Question

Name the stages in the formation of a company.

Answer 1

Formation of a company is a complex activity, involving these stages which are as follows

(i) Promotion: Identification of business opportunities, analysis of its prospects and initiating steps to form a company is known as a promotion of a company.

(ii) Incorporation: Registration of a company as a body corporate under Companies Act, 1956 is known as incorporation.

(iii) Subscription of Capital: A public company's raising funds from the public by means of the issue of shares and debentures is known as a capital subscription.

(iv) Commencement of Business: The registrar issues a certificate of commencement of business which is conclusive evidence of completion of formation requirement of a company.