2. Formation of a Joint Stock Company
Stages:
Private Limited Company:
Promotion
Incorporation
Public Limited Company:
Subscription of Capital
Commencement of Business

3. Stages in the Formation
Stage 1: Promotion of a Company:
Functions performed by Promoter/s:
Identification of a business opportunity
Feasibility studies
Technical feasibility – resources & technology
Financial feasibility – availability of funds
Economic feasibility – profitability of the business
Name approval
“The Emblem and Names Act 1950”

4. Stages in the Formation
Fixing up signatories to the MOA
members to sign the MOA- first Directors
written consent from members to act as Directors
First Directors- Qualification Shares
Pvt Co. – 3 signatories
Pub Co. – 7 signatories
Appointment of professionals
Preparation of necessary documents – MOA, AOA, Directors’ consent

5. Documents Required MOA – Doctrine of outdoor management
Principal document
Defines the powers and objectives of the company
Scope of operations
Relationship with all stakeholders
Also called as the charter of the company
A company can legally undertake only such activities which are mentioned in its MOA

6. Documents Required Contents of MOA: Name Clause
Registered Office/ Domicile Clause
Liability Clause
Capital Clause
Association Clause- signatories’ consent
Object Clause:
Main Object Clause
Other Object Clause
Alteration in the object clause- permission from the company law board

7. Documents Required
2. AOA – Doctrine of Indoor Management
Defines the rules regarding the internal management of the company
States the duties, rights and powers of the BOD, managers and officers
AOA should not contradict MOA
Public Ltd Co may adopt any of the 99 model articles given in table A of the companies act
It is mandatory for a company with their own AOA to register a duly stamped and signed copy of AOA

8. Documents Required Contents of AOA: Amount of share capital
Different classes of shares
Rights of each class of shareholders
Procedure for allotment of shares
Procedure for issuing share certificates
Procedure for conducting meetings
Procedure for appointing, remuneration and removal of directors
Duties, powers and rights of directors, mangers and other officers
Procedure for declaration and payment of dividends
Procedure regarding winding up of the company

9. Documents Required
3. Prospectus:
It is an invitation to the general public to subscribe for shares and debentures
Companies Act- “ A prospectus can be a document, a notice, a circular or an advertisement inviting deposits or offers from public for the subscription or purchase of any shares or debentures of a body corporate.
Statement in lieu of Prospectus – 3 days before the allotment of shares

10. Documents Required Contents of the Prospectus:
Company’s name and address
Qualification shares of the directors
Number and classes of shares and debentures
The nature of business and the main objective of business
Name and address of the signatories to the MOA
Names and addresses of the MD, other Directors and managers
Details of underwriters
Amount of minimum subscription

11. Documents Required
4. Consent of the proposed directors “We, the several whose names and addresses are submitted are desirous of being formed into as company in accordance with the MOA and we undertake to take the qualification shares”. 5. Agreement- company proposes to enter with the individuals to be appointed as managing director, whole-time director or a manager. 6. Statuary Declaration – that the all the formalities are complied with To be signed by an advocate of High Court/ Supreme Court/ Chartered Accountant/ person named in the AOA as a director/ manager/ secretary of the company

12. Formation of a Joint Stock Company
Stage 2: Incorporation of a company:
Promoters file an application with Registrar of the companies for incorporation
The documents to be submitted:
MOA
AOA
Written Consent of the Directors
Agreement
A copy of Registrar’s letter approving the name of the company
Statutory Declaration
A notice about the exact address of the registered office
Documentary evidence of payment of registration fees
Certificate of Incorporation is the Birth Certificate of the Company

13. Formation of a Joint Stock Company
Stage 3: Capital Subscription:
Comply with the following formalities:
SEBI Approval – to ensure that the company has disclosed all the relevant information to the investors
Filing of Prospectus
Appointment of Bankers, Brokers, Underwriters
Minimum Subscription – minimum no of share applications before the allotment of shares. (90% of the issued capital)
Application to Stock Exchange- Permission from atleast one Stock Exchange to deal in its shares and debentures within 10 weeks of date of closure of subscription
Allotment of Shares
Director/ secretary of the company to file “Return of Allotment” with the Registrar of the Companies within 30 days of allotment

14. Formation of a Joint Stock Company
Stage 4: Commencement of business:
Company applies to the Registrar of companies for the issue of COC.
Documents to be submitted:
Declaration that the shares have been subscribed and allotted
Declaration that the cash is received from every Director
Declaration that no money is payable to share applicants
A Statutory Declaration duly signed by a Director or a Secretary of the company stating that all the requirements are complied with
This certificate acts as a conclusive evidence stating that the company is entitled to do business.

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