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The Capellan Republic was formed in 2194 by Justin Aris as the successor to the earlier Capellan Holdfast. Created as a means of ensuring the survival of Capella and it's eventual dominance over local space, the Capellan Republic formed the basis of the Capellan Co-Prosperity Sphere and then the Capellan Hegemony.
Aris based the prosperity of the Capellan Republic on information and education in an era where many states were looking to meet the industrial needs of the moment and where freedom of thought was actively repressed on many worlds. Individuals of artistic or scholarly nature were actively welcomed on Capella, and Capella's copper deposits were used to begin the creation of the Library of the Capellan Republic, which would eventually be based on Geifer.  Over the next half-century as Terra's power waned and the flow of new technology from the Terran Alliance dwindled, the catalogued, indexed and systemized data held by Capella became increasingly prominent. Justin Aris used this to negotiate mutual protection treaties with several neighbouring worlds and to buy time for Capella to generate independent armed forces. 
These mutual protection treaties were initially established with the neighbouring worlds of Ares, Kurragin and Bandora formed the basis of the Capellan Co-Prosperity Sphere and proved effective when hostile forces from the Sarna Supremacy occupied key locations and installations on Capella in 2225; the Sarna forces were forced to withdraw within two weeks, with minimal Capellan losses. 
Although House Liao (The Capellan Confederation) indicates that the Capellan Holdfast was discovered in 2195 and replaced with the Capellan Republic that year,Handbook: House Liao indicates that the Capellan Republic replaced the Capellan Holdfast in 2194. The most recent publication is currently being taken as the primary source. This position was confirmed by the BattleTech Line Developer on 13 Feb 2012:
Unless the circumstances dictate otherwise, newer trumps older. Thus, Handbook: House Liao is correct.
Herbert Beas BattleTech Catalyst Game Labs
|— Herbert Beas, Catalyst Game Labs BattleTech Developer, 13 Feb 2012|
| Succeeded by|
- Handbook: House Liao, p. 12, "Timeline: Capellan Zone"
- House Liao (The Capellan Confederation), p. 13
- Handbook: House Liao, p.13
- House Liao (The Capellan Confederation), p. 12