Formation of a Company Class 11 Notes: CBSE 11th Business Studies Chapter 7, Download PDF

Formation of a Company Class 11 Notes: This article hands out handwritten notes for CBSE Class 11 Business Studies Chapter 7, Formation of a Company. These revision notes have been prepared according to the updated CBSE Syllabus 2024 and the updated CBSE Curriculum. Chapter 7 of Class 11 Business Studies is presented in Part 2, Corporate Organisation, Finance, and Trade, of the book.

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Related:

Mind Maps for CBSE Class 11 Business Studies 2023-2024(PDF)

MCQs for CBSE Class 11 Business Studies 2023-2024(PDF)

Revision Notes for CBSE Class 11 Business Studies Chapter 1

Revision Notes for CBSE Class 11 Business Studies Chapter 2

Revision Notes for CBSE Class 11 Business Studies Chapter 3

Revision Notes for CBSE Class 11 Business Studies Chapter 4

Revision Notes for CBSE Class 11 Business Studies Chapter 5

Revision Notes for CBSE Class 11 Business Studies Chapter 6

 Revision Notes for CBSE Class 11 Business Studies Chapter 7 are presented below:

Formation of a Company- It is a tedious task that involves legal work, formalities, and procedures. To ease it, we have divided it into three categories:

• Promotion
• Incorporation and
• Subscription of capital

(i) Promotion of a company- It is the first step in the formation of a company. This stage involves forming a business idea and then translating it into a full-fledged business. It is the most crucial stage since the future of your business depends on this stage completely.

Promoter- Any person or group of people focused on converting a business idea into a business is called a promoter. A promoter is said to be the one who undertakes to form a company with reference to a given project and to set it going and who takes the necessary steps to accomplish that purpose.

Functions of a promoter

• Identification of business opportunity- A promoter is responsible for choosing the most potential business idea, among all the available options
• Feasibility studies-  Then a promoter checks for the feasibility of the idea. He/she is responsible for understanding will the business idea be workable on the following grounds: Technical feasibility, Financial feasibility, Economic feasibility
• Name approval- Then, the next job is to get the name approved for the business.
• Fixing up Signatories to the Memorandum of Association- Promoters have to decide about the members who will be signing the Memorandum of Association of the proposed company.
• Appointment of professionals- Certain professionals such as mercantile bankers, auditors, etc., are appointed by the promoters to assist them in the preparation of necessary documents which are required to be with the Registrar of Companies.
• Preparation of necessary documents- The promoter takes up steps to prepare certain legal documents, which have to be submitted under the law, to the Registrar of the Companies for getting the company registered.

Documents to be submitted to the registrar's office

• Memorandum of Association- The name clause, Registered office clause, Objects clause, Liability clause, Capital clause
• Articles of Association
• Consent of Proposed Directors
• Agreement
• Statutory Declaration
• Receipt of Payment of Fee

(ii) Incorporation- After the above formalities have been completed, an application has to be submitted for incorporation of the business. The application is to be filed with the Registrar of Companies of the state within which they plan to establish the registered office of the company. The aforementioned documents are required for incorporating a firm.

Effect of Certificate of Incorporation

A company is legally born on the date printed on the Certificate of Incorporation. It becomes entitled to enter into valid contracts. The Certificate of Incorporation is conclusive evidence of the regularity of the incorporation of a company.

DIN- It stands for Director Identification Number. Every Individual intending to be appointed as director of a company shall make an application for allotment of a Director Identification Number (DIN) to the Central Government in the prescribed form along with fees.

(iii) Capital Subscription- In order for a public company to raise required funds from the public by issue of debentures, it has to issue a prospectus which is an invitation to the public to subscribe to the capital of the company and undergo various other formalities.

Steps for capital subscription:

• SEBI Approval
• Filing of Prospectus
• Appointment of Bankers, Brokers, Underwriters
• Minimum Subscription
• Application to Stock Exchange
• Allotment of Shares

Difference between Memorandrum of Association and Articles of Association

For complete Revision notes of Class 11 Business Studies Chapter 7, click on the link below.

Also find:

CBSE Class 11 Syllabus 2023-24 (All Subjects)

CBSE Class 11 Deleted Syllabus 2023-24 (All Subjects)

NCERT Class 11 Rationalised Content 2023-2024 (All Subjects)