Business Studies for Class 11 Chapter 7 Formation of a Company

Learn CBSE Business Studies Index Terms for Class 11, Chapter 7 Including Definitions and Meanings

1. Promotion – Promotion is the principal stage in the development of an organisation. It includes considering a business opportunity and taking and driving to frame an organisation so the specific shape can be offered to take advantage of the accessible business opportunity.

2. Incorporation – Incorporation of a company means the company’s registration under the Companies Act, 1956. Steps to be followed for the registration of a company are as follows:

1. Application for registration: An application in the prescribed format, duly signed by all the partners, is to be submitted to the Registrar of Companies, containing the following information: (i) Name of the company

(ii) Location of the company

(iii) Memorandum of association

(iv) Articles of association

(v) Written consent of directors,

(vi) Names and addresses of the directors

(vii) Statutory declaration announcing that all the information is accurate and all the requirements of the act have been duly fulfilled.

2. Fees: Required amount of fees is to be deposited with the Registrar of Companies.

3. Issuance of certificate: When the registrar is satisfied with all the formalities, he enters the company’s name in the register and issues a certificate of registration.

3. Memorandum of Association – A memorandum of association (MoA) is an essential document in the formation of a company as it highlights the company’s main objectives and goals. The MoA regulates the activities of the incorporated company in such a manner that the company can legally undertake only those activities that are mentioned in the MoA. This document must be signed by at least seven members in the case of a public company and by two persons in the case of a private company.

4. Articles of Association – Articles of association (AOA) is a form of a document or report that indicates the guidelines for an organisation’s tasks and characterises the organisation’s purpose. The report lays out how undertakings and tasks are to be achieved inside the association, including the interaction for designating directors and the treatment of monetary and financial records.

5. Prospectus – A prospectus is a conventional document or record that is expected by and documented with the Securities and Exchange Board of India (SEBI) that gives insights regarding an investment proposed to people in general. A prospectus is filed for providing and issuing securities like bonds, mutual funds, and common shares.

6. Capital Subscription – A public organisation can raise the necessary assets or required funds from the public by means of the issue of debentures and shares. For doing the same, the company needs to provide a prospectus and solicitation to the general population to buy into the organisation’s capital.

7. Commencement-of-business – The commencement of business certificate is the official declaration that the director of the company needs to file with the registrar of companies. This declaration is filed before starting the business and exercising borrowing powers by the company.

We hope that the offered Business Studies Index Terms for Class 11 with respect to Chapter 7: Formation of a Company, will help you.

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