11th SP 2nd Chapter Exercise (Joint Stock Company) Maharashtra Board – Free Resource

11th SP 2nd Chapter Exercise

Chapter 2 – Joint Stock Company

Q.1 (A) Select the correct option and rewrite the sentences.

1) A sole proprietorship has ……………………. owner/owners.
a) one
b) two
c) five

2) The head of Joint Hindu Family Business is called as …………………….. .
a) Proprietor
b) Director
c) Karta

3) Indian Partnership Act was passed in the year …………………….. .
a) 1923
b) 1932
c) 1956

4) The members of Hindu Undivided Family Business are called …………………….. .
a) Karta
b) partners
c) co-parceners

5) The liability of shareholders in the public limited joint stock company is ………………….. .
a) Limited
b) Unlimited
c) Collective

6) The minimum number of members required for a co-operative society is …………………… .
a) 10
b) 20
c) 50

7) The …………….. is/are elected representative of shareholders who manage affairs of company.
a) Secretary
b) Directors
c) Auditors

8) State Bank of India is an example of ……………………. Company.
a) Chartered
b) Statutory
c) Foreign

Q.1 (B) Match the pairs.

1)

Group A	Group B
a) Sole Trading concern	1) 1932
b) Joint Hindu Family Business	2) Partner
c) Partnership Act	3) Artificial person
d) Joint Stock Company	4) 1923
e) Co-operative Society	5) Karta
	6) Natural person
	7) Single Ownership
	8) Equal voting rights
	9) Multiple ownership
	10) Minimum 9 members

Answers.
a. 7) Single Ownership
b. 5) Karta
c. 1) 1932
d. 3) Artificial person
e. 8) Equal voting rights

Group A	Group B
a) Private Company	1) 51% share capital held by Government
b) Public Company	2) Bank of England
c) Government Company	3) Maximum 200 members
d) Statutory Company	4) Minimum 7 members
e) Limited Liability Partnership	5) Maximum 100 members
	6) Minimum 5 partners
	7) 40% share capital
	8) Minimum 5 members
	9) Life Insurance Corporation
	10) Minimum 2 partners

Answers.
a. 3) Maximum 200 members
b. 4) Minimum 7 members
c. 1) 51% share capital held by Government
d. 9) Life Insurance Corporation
e. 10) Minimum 2 partners

Q.1 (C) Give one word/phrase/term for the following statements.

1) The owner who is the sole manager and decision maker of his business.
Answer: Sole Trader

2) The senior most family member of Joint Hindu Family Business.
Answer: Karta

3) The members of Joint Hindu Family Business.
Answer: Co-parceners

4) An artificial person created by law.
Answer: Joint stock company

5) The persons who have entered into an agreement of partnership.
Answer: Partners

6) A person who purchases shares of Joint Stock Company.
Answer: Shareholder

7) The official signature of Joint Stock Company.
Answer: Common Seal

8) Name a company that is created by a special legislation of parliament or state assembly.
Answer: Statutory Company

Q.1 (D) State True or False.

1) A joint stock company is voluntary association of persons. (True)

2) A joint stock company is a formal form of business organization. (True)

3) Registration of Joint Stock Company is compulsory. (True)

4) A Joint Stock Company is a natural person. (False)

5) A Joint Stock Company does not enjoy independent legal status. (False)

6) The liability of shareholder of public limited company is limited. (True)

7) A joint stock company has long and stable life. (True)

8) There is no seperation of ownership and management in Joint Stock Company. (False)

9) Board of Directors manage the Company. (True)

Q.1 (E) Complete the sentences.

1) A company is a creation of law, hence it is called an Artificial Person.

2) A company which is incorporated under a special Act is called as Statutory Company.

3) A Company which has only one member is called as One Person Company.

4) A listed company must follow the provisions of Companies Act and SEBI Guidelines.

Q.1 (F) Complete the following table.

Group A	Group B
1) Private company	Maximum 200 members
2) Public company	Minimum 7 members
3) Unlimited Liability Company	Member have unlimited liability
4) Incorporated Outside India	Foreign Company

Q.1 (G) Answer in one sentence.

1) How many member/s can be there in a one person company?
Answer: One person company has only one person as a member.

2) What is a Holding company?
Answer: A Holding company is a company which holds more than one half of the total share capital of another company or has powers to appoint or remove all or a majority of directors of another company.

3) What is meant by foreign company?
Answer: Foreign company means a company incorporated outside India, but having a place of business in India.

Q.1(H) Correct the underlined word and rewrite the following sentences.

1) Statutory companies are registered under the Companies Act.
Answer: A special Act passed by the central or state legislative

2) A Subsidiary Company holds more than half of the total share capital of another company.
Answer: Holding Company

3) A private Company must have minimum 7 Members.
Answer: 2

4) A public Company can have maximum 200 Membesrs.
Answer: A Private Company

Q.2 Explain the following terms/concepts.

1) Dormant company
Answer: If a company is registered for a future project or has not made any significant accounting transactions in the last two years or has not filed financial statements or annual returns in last two years, after making application u/s 455 can be called as Dormant Company.

2) Holding company
Answer: A Holding company is a company which holds more than one half of the total share capital of another company or has powers to appoint or remove all or a majority of directors of another company.

3) Foreign company
Answer: Section 2(42): Foreign company means a company incorporated outside India, but having a place of business in India. e.g. Nestle India Limited, Bata India Limited, Whirlpool corporation, etc.

4) Company limited by guarantee
Answer: These types of companies may or may not have a share capital. Each member promises to pay a fixed sum of money specified in the Memorandum in the event of liquidation of the company for the payment of the debts and liabilities of the company.

Generally, such companies are not profit making companies because they are formed for
the purpose of promotion of art, science, culture, charity, sports, or some other similar
purpose.

5) Associate Company
Answer: An Associate Company is one over which another company exercise a significant degree of control which is less than the degree of control exercised over a subsidiary company.

Associate company in relation to another company, means a company in which that other
company has a significant influence, but which is not a subsidiary company.

For the purpose of this clause ‘significant influence’ means control of at least 20% of total
capital or of business decisions under an agreement.

6) Limited Liability
Answer: The liability of shareholders of a joint stock company is limited. It is limited up to the unpaid part of face value of shares held by a shareholder.

Shareholder is liable to pay only the unpaid amount on his shares, if any. Shareholder is not concerned with debts and liabilities of the company.

Personal property of the shareholders cannot be used for repayment of debts of a company.

7) Perpetual Succession
Answer: A Joint Stock Company has perpetual succession i.e. continuous existence. Its existence is not affected by death, insolvency or retirement of any of its members.

A Joint Stock Company enjoys a very long and stable life unless it is wound up by following
legal procedure.

8) Listed company
Answer: Listed company means a company which has any of its securities listed on any recognized stock exchange.

A public limited company may be a listed company or unlisted company. The listed companies will also have to follow SEBI’s guidelines and the provisions of the Companies Act.

9) One person company
Answer: A one person company is a company which has only one person as member.
It is private limited company and it has to fulfill and comply with all the formalities of private company unless otherwise specified in the Act or rules.

The concept of One Person Company was introduced through the Companies Act 2013.It
is operated by a single promoter who has Limited Liability.

One Person Company can have one or more directors. There is no need to hold Annual
General Meeting.

10) Government company
Answer: Government company means any company in which not less than 51% of the paid up share capital is held by
1) the central government or
2) State government or governments or
3) Partly by Central Government and partly by one or more State Governments or
4) Subsidiary company of a government company.

Government Company may be a private company or a public company. In fact it is a company registered and incorporated under the Companies Act 2013. e.g. Hindustan Machine Tools Limited, Steel Authority of India Limited., Bharat Heavy Electrical Limited, Coal India Limited, Oil Natural Gas Corporation Limited etc.

Solution of other subjects
Solution of all Chapters of SP
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8

Q.3 Study the following case/situation and express your opinion.

1) Two promoters got ‘Super Drinks Pvt. Ltd.’ incorporated on 18th Jan, 2018. The company has 100 members as on 31st Mar, 2019.

Questions:

a) What is the maximum number of members this company can have?
b) Can this company invite general public to subscribe for its shares?
c) Can the shareholders of the company sell their shares to outsiders?

Solution:
a) Super Drinks Pvt. Lts can have maximum 200 members.
b) Super Drinks Pvt. con not invite general public to subscribe for its shares.
c) The shareholders of the company can not sell their shares to outsiders bacause it is a private company.

2) Kali VFX Ltd. was incorporated on 1st Jan, 2019 as a public limited company.

a) How many minimum number of members must be there in this company?
b) Can the members of this company sell its shares to outsiders?
c) How many maximum number of members can this company have?

Solution:
a) Kali VFX Ltd. is a public limited company. Minimum 7 number of members must be there in this company.
b) The members of this company can sell its shares to outsiders.
c) There is no limit on maximum number of members. Becuase Kali VFX is a public company.

3) Sunset Printers Pvt. Ltd. was incorporated on 5th Dec, 2015 as per the provisions of Companies Act 2013. Mr. Manoj was the only subscriber to the Memorandum and Articles of Association and he was also the only member of the company.

a) Is this company a One Person company?
b) Will the liability of Mr. Manoj be limited or unlimited?
c) Will the company close down on the death, insanity or insolvency of Mr. Manoj?

Solution:
a) Yes, this company is a One Person company, because it has only one member.
b) The liability of Mr. Manoj is limited.
c) One Person Company (OPC) Will not close down on the death, insanity or insolvency of Mr. Manoj. As per the provisions of Companies Act, 2013, Mr. Manoj must have appointed his son or daughter or any other close relative as a nominee with 15 days of his appointment or incorporation of OPC.

4) On 1st Jan, 2018 Mr. John bought 100 shares of TIPS Paints Ltd. The face value of each share was Rs 10. Mr. John paid the full amount of Rs. 1000. In Dec, 2018 the company suffered a loss of Rs 10 crores.

a) Can the company ask Mr. John to pay any further money to the company?
b) Which feature of Joint stock company is referred to in this example?
c) Explain the feature briefly.

Solution:
a) Company can not ask Mr. John to pay any further money to the company. Because in Joint stock campany members have limited libility.
b) The feature of limited libility is referred to in this example.
c) The liability of shareholders of a joint stock company is limited. It is limited up to the unpaid part of face value of shares held by a shareholder. Shareholder is liable to pay only the unpaid amount on his shares, if any. Shareholder is not concerned with debts and liabilities of the company. Personal property of the shareholders cannot be used for repayment of debts of a company.

Q.4 Distinguish between.

1) Sole Trading concern and Joint Hindu Family Business.

Sr. No.	Points	Sole Trading concern	Joint Hindu Family Business
1	Meaning	A business organization owned and controlled by one person.	A business organization owned and run by family members of a joint Hindu Family.
2	Registration	Registration is not necessary.	Registration is not necessary.
3	Number of members	Minimum- 1 Maximum- 1	There is no limit on minimum and maximum number of members.
4	Liability	Unlimited liability of Sole Trader.	Karta-Unlimited Liability Co-parcenersLimited Liability.
5	Stability	Lack of Stability. Business may be affected due to death, insolvency of trader.	Lack of stability. Business may be affected due to death, insolvency of members.
6	Management	A sole trader alone is responsible for the management of business.	Karta alone is responsible for the management of business.
7	Secrecy	Ensures maximum business secrecy.	More business secrecy.

2) Sole Trading concern and Partnership Firm.

Sr. No.	Points	Sole Trading concern	Partnership Firm
1	Meaning	A business organization owned and controlled by one person.	A business organization owned and run by two or more persons collectively or jointly.
2	Registration	Registration is not necessary.	Registration is not necessary, but compulsory in Maharashtra state.
3	Number of members	Minimum- 1 Maximum- 1	Minimum- 2 Maximum- 50 for general business.
4	Liability	Unlimited liability of Sole Trader.	Liability of partners is unlimited, Joint and several.
5	Stability	Lack of Stability. Business may be affected due to death, insolvency of trader.	Lack of stability. Business may be affected due to death, insolvency of partners.
6	Management	A sole trader alone is responsible for the management of business.	All partners are equally liable for management of their business.
7	Secrecy	Ensures maximum business secrecy.	Secrets are shared by the partners.

3) Partnership Firm and Joint Stock Company.

Sr. No.	Points	Partnership Firm	Joint Stock Company
1	Meaning	A business organization owned and run by two or more persons collectively or jointly.	An incorporated association which is an artificial person created by law, having perpetual succession.
2	Registration	Registration is not necessary, but compulsory in Maharashtra state.	Registration is compulsory.
3	Number of members	Minimum- 2 Maximum- 50 for general business.	Private Company, Minimum-2 Maximum-200. Public company, Minimum-7 Maximum-No limit
4	Liability	Liability of partners is unlimited, Joint and several.	Limited Liability of members.
5	Stability	Lack of stability. Business may be affected due to death, insolvency of partners.	Stable business.
6	Management	All partners are equally liable for management of their business.	Board of directors constitute the management of company.
7	Secrecy	Secrets are shared by the partners.	Less business secrecy.

4) Joint Stock Company and Co-operative society.

Sr. No.	Points	Joint Stock Company	Co-operative society
1	Meaning	An incorporated association which is an artificial person created by law, having perpetual succession.	It is voluntary association of individuals which is formed for providing services to members.
2	Registration	Registration is compulsory.	Registration is compulsory.
3	Number of members	Private Company, Minimum-2 Maximum-200. Public company, Minimum-7 Maximum-No limit	Minimum-10 Maximum No limit.
4	Liability	Limited Liability of members.	Limited Liability of members.
5	Stability	Stable business.	Stable business.
6	Management	Board of directors constitute the management of company.	Managing committee is the managing body of co-operative society.
7	Secrecy	Less business secrecy.	Less business secrecy.

5) Private company and Public company.

Sr. No.	Points	Private company	Public company
1	Definition	A private company is a company which by its articles restricts the right to transfer its shares, if any; limits the number of its members to 200.	A public company means a company which is not a private company.
2	Number of Members	Minimum- 2 Maximum- 200	Minimum- 7 Maximum- No limit
3	Number of Directors	In a private company a minimum number of 2 directors are essential.	In a public company a minimum number of 3 directors is essential.
4	Right to transfer the shares	Shares in private company are not freely transferable.	Shares are freely transferable.
5	Issue of prospectus	There is no prescribed qualification for this type of Secretary.	Can issue a prospectus..
6	Ending word/s	It is compulsory to add the word ‘Private limited’ after the name of private company	It is compulsory to add the word ‘Limited’ after the name of public company.

Q.5 Answer in brief.

1) How is LLP different from a partnership firm?

Answer:
The difference between a limited liability partnership (LLP) and a partnership firm.

(1) A Limited Liability Partnership is governed by the Limited Liability Partnership Act, 2008, whereas Partnership Firm is governed by the Partnership Act 1932.

(2) In LLP all partners have limited liability. It means that the personal property of the partners cannot be attached or used for paying off the debts and liabilities of the LLP However, in a Partnership firm the liability of partners is unlimited and it is joint and several. It means in the case of insolvency of the firm personal property of the partners is attached and used to pay off the debts of the firm

(3) In LLP minimum number of partners is 2 and there is no limit on the maximum number of partners. While in a Partnership firm minimum number of partners is 2 and in the case of general business, the maximum number of partners is 50.

(4) The Limited liability partnership is a separate legal entity i.e. a body corporate. The
LLP and the partners are distinct from each other. while a Partnership firm does not enjoy separate legal status. There is no distinction between partners and their firms

2) Explain the different types of companies on the basis of liabilities of members.

Answer:
For the answer refer to Q.7 (7)

3) What are holding and subsidiary company?

Answer:
A Holding company is a company that holds more than one-half of the total share capital
of another company or has powers to appoint or remove all or a majority of directors of
another company.

A Subsidiary company is just the opposite of a holding company. It is a company that is
controlled by a Holding company. Such control is possible because the Holding company
purchases more than one-half of the share capital of the Subsidiary company or has powers to appoint or remove all or a majority of its directors.

Solution of other subjects
Solution of all Chapters of SP
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8

Q.6 Justify the following statements.

1) Registration of Joint Stock Company is compulsory.

Answer:
a) A joint stock company is an incorporated association, which is an artificial person created
by law, having a separate name, a separate legal entity, and perpetual succession.
b) The liability of its member is limited. A joint stock company may have a common seal.
c) Registration or incorporation is compulsory.
d) An association obtains the status of a Joint Stock Company only after its registration under the Companies Act.
e) Therefore, Registration of a Joint Stock Company is compulsory.

2) A Joint Stock Company is an artificial person.

Answer:
a) A Joint Stock Company is an artificial person created by law.
b) It is created by a legal process and has its own independent personality.
c) It enjoys certain legal rights like a person for e.g. entering into contracts, purchasing and selling assets and property, appointing persons as employees, etc.
d) But it cannot act on its own like a natural person as it is an artificial person.
e) Thus, A Joint Stock Company is an artificial person.

3) The liability of shareholder of company is limited.

Answer:
a) The liability of shareholders of a joint stock company is limited. It is limited up to the unpaid part of the face value of shares held by a shareholder.
b) Shareholder is liable to pay only the unpaid amount on his shares if any.
c) Shareholder is not concerned with the debts and liabilities of the company.
d) Personal property of the shareholders cannot be used for repayment of debts of a company.
e) Thus, the liability of shareholders of the company is limited.

4) The ownership and management are separated in Joint Stock Company.

Answer:
a) In a company, ownership is separated from management. Shareholders are real owners of the company.
b) however, they are unable to manage the day-to-day affairs of the company because
i) They are large in number ii) They are scattered
c) They keep on changing because shares are transferable. So they elect the Board of Directors to look after the management of the company.
d) All policy decisions are taken by the Board of Directors.
e) Thus, The ownership and management are separated in a Joint Stock Company.

5) The Joint Stock Company collects a huge capital from public.

Answer:
a) A Joint Stock Company can raise huge capital, due to a large number of members.
b) Huge amount of capital can be collected by the company in the form of shares, debentures, bonds, public deposits, etc.
c) It can also obtain loans from banks and financial institutions.
d) Thus, the Joint Stock Company collects a huge capital from the public.

6) There is more Government control and supervision over the working of Joint Stock Company.

Answer:
a) A Joint Stock Company has to work under Government control and supervision. Registration is compulsory for all companies.
b) A registered company must follow the regulations given in company law. A company has to file a copy of the statement of profit and loss, balance sheet, and other financial statements with the registrar.
c) It has to maintain proper books of accounts. These accounts must be audited. If a company does not fulfill these statutory obligations, it is penalized.
d) This control is essential to protect the financial interest of small investors.
e) Thus, There is more Government control and supervision over the working of a Joint Stock Company.

Q.7 Answer the following questions

1) State the features of sole trading concern.

Answer:
A Sole Trading Concern is a form of business organization. It is owned, managed, and controlled by one person. It is also called as ‘One Man Business’. A person who conducts the business is called a ‘Sole Trader’.

The following are the features of sole trading concern:

1) There is no separate Law or Act governing Sole Trading Concerns, but it has to follow
all the laws of the Land.
2) Sole Trading Concern has only one owner.
3) Capital contributed by the sole trader is very small.
4) There is no division of profit or loss as there is a single owner.
5) All decisions of a business are taken by the sole trader.
6) The proprietor (sole trader) can ensure maximum business secrecy.
7) The liability of the sole trader is unlimited.
8) This business does not enjoy a separate legal status.
9) Sole Trading Concern is not suitable for large-scale business operations.

2) State the features of Joint Hindu Family Business.

Answer:
When a Hindu Undivided Family conducts business, inherited by it as per Hindu Law, it is
called a Joint Hindu Family Business. It exists only in India. It is governed by Hindu Succession
Act 1956.

The following are the features of a Joint Hindu Family Business:

1) Membership in the Joint Hindu Family Business is by birth only. Every child born in
the family becomes a member.
2) The Head of the Family is known as ‘Karta’.
3) Other members of the family are called as ‘Co-parceners’.
4) Number of members – There is no limit on the minimum and maximum number of members.
5) All Family members are engaged in the business.
6) The Liability of Karta is unlimited.
7) The Liability of co-parceners is limited.
8) Karta is the manager, controller, and co-ordinator of the business.
9) Karta being the sole decision maker, can take quick decisions.
10) The profit-sharing ratio keeps on changing depending upon the births and deaths in the family.

3) State the features of Partnership firm.

Answer: The business organization which is owned, managed, and controlled by two or more persons is called Partnership Firm. The owners are called Partners and the organization is called a Firm. Registration of a Partnership firm is compulsory in Maharashtra state. This form of organization is governed by the Indian Partnership Act 1932.

The following are the features of a Partnership Firm:

1) This business is started by an agreement between two or more persons.
2) Number of partners- Minimum- Two
Maximum- Fifty for general business.
3) The liability of partners is Unlimited and it is joint and several.
4) Capital is contributed by partners.
5) Partnership firm does not enjoy separate legal status.
6) In Partnership Firm partners, cannot transfer their shares without the permission of
other partners.
7) All partners are joint owners as well as joint managers of a business.
8) No separation of ownership and management in Partnership firm.
9) Partners share profit and losses in the agreed ratio as mentioned in partnership deed.

4) State the features of co-operative society.

Answer:
A Co-operative Society is a voluntary association of persons formed to achieve certain economic objectives. The nature of co-operative organization is service oriented. The registration of a co-operative society is compulsory in the state of Maharashtra, under the Maharashtra State Co-operative Societies Act 1960.

The following are the features of a Co-operative Society:

1) Registration is compulsory.
2) Membership of co-operative society is open to all.
3) Number of members- Minimum- ten, Maximum- no limit.
4) The liability of a member in a co-operative society is limited.
5) It differs from other forms of organization as its aim is not maximization of profit but to provide services to its members.
6) The organization enjoys independent legal status different from its members.
7) The management of co-operative organization is democratic in nature. There is equality in voting right. They follow the principle of ‘One member one vote’.
8) There is control and supervision by the state government on the working of cooperative organization.

5) State the features of Limited Liability Partnership.

Answer:
Limited Liability Partnership has a combination of features of both partnership and Joint Stock
Company. As the name suggests partners have limited liability which means that personal assets of the partners are not attached for paying off the debts of LLP.
Nowadays it has become very popular form of business. All limited liability partnerships are
governed by the Limited Liability Partnership Act of 2008.

The following are the features of a Limited Liability Partnership:

1) The Limited liability partnership is a separate legal entity i.e. a body corporate. The LLP and the partners are distinct from each other.
2) Number of partners- Minimum- two, Maximum- unlimited.
3) No requirements of minimum capital contribution.
4) It is simple to form and easy to operate.
5) The liability of each partner is limited to his share as written in the agreement.
6) It has a low cost of formation.
7) There is no restriction on joining and leaving the LLP except as stated in the partnership agreement.
8) Double taxation is avoided. There is no tax on share in profit.

6) Define Joint Stock Company and explain its features.

Answer:
A Joint stock company is a voluntary association of individuals for profit, having its capital divided into transferable shares, the ownership of which is the condition of membership.

The following are the features of a Joint Stock Company:

1) Voluntary association:

A Joint Stock Company is a voluntary association of persons. Membership of the company is open to all. A person at his own wish can become or leave membership of the company subject to the provisions of the Articles of Association of the company.

2) Incorporated association:

A Joint Stock Company is an association of persons formed and registered under the Companies Act. Registration or incorporation is compulsory. An association obtains the status of a Joint Stock Company only after its registration under the Companies Act.

3) Separate legal entity:

A Joint Stock Company is a legal entity i.e. it enjoys separate legal status. Its existence is different from its members and directors. The members are the owners and are liable in a limited way for the acts of their company and are conferred with rights and duties.

4) Artificial person:

A Joint Stock Company is an artificial person created by law. It is created by a legal process and has its own independent personality. It enjoys certain legal rights like a person e.g. entering into contracts, purchasing and selling assets and property, appointing persons as employees, etc. But it cannot act on its own like a natural person as it is an artificial person.

5) Perpetual succession:

A Joint Stock Company has perpetual succession i.e. continuous existence. Its existence is not affected by the death, insolvency, or retirement of any of its members. A Joint Stock Company enjoys a very long and stable life unless it is wound up by following legal procedure.

6) Common seal:

A Joint Stock Company is an artificial person without physical existence like a natural person. Hence, it is not in a position to sign its name. However, it has a device in the form of a common seal. This common seal acts as its signature. It is affixed on all the important documents and contracts of the company.

7) Limited liability:

The liability of shareholders of a joint stock company is limited. It is limited up to the unpaid part of the face value of shares held by a shareholder. A shareholder is liable to pay only the unpaid amount on his shares if any. A shareholder is not concerned with the debts and liabilities of the company. The personal property of the shareholders cannot be used for repayment of debts of a company.

8) Separation of ownership and management:

In a company, ownership is separated from management. Shareholders are real owners of the company, however, they are unable to manage the day-to-day affairs of the company because
a) They are large in number.
b) They are scattered and
c) They keep changing because shares are transferable.
So they elect the Board of Directors to look after the management of the company. All policy decisions are taken by the Board of Directors.

9) Transferability of shares:

The shares of a public company are freely transferable. A shareholder can sell shares as and when he desires. Membership comes to an end once the shares are sold. Shares of a private company are not freely transferable.

10) Number of members:

A Joint Stock Company is usually owned by a large number of persons. A private limited company must have a minimum of 2 members and a maximum of 200 members. A public limited company must have a minimum of 7 members and there is no limit on the maximum number of members.

11) Capital:

A Joint Stock Company can raise huge capital, due to a large number of members. Huge amounts of capital can be collected by the company in the form of shares, debentures, bonds, public deposits, etc. It can also obtain loans from banks and financial institutions.

12) Government control:

A Joint Stock Company has to work under Government control and supervision. Registration is compulsory for all companies. A registered company must follow the regulations given in company law. A company has to file a copy of the statement of profit and loss, balance sheet, and other financial statements with the registrar.

7) Define a ‘company’. Explain the types of companies on the basis of liability of members.

Answer:
According to Prof. H. L. Haney
“A Joint stock company is a voluntary association of individuals for profit, having its capital divided into transferable shares, the ownership of which is the condition of membership.”

Thus to conclude we can say thatA joint stock company is an incorporated association, which is an artificial person created by law, having a separate name, a separate legal entity and perpetual succession. The liability of its member is limited. A joint stock company may have common seal.

Different types of companies on the basis of the liabilities of members.

1) Company limited by shares:

These types of companies have a share capital and the liability of each member is limited to the unpaid part of the face value of shares purchased by members. During the existence of the company or in the event of winding up, a member can be called upon to pay the unpaid remaining amount on the shares purchased by him/her. A company limited by shares may be a public company or a private company. These are the most popular types of companies.

2) Company limited by Guarantee:

These types of companies may or may not have a share capital. Each member promises to pay a fixed sum of money specified in the Memorandum in the event of liquidation of the company for the payment of the debts and liabilities of the company. Generally, such companies are not profit-making companies because they are formed for the purpose of promotion of art, science, culture, charity, sports, or some other similar purpose.

3) Unlimited liability company:

A company not having any limit on the liability of its members is termed as an unlimited company. The members are fully liable to cover the debts of the company. The unlimited company can be either a private or a public company or a one-person private company.

8) Explain any four types of companies.

Answer:
1) Statutory Company:

These companies are incorporated by a special Act passed by the central or state legislative. e.g. Reserve Bank of India, State Bank of India, Unit Trust of India, Life Insurance Corporation etc.

2) Private Company:

Private company means a company having a minimum paid-up capital as may be prescribed and which by its Articles –
i) Restrict the right of members to transfer its shares if any.
ii) Restrict the number of its members up to 200.
iii) Prohibits any invitation to the public to subscribe for any securities or deposits of the
company.

All the above said conditions, should be fulfilled for a company to be called as private company. If any one of the conditions is not fulfilled by the company, it shall be considered as a public company.

The minimum number of members for a private company is 2. It must add the words ‘Private Limited’ at the end of its name. A private company may be a company limited by shares or a company limited by guarantee or an unlimited company.

3) Public Company:

According to Section 2(71), a public company means a company that is not a private company. A public company –
1) Has no restriction on the transfer of its shares.
2) a Minimum number of members should be seven.
3) Has to have a minimum paid-up share capital as may be prescribed by its Articles.
4) Does not prohibit any invitation or acceptance of deposits from the public.

4) One-Person Company:

According to Section 2(62) a one-person company is a company that has only one person as a member. It is a private limited company and it has to fulfill and comply with all the formalities of the private company unless otherwise specified in the Act or rules.

The concept of One Person Company was introduced through the Companies Act 2013. It
is operated by a single promoter who has Limited Liability. It is a better form of business
organization than the sole proprietorship because the liabilities of the member is limited
to the extent of his capital in the company.

One Person Company can have one or more directors. There is no need to hold Annual
General Meeting.

Solution of other subjects
Solution of all Chapters of SP
1 – 2 – 3 – 4 – 5 – 6 – 7 – 8

11th SP Textbook Solutions

Chapter Name	Solution Link
1) Secretary	Click Here
2) Joint Stock Company	Click Here
3) Formation of a company	Click Here
4) Documents related to formation of a company	Click Here
5) Members of a company	Click Here
6) Directors and Key Managerial personnel of a company	Click Here
7) Company Meetings – I	Click Here
8) Company Meetings – II	Click Here
9) Business Communication Skills of Secretary	Click Here
10) Correspondence with Directors	Click Here
11) Correspondence with Banks	Click Here
12) Correspondence with Statutory Authorities	Click Here

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Textbook Solutions of 11th Commerce (All Subjects)	Click Here
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