FORMATION OF A

COMPANY
NARENDRA MISHRA
MBA 1st SEM
ROLL NO. 23
CONTENT OF PRESENTATION
qConcept of company
qCharacteristics of a company
qClassification of a company
qIncorporation of a company


q
CONCEPT OF A COMPANY
Company is a voluntary association of persons
formed for the purpose of doing business
having a distinct name and limited liability. It
is a juristic person having a separate legal
entity distinct from the members who
constitute it, capable of rights and duties of
its own and endowed with the potential of
perpetual succession.
CHARACTERISTICS OF A
COMPANY
1. Incorporated association



A company is formed and registered by
complying with the prescribed formalities
prescribed under the act.
2. Artificial Person



A company is an artificial person but not a
fictitious person.
3. Separate legal entity



A company is a legal entity separate from its
owners.It is a person distinct from who owns it.
4. Perpetual succession


5. Limited liability

Liability of the members of the company are
limited

6. Common seal

Common seal is the official signature of the
company. Any document on which common
seal is affixed is deemed to be signed by the
company.

7. Transferability of shares

Shares are movable property transferable in
the manner provided in articles. But in case of
public company shares are freely transferable.

8. Right to sue

A company is a legal person. A company acts in its
own name, and not as an agent of its members. A
company can sue others and can be sued on its
own name.

9. Right to enter in to contracts

Since a company is a legal person, it has the right
to enter into a contract on its own name.

10. Separation of ownership from management

The members do not participate in day to day
affairs of the company. The management of the
company lies in the hands of elected
representatives of members, commonly called
board of directors.
CLASSIFICATION OF
COMPANIES
On the basis of business activities
undertaken

1- Manufacturing Activities

2- Service Activities

3- Non-Banking Finance Activities

4- Non-profit making (Section-25)

5- Producer (Section 581 A)



v On the basis of membership pattern or
size
 Public
 Private
 Government
v On the basis of place of registration
 Indian Company
(Incorporated in India)
 Foreign Company
(Company incorporated outside
India but having place of
business in India)

On the basis of liabilities of the
members and directors:
v With Limited liability

1- Limited by shares

2- Limited by Guarantee & having share

capital

3- Limited by Guarantee and having no share capital


v With Unlimited Liability

v
 On the basis of control over the
management



1- Holding Company

2- Subsidiary Company


PROMOTION
Meaning of promotion

Promotion means all those steps that are required
to bring a company into existence and then to set
it going. Promotion involves following five stages:

1- Generation of idea of starting a new

company

2- Registration of the company

3- Floatation, i.e., raising of capital or arranging
the financial resources so as to carry on its
business operations.

4- Obtaining the certificate of commencement of
business (necessary for public company only)
INCORPORATION OF A COMPANY
PROCEDURE

1- REQUIREMENT OF SEC.12

(a) associations of persons

(b) statutory minimum number of members

(c) common object

(d) lawful object

(e) subscription

(f) compliance of formalities


2- Availability of name

Required to fill FORM NO. 1A

3- Documents required to be filed with the

registrar

(a) Memorandum of association

(b) Article of association

(c) Statutory declaration stating that all the

requirements relating to registration of
the company have been complied with.

(d) If a managing director, whole time director or
manager is proposed to be appointed , the
agreement entered into by the company with such
person must be filed with the registrar.

(e) If a director has been named in the articles,
his consent must be filed with the registrar.
OPTIONAL DOCUMENTS

Following documents may be filed with the
registrar before incorporation or within 30 days
of incorporation.

(a) Address of registered office of the
company.

(b) Particulars of directors, manager and
secretary.

4- Issue of certificate of incorporation

The registrar shall retain and register the
documents filed with him, and afterwards
register the company if he is satisfied that

(a) all the requirements aforesaid have been
compiled with , and

(b) the company is authorized to be registered
under this act.
EFFECTS OF INCORPORATION

(a) The company becomes a body corporate

(b) The company acquires a legal recognition

(c) The company gets a name in which it shall
carry on business.

(d) The company comes into existence from
such date as is mentioned in the certificate of
incorporation.

(e) The objects of the company are laid down.
REFERENCES
Corporate law by Munish Bhandari
Wikkipedia.com
Corporate law M.C. Kuchhal



THANK YOU