Formation of a Company — Flashcards

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The four distinct stages are: 1) Promotion, 2) Incorporation, 3) Floatation or Capital Subscription, and 4) Commencement of Business. A private company needs only the first two stages because it can s…

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Promotion is the process of discovering a business idea, arranging the necessary funds, property, and managerial ability, and bringing a company into existence. It covers all preliminary work done bef…

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A promoter is a person, firm, association, or company that conceives the idea of a business enterprise, does the preliminary work, and brings the company into existence. The promoter may also arrange …

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A successful promoter creates wealth, acts like an economic prophet, visualises a business that does not yet exist, and organises business enterprises to make products available to the public. This sh…

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The four types of promoters are professional promoters, occasional promoters, entrepreneur promoters, and financier promoters. Professional promoters hand over control to the Board after promotion, oc…

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Incorporation means registration of a company with the Registrar of Companies. A company is said to be incorporated when it receives the Certificate of Incorporation, which is conclusive proof that th…

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The Certificate of Incorporation is conclusive evidence that the company has been lawfully formed. After it is issued, the regularity of the earlier proceedings cannot be questioned. It also gives the…

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The main preliminary activities are: deciding the location of the registered office, deciding the name of the company, obtaining a licence if required, making appointments, preparing the memorandum an…