CHAPTER-7 Formation of a Company

Is it necessary for a public company to get its share listed on a stock exchange? What happens if a public company going for a public issue fails to apply for a stock exchange for permission to deal in its securities or fails to get such permission?

What is the effect of conclusiveness of the 'Certificates of Incorporation' and 'Commencement of Business'?

Distinguish between 'Memorandum of Association' and 'Articles of Association.'

What is 'Memorandum of Association'? Briefly explain its clauses.

Explain the steps taken by promoters in the promotion of a company.

If a company suffers heavy losses and its assets are not enough to pay off its liabilities, the balance can be recovered from the private assets of its members.

A provisional contract is signed by promoters before the incorporation of the company.

Every company must file Articles of Association

Preliminary Contracts are

(a) binding the company

(b) binding on the company, if ratified after incorporation

(c) binding on the company after the incorporation

(d) not binding on the company

'Articles of association' is the main document of a company.

Distinguish between 'preliminary contracts' and 'provisional contracts'.

If a company is registered on the basis of fictitious names, its incorporation is invalid.

At which stage in the formation of a company does it interact with SEBI?

A company can ratify preliminary contracts after incorporation.

Briefly explain the term 'Return of Allotment'.

Expert who help promoters in the promotion of a company are also called promoters.

Explain the term 'Minimum Subscription'.

A private company can commence business after incorporation.

What is a prospectus? Is it necessary for every company to file a prospectus?

Statement in lieu of prospectus can be filed by a public company going for a public issue.

List the documents required for the incorporation of a company

It is necessary to get every company incorporated, whether private or public.

Name the stages in the formation of a company

Preliminary Contracts are signed

(a) before the incorporation

(b) after incorporation but before capital subscription

(c) after incorporation but before commencement of business

(d) after commencement of business

Stages in the formation of a public company are in the following manner

(a) Promotion, Commencement of business, Incorporation, Capital Subscription

(b) Incorporation, Capital Subscription, Commencement of business, promotion

(c) Promotion, Incorporation, Capital Subscription, Commencement of Business

(d) Capital Subscription, Promotion, Incorporation, Commencement of Business

A prospectus is issued by

(a) A private company

(b) A public company seeking investment from public.

(c) A public enterprise

(d) A public company

A proposed name of Company is undesirable if

(a) It is identical with the name of an existing company

(b) It resembles closely with the name of an existing company.

(c) it is an emblem of Government

(d) in case of any of the above.

Application of approval of name of a company is to be made to

(a) SEBI

(b) Registrar of Companies

(c) Government of India

(d) Government of the state in which company is to be registered.

Minimum number of members to form a public company is

a) 5

(b) 7

(c) 12

(d) 21

Minimum number of members to form a private company is

(a) 2

(b) 3

(c) 5

(d) 7