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Formation of a Company

Formation of a company involves a lot of complex activities like getting into a lot of legal dealings and procedures. For a better understanding, we can divide the steps into four:
  1. Promotion;
  2. Incorporation;
  3. Subscription of capital; and
  4. Commencement of business.
But these steps are appropriate only for the formation of a public limited company. As far as the private limited companies only the first two steps needed. It means a person can start a private company as soon as he gets the appropriate certifications. Since it is restricted to raise funds from public, it does not require to issue a prospectus and complete the formality of minimum subscription. But a public company receives the certificate of commencement as soon as it goes through the capital subscription stage and hence has to undergo all the four stages. We will discuss the four steps in detail in the next section.

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