Formation of a Company | One Shot | Chapter 7 | Class 11

Rajat Arora27 minutes read

Chapter 7 discusses the formation of a company through legal formalities and procedures, covering types of companies and stages like promotion, incorporation, and subscription. Key documents like Memorandum of Organization and Articles of Association are crucial for registering the company and outlining internal rules, with SEBI approval needed for public companies to raise funds for investor protection and disclosure.

Insights

  • The formation of a company involves crucial steps such as promotion, incorporation, and subscription, with promoters playing a key role in identifying business opportunities, conducting feasibility studies, and obtaining necessary approvals for the company name.
  • Essential documents like the Memorandum of Association, Articles of Association, and Consent of Directors are required during the formation process, emphasizing the importance of adhering to these documents to ensure proper management and compliance within the company.

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Recent questions

  • What are the key stages in forming a company?

    Promotion, incorporation, and subscription.

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Summary

00:00

"Company Formation: Legal Steps and Stages"

  • Chapter 7, "Formation of a Company," is discussed in a one-shot format.
  • The chapter covers the formation of a company through legal formalities and procedures.
  • Types of companies include one-person company, private company, and public company.
  • The stages of forming a company include promotion, incorporation, and subscription.
  • Promotion involves conceiving a business idea and taking steps towards forming a company.
  • Promoters identify business opportunities, conduct feasibility studies, and get the company name approved.
  • The Memorandum of Organization is a crucial document signed by the first directors of the company.
  • Professionals like bankers, chartered accountants, and marketing officers are appointed during the formation process.
  • The return of allotment is submitted to the register after all formalities are completed.
  • Necessary documents like the Memorandum of Association and Articles of Association are prepared before registering the company.

13:39

"Company Formation: Documents and Legal Requirements"

  • The first document needed is the Article of Organization, which outlines the internal management rules of the company.
  • The second document required is the Memorandum, detailing the company's objectives.
  • The third document necessary is the Consent of Directors, where directors provide their consent in writing.
  • A Director's Agreement is essential if there are any agreements made during the company's formation.
  • A Sedutary Declaration is needed from the promoter, declaring the genuineness of the company's actions.
  • A Receipt of Payment of Fees is crucial to show the registration fee has been paid.
  • Incorporation involves the promoter submitting completed documents to the Registrar of Companies for registration.
  • The Certificate of Incorporation is issued by the Registrar, marking the legal birth of the company.
  • A Prospectus is a document containing all company details, essential for investors before investing.
  • SEBI approval is required for public companies to raise funds from the public, ensuring investor protection and disclosure of information.

26:20

"Mo and Aao: Vital Company Documents"

  • Mo and Aao are two important documents in a company, with Mo detailing the company's objectives and status, while Aao focuses on the relationship of the company with outsiders, ensuring that any actions outside the Memorandum of Organization are considered invalid.
  • The Memorandum of Organization (Mo) outlines the company's objectives and rules for internal management, emphasizing that any actions outside its articles are invalid unless permitted by Amway, highlighting the necessity of adhering to these documents for the company's proper functioning and compliance.
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