Business Studies · Class 11 Commerce
Ch 7Formation of a Company — Class 11 Business Studies, concept-first.
A story that sets the stage - Avtar, a brilliant automobile engineer running his own factory as a sole proprietor, has just developed a new carburettor that can cut a car engine's petrol consumption by 40 percent.
Key concepts
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Stages in Company Formation
A company does not spring into existence overnight. Because it can pool large capital from many people while limiting each member's risk, the company form is preferred for medium and large ventures — but bringing one int…
Most relevant Q&A
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Introduction
A story that sets the stage - Avtar, a brilliant automobile engineer running his own factory as a sole proprietor, has just developed a new carburettor that can cut a car engine's petrol consumption b…
Formation of a Company
Forming a company is a complex activity because it involves completing several legal formalities and procedures laid down under company law.
Promotion of a Company
Promotion is the first stage in the formation of a company. It involves conceiving a business idea and taking the initiative to form a company so that a practical shape can be given to exploiting an a…
Incorporation
After completing the promotion formalities, the promoters apply for the incorporation of the company. The application is filed with the Registrar of Companies of the state in which the registered offi…
Capital Subscription
A public company can raise the funds it needs from the public by issuing securities (shares, debentures, etc.).
Key Terms
- Promotion — the first stage of forming a company: conceiving a business idea, testing its feasibility, and taking the initiative to get the company registered.
Summary
A private company goes through two stages of formation — promotion and incorporation — while a public company must additionally complete the capital subscription stage before it can begin operations.
Short Answer Questions
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- Q1Name the stages in the formation of a company.Free
- Q2List the documents required for the incorporation of a company.Free
- Q3What is a prospectus? Is it necessary for every company to file a prospectus?Preview
- Q4Briefly explain the term ‘Return of Allotment’.Preview
- Q5At which stage in the formation of a company does it interact with SEBI.Preview
Long Answer Questions
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- Q1What is meant by the term ‘Promotion’. Discuss the legal position of promoters with respect to a company promoted by them.Free
- Q2Explain the steps taken by promoters in the promotion of a company.Free
- Q3What is a ‘Memorandum of Association’? Briefly explain its clauses.Preview
- Q4Distinguish between ‘Memorandum of Association’ and ‘Articles of Association.’Preview
- Q5What is the meaning of ‘Certificate of Incorporation’?Preview
- Q6Discuss the stages of formation of a company?Preview