State the steps involved in the formation of a company under the Companies Act 1994.

Formation of a Company:

2 (two) or more persons (not more than 50) and 7 or more persons (unlimited) may form a Private or a Public Limited Company respectively by subscribing their signature in the Memorandum of Association.

They may form -

A. a Company limited by shares;

B. a Company limited by guarantee;

C. an unlimited Company.

There are 3 stages for formation of a company -
i. Promotion;
ii. Registration;
iii. Commencement of business.

Promotion stages -

 
i. Promoters
ii. Clearance of name
iii. Sponsors' equity
iv. Consent of the Directors
v. Selection of objectives.

Registration:

i. Submission of Memorandum & Articles of Association.
ii. Payment of stamp duty & Registration fees.
iii. Obtaining certificate of incorporation.

Commencement of business:

 1. For a Private Limited Company, the business of the Company can be commenced after
getting the registration i.e. certificate of incorporation.

2. For a Public Limited Company, the Company shall obtain the certificate of
commencement of business from the Registrar.

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Can a director be removed? How?

As per section 106 of the Companies Act 1994 –

(1) The company may be extraordinary resolution remove any share-holder director before the expiration of his period of office and may by ordinary resolution appoint another person in his stead and the person so appointed shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is appointed was last elected director.

(2) A director so removed shall not be re-appointed a director by the Board of Directors.

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