Formation of Company

Unit
Anjali Singh
!rocedure for formation
!romotion
ncorporation / Registration
Capital Subscription
Commencement of Business
Functions
Discovery of Business dea
Detailed nvestigation
Ensuring Availability of Resources
Canvassing
Making Contracts
ncorporation/ Registration
Check from registrar of Companies
whether name is available or not
To get a license if required
Get MOA & AOA prepared and printed.
Documents required
MOA & AOA stamped, signed & witnessed
Written consent of directors
Notice of address of the registered Office
Statutory declaration
Capital Subscription
Relevant only for !ublic Companies having a
share Capital
Ensure that proposed issue is in conformity with
SEB's guidelines.
!rospectus has to be issued and filed with the
Registrar of Companies
Allotment of shares made by board of directors
in consultation with the stock exchange
Before allotment of shares, minimum shares
have to be subscribed to by public
Commencement of Business
To get a certificate of commencement of
business
Declaration that shares payable in cash have been
allotted up to the minimum subscription
Declaration that directors have paid in cash the
application and allotment money in same proportion
as others
No money is liable to became refundable to the
applicants by failure to list on stock exchange
Statutory declaration be secretary/director that the
above requirements have been dealt with
MOA
!rincipal document both for the
company and for the outside public
Contains the fundamental conditions upon
which alone with company is going to be
incorporated
!urpose is to enable the those dealing
with the company know what is the
permitted range of enterprise
MOA
MOA should be printed, divided into
paragraphs, numbered consecutively,
signed by each subscriber, duly attested
by a witness who is not a subscriber
Company cannot undertake any
operations which are not mentioned in the
MOA. Such activity is ultravires
t is a public document and the public can
get copies of it on nominal charges
Contents of Memorandum
Name Clause
Ltd or !vt. Ltd for every public/private company
limited by shares
Not identical/similar to existing company's name
Should not convey link to government/local authority
Registered Office Clause
mportant documents are sent to this address
mportant documents are kept at the registered office
Capital Clause
State the share with which it proposes to be
registered.
Contents of Memorandum
The objects Clause
Must not be illegal
Must not be against the provisions of
companies act
Must not be against public policy
Must be stated clearly and definitely
Must be comprehensive
The liability Clause liability is limited
Association or Subscription Clause
agree to purchase of qualification shares
Articles of Association
Mandatory for companies
Limited by Guarantee
Unlimited Company
!rivate company limited by shares
AOA contents
Rules ,regulations and by-laws for internal
administration
Different classes of shares and their rights
Conversion of shares into stock
!ayment of commission to underwriters
!ayment of dividends
General meeting
Winding up
Contents
Articles of a private company with share
capital must contain three restrictions
Restrictions on right of members to transfer
shares
Limitation of members to fifty.
!rohibition of any invitation to public to
subscribe for any shares/ debentures of the
company.
Alteration
Freely altered by special resolution unless
Alteration results in conversion of a public
company into a private company
Alteration related to any provisions regarding
the appointment / reappointment of a
managing or whole time director not liable to
retire by rotation
Alteration results in an increase in
remuneration to a director including a MD or
whole time director
Difference
MOA
Lays down charter of
Company
Defines objectives &
powers of Company
Fundamental
document
Governs external
relations
Compulsory document
AOA
!rovides rules for
internal management
Lays down ways to
achieve objectives
Supplementary & sub-
ordinate to MOA
nternal relations of
Company & members
Filing of articles not
compulsory if company
adopts Table A
!rospectus
Copy of the prospectus duly dated & signed by all the
directors must be registered with the registrar.
Consent of expert in writing if his report has been used in the
report
A copy of every material contract and every contract related to
appointment & remuneration of managerial personnel
Consent in writing of auditors, bankers & brokers
Written statement relating to adjustment if any made by auditors
or accountants in their reports relating to ! & L account, Assets
& liabilities or rate of dividends
!rospectus must be issued within 90 days of the date on
which it was delivered to the registrar for registration
Statement in lieu of prospectus when the Company
confident of raising the capital privately. Has to be filed
with registrar