🔷 DESCRIPTIVE EXPLANATION
🔹 Meaning of Formation of a Company
Formation of a company is the legal process through which a company comes into existence. It involves several steps and legal formalities under the Companies Act, 2013.
📌 Example: Before Flipkart could operate, its founders had to identify the idea, register the name, and obtain legal certificates.
🔷 STAGES IN THE FORMATION OF A COMPANY
Memory Trick: “PRCS” → Please Read Carefully Students
- P – Promotion
- R – Registration (Incorporation)
- C – Capital Subscription
- S – Commencement of Business
🔸 1. Promotion Stage
Promotion is the first stage where the idea is born. The person who handles this is the Promoter.
Functions: Feasibility studies, name approval, and fixing signatories to the MOA.
🔸 2. Incorporation Stage
The company is registered with the Registrar of Companies (ROC). Upon approval, the company receives its birth certificate: the Certificate of Incorporation.
🔷 SUMMARY TABLE
| Stage | Main Activity | Important Document |
|---|---|---|
| Promotion | Planning & Idea | MOA |
| Incorporation | Legal Registration | Certificate of Incorporation |
| Capital Sub. | Raising Funds | Prospectus |
🎯 MEMORY SUPER TRICK
PRCS + MAP
PRCS (Stages): Promotion, Registration, Capital, Commencement
MAP (Documents): MOA, AOA, Prospectus
Quick Formula: Stages → PRCS | Documents → MAP
Prepared by: Rathin Kumar Bardhan | CBSE 2026-27 Series
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