Earlier than an organization comes into existence, a brand new enterprise concept has to endure some levels and procedures. The preliminary levels of formation of an organization are termed as promotion. There are people who find themselves concerned in executing these levels earlier than an organization can begin its operations. These individuals are known as the promoters.
Be aware that not all sorts of firms endure all these levels. Some firms begin working solely after present process two levels because the case with a non-public firm and public firm. These two firms do not have a share capital. A public Firm restricted by a share capital has to endure all of the 4 levels earlier than it is integrated to begin its particular objective acknowledged within the memorandum of affiliation. Gw. Gerstenburge defines promotion of an organization as, “The invention of enterprise alternative and the next group of funds, property and managerial capacity right into a enterprise concern for the aim of constructing earnings there from.”
So, promoters have the obligation of persuading a superb variety of individuals to return along with the purpose of achieving their frequent goal by way of the corporate type of group. The promoters are those who uncover the brand new enterprise concept that the corporate is to hold throughout its existence. The enterprise concept could also be an already present line of enterprise or a very new one. Whichever the case, the promoters of an organization should be certain that the enterprise concept is worthy venturing. Listed below are the 4 promotion levels of an organization which are undertaken by the promoters:
Within the first stage, the promoters uncover an concept. It could be a brand new one or from an present line of enterprise. The promoters are those who uncover a enterprise concept and be certain that the brand new enterprise concept is price investing in.
Within the second stage, the promoters examine the small print relating to the brand new enterprise concept by first discovering out its profitability and financial viability. They venture all the necessities relating to the sources to run the corporate. On this stage, they might contain specialists from completely different fields equivalent to accounting, financing and many others.
Within the third stage, the promoters assemble and make preparations of getting all the necessities they’d determined within the second stage. On this stage, preliminary contracts are taken. The promoters make the mandatory preparations of getting the licenses and permits from accountable authorities departments.
Within the fourth stage, promoters resolve the required quantity of finance and the securities to be issued by the general public Firm restricted by a share capital. These securities elevate the fastened capital required. They enter into contracts with underwriters for the subscription of shares or debentures. The promoters put together the prospector which is issued to the general public with a view to elevate the capital. Additionally they make the mandatory preparations with the banks and different monetary establishments with a view to purchase loans.