2 Most VSAQ’s of Formation of a Company Chapter in Inter 1st Year Commerce (TS/AP)

2 Marks

VSAQ-1 : Who is a Promoter?

A promoter is an individual who takes the initiative and plays a pivotal role in the initial stages of forming a company. They are the first individuals who oversee and manage the company’s activities during its early development. Promoters work with the objective of incorporating the company and bringing it into existence. They may acquire the necessary share capital or loan capital to establish the company. Once all the requirements are met, the promoters typically transfer control of the business to the company’s directors.

VSAQ-2 : What is capital subscription? (OR) What is meant by capital subscription?

Capital subscription refers to the process by which a public company secures the minimum level of subscription required for it to commence its business operations. Before a company is formally incorporated, it typically issues a prospectus to the public, inviting individuals to subscribe to the company’s share capital. In many jurisdictions, there are legal requirements that specify a minimum percentage of the offered shares that must be subscribed to within a certain timeframe. Usually, at least 90% of the shares offered in the prospectus must be subscribed to by the public within a specified period, often 120 days from the date of the prospectus issue. Once the required minimum subscription level is met, the company can proceed to issue shares and debentures and officially begin its operations.