Arrange the following stages of formation of companies in a proper sequence:
1. Promotion stage
2. Raising of share capital stage
3. Incorporation stage
4. Commencement stage
5. Selection of name

Correct option is C

The formation of a company follows a logical sequence that ensures all legal and operational requirements are fulfilled. The correct order is:

1. Promotion Stage: The process begins with the promotion stage, where the idea of starting a company is conceptualized, and initial groundwork is laid. This includes identifying the purpose, preparing feasibility reports, and arranging resources.

2. Selection of Name: After the promotion, the company selects a unique and permissible name. The name must comply with the rules prescribed under the Companies Act, 2013, and should not conflict with existing company names.

3. Incorporation Stage: At this stage, the company is legally brought into existence. Necessary documents, such as the Memorandum of Association (MOA) and Articles of Association (AOA), are filed with the Registrar of Companies (ROC). Once approved, the company receives a Certificate of Incorporation.

4. Raising of Share Capital Stage: For public companies, raising share capital involves issuing a prospectus, inviting the public to subscribe to shares, and allotting shares to investors. Private companies may raise capital privately.

5. Commencement Stage: The final step is the commencement of business. For companies requiring share capital, a certificate of commencement is issued after meeting the required conditions, enabling the company to begin operations.

This sequence ensures the systematic formation of a company while adhering to legal requirements.

Information Booster:

Key Steps in Company Formation:

1. Promotion Stage: This involves brainstorming, organizing resources, and laying the foundation of the business idea. It is carried out by promoters.
2. Selection of Name: A unique name compliant with the Companies Act is chosen. Name approval is obtained from the ROC.
3. Incorporation Stage: Legal registration of the company occurs, providing it a corporate identity and perpetual existence.
4. Raising Share Capital: Companies raise capital to fund their operations. Public companies do so through public offers, while private companies rely on private placements.
5. Commencement of Business: Once the company has raised the required capital, it obtains a certificate of commencement and begins its operations.

This order facilitates a smooth transition from ideation to operation.