Explain the procedure of a formation of a company.

Explanation

The whole process of company formation can be divided into four stages as given below:


1.Promotion of a Company:The process of business promotion begins with the conceiving of an idea and ends when that idea is translated into action i.e., the establishment of the business enterprise and commencement of its business.

2.Registration of a Company
:It is registration that brings a company into existence. A company is properly formed only when it is duly registered under the Companies Act.

3.Certificate of Incorporation: On the registration of Memorandum of Association, Articles of Association and other documents, the Registrar will issue a certificate known as the ‘Certificate of Incorporation‘. The issue of certificate is the evidence of the fact that the company is incorporated and the requirements of the Companies Act have been complied with.

4.Commencement of the Business:A public company can commence its business only after getting the ‘certificate of commencement of business‘. After the company gets the certificate of incorporation, a public company issues a prospectus for inviting the public to subscribe to its share capital. It fixes the minimum subscription. Then it is required to sell the minimum number of shares mentioned in the prospectus.