Steps Involved in Promotion of Company(Functions of a Promoter)

1. Identifying Business Opportunity: A promoter’s first and most important task is to identify a business opportunity. The opportunity could be to create a new product or service, to make a product available through a different channel, or to pursue any other opportunity with investment potential. This opportunity is then evaluated for technical and economic feasibility.

2. Feasibility Studies: Converting all identified business opportunities into actual projects may not be feasible or profitable. The promoters conduct extensive feasibility studies to investigate all aspects of the proposed business. Depending on the project’s nature, the following feasibility studies may be conducted with the assistance of specialists such as engineers, chartered accountants, and so on, to determine whether the perceived business opportunity can be profitably exploited. 

• Technical feasibility: Sometimes a good idea is technically impossible to carry out. It could be because the required raw material or technology is difficult to obtain. 
• Financial feasibility: Every business activity requires funds. The promoters must estimate the amount of money needed to fund the identified business opportunity. If the project’s required outlay is so large that it cannot be easily arranged within the available resources, the project must be abandoned. 
• Economic feasibility: Sometimes a project is technically and financially viable, but the chances of it being profitable are very low. In such cases, the idea may also have to be abandoned. These studies are typically carried out with the assistance of professionals in the field.

3. Approval of Name: After deciding to incorporate a company, the promoters must choose a name for it and submit an application for approval to the registrar of companies in the state where the company’s registered office will be located. If the proposed name is not considered unfavourable, it may be approved. It is possible that another company with the same or very similar name already exists, or that the preferred name is misleading in implying that the company is in a specific business when this is not the truth. The proposed name is not accepted in such cases, but an alternate name may be approved. As a result, three names are submitted to the Registrar of Companies in the order of their priority.

Important points while selecting the Name:

• The name should neither be identical with nor closely resemble the name of an existing company
• The name should be misleading, i.e., name should not suggest that the company is in a particular business or it is an association of a particular type when it is not true.
• The name  should not be objectionable under the provisions of the Emblem and Names(Prevention of Improper Use) Act, 1950
• The word ‘Cooperative’ should not be included in the name.
• The name should not convey any connection with a government department or local authority.
• The name should end with the word ‘Limited’ in case of a public company and with the words ‘Private Limited’ in case of a private company. 
   

4. Fixing up Signatories to the Memorandum of Association: Promoters must decide on the members who will sign the proposed company’s Memorandum of Association. The people who sign the memorandum are usually the first directors of the company. It is necessary to obtain their written consent to act as Directors and to consider purchasing the qualification shares in the company.

5. Appointments of Professionals: Certain professionals such as merchant bankers, auditors, and so on are appointed by the promoters to assist them in completing the necessary paperwork that must be filed with the Registrar of Companies. In a document known as a return of allotment, shareholders’ names, addresses, and the number of shares allotted to each are provided to the Registrar.

6. Preparation of Necessary Documents: The promoter begins the process of preparing certain legal documents that must be submitted to the Registrar of Companies under the law in order for the company to be registered. These documents are the Memorandum of Association, Articles of Association, and Directors’ Consent.