How is a business idea explained?
A business idea is explained by naming the activity, the person who pays for it, and the structure that will carry it. The explanation is not a company. It does not reserve a name, and it does not file a tax return.
What does the explanation have to say?
Three facts are enough to start. The activity is what will be done. The payer is the customer, the client, or the other person the money comes from. The structure is the person who will carry the activity: a private limited company, a one person company, a proprietorship, or a partnership.
A listener cannot use a list of hopes in place of those three facts. Market size, a slogan, and a picture do not say who pays. They can sit beside the three facts. They do not replace them.
Which structure does it point to?
The structure follows the activity and the number of owners. One natural person who wants a company, and a nominee, points to a one person company. Two or more owners who want a separate legal person and limited liability point to a private limited company. One person who will carry the activity in their own name points to a proprietorship. The choice, and the pages that belong to each structure, are on the start page.
If the structure is a company, the activity named in the explanation is what the objects clause has to cover. Changing that activity later is an alteration of the memorandum, on the objects page.
What is a pitch?
A pitch is the same explanation, said to one listener: a partner, a lender, or a customer. It is short because the listener has to hear the activity, the payer, and the structure in one sitting. Enthusiasm does not add a fact the explanation missed. A question from the listener is a missing fact, and the explanation is corrected before anyone is asked to rely on it.
What does the explanation not do?
It does not incorporate anything. Name reservation and the incorporation forms come after the structure is chosen. It does not open a bank account, and it does not register a tax. It does not create a right to funding. A listener may put money in, or may refuse. The explanation’s job is to make that decision possible, not to guarantee it.
Frequently asked questions
Four questions cover incorporation, a pitch, the objects clause, and funding.
Does an explanation incorporate a company?
No. Incorporation is a filing on the Ministry portal. The explanation only names the activity and the structure. It does not reserve a name.
Is a pitch a different document?
No. A pitch is the same explanation, said to one listener. It still has to name the activity, the person who pays, and the structure.
Does the explanation choose the objects?
It names the activity in ordinary words. If a company is incorporated, that activity is what the objects clause of the memorandum has to cover.
Does a clear explanation raise money?
No. A listener may decide to fund the activity or may not. The explanation does not create a right to funding.
Sources
The explanation names an activity. If that activity is later carried on by a company, the objects clause of the memorandum has to cover it.