Discuss the various stages or legal formalities and Procedure of Formation of Joint stock Company

Formation of Joint Stock Company

Following steps are taken for the formation of Joint stock company :

1. Promotion :-
Promotion means to start the business. The act of the commencement to form the joint stock company is known as promotion.

Promoters :- Those people who take initiative in the formation of Joint stock company are called "Promoters". Promoters prepare the legal documents and take all steps for registration in Public Company there are at least seven in a private Company there are at least two promoters. There are three kinds of promoters :

i. Professional Promoters :- These are professional and they provide their services for the formation of a company to other people. They retire after performing their duty.

ii. Part time Promoter :- These people provide the services to other people for the formation of a company as a part time job. By profession these are not promoters. They receive the reward in the shape of commission after the existence of a company.

iii. Promoters :- These people do the job promotion for their own sake. After the formation of a company they do not retire.

2. Incorporation of a Company :-
Incorporation means to register the company in the registrar office according the company ordinance. For registration of a company following documents are submitted with registration fee :

1. Memorandum of Association.
2. Article of Association.
3. Nominal Capital.
4. Qualification of shares.
5. List of Directors.
6. Consent of Directors.
7. Declaration.
If the registrar is satisfied with documents then he will issue the certificate of incorporation. After the issuance of this certificate a private limited company can start the business. But a public limited company will start the business when it will obtain the certificate of commencement of business. The certificate of incorporation means that company has been registered and now it has legal existence.

3. Certificate of Commencement of Business :-
A public limited company has to receive the certificate of commencement before starting the business. A company submits the following documents to the registrar for this purpose.
1. Submission of prospectus.
2. Minimum subscription.
3. Directors share payments.

4. Declaration Regarding Conditions Completed :-
After verifying these documents Registrar issues a certificate of commencement public limited company.From the date of issuance company can start the business.