Formation of Joint Stock Company

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Joint Stock Company involves a lengthy legal procedure. Its registration with the Register of Companies is obligatory, before it can commence its business.

Stages in the Formation of a Joint Stock Company

The establishments of a company, a lot of formalities are to be complied with. The registration of the company is mandatory before starting its operation. To establish a company goes through four different stages:

Promotion:

Promotion of a business means to all those activities that are required to be undertaken to establish a new business unit for manufacturing or distribution of any product or provide any service to the people.

  • Starts with conceiving an idea of business or discovers an opportunity for doing a business.

  • Involves ascertain as to whether all the basic requirements such as land, building, raw material, machine, equipments etc. are available or not. T

  • Whole process is called business ‘promotion’ and the person who does it is called the ‘promoter’.

Role and importance of promoter:

  • Promoter is a person or group of persons who conceive the idea of setting up a new business

  • It takes necessary steps to arrange the basic requirements and establish a business, or company and put into operation.

  • Play an essential role in the promotion of a company.

  • Conceives the idea of business enterprise and analyses its prospects.

  • Works out a tentative scheme of organisation, brings together the requisite men, material, machines and money and starts the enterprise.