Stock Market

By
12th Commerce
 WHAT IS STOCK MARKET?

The stock market broadly refers to the collection of

exchanges and other venues where the buying, selling, and
issuance of shares of publicly held companies take place.
But first we need to know how a company is formed and
how is issues the shares.
 FORMATION OF COMPANY

The formation of a company goes through a number of steps, starting from idea
generation to commencing of the business. This whole process can be broken down into 4
major phases or steps, which we will be discussing in the lines below.
• The major steps in formation of a company are as follows:
1.Promotion stage
2.Registration stage
3.Incorporation stage
4.Commencement of Business stage
• Promotion Stage: Promotion is the first step in the formation of a company. In this phase,
the idea of starting a business is converted into reality with the help of promoters of the
business idea.
• Registration stage: Registration stage is the second part of the formation process. In this
stage, the company gets registered, which brings the company into existence. A company
is said to be in existence, if it is registered as per the Companies Act, 2013. In order to get a
company registered, some documents need to be provided to the Registrar of Companies,
like Memorandum of Association, Article of Association, etc.
• Certificate of Incorporation: Certificate of incorporation is issued when the registrar is
satisfied with the documents provided. This certificate validates the establishment of the
company in the records.
• Certificate of commencement of business: Certificate of commencement of business is
required for a public company to start doing business, while a private company can start
business once it has received the certificate of incorporation
 WHY DO COMPANIES ISSUE SHARES?

• Companies issue shares to raise money from investors who tend to invest their money. This
money is then used by companies for the development and growth of their businesses.
• The main motto of companies behind share issuance is to raise capital. Companies need money
for their operations and expansion and equity shares help them with the same.
• On the other hand, the investor who buys these shares gets part ownership in the company.
HOW COMPANY ISSUE SHARES?