Commerce Exam > Commerce Questions > Preliminary Contracts are signeda)After comme...
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Preliminary Contracts are signed
- a)After commencement of commencement of business business
- b)After incorporation but before capital subscription
- c)After incorporation but before
- d)Before the incorporation
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Preliminary Contracts are signeda)After commencement of commencement o...
Contracts signed by promoters with third parties before the incorporation of company. Contracts signed after incorporation but before commencement of business. These are not legally binding on the company and cannot be ratified after incorporation. They can only be undertaken by public company.
This question is part of UPSC exam. View all Commerce courses
Most Upvoted Answer
Preliminary Contracts are signeda)After commencement of commencement o...
Explanation:
Preliminary contracts are signed after incorporation but before capital subscription. Let's break down the given options and understand why option 'C' is the correct answer:
a) After commencement of business:
- Commencement of business refers to the start of the company's operations and activities.
- Signing preliminary contracts after the commencement of business means that the company has already started its operations.
- However, preliminary contracts are typically signed before the company begins its business activities.
- Therefore, option 'a' is incorrect.
b) After incorporation but before capital subscription:
- Incorporation refers to the process of legally forming a company or business entity.
- After incorporation, the company becomes a separate legal entity.
- Capital subscription refers to the process of raising capital or funds by issuing shares or other financial instruments to investors.
- Preliminary contracts are commonly signed after incorporation but before capital subscription.
- These contracts may include agreements with suppliers, service providers, or other stakeholders.
- By signing these contracts, the company can secure necessary resources and establish relationships before raising capital.
- Therefore, option 'b' is incorrect.
c) After incorporation but before capital subscription:
- As explained above, this is the correct answer.
- Preliminary contracts are signed after the company has been legally incorporated but before it raises capital through subscriptions.
- This allows the company to prepare for its operations and establish contractual relationships.
d) Before the incorporation:
- Before the incorporation, the company does not exist as a separate legal entity.
- It cannot enter into contracts or engage in business activities.
- Therefore, option 'd' is incorrect.
In conclusion, preliminary contracts are signed after incorporation but before capital subscription. This allows the company to establish necessary relationships and secure resources before raising capital.
Preliminary contracts are signed after incorporation but before capital subscription. Let's break down the given options and understand why option 'C' is the correct answer:
a) After commencement of business:
- Commencement of business refers to the start of the company's operations and activities.
- Signing preliminary contracts after the commencement of business means that the company has already started its operations.
- However, preliminary contracts are typically signed before the company begins its business activities.
- Therefore, option 'a' is incorrect.
b) After incorporation but before capital subscription:
- Incorporation refers to the process of legally forming a company or business entity.
- After incorporation, the company becomes a separate legal entity.
- Capital subscription refers to the process of raising capital or funds by issuing shares or other financial instruments to investors.
- Preliminary contracts are commonly signed after incorporation but before capital subscription.
- These contracts may include agreements with suppliers, service providers, or other stakeholders.
- By signing these contracts, the company can secure necessary resources and establish relationships before raising capital.
- Therefore, option 'b' is incorrect.
c) After incorporation but before capital subscription:
- As explained above, this is the correct answer.
- Preliminary contracts are signed after the company has been legally incorporated but before it raises capital through subscriptions.
- This allows the company to prepare for its operations and establish contractual relationships.
d) Before the incorporation:
- Before the incorporation, the company does not exist as a separate legal entity.
- It cannot enter into contracts or engage in business activities.
- Therefore, option 'd' is incorrect.
In conclusion, preliminary contracts are signed after incorporation but before capital subscription. This allows the company to establish necessary relationships and secure resources before raising capital.
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Preliminary Contracts are signeda)After commencement of commencement of business businessb)After incorporation but before capital subscriptionc)After incorporation but befored)Before the incorporationCorrect answer is option 'C'. Can you explain this answer?
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