Formation of a Company — Practice Quiz

Seven

Step 1: The Memorandum of Association requires signatories, who are also required to be shareholders of the company. Step 2: For a Public Limited Company, a minimum of seven persons are required to be signatories (subscribers) to the Memorandum of Association. Step 3: For a Private Limited Company, the minimum number is two. Step 4: The options 'Two' (minimum for private company), 'Five', and 'Ten' are all incorrect for a public company. Step 5: Each signatory must sign in the presence of at least one witness. Therefore, the correct answer is Seven.

Domicile or Situation Clause

Step 1: The Memorandum of Association contains several important clauses. Step 2: The Domicile, Situation, or Registered Office Clause mentions the name of the state where the company's registered office is to be situated. Step 3: This is important because it determines the jurisdiction of the court for legal matters. Step 4: The Object Clause defines what the company will do (its business activities). Step 5: The Capital Clause mentions the total registered capital, and the Liability Clause mentions whether members' liability is limited or unlimited. Hence, the correct answer is Domicile or S

Internal

Step 1: Understand the purpose of the Articles of Association (AoA). Step 2: The AoA contains rules and regulations relating to the internal affairs of the company — such as how meetings are conducted, how shares are allotted, how directors are appointed, etc. Step 3: It is like the bye-laws of the company that govern its day-to-day internal functioning. Step 4: The Memorandum of Association (not AoA) governs the company's relationship with the external/outside world. Step 5: 'Financial' and 'Government' management are too narrow or incorrect descriptions. Therefore, the correct answer is Inte

The process of exploring, investigating and organising resources to bring a company into existence

Step 1: The word 'Promotion' in everyday language means advertising, but in commerce/company law it has a specific meaning. Step 2: Promotion is the very first stage of company formation. It means the discovery of a business idea, searching for means to implement the idea, arranging capital and infrastructure, and meeting legal requirements. Step 3: In simple words, promotion means 'bringing a company into existence and making arrangements for running of the company.' Step 4: Advertising products is a marketing activity, not the promotion stage of company formation. Step 5: Issuing shares is p