Unit 2

Promotion Incorporation

or registration Capital subscription or raising of the share capital Commencement of the business

to haney, promotion is the process of organizing and planning the finances of a business enterprise under the corporate form It refers to the series of the processes or activities designed to bring into existence of the company to operate a business The work of promotion is done by a person called promoters
Acc

of the business proposition or idea Detailed investigation of the business proposition Assembling the various requirement of the business proposition Financing the business proposition
Discovery

and the doughall , promoter is the person who assembles the men, money and the materials into going concern Individual , partnership firm, an association of the persons or a joint stock companies
Guthumann

 Promotion

of the company Incorporation of the company Raising the capital Nursing the company

 Agent

??? trustee ???

 To

do all such acts as the trustee would do To make full disclosure of the relevant facts Not to make any secret profits To disclose his interest in the property Not to make an unfair or unreasonable use of his position

 Right

to claim remuneration for his services Right to get reimbursement in respect of the expenses incurred Right to get the rateable contribution from the co promoters

 Personal

liability in respect of pre in corporation or preliminary contracts Liability to hand over the secret profits Liability to pay compensation to the subscribers Criminal liability Liability for misfeasance or breach of trust liability for alleged fraud

These contracts are made by the promoters o behalf of the company before its incorporation

 Not

biding on the company Not binding on the other party No ratification Personal liability of promoters

 The

contract is made for and on behalf of the company Such a contract is warranted by the terms of the incorporation The company has accepted the contract and communicated its acceptance to the other party

 Registering

the company with the ROC

getting the approval of the ROC for the proposed name of the company Fixing up the signatories to be MOA , auditors, bankers, underwriters, brokers, etc Getting the MOA and AOA prepared and printed Filing an application with ROC along with the various documents for the registration of the company Payment of stamp duty, filing fees and registration fees Obtaining the certificates of incorporation

 REGULARITY

OF REGISTRATION BODY CORPORATE INDEPENDENT LEGAL ENTITY PERPECTUAL SUCCESSION LIMITED LIABILITY COMMON SEAL BINDING DOCUMENTS PUBLIC DOCUMENTS COMMENCEMENT OF BUSINESS

 In

case of private co, it needs to have incorporation certificate to commence its business But in the case of the public co, it needs to have incorporation certificate along with the business commencement certificate to commence its business So in a public co it needs to :  Raise the capital  Obtain BCC

 CONVENING

THE FIRST BOARD MEETING  APPOINTMENT OF THE REGULAR SECRETARY OF THE COMPANY  APPOINTMENT OF THE BANKERS, AUDITORS, SOLICITORS, BROKERS, ETC  RATIFICATION OR ADOPTION OF PRELIMINARY OR PRE INCORPORATION CONTRACTS  APPROVAL LISTING OF SHARES OF THE COMPANY IN A RECOGANISED STOCK EXCHANGE  ADOPTION OF THE UNDERWRITING AGREEMENTS

 FILING

A COPY OF THE PROSPECTUS OR STATEMENT IN LIEU OF THE PROSPECTUS WITH THE ROC ISSUE OF THE PROSPECTUS TO THE PUBLIC AND CALLING FOR APPLICATION FOR SHARES ALLOTMENT OF SHARES

A company can proceed with the allotment of the shares only if it has received applications for the shares for an amount equal to least the minimum subscription stated in the prospectus Clause 5 of the schedule II of part 1 of the co act defines minimum sub as the minimum amount which in the opinion of the directors or signatories to MOA must be raised by the issue of shares to meet the expenditure on each of the foll heads : Purchase price of any property bought or to be bought Preliminary expenses Repayment of any money borrowed Working capital All other expenditure Note ::: min sub amt == exclusive of any amt payable other than in cash Should be cal with reference to the face value of the shares applied for.

public needs BCC certificate along with the incorporation certificate to commence its business

 MAKING

OF THE APPLICATION TO THE REGISTRAR FILING OF THE DOCUMENTS AND THE STATEMENTS PAYMENT OF THE REQUIRED REGISTRATION FEES OBATINMENT OF THE BUSINESS COMMENCEMENT CERTIFICATE

 Brings

the process of the formation of the company to the end Evidence to commence business Exercise its borrowing powers Pre in corporation contracts will not be binding on the company

 Every

person who is responsible for the contravention or non compliance will be liable for fine which may extend up  Rs. 500 or  every day of default.

 Basic

document Defination ::: the MOA of the company is its charter ad defies the limitation of the powers of a company. The MOA contains the fundamental conditions upon which alone the company is allowed to be incorporated lord cairns Lord Macmillan, the purpose of memorandum is to enable the shareholders, creditors and those who deal with the company to know what is permitted range of enterprise

 It

informs shareholders about the nature of the business In which their money would be employed ad that risk they are taking I making their investment It informs the creditors ad all those who deal with the company as what activities the company is authorized to carry.

Life giving document Foundation Constitution of the company Throws light on the name of the company Determines the jurisdiction of the ROC Fix area of operation of the company Information about authorized capital Throws light on the liability of the members of the company Public document Governs the AOA Unalterable charter of the company

Table B C D E

Specimen of memorandum of a company Limited by shares Limited by guarantee and not having share capital Limited by guarantee and having share capital Unlimited company

 name

clause Situation clause Object clause Liability clause Capital clause Association clause, subscription clause or declaration clause Other provisions of MOA