The members do not participate in day to day affairs of the company. The management of the company lies in the hands of elected representatives of members, commonly called board of directors.

CLASSIFICATION OF COMPANIES
On the basis of business activities

1 2 3 4 5   

undertaken Manufacturing Activities Service Activities Non-Banking Finance Activities Non-profit making (Section-25) Producer (Section 581 A)

v On the basis of membership pattern or size  Public  Private  Government v On the basis of place of registration  Indian Company (Incorporated in India)  Foreign Company (Company incorporated outside India but having place of business in India)

On the basis of liabilities of the

members and directors: v With Limited liability

1- Limited by shares  2- Limited by Guarantee & having share  capital  3- Limited by Guarantee and having no share capital

v With Unlimited Liability

v

 On the basis of control over the management

1- Holding Company  2- Subsidiary Company 

PROMOTION
Meaning of promotion

Promotion means all those steps that are required to bring a company into existence and then to set it going. Promotion involves following five stages:  1- Generation of idea of starting a new  company  2- Registration of the company  3- Floatation, i.e., raising of capital or arranging the financial resources so as to carry on its business operations.  4- Obtaining the certificate of commencement of business (necessary for public company only)

INCORPORATION OF A COMPANY
PROCEDURE

1- REQUIREMENT OF SEC.12  (a) associations of persons  (b) statutory minimum number of members  (c) common object  (d) lawful object  (e) subscription  (f) compliance of formalities
 

2- Availability of name  Required to fill FORM NO. 1A  3- Documents required to be filed with the  registrar  (a) Memorandum of association  (b) Article of association  (c) Statutory declaration stating that all the  requirements relating to registration of the company have been complied with.  (d) If a managing director, whole time director or manager is proposed to be appointed , the agreement entered into by the company with such person must be filed with the registrar.  (e) If a director has been named in the articles, his consent must be filed with the registrar.

OPTIONAL DOCUMENTS

Following documents may be filed with the registrar before incorporation or within 30 days of incorporation. (a) Address of registered office of the company. (b) Particulars of directors, manager and secretary.

4- Issue of certificate of incorporation  The registrar shall retain and register the documents filed with him, and afterwards register the company if he is satisfied that  (a) all the requirements aforesaid have been compiled with , and  (b) the company is authorized to be registered under this act.

EFFECTS OF INCORPORATION
(a) The company becomes a body corporate  (b) The company acquires a legal recognition  (c) The company gets a name in which it shall carry on business.  (d) The company comes into existence from such date as is mentioned in the certificate of incorporation.  (e) The objects of the company are laid down.

REFERENCES
Corporate law by Munish Bhandari Wikkipedia.com Corporate law M.C. Kuchhal

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