The process of forming a company can be divided into four distinct stages:

a. Promotion
b. Registration or incorporation
c. Capital Subscription
d. Commencement of Business.

As regards a private company, it needs to go through the first two stages only. As soon as it
receives the certificate of incorpo-ration, it can commence business. This is so because it
cannotinvite the public to subscribe to its shares and must arrange toraise the capital privately.
But Public Company has to go through all of the four stages.

We shall now discuss each of these four stages.

Promotion

This is the first stage in the formation of a company. It refers tothe entire process by which a
company is brought into existence.It starts with the conceptualization of the birth of a
companyand determination of the purpose for which it is to be formed.Do you know what we
mean by promoters?

Promoters

The persons who conceive the company and invest the initialfunds are known as the promoters
of the company. Thepromoters enter into preliminary contracts with vendors andmake
arrangements for the preparation, advertisement and thecirculation of prospectus and
placement of capital. However, aperson who merely acts in his professional capacity on behalf
ofthe promoter (e.g. lawyer, CA, etc) for drawing up the agree-ment or other documents or
prepares the figures on behalf of the promoter but the person to whom the promoter pays isnot
a promoter.
Pre-Incorporation or Preliminary Contracts
The promoters of a company usually enter into contract toacquire some property or right for
the company, which is yet to be incorporated. Such contracts are called Pre-Incorporation
orPreliminary Contracts

Registration of the Company

Once the documents have been prepared, vetted, stamped andsigned, they must be filed with
the Registrar of Companies forincorporating the Company. The following documents must be
filed in this connection: -
1. The Memorandum of Association duly signed by subscribers and the Articles of
Association, if any signed by subscribers to the Memorandum of Association
2. An agreement, if any, which the company proposes to enter into with any individual for
appointment as its managing director or whole-time director or manager.
3. In addition to the above, in case of a public company, the following documents must also be
filed: -
 1. Written consent of directors in Form 29 to agree to act as directors and their written
consent to act as directors and take up qualification shares.
2. The complete address of the registered office of the company in Form 18.
3. Details of the directors, managing director and manager of the company in Form 32.
4. A statutory declaration in Form 1 by an advocate, attorney or pleader entitled to appear
before the High Court or a company secretary or Chartered Accountant in whole - time
practice in India who is engaged in the formation of the company or by a person who is
named as a director or manager or secretary of the company that the requirements of the
Companies Act have been complied with in respect of the registration of the company
and matters precedent and incidental thereto.

Certificate of Incorporation

Once all the above documents have been filed and they arefound to be in order, the Registrar of
Companies will issueCertificate of Incorporation of the Company. This document isthe birth
certificate of the company and is proof of theexistence of the company. Once, this certificate is
issued, thecompany cannot cease its existence unless it is dissolved byorder of the Court.

Incorporation Stage:
Prescribed forms
 Prescribed fees
 Prescribed documents
to be filed with ROC of the state in which the
company is to be incorporated. (Sec 33).
Following documents are to be submitted
electronically as scanned attachment to E-Form
No. 1. After submission, a SRN (Service request
number) will be generated by the system

1. MEMORANDUM OF ASSOCIATION duly signed by the minimum number of subscribers,

stamped and witnessed.
2. ARTICLES OF ASSOCIATION, which should be similarly signed, stamped and witnessed.

3. A STATUTORY DECLARATION stating that all the provisions of Companies Act,1956

with regard to registration have been complied with.Section 33(2). The declaration should be in
FORM NO. 1 on a non-judicial stamp paper of appropriate value. Digital Signature of the
applicant in Form No. 1 onthe last page.

4. The PARTICULARS OF DIRECTORS, etc. in FORM NO. 32. This Form 32 can be filed
either at the time of registration of a company or within 30 days of incorporation. Digital
Signature of Applicant and Practicing CS, CA, CWA

5. NOTICE OF REGISTERED ADDRESS of the company inFORM NO. 18 This Form can be
filed either at the time of registration of a company or within 30 days of incorporation.
Digital Signature of Applicant and Practicing CS, CA, CWA
6. POWER OF ATTORNEY signed by all the subscribers, authorising one or more persons to
act as their representative(s) to make amendments and/or alterations in memorandum and
articles of association and other forms and papers filed before ROC, for incorporation and also
to collect the certificate of incorporation.

In the case of a public company having share capital, in addition to the above, written consent
of all those persons who have agreed to act as directors is
required to be given.

CERTIFICATE OF INCORPORATION: After scrutinizing the documents and on being

satisfied that they are in order, the R.O.C. issues the certificate of incorporation.
By post at the company’s registered office

Raising of Capital Stage

Section 70 makes it obligatory for every public company to take either of the following steps :-
1. Issue of a prospectus in case public is to be invited to subscribe to its capital or

2. Deliver a statement in lieu of prospectus where the company has either not issued a
prospectus or though it has issued a prospectus it has not proceeded to allot any of the shares
offered to thepublic for subscription.

Commencement of Business Stage

In order to commence its business and exercise itsborrowing powers a public company must
procure acertificate called the certificate to commencebusiness. In order to obtain this
certificate thecompany must comply with the provision of Section 149 of the Companies Act

In the case of a company which has issued a prospectus, the Registrar will grant the
certificate only when :-
a. the minimum subscription has been allotted.

b. the directors have taken up and paid for theirqualification shares.

c. no money is repayable to the applicants by reason offailure to obtain stock exchange

recognition for the shares, when such recognition was promised.

d. a statutory declaration of compliance signed by the Directors or the Secretary in the

prescribed form. (Form No. 19) the clauses (a), (b) and (c) mentioned above have been
complied with.

Where the company has not issued a prospectus,section 149(2)requires that it shall not
commence business unless:
a. it has filed with Registrar a statement in lieu of prospectus.
b. the directors have taken up and paid for their qualification shares.

c. there has been filed with the Registrar a duly verified declaration by one of the directors or
the secretary in the prescribed form (Form no. 20) that clause (b) stated above has
been complied.