What is the process of forming a company?

The process of forming a company can be divided into four distinct stages:

a) Promotion

b) Registration or incorporation

c ) Capital Subscription

d) Commencement of Business.

As regards a private company, it needs to go through the first two stages only. As soon it receives the certificate of incorpora­tion, it can commence business. This is so because it cannot invite the public to subscribe to its shares and must arrange to raise the capital privately. But Public Company has to go through all of the four stages.


This is the first stage in the formation of a company. It refers to the entire process by which a company is brought into existence. It starts with the conceptualization of the birth a company and determination of the purpose for which it is to be formed.

Do you know what we mean by promoters?


The persons who conceive the company and invest the initial funds are known as the promoters of the company. The promoters enter into preliminary contracts with vendors and make arrangements for the preparation, advertisement and the circulation of prospectus and placement of capital. However, a person who merely acts in his professional capacity on behalf of the promoter (e.g. lawyer, CA, etc) for drawing up the agree­ment or other documents or prepares the figures on behalf of the promoter and whom the promoter pays is not a promoter.

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