What are the three main stages involved in the company formation process?

Promotion, Incorporation, and Subscription of Capital.

True or False: A private company is required to issue a prospectus to the public for raising funds.

False. A private company does not need to raise funds from the public and thus does not issue a prospectus.

What role does a feasibility study play in the promotion phase of company formation?

A feasibility study evaluates business viability.

• Assesses market demand effectively.

• Identifies required resources accurately.

• Ensures financial sustainability long-term.

List the legal documents required for the incorporation of a company.

Documents for Company Incorporation

• Memorandum of Association needed.

• Articles of Association outline rules.

• Consent of Directors is required.

Fill in the blank: The Articles of Association (AoA) specify the ___ for managing the company.

Internal rules

What is the significance of the Certificate of Incorporation in company formation?

Certificate of Incorporation is vital.

• Confirms legal status of company.

• Allows formal business operations.

• Facilitates contract signing authority.

Explain the concept of a One Person Company (OPC) and its key characteristics.

One Person Company (OPC) Explained

• Single individual forms company.

• Offers limited liability protection.

• Maintains perpetual succession status.

What is the minimum subscription requirement for a public company before share allotment can proceed?

A public company must receive applications for at least 90% of the issue size.

Describe the fiduciary position of promoters in relation to the company.

Promoters have fiduciary duties to the company.

• Act in company's best interest.

• Disclose profits and avoid gains.

• Liable for pre-incorporation contracts.

Fill in the blank: A public company can raise funds from the public by issuing ___ and ___.

Shares and debentures.