According to companies act 1956
companies are incorporated by following four steps.
Promotion
Incorporation
Certificate
of Incorporation
Commencement
of business
Promotion:
Promotion means taking the basic
steps for formation of company
Promotion is done by promoters
Meaning of Promoters:-
promoters are the persons who take the basic steps for the formation of the
companies. They are representatives of company before its formation. They are
the persons who decide to form a company and make a contract for the company so
that the contracts can be useful for the company.
Position of a Promoter:-
Every promoter is the representative of the company before its formation. Hence
when the company will be formed then the company will take the benefits of work
done by promoters. Promoters are representatives of a company which is not in
existence.
Preliminary Contracts:-
these are the contracts made by the promoters before the incorporation of
company.
Binding Effect of Preliminary
Contracts:- A preliminary contract is binding against the promoters however
the preliminary contracts are made for the benefits of the company. Every
company must fulfil the obligations imposed upon the company by the preliminary
contracts.
In
1963 specific relief act was passed and according to this law when preliminary
contracts were made and the company takes their benefit then the company is
also bound by the preliminary contracts. Hence from 1963 preliminary contracts
are enforceable against the company. Before 1963 the preliminary contracts were
not enforceable against the company and were enforceable against the promoters
only. Because of this it was very difficult for the promoters to work for the
betterment of the company.
Promotion is done by deciding
following things in relation to the company.
Name of Company
Nature of company
Memorandum and Articles of
association are drafted
Choosing the first directors and
auditors of company
No comments:
Post a Comment
Tell Us What You've Got...