Times Biz

Flotation or capital subscription involves the following steps:

Consent of SEBI: The proposed issue of shares is approved by the Securities and Exchange Guard of India. For this purpose, the company sends a copy of the prospectus to SBI for vetting.

Filing of Prospectus: The prospectus is filed with the Registrar of Companies. A company noticing a prospectus has to file a ’statement-in-lieu of prospectuses with the Registrar of Companies.

Receipt of Applications: The company issues application forms and copies of the prospectus to intending investors through its rockers, underwriters and bankers, Then filled in application along with money are received by the company’s bankers.

Application for Listing: The Company also makes application tone or more stock exchanges for listing of the proposed issue for the purpose of trading.

Minimum Subscription: The amount of minimum subscription is specified in the prospectus. It is the minimum amount of capital which must be raids before allotment of shares is done. It is mint for purchase of fixed ashes, working capital initial expenses of the issue of shires. The Company must receive a minimum subscription of 90 per cent of the public offer within 60 days the closure of the issue.

Allotment of Shares: Applications are scrutinize and shares are allotted to the successful applicants. Money received with applications is refunded to the unsuccessful applicants.

The term ‘promoter’ means an individual, firm or institution which undertakes to form a company with reference to a given object and sets it going and takes the necessary steps to accomplish that purpose.  It is not a terms of law but of business.  Tata, Birla, Ambani are well-known promoters in India.
The role of promoters may be described as follows:

• Discovery of Business Opportunities: Promoters identify the opportunities which could be undertaken as business concerns.  They carry out a preliminary study of the market to judge whether a new product or service will sell.  They also consult experts in the field for this purpose.

• Detailed Investigation: Promoters conduct detailed examination to judge the prospects and profitability of business proposals.  They analyze the probable cost of production, nature of competition in the market, availability of required technology and raw materials,. Expected sales volume, amount of refit expected, etc.

• Assembling Resources: Promoters take steps to ensure the availability of necessary capital, materials, machinery, personnel, etc.  They enter into contracts with brokers, underwriters, bankers, etc.

• Canvassing: Promoters approach the appropriate persons and persuade them to join in the formation of the company.

• Launching the Enterprise: Promoters take steps to get the Oman incorporated.  They set the necessary documents prepared a filed so that the company is formed and can commence business operations

Promotion is the process of identifying some business idea or opportunity and taking steps to implement it through the incorporation and flotation of a company. It involves detailed study of the proposed business and formation of a company to carry on the business.
The steps involved in promotion are as fools:

• Discovery of a Business Idea: First of all, the idea of starting a business is born in his mind of the promoter. The idea may relate to manufacturing or selling a new product by new methods, introducing a product within uses, selling a product in new market or commercial use of an invention or patent.  The promoter identifies the areas for profitable investment and takes all preliminary work to analyze the opportunity.

• Detailed Investigation: This step involves a detailed analysis of the capital investment, required expected volume of seas, degree of competition in the market, expected cost of production, degree of risk involved etc.  The purpose of detailed investigation is to ascertain the profitability and possibility of the proposed business.

• Assembling the Resources: Ones the promoter is satisfied about the feasibility and viability of the project, steps retaken to collect financial and other resources for the proposed venture.  Preliminary agreements dare made for purchase of assets. Appointment of personnel, etc.  Decisions are taken regarding the size, location, layout, etc of business.

• Incorporation: It means getting the company registered under the Companies Act.  For this purpose, various documents are prepared and filed with the Registrar of Companies. Memorandum of association and articles of association are the main documents.  A suitable name of the company is selected.  The promoter appoints bankers, brokers, underwriters and solicitors of the company.

A promoter is neither an agent nor a trustee of the company set by him.  He is not an agent of the company because a non existent principal (company before its incorporation) cannot have an agent.  Therefore, a promoted is personally liable for the preliminary contracts if they are not ratified by the company after incorporation. Though a promoter is not a trustee, he must observe good faith in the promotion of the company.  He must nutmeat any secret profits out of his dealings.  In case there are nay profits on the purchase of machinery and other assets for the company, he must disclose them to the company.

Promoters are of the following types:

Professional Promoter: He promotes a company and then transfers its management and contralto the shareholders.  Promotion is his profession.

Occasional Promoter: He promotes a company once in a while. Promotion is not his profession.  Once the task of promotion is over, he returns to his original occupation.

Entrepreneur Promoter: He promotes a company for himself.  He continues to manage and control the company after promotion.

Financial Promoter: He may be an investment banker or a financial institution who promotes a company due to his financial experience.

Technical promoter:  Sometimes an expert in a technical field such as engineering, architecture, etc. may promote a new enterprise and charge fee for his service.

A promoter requires the following qualities:

Vision: He should possess a clear view of the future in order to visualize the changing business conditions.
Creativity: he should be imaginative and innovative.  He needs to discover business opportunities.  He should have an alert mind.
Resourcefulness: He should have the ability to mobilize the financial. Physician human resources to translate his ideas into reality.
Analytical Skill: He should able to critically investigate the technical feasibility and commercial viability of the
Patience: He should have the patience to bear the initial set backhand hurdles in the life of an enterprise.
Alert mind: he should be alert to notice business opportunities which can be turned to advantage.
Action oriented: He should be able to give his idea a practical shape.

Promotion means the discovery of business opportunities and subsequent organization of funds and managerial skills into a business enterprise for the purpose lovemaking refits there from.
A promoter is a person who identifies a business opportunity, analysis its prospects and takes steps to form a company with reference to the business opportunity.  The promoter conceives the idea of a business, analysis its prospects, brings together the required resource and gets a company incorporated.  The promoter may be an individual firm or even company.
The objects of promotion of a company are as under
to start a new business enterprise;
to expand an existing enterprise, and
to amalgamate or combine tow or more existing enterprise into one enterprise.

Social responsibility means the intelligent and objective concern for he well being of society.  It restrains behavior form ultimately destructive activities, no matter, however profitable in the immediate future.  It leads towards betterment of humanity.

The liability of a minor partner is limited to the amount of capital invested by him n the firm. After attaining the age of 18 years, the minor must inform the ulcer whether he will continue in the firm as a partner or not.  If he keeps quiet, he will be assumed to continue as a partner and his liability will become unlimited.

The term Business reeds to production, purchase, sale an exchange of goods and services on a regular basis with the aim of earning profits by satisfying by human wants. It includes all industrial and commercial activities such as mining, manufacturing, trading, transportation, warehousing, banking insurance and others.  Business is an economic activity.

Business involves risk.  Unless there is the possibility of earning profit no one would like to enter business.  Therefore profit is the reward for a businessman.  Profit is the greatest motivating force for business activity.  According to Ducker “Unless we provide roar risk we are going to destroy capacity to produce.  Therefore a minimum profitability adequate to risks which we by necessity assume and create is an absolute condition of survival not only for the enterprises but for society”.  Profit is the test of business performance.  In other words the efficiency of a bus business cannot be sustained for long and its closure can cause harm to the society.

Business exists and functions in a society and it must serve the interest of society.  The pursuit of money at the cost of service is not business.  In the words of uric “earning profit

Business exists and functions in a society and it must serve the interest of society.  The pursuit of money at the cost of service is not business.  In he words of Uric “earning profit can be no more the objective of a business than betting is the objective of a race making a score the objective of cricket or eating the objective of living.” According to Ducker “the problem of any business is not the maximization of profit but the achievement of sufficient profits to cover the risks of economic activity and thus to avoid loss”.

Thus earning of profits is essential for the survival and growth of a business.  Profit is a source of income and provides the means of livelihood for businessmen and their families.  It is an incentive and a reward for bearing the risks of business.  But earning of profits cannot be the sole objective of business.  In order to earn profits business must pursue other economic and social objectives.  Other economic objectives include maximum utilization of scarce sources creating customers innovation etc.  Business also has social objectives such as production of good quality products at fair prices generation of employment employment employee welfare etc.

Earning of profits is very necessary in business

Business is full of risks. No one will take the risk without the incentive of profit. Profit is the motivating force because it serves as a reward for bearing the risks of business.

No business can survive for long without earning profits. profits are the lubricants that drive the wheels of business. A business can maintain its profit earning capacity by replacing its obsolete assets.

Profits are he internal source of finance or the expansion of business. A business can grow if it continues to develop new products services markets and processes. For this purpose continuous research and development is necessary .Profits provide the capital for research and development. Reinvestment of earnings is the best method of financing expansion and growth of business.

A profit –making business commands prestige and recognition in society. Goodwill helps business to obtain funds and attract talented employees.

Profit is the indicator of success in business. More efficient a business is greater are its profits. Profit is the index of performance of businesses.

Profits provide the means of livelihood to businessmen and their families.