Promotion1_and_Formation1_of_Company45123.pptx

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1. Promotion & Formation of Company -45123 By Dr Ashok Khurana Associate Professor, Guru Nanak Khalsa College

2. Introduction - Company is an artificial person created by law - Formation involves multiple steps

3. Section 3: Formation of Company - 7+ persons: Public Co - 2+ persons: Private Co - 1 person: OPC

4. Types of Companies [3(2)] - Limited by shares - Limited by guarantee - Unlimited

5. Promotion: Stage I - Conceiving a business idea - Taking initiative to form a company

6. Definition of Promotion "Discovery of business opportunities and organizing resources for profit" - C.W. Gesternberg

7. Stages of Promotion - Discovery of ideas - Detailed investigation - Assembling & financing the proposition

8. Definition of Promoter - "Person who assembles men, money & materials into a business" - Guthman & Doughall

9. Functions of a Promoter - Identify business idea, plan formation - Select directors, advisors, draft MOA/AOA - Arrange capital, registration

10. Legal Position of Promoter - Fiduciary position - Must disclose profits, material facts - Cannot earn secret profits

11. Rights of Promoter - Right to preliminary expenses - Right to share from co-promoters - Right to remuneration

12. Liabilities of Promoter - Breach of fiduciary duty - Fraud or false particulars - Liability on insolvency or winding up

13. Duties of Promoter - Disclose profits & private arrangements - Disclose goodwill to shareholders

14. Remuneration of Promoter - Lump sum, option to purchase shares - Commission, profit on assets

15. Types of Promoters - Professional - Occasional - Government

16. Pre-Incorporation Contracts - Made by promoters before incorporation - Company not bound unless ratified

17. Incorporation: Stage II - Preliminary activities - Filing documents with ROC - Scrutiny and Registration

18. Documents for Incorporation - MOA, AOA, declarations, DINs, consents - Proof of identity, address, name approval

19. Certificate of Incorporation - Issued by ROC upon approval - CIN allotted - Conclusive legal evidence

20. Capital Subscription: Stage III - Issue of prospectus or statement - Required for raising capital

21. Commencement of Business: Stage IV - Pvt Co: after COI - Pub Co: after Certificate of Commencement - Sec 10A compliance required