Stages in the Formation of a Joint Stock Company

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Incorporation:

Company comes into existence only when it is registered with the Registrar of Companies. For this purpose the promoter has to take the following steps:

(a) Approval of Name

(b) Filing of Documents

(c) Payment of Filing and Registration Fees

Registration of company promoter has to take the following steps

Registration of Company Promoter Has to Take the Following Steps

Registration of company promoter has to take the following steps

(A) Approval of Name:

  • Ensured that the name selected for the company does not match with the name of any other company.

  • Promoter has to fill in a “Name Availability Form”.

  • Submit it to the Registrar of Companies along with necessary fees.

  • The name must include the words(s) ‘Limited’ or ‘Private limited’ at the end.

  • Then, promoter can proceed with other formalities for the incorporation of the Company.

(B) Filing of Documents:

Application for registration must be accompanied by the following documents.

  • Memorandum of Association (MOA)

  • Articles of Association (AOA)

  • List of persons who have agreed to become Directors with their addresses etc.

  • Written approval of the proposed Directors to act in that capacity, duly signed by each Director.

  • Notice about the exact address of the Registered Office of the company.

  • A copy of the name approval letter received from the Registrar of Companies.

Application for registration must be accompanied by the following documents

Required Document Detail

Application for registration must be accompanied by the following documents

(C) Payment of Filing and Registration Fees:

  • Necessary filing fees and registration fees at the prescribed rates are also to be paid.

  • Registrar will scrutinize all the documents are issue of Certificate of Incorporation.

  • Moment the certificate is issued, the company comes into existence.

  • So, this certificate may be called as the Birth Certificate of a Joint Stock Company.

Raising Capital or Subscription of Capital

In case of:

Private Limited Company:

Funds are raised from the members or through arrangement from banks and other sources.

Public limited company:

Share capital has to be raised from the public.

This involves the following:

  • Preparation of a draft prospectus and get it inspected (vetted) by SEBI.

  • Filing a copy of the prospectus with the Registrar of Companies.

  • Issue of prospectus to the public by:

    • Notifying in a newspaper

    • Inviting the public to apply for shares as prescribed in the prospectus

  • If minimum subscription has been received, shares should be allotted to the applicants as per SEBI guidelines.

  • File a return of allotment with the Registrar of Companies.

  • Listing of shares in a recognized stock exchange.

  • Consent of a stock exchange for listing should be obtained before issue of the prospectus to the public.