Here is a complete information that how to start a new business or to form a new company.

2. Group ”C”Group ”C”
Shoaib Manzoor 23
Farhan Sajid 13
Ali Raza 34
Ali Hassan 35
Azam Bhutta 06

3. FORMATION OF AFORMATION OF A
COMPANYCOMPANY

4. STAGES OF FORMATION OF A COMPANY
 Promotion
 Incorporation
 Raising share capital.
 Certificate of commencement.

5. 1. PROMOTION STAGE INCLUDES
 Professional Promoters.
 Part time Promoters.
 Promoters.

6. 2.INCORPORATION STAGE
Nominal Capital
Total amount of company’s capital
List of Directors
Director’s names and addresses
Qualification Shares
Minimum requirement
Consent of Directors
A written agreement
Declaration
Registration of the company

7. 3. RAISING OF SHARE CAPITAL
Entering onto an agreement with underwriters.
Applying to the stock exchange for listing of
shares.
Issue of prospectus inviting public to subscribe.
Allotting shares.

8. 4. Certificate of Commencement4. Certificate of Commencement
Minimum Subscriptions
No. of shares collected to start
Prospectus
Documentation of a company
Qualification Shares
Shares that directors purchased
Declaration
Written statement

9. Memorandum of AssociationMemorandum of Association
• The Name of a Company
• Location of Head office
• Liability of members
• Capital of the company
• Subscription clause

10. Alteration in Memorandum ofAlteration in Memorandum of
AssociationAssociation
Articles of Association
 Capital
 Sales of shares
 Commission on sales of shares
 Transfer of shares
 Conversion into stock
 Alternation in Capital
 Appointment of directors
 Rights and Duties of Directors

11.  Company’s meeting
 Voting rights
 Appointment of Employees
 Winding up of a company

12. Distinction betweenDistinction between
Memorandum of associationMemorandum of association
and articleand article
Farhan Sajid
Roll No 13

13. Determine Scope of company
and relation ship with Outsiders.
Statement by which internal affairs
of company are managed.
Meaning:
Memorandum Articles
Objects:
Lays down the objectives of
company.
Determine method by which the
goals of company are achieved.

14. It is compulsory to Submit
memorandum for registration of
company.
If not submitted provision of table A of
company ordinance will become
automatically applicable
Registration:
Memorandum Articles
Relationship:
It determine relation of company
with outsiders.
It determine relation B/W members and
management of company.

15. It is constitution of company so
its more important.
It is document of company’s
internal regulation so it is less
important.
Importance:
Memorandum Articles
Alteration:
Once registered it can not be
changed except legal formalities.
It is company’s internal document so
it can be changed any time.

16. Principal document(subordinate
of Company’s Ordinance) of
company so it can not contain
contrary things.
AOA is subordinate of
memorandum.
Subordinate:
Memorandum Articles
No.Of Clauses:
Usually Contain 6(Six) Clauses. According to company’s
ordinance 1984 it should
contain near 85 clauses.

17. Any act beyond the scope of
memorandum is treated as
illegal.
Any act beyond the scope of
Article is Not illegal except
through resolution.
Legal Affects:
Memorandum Articles
Nature:
Agreement B/W company and
outsiders.
Agreement B/W company and
its employs and shareholders.

18. Prospectus of Company
Prospectus is defined according to section 2(29) of company’s
Ordinance 1984. Basically It is document which introduce company
with public, invites applications for shares and investors.

19. Objectives and contents of
Prospectus.
1->Content of memorandum:
Prospectus have all contents of memorandum like name or location of company etc..
2->Names of Signatories:
Info of those who have signed memorandum.
3->Description of business:
Company’s plans for past and future are mentioned like expansion of business.
4->Name of Management:
Info of directors, chief executive, directors or other authorities are given.

20. 8->Timing of subscription:
The date time of opening and closing of share subscription.
9->Right Issues:
Who have rights for what.
10->Allotment other than cash:
Number of shares issued or agreed to issue other than cash within two years.
11->Share at difference price:
Difference in price of share and why this difference is caused.
7->Minimum subscription:
Minimum subscription of signatories of memorandum before offering share to general public.

21. ALI RAZA
ROLL NO 34

22. Purchase of Property:
The brief description of the property
purchased by the company within two
preceding years; the names addresses of
the vendors and the amount paid or
payable.
Preliminary Expenses:
The actual or estimated amount of
preliminary expenses and the person by
whom those expenses have been paid or
payable.

23. Payment to promoters:
Any amount or benefit paid or given to any
promoter or officer of the company within
two preceding years or is intended to be
paid or given is also stated in the
prospectus.
Auditors and Advisors:
The names and addresses of the auditors
and legal advisors of the company are also
given in prospectus.

24. Interest of Directors:
The full particulars of the nature and extent
of the interest within two years of the data
of prospectus.
Right of Voting:
The right of voting at meeting of the
company conferred by, and the right in
respect of capital and dividends attached to
shares are also stated.

25. Nature of Restrictions:
The nature and extent of restrictions, if any,
imposed by articles of association
regarding the voting rights.
Length of Business:
If the company has already been carrying
on business, the length of time during
which the business of the company has
been carried on.

26. Capitalization of Funds:
Time and Place of Inspection:
A reasonable time and place at which the
copies of all balance sheets and profit and
loss accounts of the company on which
auditor report is based is also mentioned.
If any reserve or profit of the company
or its subsidiary has been capitalized,
the particulars of such capitalized are
also given.

27. Principal Purposes:
Pending Cases:
Pending legal proceeding which is not of
ordinary routine matter, in which company
or any its subsidiaries is a party.
The principal for which the net
proceeds of the issue has been used
or intended to be used for each such
purpose.

28. Auditors Report:
It contain audit of company with respect to profit
loss assets etc. for the each of the last five
years mentioned in prospectus

29. SOURCES OF COMPANY FINANCE:
No business can run without finance.
It is needed at every step business
activity. the main sources of
company finance are follows:
(a)By issue of shares,
(b) by incorporating
savings
(c) by issuing
debentures

30. Share Capital:
The amount of funds invested into
the business by its owners is known
as capital, owners investment or
owners equity.
KINDS OF CAPITAL:
Authorized Capital:
The maximum limit of capital with which
company is registered is known as nominal
capital.

31. Issued Capital:
Issued capital is that part of the
authorized capital which company
has offered to the general public for
sale.
Subscribed Capital:
The subscribed capital is that part of the
issued capital for which people has applied to
purchase.

32. Called up Capital:
The called up capital is that part of
subscribed capital which is called
from the subscribers.
Paid up Capital:
The paid up capital is that part of called up
capital which is actually paid by the
shareholders.

33. Reserved Capital:
The reserved capital is that part of uncalled
capital which is only payable at the time of
winding up of the company.

34. Shares of companyShares of company
Ali Hassan
Roll No 35

35. SHARES
Total Capital of a company is divided into small units
of nominal value and each unit is known as share
persons who purchase the share called
shareholders.

36. Kinds of Share
1-> Preference share.
2-> Ordinary share.
3->Deferred share.

37. Preference share
These are the shares which have some preferential
rights over other kinds share. Profit rate is fixed.

38. Characteristics
1->Its has preference as to divide.
2->It is callable at the option of the corporation.
3->It has no voting Power.
4->It can be converted into Common stock.

39. Types of Preference
shares(Stock)
1->Cumulative Preference share:
2->Non Cumulative Preference share:
3->Convertible Preference Share:

40. Types of Preference
shares(Stock)
4->Non-Convertible Preference share.
5->Participating preference share.
6->Non-participating preference share.

41. Ordinary Shares
Common shareholders are the persons who are the real
owners of the business. These are the share on which rate of
dividend is not fixed and it is paid only when the preference
share holders got their profit.

42. Characteristics of OS
1-> ordinary share holders are treated as real owner of company.
2->They have voting rights.
3->They have dividend at declared rate which is not fixed.
4->They have right to purchase a proportionate number of shares
of any additional Issuance(preemptive right/right issue.)

43. Deferred Shares
These are the shares which are commonly issued to the promoters.
These are also known as Promoters shares. Company ordinance
does not allow issuance of these shares in Pakistan

44. Underwriting Commission
The section 82 of the ordinance allows the company to contract with
any person or institution to work as an agent of the company for the
sale of its shares. The company pays commission as reward for his
services.

45. Condition Underwriting
Commission
1-> The rate of commission must be in accordance with the articles of
association.
2->The rate of commission and its payment has been declared in
prospectus if the share are offered to general public.

46. Thank You
Thank You