PROGRAMME B.Com SUBJECT Business Organisation and …

1

PROGRAMME B.Com

SUBJECT Business Organisation and Market

Dynamics

SEMESTER First Semester

UNIVERSITY Bangalore University

SESSION 01

Meaning and definition of Business

.Meaning of Business

.Definition of Business

2

LEARNING OBJECTIVES OF THE CHAPTER

• To understand the basic forms of Business entities

3

SESSION OUTCOME

• The students can be able to understand the meaning and definition of the

business

4

Meaning of Business

• The word “Business” literally means ‘ a state of being busy’.

• Business is an activity concerned with the production and exchange of goods and

services with the objective of earning profits.

• An entrepreneur runs a factory, a trader sells goods, a banker lends money, a

transporter carries goods etc.,

5

Definition of Business

• “Business may be defined as human activities directed towards providing or acquiring

wealth through buying and selling goods.”- L.H.Haney

• “Business may be defined as an activity in which different persons exchange

something of value weather goods or services, for mutual gain or profit.”- Peterson

and Plowman

6

Multiple Choice Questions

1. Business is an------- activity?

a) Service activity b) economic activity

c) Product activity d) none of the above

7


2.The main purpose of business is :

a) Incurring loss b) distribution of products

c) Profit making d) Advertising

8

MCQs

3) Literally the word Business means---

a) A state of being busy b) being emotional

c) Buying of goods d) selling of goods

9

MCQs

4) The word trading involves:

a) Buying activity b) selling activity

c) Both buying and selling activity d) marketing activity

10

MCQs

5) Business may be defined as human activities directed towards providing or acquiring wealth through buying and selling goods.”- who gave this definition

a) L.H.Haney b) Peter F Drucker

c) John d) Peterson and Plowman

11

REFERENCES

• Business Organization and Environment– R K Sharma, Shashi K Gupta

• Business Organization and Environment – R V Tyagarajan

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PROGRAMME B.Com


Dynamics



SESSION 02

Features of Business

.Features of Business

2

Recap of Previous class

• Meaning and definition of Business

3



4

SESSION OUTCOME

• The students can be able to understand the various features of the business

5

Features of the Business

• Economic activity

• Exchange of goods and services

• Profit motive

• Risk and uncertainty

• Continuity of transactions

• Creation of utility

• organisation

6

Features of the Business-contd

• Financing

• Consumer satisfaction

• Satisfying social needs

• Entrepreneur

7


1. Business means?

a) Exchange of goods b) exchange of services

c) Exchange of money d) exchange of goods and services

8


2.Business involves:

a) Creation of name b) creation of product

c) Creation of utility d) creation of services

9

MCQ

3) The main aim of business is –

a) Government satisfaction b) business satisfaction

c) Owner satisfaction d) consumer satisfaction

10

MCQ

4) Business requires:

a) finance b) advertisement

c) Brand d) all of the above

11

MCQ

5) Business is engaged in ----------- activity

a) continuous b) stationary

c) stagnant d) temporary

12

REFERENCES



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Dynamics



SESSION 03

Major Forms of Business

.Major forms of Business

2


• Features of Business

3



4

SESSION OUTCOME

• The students can be able to understand the various forms of the business

5

Forms of the Business

• Sole Proprietorship

• Hindu Undivided Family

• Partnership

• Limited liability Partnership

• Joint Stock Companies

• Co-operative societies

• Government Departments

6


1. How many people establish sole trading concern?

a) one b) Two

c) Seven d) Ten

7


2.Minimum number to form partnership concern:

a) 2 b) 25

c) 11 d) 7

8

MCQ

3) The senior person in HUF is called –

a) Father b) head of the family

c) Karta d) member of the family

9

MCQ

4) Year of New company act :

a) 1956 b) 2013

c) 1986 d) 2019

10

MCQ

5) In which year co-operative societies act introduced?

a) 2000 b) 1918

c) 1947 d) 1912

11

REFERENCES



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SESSION 04

Sole Trading Concern

.Meaning

.Definition

.features

2


• Various Forms of Business

3

Learning objectives of the chapter


4

Session Outcome

• The students can be able to understand the concept of sole trading concern

meaning, its definition and features.

5

Meaning of sole trading concern

• It is a oldest form of organization which is owned and managed by a single

person. He contributes the capital required, enjoys all profits and has to bear all

losses.

6

Definition of sole trading concern

• “The individual entrepreneurship is the form of business organization on the

head of which stands an individual as the one who is responsible ,who directs its

operations , who alone runs the risk of failure”- L H Haney

• “A sole trader is a person who carries on business exclusively by and for himself.

He is not only the owner of the capital of the undertaking, but is usually the

organizer and manager and takes all the profits or responsibility for losses”-

James Stephenson

7

Features of Sole Trading Concern

• Individual initiative

• Unlimited Liability

• Management and control

• Motivation

• Secrecy

• Proprietor and proprietorship are alone

• Limited area of operations

• No sharing of profits or loss

• Limited legal formalities

8


1. Minimum number to establish sole trading concern?

a) one b) Two

c) Seven d) Ten

9


2. The liability of Sole trader is :

a) unlimited b) Joint

c) Limited d) both a & C

10


3) Sole trading concern is owned and managed by-

a) Two persons b) Three persons

c) Single person d) Five Persons

11


4) registration of sole trading concern is

a) compulsory b) optional

c) No registration d) Can’t say

12


5) “The individual entrepreneurship is the form of business organization on the head of which stands an individual as the one who is responsible ,who directs its operations , who alone runs the risk of failure”- who gave this definition

a) L H Haney b) S R Davar

c) James Stephenson d) Prabhu Urs

13

References



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Dynamics



SESSION 05

Partnership Firms

.Meaning

.Definition

2


• Various Forms of Business

3



4

Session Outcomes

• The students can be able to understand the concept of sole trading concern

meaning, its definition and features.

5

Meaning Partnership firm

• A partnership is an association of two or more persons to carry on, as co-owners

of a business and to share its profits or losses.

• It may be extension of STC or new establishment.

• Partnership deed is required

6

Definition of Partnership

• Sec 4 of Partnership Act,1932- “ The relationship between persons who have

agreed to share profits of a business carried on by all or any of them acting for

all.”

• “Two or more individuals may form a partnership by making a written or oral

agreement that they will jointly assume full responsibility for the conduct of

business”- John A Shubin

7


1. Minimum number to establish partnership is-

a) one b) Two

c) Seven d) Ten

8


2. The liability of partners is :


c) Limited d) both a & b

9


3) The agreement of partnership is called

a) Contract b) Partnership deed

c) business deed d) Agreement

10


4) registration of Partnership firm is



11


5) In which year partnership act is executed?

a) 1965 b) 1991

c) 1932 d) 2013

12

References



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Dynamics



SESSION 06

Introduction to Joint Stock Companies

.Meaning

.Definition

2


• Partnership firms- meaning and definition

3



4

Session Outcomes

• The students can be able to understand the concept of Joint stock companies, its

meaning, its definition .

5

Meaning of joint stock company

• The word ‘company’ is derived from the Latin word (Com=with or together; panis

=bread), and it originally referred to an association of persons who took their

meals together.

• A company is a corporate body and a legal person having status and personality

distinct and separate from the members constituting it.

• A joint-stock enterprise in which the capital is contributed by several people

6

Definition of Company

• In terms of the Companies Act, 2013 (Act No. 18 of 2013) a “company” means a

company incorporated under this Act or under any previous company law

[Section 2(20)]. In common law, a company is a “legal person” or “legal entity”

separate from, and capable of surviving beyond the lives of its members.

However, an association formed not for profit also acquires a corporate character

and falls within the meaning of a company by reason of a license issued under

Section 8(1) of the Act.

7

Definition of Company

• Lord Justice Lindley has defined a company as “ an association of many persons

who contribute money or money’s worth to common stock and employ it in some

trade or business and who share the profit and loss arising therefrom. The

common stock so contributed is denoted in money and is the capital of the

company.

8


1. A company is a -

a) Corporate body b) Legal entity

c) Association of Persons d) all of the above

9


2. The liability of company shareholders is :


c) Limited d) both a & c

10


3) The registration of companies is done under

a) Company act b) Revenue act

c) Co-operatives act d) Land Development act

11


4) Registration of JSC is



12


5) In which year company act new amendments introduced?

a) 1965 b) 1951

c) 1932 d) 2013

13

References

• Corporate Administration – H R Appannaiah, V Prabhudev, Sandeep P. N Reddy

• Corporate Administration – K. Ramachandra, Alla Bakash, B. Chandrashekara

• Corporate Administration – Farooq Pasha, Ganesh N K

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Dynamics



SESSION 07

Features and Classifications of Joint Stock Companies

.Features of JSC

.Classifications of JSC

2


• Introduction to joint stock companies-

• meaning and definition

3



4

Session Outcomes

• The students can be able to understand the characteristics and classifications of

Joint stock companies .

5

Features of joint stock company

• (i) Corporate personality

• (ii) Limited Liability

• (iii) Perpetual Succession

• (iv) Separate Property

• (v) Transferability of Shares

• (vi) Common Seal

• VII) Capacity to sue or be sued

• (viii) Contractual Rights

6

Features of joint stock company

• ix) Limitation of Action

• (x) Separate Management

• (xi) Voluntary Association for Profit

• (xii) Termination of Existence

7

Classifications of Companies

•Classification on the basis of Incorporation

a) Statutory Companies

b) Registered Companies

•Classification on the basis of Liability

(a) Unlimited Liability Companies

(b) Companies limited by guarantee

(c) Companies limited by shares

8

Classifications of Companies

Other forms of companies:

(a) Associations not for profit having a license under Section 8 of the Companies

Act, 2013 or under any previous company law;

(b) Government Companies;

(c) Foreign Companies;

(d) Holding and Subsidiary Companies;

(e) Associate Companies/Joint Venture Companies

(f) Investment Companies

9


1. The capital of a company is divided into parts, called ------- -

a) debentures

b) shares

c) bonds

d) all of the above

10


2. Which section of the company proved that prospectus issued intent to defraud the applicants for the securities of a company?

a) u/s 35(1)

b) u/s 35(2)

c) u/s 35(3)

d) u/s 35 (4)

11


3) The term Perpetual Succession means

a) Continuity of existence

b) stop at a moment

c) Goal oriented

d) Market forces

12


4) Who uses company seal for official purpose?

a) employee

b) shareholder

c) secretary

d) Manager

13


5)A company constituted by a special Act of Parliament or State Legislature is a

a) Constitution company

b) parliamentary company

c) Public company

d) statuary company

14

References




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SESSION 08

Private Companies

.Meaning

.Definition

.Features

.Privileges

.Merits

.Limitations

2


• Joint stock companies- features and classifications

3



4

Session Outcomes

• The students can be able to understand the concept of private companies, its

features, privileges , merits and limitations .

5

Meaning of private company

• A private company is one which is owned and managed by a group of private

persons. It is not a company raised capital from the public by offering shares and

debentures to the public.

• The name of the company ends with the word “pvt ltd”

6

Definition of Private company

• As per Section 2(68) of the Companies Act, 2013, “private company” means a

company having a minimum paid-up share capital of one lakh rupees or such

higher paid-up share capital as may be prescribed, and which by its articles,—

• restricts the right to transfer its shares;

• except in the case of One Person Company, limits the number of its members to

two hundred

7

Features of private companies

. Minimum capital of one lakh rupees

.The name of the company ends with the word pvt limited

. restricts the right to transfer its shares

. except in the case of One Person Company, limits the number of its members to

two hundred

.

8

Merits of private companies

.Separate Legal Entity

.Uninterrupted existence

.Limited Liability

.Owning Property

.Dual Relationship

.Borrowing Capacity

9

limitations of private companies

.Restricts the transfer ability of shares by its articles.

. The number of members in any case cannot exceed 50

. It cannot issue prospectus to public.

. In stock exchange shares cannot be quoted.

. Smaller resources

.poor protection to members

. Lack of public confidence

10


1. Which section of the companies act 2013 defines the term private company ?

a) u/s 3(45)

b) u/s 2(68)

c) u/s 3(74)

d) none of the above

11


2. The source of capital of private company is

a) limited

b) unlimited

c) huge

d) comparable

12


3) Can the shares of a private company are transferable?

a) transferable

b) restricted

c) No such restriction

d) Difficult process

13


4) Can a private company quote its shares in stock exchange?

a) Can be quoted

b) Cannot be quoted

c) quoted but limited


14


5) Maximum number of share holders in a private company

a) 50

b) 100

c) 150

d) 200

15

References




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Dynamics



SESSION 09

Public Companies

.Meaning

.Definition

.Features

.Merits

.Limitations

2


• Private companies

meaning,definition,previleges,features,merits and limitations

3



4

Session Outcomes

• The students can be able to understand the concept of public companies, its

features, merits and limitations .

5

Meaning of public company

• A public company is a company with securities (equity and debt) owned and

traded by the general public through the public capital markets. Shares of a public

company are openly traded and widely distributed.

• In other words, A public company is a corporation whose ownership is distributed

amongst general public shareholders via the free trade of shares of stock on

exchanges or over-the-counter markets.

6

Definition of Public company

• By virtue of Section 2(71), a public company means a company which:

(a) is not a private company;

(b) has a minimum paid-up share capital of five lakh rupees or such higher paid-

up capital, as may be prescribed.

7

Features of Public companies

. Separate legal existence .

.All activities are strictly governed by rules, laws, and regulations.

.A company must have a minimum of seven members

.There is no limit as regards the maximum number.

. Public share capital

.The shares of a company are freely transferable

.The liability of a member of a company is limited

8

Merits of Public companies

.Led by Board of Directors

.Limited Liability

.Number of Members

.Transferable shares

.Life Span

.Financial Privacy

.Large Capital

9

limitations of private companies

High Costs.

.Greedy Shareholders.

.Takeover.

.Power.

.Slow Decisions.

. Potential for Loss of Control

. Stock Market Vulnerability

. Increased Legal Implications 10


1. Which section of the companies act 2013 defines the term public company ?

a) u/s 2(71)

b) u/s 2(72)

c) u/s 3(73)


11


2. The source of capital of public company is

a) limited

b) unlimited

c) huge

d) comparable

12


3) Can the shares of a public company are transferable?

a) transferable

b) restricted

c) No such restriction

d) Difficult process

13


4) Can a public company quote its shares in stock exchange?

a) Can be quoted

b) Cannot be quoted

c) quoted but limited


14


5) Maximum number of share holders in a public company

a) 50

b) 100

c) 150

d) unlimited

15

References




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SESSION 10

Distinction between Private and Public Companies

. Distinction between Private and Public Companies

2


• Public companies

meaning,definition,features,merits and limitations

3



4

Session Outcomes

• The students can be able to understand the differences between public

companies, and private companies.

5

Differences

6

Features Public Limited Company Private Limited Company

Minimum members 7 2

Minimum directors 3 2

Maximum members Unlimited 200

Minimum capital 5,00,000 1,00,000

Invitation to public Yes No

Issue of prospectus Yes No

Quorum at AGM 5 members 2 members

Certificate for commencement of business Yes No

Term used at the end of name Limited Private limited

Managerial remuneration No restriction Can not exceed more than 11\% of net profits

Statutory meeting (mandatory) Yes No


1. Which company shares are easily transferable?

a) Public company

b) Private Company

c) Statutory company

d) Foreign company

7


2. Which company shares are not easily transferable?

a) Public company

b) Private Company

c) Statutory company

d) Foreign company

8


3) Minimum number of directors in a Private company-

a) 3

b) 7

c) 2

d) 5

9


4) Minimum number of directors in a Public company-

a) 3

b) 10

c) 8

d) 5

10


5) Who can issue a Prospectus to the public?

a) Government Company

b) Public Company

c) Legal company

d) Private Company

11

References




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SESSION 11

One man Company, Limited Liability Partnership(LLP)

. One man Company, Limited Liability Partnership(LLP)

2


• Differences between Public companies and private companies

3



4

Session Outcomes

• The students can be able to understand the concept of one man company and

limited liability partnership .

5

One Man Company

6

• In India, in the year 2005, the JJ Irani Expert Committee recommended the formation of OPC.

• With the implementation of the Companies Act, 2013, a single person could constitute a Company, under the One Person Company (OPC) concept

• A one-person company is different from a sole proprietorship because it is a separate legal entity that distinguishes between the promoter and the company

• As per section 2(62) of the Companies Act, 2013, “One Person Company” means a company which has only one person as a member

One Man Company

7

• One person company shall have a minimum of one director. Therefore, a One Person Company will be registered as a private company with one member and one director.

Limited Liability Partnership

8

• Limited liability partnerships (LLPs) allow for a partnership structure where each partner's liabilities is limited to the amount they put into the business.

• Having business partners means spreading the risk, leveraging individual skills and expertise, and establishing a division of labor.

• Limited liability means that if the partnership fails, creditors cannot go after a partner's personal assets or income.

• LLPs are common in professional business like law firms, accounting firms, and wealth managers.

Limited Liability Partnership

9

• Limited Liability Partnerships are often referred to in their abbreviated form as

LLP’s. LLP’s were introduced in 2000 by the Partnerships Act 2000 to provide

partnerships with the limited liability previously only available to companies. The

LLP formation is popular when a ‘professional partnership’ would like the benefit

of protected liability. This is particularly suited to accountants, solicitors,

architects, consultants, surveyors and other fields of expertise where a

partnership is preferred to a limited company.

Limited Liability Partnership- Merits

10

• LLP’s are a separate legal entity to the members.

• Flexibility.

• The LLP is deemed to be a legal person.

• Corporate ownership.

• Designate and non-designate members.

• Protecting the partnership name.


1. Quorum in one man company -

a) 4

b) 3

c) 2

d) 1

11


2. Under which section minute book is maintained in OPC?

a) 116

b) 118

c) 117

d) 119

12


3) The term DSC stands for:

a) Director of social science

b) Distance study Centre

c) Digital signature certificate

d) Distinguish signature certificate

13


4) In which year LLP is introduced in India?

a) 2000

b) 2005

c) 2010

d) 2015

14


5) Every partner is an agent of the LLP: which section states this

a) Section 23

b) Section 62

c) Section 32

d) Section 26

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References




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SESSION 12

Recap of chapter 1

. Recap of chapter 1

2



3

Session Outcomes

• The students can be able to memorize the discussion made in the first chapter

4

Recap of chapter 1

5

• Meaning and definition of business

• Features of business

• Major forms of business

• Sole trading concern- meaning, definition and features

• Partnership firms- meaning, definition

• Introduction to Joint Stock companies- meaning and definition

• Features and classifications of Joint Stock Companies

• Private companies-meaning,definition,features,Previlises, merits and limitations

• Public companies- meaning, definition, features,merits and limitations

• Distinction between private and public companies

• One man company- LLP

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PROGRAMME B.Com


Dynamics



SESSION 13

Salient Features of Company's Act of 2013

• Salient Features of Company's Act of 2013

2


• Different forms of business

• JSC – features, types

• Differences between public and private companies etc.,

3


• To understand the concepts of JSC, Company Act 2013 in detail

4

Session Outcomes

• The students can be able to understand salient features of companies act 2013 .

5

Salient features of companies act 2013

6

1. The concept of “dormant companies” introduced (companies not engaged in business for two consecutive years can be declared a s dormant).

2. National Company Law Tribunal introduced.

3. Provision of self regulation with disclosures/transparency instead of government approval based regime.

4. Companies are required to go for maintenance of documents in electronic form.

5. Faster merger and acquisitions including short mergers and cross border mergers.

Contd

6. For companies which have net assets of 1 cr. or less, then official liquidators are empowered with adjudicatory powers.

7. Concept of “one Person Company” introduced.

8. Concept of independent directors included as a statutory requirement.

9. Women director for prescribed class of companies.

10. Compulsory provision for constitution of Corporate Social Responsibility (CSR) committee and formulation of CSR policy, with mandatory disclosure for specified class of companies.

Contd.,

8

11. The term “Key Managerial Personnel” and “Promoter” has been defined to affix the responsibility on main functionaries of the company.

12. Duties of director to shareholders, employees, the community and the environment defined.

13. Listed companies are required to have one director representing small shareholders.

14. Companies Act, 2013 has put a cap on the number of directorship up to 20 companies of which 10 can be public companies.

15. Search and seizure of documents, during investigation, without an order from a magistrate.

Contd.,

9

16. Freezing assets or disgorgement of illegal gains of company under investigation.

17. Stringent norms made for the accepting the deposits from the public.

18. Internal audit for bigger companies and auditor is not authorized to perform

specified non audit services.

19. Substantial civil and criminal liability for an auditor in case of non compliance.

20. National Financial Reporting Authority (NFRA) to be constituted.


1. companies not engaged in business for two consecutive years are called

a) Engaged companies

b) Dormant companies

c) Regular companies

d) not regular companies

10


2. For companies which have net assets of ---------- then official liquidators are empowered with adjudicatory powers.

a) 2 crore or less

b) 1 crore or less

c) 3 crore or less

d) 4 crore or less

11


3) Concept of “one Person Company” introduced in

a) Companies act of 2013

b) Companies act of 1956

c) Partnership act 0f 1932

d) Contract act of 1872

12


4.Companies Act, 2013 has put a cap on the number of directorship up to -------companies of which 10 can be public companies.

a) 20

b) 25

c) 30

d) 35

13


5) NFRA stands for

a) National financial reporting agency

b) National financial and reporting account

c) National funding and restructuring agency

d) National financial reporting authority

14

References




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SESSION 14

Features of Latest amendments Company's Act of 2013

• Features of Latest amendments Company's Act of 2013

2


• Salient features of companies act 2013

3



4

Session Outcomes

• The students can be able to understand latest amendments of companies act

2013

5

Features of Latest amendments Company's Act of 2013

6

.The Companies (Significant Beneficial Owners) Amendment Rules 20191

. Companies (Incorporation) Amendment Rules, 2019

. Requirement of filing of MSME Form

.The Companies (Acceptance of Deposits) Amendment Rules, 20196


1. The term SBO means

a) State bank of odissa

b) Significant beneficial owner

c) state business organisation

d) Standard business organisation

7


2. SBO holds indirectly, or together with any direct holdings, at least ------- of the shares or voting rights;.

a) 10%

b) 12%

c) 16%

d) 18%

8


3) Companies (Incorporation) Amendment Rules made in

a)2020

b) 2019

C) 2013

d) 1956

9


4. The following companies are not required to filed Form INC 22A Active:

a) Companies which have been Struck off or

b) Under process of striking off or

c) Under Liquidation or

d) All of the above

10


5) Which form is to be filled for Form INC-22 Change in Registered office?

a) Form INC-22

b) Form SH-7

c) Form PAS-3

d) Form INC-28

11

References




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SESSION 15

Meaning and steps of incorporation

• Meaning of incorporation

• Steps of incorporation

2


• latest amendments of companies act 2013

3



4

Session Outcomes

• The students can be able to understand the meaning and steps of incorporation

5

Meaning of incorporation

6

It means the inclusion of something as part of a whole

In otter words incorporation is the process of constituting a company, city, or other organization as a legal corporation.

The incorporation of a company refers to the legal process that is used to form a

corporate entity or a company. An incorporated company is a separate legal entity

on its own, recognized by the law. These corporations can be identified with terms

like ‘Inc’ or ‘Limited’ in their names. It becomes a corporate legal entity completely

separate from its owners.

Steps of incorporation

7

1. Ascertaining Availability of Name

2. Preparation of Memorandum of Association and Articles of Association

3. Printing, Signing and Stamping, Vetting of Memorandum and Articles

4. Power of Attorney

5. Other Documents to be Filed with the Registrar of Companies

6. Statutory Declaration in e-Form No.1

7. Payment of Registration Fees

8. Certificate of Incorporation


1. Which document is referred as company’s constitution

a) MOA

b) Company law

c) AOA

d) Prospectus

8


2. A document that states rules which the internal management of the company will follow is called?

a) MOA

b) AOA

c) Prospectus

d) Company law

9


3.e-Form No.32 describes about

a) Consent of members

b) Consent of directors

C) Consent of share holders

d) Consent of Promoters

10


4.e-Form No.18 – document describes

a) Notice of Registered Address

b) Notice of registered name

c) Notice of honour

d) None of the above

11


5) e-Form No.32 document describes?

a) Particulars of shares

b) Particulars of assets

c) Particulars od Directors

d) All of the above

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References




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SESSION 16

Memorandum of Association

• Meaning of MOA

• Contents of MOA

2


• Steps involved in incorporation of a company

3



4

Session Outcomes

• The students can be able to understand the meaning and contents of MOA

5

Meaning of MOA

6

.The memorandum of association of a company can be referred to as its

constitution or rulebook. The memorandum states the field in which the company

will do business, objectives of the company, as well as the type of business the

company plans to undertake.

.It is the constitution of the company, which describes its objects and scope and the

relation with outside world. The memorandum is to be signed by at-least seven

persons if it is a public limited company and at least two persons in case of a private

limited company. The memorandum should also be properly stamped.

Contents of MOA

7

1. Name Clause

2. Registered Office Clause

3. Objects or Objective Clause

4. Object Clause

5. Liability Clause

6. Capital Clause

7. Association Clause


1. MOA is called -------------- of the company.

a) constitution

b) article

c) Section

d) All of the above

8


2. MOA states rules of -------------- of the company will follow

a) Internal management

b) external management

c) Both a & b


9


3.Object clause of MOA defines

a) Scope of operations

b) Limitations

c) Functions

d) All of the above

10


4. Liability Clause of MOA describes

a) Members liability

b) registrar liability

c) Partners liability

d) All of the above

11


5) Capital Clause of MOA states

a) Particulars of banks

b) Capital of partners

c) Total capital of proposed company


12

References




13

1

PROGRAMME B.Com


Dynamics



SESSION 17

Articles of Associations

• Meaning of AOA

• Contents of AOA

2


• Meaning and contents of MOA

3



4

Session Outcomes

• The students can be able to understand the meaning and contents of AOA

5

Meaning of AOA

6

. Articles of association form a document that specifies the regulations for a

company's operations and defines the company's purpose. The document lays out

how tasks are to be accomplished within the organization, including the process for

appointing directors and the handling of financial records.

. The Articles of Association or AOA are the legal document that along with the

memorandum of association serves as the constitution of the company. It is

comprised of rules and regulations that govern the company’s internal affairs.

Contents of AOA

7

1. Classes of shares, their values and the rights attached to each of them.

2. 2. Calls on shares, transfer of shares, forfeiture, conversion of shares and

alteration of capital.

3. Directors, their appointment, powers, duties etc.

4. Meetings and minutes, notices etc.

5. Accounts and Audit

6. Appointment of and remuneration to Auditors.

7. Voting, poll, proxy etc.

Contents of AOA

8

8.Dividends and Reserves

9. Procedure for winding up.

10. Borrowing powers of Board of Directors and managers etc.

11. Minimum subscription.

12. Rules regarding use and custody of common seal.

13. Rules and regulations regarding conversion of fully paid shares into stock.

14. Lien on shares.


1. AOA is the -------------- of the company.

a) constitution

b) Legal document

c) Section


9


2. AOA concerned with ------------------ of the company operations

a) Terms and conditions

b) Rules and regulations

c) Both a & b


10


3.AOA is related to------------- of the company

a) Internal working

b) External working

c) Both A and B


11


4. AOA contents includes:

a) Dividend and reserves

b) Meeting and minutes

c) Accounts and audits

d) All of the above

12


5) A copy of every special resolution altering the Articles must be filed with the Registrar within --------- days of its passing.

a) 90 days

b) 14 days

c) 45 days

d) 30 days

13

References




14

1

PROGRAMME B.Com


Dynamics



SESSION 18

Prospectus and Statement in lieu of prospectus

• Meaning

• Contents

2


• Meaning and contents of AOA

3



4

Session Outcomes

• The students can be able to understand the meaning and contents of Prospectus

and statement in lieu of prospectus

5

Meaning of Prospectus

6

. Prospectus is an important document for a public Company. It is nothing but an

invitation to the public to subscribe for the shares of the Company.

. A prospectus is a formal document that is required by and filed with the Securities

and Exchange Commission (SEC) that provides details about an investment offering

to the public. A prospectus is filed for offerings of stocks, bonds, and mutual funds.

The document can help investors make more informed investment decisions

because it contains a host of relevant information about the investment security.

Contents of Prospectus

7

1. Address of the registered office of the company.

2. Name and address of company secretary, auditors, bankers, underwriters etc.

3. Dates of the opening and closing of the issue.

4. Declaration about the issue of allotment letters and refunds within the prescribed

time.

5. A statement by the board of directors about the separate bank account where all

monies received out of shares issued are to be transferred.

6. Details about underwriting of the issue.

7. Consent of directors, auditors, bankers to the issue, expert’s opinion if any.

8. The authority for the issue and the details of the resolution passed therefore.

contd

8

9. Procedure and time schedule for allotment and issue of securities.

10. Capital structure of the company.

11. Main objects and present business of the company and its location.

12. Main object of public offer and terms of the present issue.

13. Minimum subscription, amount payable by way of premium, issue of shares

otherwise than on cash.

14. Details of directors including their appointment and remuneration.

15. Disclosure about sources of promoter’s contribution.

16. Particulars relation to management perception of risk factors specific to the

project, gestation period of the project, extent of progress made in the project and

deadlines for completion of the project.

Statement in lieu of Prospectus - meaning

9

The Statement in Lieu of Prospectus is a document filed with the Registrar of the

Companies ( ROC ) when the company has not issued prospectus to the public for

inviting them to subscribe for shares.

.The statement must contain the signatures of all the directors or their agents

authorized in writing.

.It is similar to a prospectus but contains brief information.

Statement in lieu of Prospectus - contents

10

.Name of company

.Statement of capital

.Description of the business

.Names, addresses and occupations of directors

.Estimated initial expenses

.Names of vendors and details of property

.Material contracts

.Director’s interests

.Minimum subscription


1. Full form of ROC is…. a) Registrar of commission

b) Registrar of Companies

c) Registrar of corporates


11


2. Who must file a statement in lieu of Prospectus with the Registrar of the companies?

a) Foreign company

b) Private company

c) Public company

d) All of the above

12


3.SLIOP is related to :

a) Internal management

b) Share capital raising

c) Administration

d) External audit

13


4. SILOP contents includes:

a) Material contracts

b) Minimum subscription

c) Director’s interests

d) All of the above

14


5) An invitation to the public to subscribe for the shares of the Company is called…

a) Prospectus

b) Wedding card

c) Invitation

d) ID cards

15

References




16

1

PROGRAMME B.Com


Dynamics



SESSION 19

Distinction between MOA and AOA

• Differences

2


• Meaning and contents of Prospectus and statement in lieu of Prospectus

3



4

Session Outcomes

• The students can be able to understand the differences between AOA and MOA

5


6

MOA AOA

1.Memorandum of Association is a

document that contains all the

fundamental information which are

required for the incorporation of the

company.

1.Articles of Association is a document

containing all the rules and regulations

that governs the company.

2. Defined in Section 2 (56) 2. Defined in Section 2 (5)

3. Contains Powers and objects of the

company.

3.Contains Rules of the company.

4. It is subordinate to the Companies

Act.

4. It is subordinate to the memorandum

5. Obligatory for all companies. 5. A public company limited by shares

can adopt Table A in place of articles


7

MOA AOA

6. A memorandum must contain six

clauses.

6. The articles can be drafted as per the

choice of the company.

7. Compulsory required at the time of

Registration

7. Not required at all.

8. Acts done beyond the scope

Absolutely void

8. Can be ratified by shareholders.


1. MOA is defined in …. a) Section 2(56)

b) Section 2(5)

c) Section 2(65)


8


2. AOA is defined in …. a) Section 2(56)

b) Section 2(5)

c) Section 2(65)


9


3. Which document is subordinate to the Companies Act.

a) MOA

b) AOA

c) Prospectus

d) SILOP

10


4. Which document states the rules of the Companies?

a) MOA

b) AOA

c) Prospectus

d) SILOP

11


5. Which document is obligatory for all Companies?

a) MOA

b) AOA

c) Prospectus

d) SILOP

12

References




13

1

PROGRAMME B.Com


Dynamics



SESSION 20

Methods of raising share capital-IPO, Borrowed capital Debentures- kinds

• IPO

• Debentures

2


• Distinction between MOA and AOA

3



4

Session Outcomes

• The students can be able to understand the raising of capital through IPO and

Debentures

5

IPO- Initial Public Offer

• IPO means Initial Public Offering. It is a process by which a privately held company

becomes a publicly-traded company by offering its shares to the public for the first

time.

• A private company that has a handful of shareholders shares the ownership by going

public by trading its shares.

• Through the IPO, the company gets its name listed on the stock exchange.

6

How Does a Company Offer an IPO?

• A company before it becomes public hires an investment bank to handle the IPO. The

investment bank and the company work out the financial details of the IPO in the

underwriting agreement.

• Later, along with the underwriting agreement, they file the registration statement with

SEC.

• SEC scrutinizes the disclosed information and if found right, it allows a date to

announce the IPO.

7

Debentures

• It is a long-term security yielding a fixed rate of interest, issued by a company and

secured against assets.

• an unsecured loan certificate issued by a company.

• A debenture is a type of debt instrument that is not backed by any collateral and

usually has a term greater than 10 years.

• Debentures are backed only by the creditworthiness and reputation of the issuer.

• Both corporations and governments frequently issue debentures to raise capital

• Some debentures can convert to equity shares while others cannot.

8

Kinds of Debentures

• Secured and Unsecured

• Registered and Bearer

• Convertible and Non-Convertible

• Redeemable and Irredeemable

9


1. IPO means…. a) Imagination P&G organization

b) Investment public offer

c) Initial Public offer


10


2. Which type of company offers IPO…. a) Public company

b) Private company

c) Both A and B


11


3. A debenture is a ------------- document.

a) Long term

b) Short term

c) Debt

d) Both A and C

12


4. The debentures convertible in to shares are called?

a) bonds

b) shares

c) Convertible debentures

d) Non convertible debentures

13


5. The debenture creates a charge on the assets of the company are called:

a) Unsecured debentures

b) Secured debentures

c) Convertible debentures

d) Non convertible debentures

14

References




15

1

PROGRAMME B.Com


Dynamics



SESSION 21

Bonds-meaning and definition, features- kinds- Govt bonds, corporate bonds, foreign bonds

• Meaning of bonds

• Features

• Kinds

2


• Methods of raising share capital-IPO, Borrowed capital Debentures- kinds

3



4

Session Outcomes

• The students can be able to understand the meaning of bonds, features of bonds,

and types of bonds.

5

Meaning of Bonds

• Bonds are units of corporate debt issued by companies and securitized as tradable

assets.

• A bond is referred to as a fixed income instrument since bonds traditionally paid a fixed

interest rate (coupon) to debt holders. Variable or floating interest rates are also now

quite common.

• Bond prices are inversely correlated with interest rates: when rates go up, bond prices

fall and vice-versa.

• Bonds have maturity dates at which point the principal amount must be paid back in

full or risk default. 6

Features of Bonds

• Face value is the money amount the bond will be worth at maturity

• The coupon rate is the rate of interest the bond issuer will pay on the face value of the

bond, expressed as a percentage.

• Coupon dates are the dates on which the bond issuer will make interest payments.

Payments can be made in any interval, but the standard is semi-annual payments.

• The maturity date is the date on which the bond will mature and the bond issuer will

pay the bondholder the face value of the bond.

• The issue price is the price at which the bond issuer originally sells the bonds

7

Kinds of Bonds

• Government bonds such as those issued by the U.S. Treasury. Bonds issued by the

Treasury with a year or less to maturity are called “Bills”; bonds issued with 1–10 years

to maturity are called “notes”; and bonds issued with more than 10 years to maturity

are called “bonds”. The entire category of bonds issued by a government treasury is

often collectively referred to as "treasuries." Government bonds issued by national

governments may be referred to as sovereign debt.

8

cont.

• Corporate bonds are issued by companies. Companies issue bonds rather than seek

bank loans for debt financing in many cases because bond markets offer more

favourable terms and lower interest rates.

• Municipal bonds are issued by states and municipalities. Some municipal bonds offer

tax-free coupon income for investors.

9

cont.

• A foreign bond is a bond issued in a domestic market by a foreign entity in the

domestic market's currency as a means of raising capital.

• For foreign firms doing a large amount of business in the domestic market, issuing

foreign bonds, such as bulldog bonds, Matilda bonds, and samurai bonds, is a common

practice.

• Since investors in foreign bonds are usually the residents of the domestic country,

investors find the bonds attractive because they can add foreign content to their

portfolios without the added exchange rate exposure.

10


1. A bond is a…. a) Floating income security

b) Fixed income security

c) Both A and B


11


2. The money amount the bond will be worth at maturity is called---

a) Face value

b) Real value

c) Redeemable value

d) All of the above

12


3. The rate of interest the bond is called---

a) Coupon rate

b) Interest rate

c) Bond rate


13


4. The price at which the bond issuer originally sells the bonds.?

a) Face price

b) Maturity price

c) Real price

d) Issue price

14


5. A bond issued in a domestic market by a foreign entity is called--

a) Corporate bonds

b) Domestic bonds

c) Foreign bonds

d) convertible bonds

15

References




16

1

PROGRAMME B.Com


Dynamics



SESSION 22

Review of the chapter 2

2


• meaning of bonds, features and kinds

3



4

Session Outcomes

• The students can be able to memorize the topics studied in chapter no 2

5

Review contents

• Silient Features of Company's Act of 2013

• Features of Latest amendments Company's Act of 2013

• Meaning and steps of incorporation

• Memorandum of Association- meaning and contents

• Articles of Associations-meaning and contents

6

Review contents

• Prospectus and Statement in lieu of prospectus- meaning and contents

• Distinction between MOA and AOA

• Methods of raising share capital-IPO, Borrowed capital Debentures- kinds

• Bonds-meaning and definition, features- kinds- Govt bonds, corporate bonds,foreign

bonds

7

References




8

Date post:	06-Feb-2022
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