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   /   m   o   c . Quest Questio ion n No 16:   e Descr Describe ibe the Proc Procedure edure of Formation of JSC J SC.. And also   e drive the specimen specimen o f Incorpor ation.   r  An  A n s w er: er :    f Procedure of Formation of Joint Stock Company:   e Introduction:   n JSC is a form of a business which is usually involved in    i play vital rule in large scale business. Such businesses the development of the country.    lMoreover, establishment of such organizations requires a very long procedure and   n compulsions. However, steps involved in formation of a   o JSC are given below:    l    lof JSC: Steps Steps for f or t he Form Formation ation JSC: Followings are main steps   a for the formation of a JSC: .   w   w   w    /    /   :   p     t    t    h

   /   m   o   c .   e   eIncorporation Promoti rom otion on Stage Incorp oration Stage Stage Capi Capital tal Raisi Ra ising ng Stage   r Commencement Stage    f   e   n <>Idea <> Idea Gener Generatio atio n <>Se <> Select lectio ion n of Name Name <>Contact with wit Underwriters iters    ih Underwr <>Min. <> Min. Subs Subscri cripti ption on    l <>Ana Anal ys ysis is   n <>Li <> License cense <>Contact <> Contact with wi th   o Bankers <>Pa <> Paym yment ent of Shares Shares    l <> <> Seekin eeking g Opinion <>Submiss Submission ion of Documents <>Issue >Issue of Prospectus    l <>Statutory Declaration   a <> Planning lanning for Resource Resources s <>payme payment nt of . Fees Fees <>Issu <> Issue e of Shares <> Commencement Commencement Certi Ce  w rti ficate fic ate <>Prelimi <> Preliminary nary Expenses <>   w Verif Verification ication <>Issue >Issue of   w Debentures Debentures <> Submission Submiss ion of Prospectus    / <> Preparatio Preparatio n of <> Cert Certif ific icate ate of Incor ncorpo pora rati tion on    / Documents  : <> Address Add ress of Company   p     t    t    h

   /   m   o   c .   e   e   r    f   e   n    i  A)  A ) PROMOTION STAGE:    l It is the first stage of formation of JSC.   n Definition:   o “Prom “Promot ot ion st st art s w it h t he conc concepti eption on of i dea for t he busines businesss    ldow n t o t he point at w hich t o be involved involved and cont continue inue down hich t he    l operat ion as a going busines businesss f ully ull y ready t o begin goi ng conc concern. ern. Those hose people people w ho t ake   a init ini t iat ive in t he form at ion of JSC are called promot prom ot ers.”  ers.”  . Note: Promotion Promotion is the  w discovery discovery of ideas and or organization organization of funds, property and shill, to run the business for the   w purpose of earning income, There must be minimum (7)   w promoters in case of public and (2) promoters in case of private company.    / Steps teps in volved   / in pr omotio n stage: stage: Following important steps are involved in promotion   : stage.   p  1. Idea Idea Generat Generatio ion: n:    t    t    h

   /   m It all starts from an idea, the promoters discover the idea   o of the of the company and hopes that there is possibility existence of the idea they have thought   c of. The idea is always based on the experience of the expert. .   e 2. Analysis / Investig Investigation: ation:   e take an deep  After the idea generation the promoters deep   r analysis regarding the following things: Cost of Land & Building.    f Estimation of labour.   e Estimation of raw material.   n Sources of financial fulfillment.    i Report). Cost Vs Benefits analysis (Feasibility Note: The success success and growth   l of the busines businesss depends upon upon the correct analysis. And then  n these results are verified by experts.   o    l 3. Seeking Seeking Opinion Opini on::    l and experts must be taken The view of the consultants while preparing the final  a draft of the idea. The success of the business can be linked with the exact calculations of . programs.   w   w rces: 4. Planning for Resou Resources: The promoters can  w assemble the business resources and factors factors of production, producti on, the promoters promoters arrange arrange sources of    / capital, raw material, and other factors of production. They    / make contact with the suppliers for raw material and   : machinery and they also arrange for license, copyrights, employment of  p  necessary employees etc…..    t    t    h

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   /   m   o 5. Preli Prelimi minary nary Expenses: Expens es: The initial expenses of the company are  c paid by the promoters. The preparation of: . MOA. (A document indicating name, address, objects,   e authorized capital etc.)   eand rules for  AOA. (A document containing laws internal control and management of  r a company.) Prospectus. (Promoters also have to file a prospectus    f with the registrar, used to invite the public.)   e Registration Fees etc… are called initial or preliminary   n expenses.    i    l   n   o    l 6. Preparation reparation of Documents: ocu   l ments: Followings are the various legal documents prepared by   a the promoters: . Memorandum of Association (MOA)   w (AOA)  Articles of Association Other Documents :   w Documents related to Registered Office.   w List of Directors.    / Written consent of directors.    /  Authorized / Nominal / Registered Capital. Qualification  : of Shares. Declaration.  p     t    t    h

   /   m   o STAGE: B) INCORPORATION OR REGISTRATION   c It is the second stage of formation of JSC. Definition: . “To register the company with the registrar and it is done   e promoters under the Companies Ordinance 1984 is called   e Incorporation/ Registration.”   r However, this stage includes the   f following steps: 1. Selecti Selection on of Name: Name:   e The name of the JSC is proposed by the promoters. The   n name should be different from other existing companies. The name must not state the    i patronage (aid) of any head    l of the state.   n 2. License:   o The application for the license is submitted to the Federal    l Government before registration of the company. The    lto get started the company. license is usually required   a 3. Submiss ion of Documents: . The various documents prepared by the promoters of JSC   w are filed to the registrar for the verification and registration   w of JSC.   w 4. Paym Payments ents o f    / Fees: Fees: Both the public    / and private limited companies will pay the amount of fees to registrar as prescribed depending upon   : the scale of the business and in particular the amount of share capital.   p  The amount are transferred to the Govt Treasury.    t    t    h

   /   m .   o 5. Verification:   cthe documents The registrar of companies verifies the all to ensure the legality and viability to insure proper . registration.   e   e 6. Certificate of Incorporation:  After verification of legal documents  r the registrar issues the certificate of incorporation or    f registration which means that now the company is registered and hence become an   e artificial and legal entity.   n 7.  Add  Ad d r ess es s o f t h e co c o m p any an y   i :  After incorporation the management    l must inform the registrar in writing about the   n registered office of the JSC within 28 days.   o NOTE: after getting certificate of incorporation the private    l limited companies can start its activities but not public limited    l companies.   a C. CAPITAL RAISING STAGE: .  After receiving the certificate of incorporation, the next   w step is to make arrange arrangement ment for raising raising capital. capital. It is the   w of JSC. Followings are the steps third stage of formation   w the share capital of JSC: taken in order to raise 1. Contact with    / underwriters: The promoters make contact with underwriters for the sale    / of the company’s shares. The underwriters provide   : guarantee for the sale of company’s shares within the specified time   p  period as agreed.    tthe underwriters are the Bankers. NOTE: Usually    t    h

   /   m   o 2. Contact with Bankers:   cfor the sale of The promoters make contact with bankers the shares of the company. .   e 3. Issue of Prospectu s:   e for inviting The public limited company issues prospectus   r shareholders of investors to purchase shares and become the company. Prospectus is an advertisement or an    f invitation to general public for purchasing   e the shares.   n 4. Issue of Sha Share res: s:    i the company issues On the receipt of shares applications the shares to the applicants    l at the agreed price.   n 5. Issue of Debentures:   o The public limited company also collects capital by    l are the debt proof, at the issuance of debentures which    l agreed price.   a D. COMMENCEMENT STAGE: . It is the fourth and last stage of formation of JSC.   w Following steps are taken in this stage: 1. Minimum ini mum Subsc  w riptio rip tion n (Share (Shares): s):  A declaration regarding to the allotment of shares is   w fulfilled by the public    / limited company.    / 2. Paym Payment ent of Shares: Shares:   : to obtain the qualifying share and to The directors have have made the  p  payment against them. NOTE: Minimum    tlimit of qualifying shares is one.    t    h

   /   m   o 3. Submiss ion of Prospectus: Now the company files the prospectus to  c the registrar of the companies. .   e 4. Statutory tatuto ry Declaration: Declaration:   e condition under The declaration relevant to the company   r by the Secretary the companies Ordinance1984 is made of company. The secretary or a chartered accountant can    f give declaration that all the provisions of the Companies   e Ordinance with regard to registration have been fulfilled.   n    i    l 5. Certi Certi ficate fic ate of Commencement of th e Business: Bus iness:   n  After checking all the documents the registrar issues a   o certificate of commencement of the business to the public    ldate of issuance of this a limited company. From the    l a public limited company company can start the business can starts its business activities.   a .   w   w   w    /    /   :   p     t    t    h

   /   m   o   c .   e   e   r    f   e   n    i    l   n CONCLUSION:    o It is conc conclud luded ed t hat Joint oin t St ock ock Com Company pany f orm ed pass passing t hrough promot ion st st age,    l incorporat incorporat ion st st age, capit al raising raising    lst age. AftAft er compl st age and comm commenc enceme ement nt completi eting ng t he   acompany procedure procedure a Public Public limi li mitt ed company can operat e it s act act ivit ies, ies, but a privat e limit limi t ed company company cab st st art it s busines businesss aft er . get get t ing ce cert ific if icat at e of incorporat inc   worporat ion.   w   w    /    /   :   p     t    t    h

   /   m   o   c .   e   e   r    f   e   n    i    l   n   o    l    l   a .   w   w   w    /    /   :   p     t    t    h