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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.
Promotion: Promotion is the first stage in the process of formation. It involves dreaming of a business opportunity and taking necessary steps to form a company so that practical shape can be given to exploiting the provided business opportunity. So it has to begin with someone who has come up with a potential business opportunity. It can be a person or a group or even a company.

Necessary Documents
  1. Memorandum of Association
  2. Articles of Association
  3. Consent of proposed directors
  4. Agreement, if any, with proposed managing or whole time director
  5. Statutory declaration
Incorporation: The application has to be submitted to the Registrar of Companies of the state where they plan to setup the registered office of the company. This application should be must be accompanied with certain documents which have already been discussed by us.

Capital Subscription: A public company raising funds from the public needs to take following steps for fund raising:
  1. SEBI approval;
  2. File a copy of prospectus with the Registrar of Companies;
  3. Appointment of brokers, bankers and underwriters etc.;
  4. Ensure that minimum subscription is received;
  5. Application for listing of company's securities;
  6. Refund/adjust excess application money received;
  7. Issue allotment letters to successful applicants; and
  8. File return of allotment with the Registrar of Companies (ROC).
Commencement of Business: A public company raising funds from public has to apply to the Registrar of Companies for the certificate of commencement of business along with the following documents.
  1. A declaration about meeting minimum subscription requirement;
  2. A declaration about details in respect of allotment to directors;
  3. A declaration about no money being payable to applicants; and
  4. A statutory declaration.
A public company raising funds privately has to submit only documents (ii) and (iv) listed above.

The Registrar, upon satisfaction, issues Certificate of Commencement of Business. This certificate is also a conclusive evidence of completion of formation requirements.

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