DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : R. Dasharatham
Designation : Lecturer
Branch : D.C.C.P.
Institute : GPW, Warangal
Year : I year
Subject : Business Organization
Subject code : CCP-104
Topic : Formation of a Joint Stock Company
Duration : 50 mts
Sub topic : Certificate of Commencement
Teaching Aids : P.P.T., Animation, Photos

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Recap

In the Previous Class, we have discussed about:

 Prospectus
 Statement in lieu of Prospectus

CCP104.50 2
Objectives

On completion of this period the student will be able

to explain:

 Allotment of shares
 Minimum Subscription
 Certificate of Commencement

CCP104.50 3
 COMPANY FORMATION

II. LEGAL ASPECT

I. BUSINESS
ASPECT
1. PROMOTION 3. PROSPECTUS
2. INCORPORATION

A. DISCOVERY OF NEW
IDEA

B. ASSEMBLING A. MEMORANDUM OF B. ARTICLES OF C. WRITTEN D

ASSOCIATIONN ASSOCIATION CONSENT NOT
ICE

C. PREPARATION OF
FINAL PLAN

4. COMMENCEMENT CERTIFICATE

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Allotment of shares

 The prospectus invites the general public to make

offers for the purchase of shares in the company.
 Intending investors apply in prescribed form
 Specify the no. of shares they like to buy

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Allotment

 Accepting application means allotment

 Allotment establishes legal relationship with the
company and the persons to whom shares are
allotted.

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Allotment

 The Board of Directors

 after the last date of the receipt of applications
 shall meet and decide
 about the allotment of shares.
 The Secretary of the company should prepare
applications and allotment sheets
 place them before the meeting of directors.

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Allotment

 The Board passes a resolution

 sanctioning the allotment of specified shares to
specified persons.
 The secretary then informs the persons concerned
 about the allotment of shares to them.

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Allotment

 Letters of Allotment are written to the allottees

 Informing the number of shares allotted to them
 Requesting them to pay the allotment money .
 Letters of Regret are written
 To those who have not been allotted any shares.
 After the receipt of allotment money
 The names of shareholders are entered in the
Register of Members.
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ALLOTMENT ADVICE (FIG.1)

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Minimum subscription

 Minimum subscription is that part of the issued capital

 which should be received within the above mentioned
specified period.
 It is the minimum amount necessary to meet the
preliminary expenses etc.

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Certificate of commencement

 The Public Limited Company thereafter should take

steps to get the Certificate of Commencement of
Business from the Registrar.
 No public company should start business with out
their certificate
`

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Certificate of commencement

Issued on submitting:
 Declaration of minimum subscription
 Requisite amount from directors
 Qualifications shares
 Issue of prospectus
 On statement in lieu of prospectus

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Certificate of commencement

 Then the Registrar issues a certificate of commencement

of business
 Entitling the company to commence business
 From the date of such certificate.

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Certificate of commencement of business (fig.2)

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Summary

We have discussed about:

 Allotment
 Minimum Subscription
 Certificate of Commencement

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Quiz
Q1: The allotment of shares should be completed within
_____ days , after minimum subscription is raised:

A. 30 days

C. 60 days

E. 90 days

G. 120 days.

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 Quiz

Q2: Who will issue the Certificate of

Commencement ?
A) The company directors
B) Registrar of Companies
C) Chief Minister
D) Governor of a State.

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Frequently asked Questions

 What is Minimum Subscription?

 What is Allotment?
 What is Certificate of Commencement?

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Assignment

 Explain the Allotment of shares?

 Explain regarding the Minimum Subscription?
 Briefly explain regarding the Commencement
certificate?

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