Overview

Formation of a Company — how this chapter fits the syllabus

The previous chapter, "Joint Stock Company," explained WHAT a company is — an artificial person, created by law, with a separate legal identity from its members. This chapter answers the natural next question: HOW does such a person actually come into existence? A company is not born the way a sole proprietorship or a partnership is, by two people simply agreeing to start a business together — it is brought into being only through a definite, law-governed sequence that the Companies Act, 2013 lays down step by step.

This is one of the foundational process-chapters of Maharashtra HSC Secretarial Practice, because almost everything a Company Secretary does in professional life — drafting board resolutions, filing e-forms with the Registrar of Companies, maintaining statutory registers — traces back to the discipline learned here. For a Std XI Secretarial Practice student, this chapter is also a frequent source of short-answer and distinguish-between questions in the MSBSHSE Class 11 Secretarial Practice examination, since the four stages and their sequence are precise, testable facts.

This chapter covers, in order: the meaning of "formation" and the four stages a company passes through (Promotion, Incorporation, Capital Subscription, and Commencement of Business); who a promoter is, what a promoter does, and a promoter's peculiar legal position; how a company is actually registered with the Registrar of Companies in today's largely paperless process; how a public company raises its initial capital from the investing public; the conditions a company must satisfy before it may actually start trading; and, because this is a Secretarial Practice paper and not a general Commerce paper, the specific part a Company Secretary plays at every one of these stages. The next chapter, "Documents Related to Formation of a Company," takes up the Memorandum of Association, Articles of Association, Prospectus and Certificate of Incorporation as documents in their own right, in much greater depth than the brief mentions made of them here.