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Company Formation Process and Secretarial Services

Company Formation Process and Secretarial Services: Pillars of a Successful Business

Establishing a company and running within the bounds of the law is not an easy road to follow. It requires following a legal procedure according to the laws of the country you want to start a business in. This involves going through different steps of a new company formation that complies with the statutory laws of the country the business is resided. Needless to say, this requires legal expertise and industry-relevant knowledge. Businesses should hire experts and consultants to better guide them through the legal procedures and advise them on making sound business decisions.

Here, we will talk about two of the most important legal services that an organization needs to outsource. These legal services are:

  1. Company Formation
  2. Secretarial services

Let’s see what these services entail.

Company Formation Process

Company formation is a complex process that involves developing a business plan, getting your company registered, obtaining necessary permits or licenses, and getting certificates depending upon the nature of your business. Transforming your company from just a name to a separate legal identity is the process of company formation.

Company Formation Process and Secretarial Services

The company formation process entails the following 4 stages:

Promotion Stage

The first stage in the formation of any company is the promotion stage. This is the stage where your business idea transforms into a functioning organization. An individual or a group of individuals realize potential business opportunities and make them real by forming a company. They are known as promoters of the company. These promoters analyze whether the business opportunity is practical or not. After analyzing all the economic, political, and technical factors; the promoters decide to take on this venture.

Registration Stage

It is by far the most hectic and time-consuming stage. According to Section 7 of the Companies Act, 2017, you must follow a detailed procedure to register your company. It includes:

  • Getting the memorandum of the company ready.
  • Submitting an affidavit that clearly states that you have never been involved in any kind of public offense, fraud, or breach of law.
  • Submitting the memorandum with the signatures of all the promoters of the company and other necessary documents including the affidavit to the registrar’s office.
  • Submit a temporary address to contact you until you decide on the permanent location of your company’s office.
  • Obtaining a Certificate of Incorporation from the registrar’s office.
  • Acquiring a Certificate of Commencement of Business from the registrar’s office.
  • Getting a corporate Identity Number issued in your company’s name.

After successful completion of all these steps, a company finally gets registered.

Note that after getting the Certificate of Incorporation, a private company can start its business. But the public company cannot become operational until it gets the Certificate of Commencement of Business.

Capital Subscription Stage

This is the stage where companies or startups generate their startup capital. If the company does not have a shared capital, it can start working after receiving a Certificate of Incorporation. But if that’s not the case, then a public company will have to go through this stage as well. This stage includes the following steps:

  1. The company first makes a prospect for the public to inspire them to buy or invest in the company.
  2. Then the company raises capital from the public with the help of brokers. Brokers are people who encourage the public to invest in the company they work for.
  3. Let’s say that the public is not buying the shares, that’s where an underwriter comes in. An underwriter is someone who gets a commission to buy the company’s shares if the public is not investing in it.
  4. Companies also hire bankers who keep records of this money.
  5. After that, there is an endurance of a minimum percentage of the subscription to get an allotment.
  6. Then, the company’s promoters list it in the stock exchange market so the public can invest or buy shares.
  7.  In the end, the shareholders receive allotment letters declaring the acceptance of their investment.

How Do Secretarial Services Ensure Good Corporate Governance

Commencement of Business Stage

At this stage, the company has to get a Certificate of Commencement of Business from the registrar. To get this certificate, the company has to provide the registrar with the following documents:

  • A document declaring that the shares of the company which can be subscribed to only with cash, have been allotted.
  • A document that declares that the directors of the company have paid cash for the shares.
  • Another document declares that the above two conditions have been fulfilled. It should have the signature of the director of the company.
  • After that, these documents are submitted to the registrar’s office and he issues the Certificate of Commencement of Business.

This is how you turn your business venture into a legally registered organization.

Why Should Your Organization Outsource Company Formation Services?

Company formation is a tricky process as all its stages require legal assistance. The legal consultants hired from an outsourced firm will help your business prosper while complying with the law. They will prepare documents, submit them to the registrar’s office, help you generate capital, and get you the necessary certificates to start your business.

Outsource Company Formation Services

After an organization is operational, it is time to focus on how to manage it. This involves managing and governing an organization’s administrative functions and streamlining its processes. This brings us to Corporate Secretarial Services.

Secretarial Services

Secretarial Services refer to the degree of administrative and managerial capabilities of an organization. Efficient secretarial services can lead your organization to strengthen financially, reach desired goals in compliance with the law, and make smart foreign investments.

How Do Secretarial Services Ensure Good Corporate Governance?

The 4P’s (people, process, performance, and purpose) of corporate governance require you to have effective corporate secretarial services. A company depends on its corporate governance to thrive, and good corporate governance is directly related to competent secretarial services.

Secretarial services follow all three principles of corporate governance:

Accountability

These services hold the shareholders, directors, board of members, employees, and executive managers responsible for the organizational activities.

Transparency

Secretarial services keep the shareholders informed of all the financial transactions taking place.

Security

These services warrant the safety and confidentiality of the information shared by shareholders and customers.

What Do Secretarial Services Entail?

Following are the functions performed by a secretarial services professional or company secretary:

  • Note down the minutes of meetings whether they are with shareholders regarding financial matters or with the board of members regarding managerial duties.
  • Ensure that your organization is working in compliance with the Memorandum of Association.
  • Maintain statutory registers in addition to the accounting registers.
  • Prepare annual business guides or secretarial plans under the Companies Act (2017).
  • Act as the company’s representative or spokesperson in case of non-filing or discrepancies of any statutory register to the registrar.
  • Help with the registration of funds with the concerned registering authority.
  • Schedule important meetings between the Board of Directors and the CEO.
  • Prepare the proposal and objective of the meeting in advance after consulting with the CEO.
  • Ensure that the organization is staying ahead of legal matters.
  • Prepare in advance to deal with the audits.
  • Ensure that the account statements are clean.
  • Ensure the timely submission of the registers to be returned.
  • And lastly, prepare for any liabilities that may befall your organization.

How Do Secretarial Services Help Your Business?

There are certain internal and external challenges that every company has to face. Let’s have a look at how secretarial services help you overcome these challenges.

Internal challenges

Productivity

Outsourcing to a professional secretarial services provider can help increase the productivity of your managers so they can focus on the core functions.

Cost-efficient resource management

Outsourcing the secretarial services can help you efficiently manage the resources by hiring a trained professional instead of a secretary that you will have to train and supervise constantly.

Value addition

A professional with years of experience will be handling your work and hence you will gain both exposure and access to global resources.

Risk assessment

Secretarial services will help identify weak areas of an organization and provide solutions to eliminate the risk of any potential damage.

External challenges

Compliance with the law

The experts will ensure that your organization complies with all the rules and regulations and acts under the Companies Act, 2017.

Maintaining registers

The experts will ensure that you maintain the statutory registers, and file annual returns, answers to the regulatory authority inquiries and legal forms on time.

Governing the corporate sector

The consultant will help you with the corporate governance issues and guide the managers regarding their responsibilities.

Managing shared capital

Secretarial services help you smoothly manage the process of restructuring shared capital. This process involves the transference and issuance of shares, etc.

End word:

Forming a company and handling its secretarial services is not child’s play. It requires:

  1. Time
  2. Effort
  3. Attention to detail
  4. Energy, and
  5. Constant hustle.

It is better to outsource these services rather than trying to stretch your arms in all directions. Outsource all these services and much more at Patronage. Patronage is helping businesses reach their true potential via its extraordinary company formation and secretarial services. The consultants at Patronage provide you with the best business secretarial services and guide you throughout the process of company formation.

Contact Patronage today at connect@patronage.pk to avail company formation and secretarial services for your business.

About Mark Stefen

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