Question 1.
\nWho are promoters? (March-S-2018)
\nAnswer:
\nA person or group of persons who conceive the idea of setting up a new business, assess its feasibility and take necessary steps to arrange the basic requirements, and establish a business unit say, a Company and put into operation is known as a promoter.<\/p>\n
![\"1st](\"https:\/\/kseebsolutions.guru\/wp-content\/uploads\/2021\/06\/KSEEB-Solutions.png\")
<\/p>\n
Question 2.
\nState any one type of feasibility study conducted by the promoter in the promotion of the company.
\nAnswer:
\nTechnical feasibility.<\/p>\n
Question 3.
\nWhich type of company issues prospectus?
\nAnswer:
\nPublic company.<\/p>\n
Question 4.
\nWhich is the main document of Joint Stock Company?
\nAnswer:
\nMemorandum of Association.<\/p>\n
<\/p>\n
Question 5.
\nHow many members have to sign a memorandum of association in the case of a public company?
\nAnswer:
\n7 members have to sign a memorandum of association in ease of a public company.<\/p>\n
Question 6.
\nHow many members have to sign a memorandum of association in the case of a private company?
\nAnswer:
\n2 members have to sign a memorandum of association in ease of a private company.<\/p>\n
Question 7.
\nDirector of which type of company has to subscribe for qualification share. (March-S-2019)
\nAnswer:
\nPublic company.<\/p>\n
Question 8.
\nExpand SfBl.
\nAnswer:
\nSecurity Exchange Board of India.<\/p>\n
Question 9.
\nAt what stage a private company can commence its business?
\nAnswer:
\nIncorporation stage.<\/p>\n
Question 10.
\nAt what stage a public company can commence its business?
\nAnswer:
\nCommencement of business stage.<\/p>\n
<\/p>\n
Question 11.
\nWhich type of company may use table A of Companies Act, 1956?
\nAnswer:
\nPublic company.<\/p>\n
Question 12.
\nMention any two certificates to be obtained by a public company
\nAnswer:
\n(a) Certificate of incorporation.
\n(b) Certificate of commencement of business.<\/p>\n
Two Mark Questions<\/span><\/p>\n Question 1. Question 2. Question 3. Question 4. Question 5. Question 6. Question 7. Question 8. Four Mark Questions<\/span><\/p>\n Question 1. (b) Financial feasibility: Every business activity requires funds. The promoters have to estimate the fund requirements for the identified business opportunity. If the required outlay for the project is so large that it cannot easily be arranged within the available means, the project has to be given up.<\/p>\n (c) Economic feasibility: Sometimes it so happens that a project is technically viable and financially feasible but the chance of it being profitable is very little. In such cases as well, the idea may have to be abandoned. Promoters usually take the help of experts to conduct these studies.<\/p>\n Question 2. (b) It defines the relationship between the company and its members and also among the members themselves. The rules given in the AOA must be in conformity with the Memorandum of Association.<\/p>\n (c) Articles of Association of a company generally contain rules and regulations with regard to the following matters:<\/p>\n Question 3. The main objectives of the issue of a prospectus are: The prospectus usually contains the following information which is considered important for the prospective investors of shares and debentures of the company. Question 4. Eight Mark Questions<\/span><\/p>\n Question 1. Steps involved in the promotion of a company: (b) a Feasibility study or detailed investigation: Once the idea has been conceived, a thorough investigation is made to establish the soundness of the proposition, taking into consideration its technical feasibility and commercial viability. All these investigations on technical feasibility, commercial viability, and profitability are presented in a report called \u201cproject report\u201d or \u201cfeasibility report\u201d. This feasibility report is the primary or basic documents that help in procuring licenses and arrange the necessary finance from financial institutions and other investors.<\/p>\n (c) Assembling: Once the promoter is convinced of the feasibility and profitability of the proposition, he takes steps in assembling or making arrangements for all the necessary requirements such as land, building, machinery, tools, capital, etc. The decision is also to be made regarding size, location, and layout, etc. for the plant, and make contracts with suppliers for raw materials, enter into an agreement with the dealers to purchase equipment, make an agreement with bankers to finance, and take initial steps for the setting up of a Company.<\/p>\n (d) Financing the proposition: At this stage, financial plans are prepared with respect to the amount of capital required, the nature of capital structure i.e., the proportion of capital to be raised from owners fund and that borrowing from banks and others, and how and when to raise the share capital from the general public. Agreements are made with merchant bankers, underwriters, and stockbrokers who are to assist the capital issue and so on.<\/p>\n Question 2. This involves the following: (b) Filing of Prospectus: A copy of the prospectus or statement in lieu of prospectus is filed With the Registrar of Companies. A prospectus is \u201cany document described or issued as a prospectus including any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares or debentures of, a body corporate\u201d.<\/p>\n (c) Appointment of Bankers, Brokers, and Underwriters: Raising funds from the public is a stupendous task. The application money is to be received by the bankers of the company. The brokers try to sell the shares by distributing the forms and encouraging the public to apply for the shares.<\/p>\n (d) Minimum Subscription: In order to prevent companies from commencing business with inadequate resources, it has been provided that the company must receive applications for a certain minimum number of shares before going ahead with the allotment of shares. According to the Companies Act, this is called the \u2018minimum subscription\u2019. The limit of minimum subscription is 90% of the size of the issue.<\/p>\n (e) Application to Stock Exchange: An application is made to at least one stock exchange for permission to deal in its shares or debentures. If such permission is not granted before the expiry of ten weeks from the date of closure of the subscription list, the allotment shall become void and all money received from the applicants will have to be returned to them within eight days.<\/p>\n (f) Allotment of Shares: In case the number of shares allotted is less than the number applied for, or where no shares are allotted to the applicant, the excess application money, if any, is to be returned to applicants or adjusted towards allotment money due from them. Allotment letters are issued to the successful allottees. Return of allotment, signed by a Director or Secretary is filed with the Registrar of Companies within 30 days of allotment.<\/p>\n Question 3. For this purpose the promoter has to take the following steps: (b) Filing of Documents: After getting the name approved the promoter makes an application to the Registrar of Companies of the State in which the Registered Office of the company is to be situated for registration of the company.<\/p>\n The application for registration must be accompanied by the following documents:<\/p>\n (c) Payment of Filing and Registration Fees: Along with the above documents, necessary filing fees and registration fees at the prescribed rates are also to be paid.<\/p>\n The Registrar will scrutinize all the documents and if he finds them in order, he will issue a Certificate of Incorporation. The moment the certificate is issued, the company comes into existence. So this certificate may be called the Birth Certificate of a Joint Stock Company.<\/p>\n Question 4. (b) Articles of Association: The Articles of Association of a company contains the various rules and regulations for the day-to-day management of the company. It covers various rights and powers of its members, duties of the management, and the manner in which they can be changed. It defines the relationship between the company and its members and also among the members themselves.<\/p>\n (c) Prospectus: According to Section 2 (70) of Companies Act 2013 a prospectus has been defined as \u201cany document described or issued as a prospectus and includes any notice, circular, advertisement or another document, inviting deposits from the public or inviting offers from the public for the subscription or purchase of shares or debentures of a company or body corporate\u201d.<\/p>\n (d) Agreement: The agreement, if any, which the company proposes to enter with any individual for appointment as its Managing Director or a whole-time Director or Manager is another document that is required to be submitted to the Registrar for getting the company registered under the Act.<\/p>\n Question 5. (b) Feasibility Study or Detailed Investigation: The second stage in the promotion of a company is detailed investigation. This is done to find out whether the business which he likes to start will be profitable or not. For this purpose, he takes the help of experts like engineers, accountants, cost accountants, market research specialists, etc. This will enable him to known the probable cost of production, the probable demand, and supply of the product. On the basis of reports submitted, the promoter takes his decision. If the reports are favorable, he proceeds further with his business idea.<\/p>\n (c) Company\u2019s Name Approval: Having decided to form a company, the promoters have to select a name for it and submit, an application to the Registrar of Companies for the state in which the registered office of the company is to be situated, for its approval. The proposed name may be approved if it is not considered undesirable. Therefore, three names, in order of their priority are given in the application to the Registrar of Companies.<\/p>\n (d) Fixing up Signatories to the Memorandum of Association: Promoters have to decide about the members who will be signing the Memorandum of Association of the proposed company. Usually, the people signing Memorandum are also the first directors of the company.<\/p>\n (e) Appointment of Professional: Professionals such as mercantile bankers, auditors, legal advisors, etc. are appointed by the promoters to assist them in the preparation of necessary documents which are required to be filed with the Registrar of Companies.<\/p>\n (f) Preparation of Necessary Documents. The promoter takes up steps to get prepared certain legal documents, which have to be submitted under the law, to the Registrar of the Companies for getting the company registered. These documents are the Memorandum of Association and Articles of Associations.<\/p>\n Question 6. (b) The Certificate of Incorporation is conclusive evidence of the regularity of the incorporation and legal existence of a company. Once a Certificate of Incorporation has been issued, the company has become a legal business entity irrespective of any flaw in its registration.<\/p>\n (c) Thus, whatever be the deficiency in the formalities, the Certificate of Incorporation once issued, is conclusive evidence of the existence of the Company. Even when a company gets registered with illegal objects, the birth of the company cannot be questioned. The only remedy available is to wind it up.<\/p>\n (d) On the issue of Certificate of Incorporation, a private company can immediately commence its business. It can raise necessary funds from friends, relatives, or through private arrangements and proceed to start a business. A public company, however, has to undergo two more stages in its formation.<\/p>\n Effect of Certificate of Commencement of Business: The Registrar, after examining the required documents like Memorandum of Association, Articles of Association and Consent of Directors, etc. issues a \u2018Certificate of Commencement of Business\u2019 if these documents are found satisfactory. This certificate is conclusive evidence that the company is entitled to do business. With the grant of this certificate, the formation of a public company is complete and the company can legally start doing business.<\/p>\n Question 7. (b) If a public company going for a public issue fails to apply to a stock exchange for permission to deal in its securities or fails to get such permission before the expiry of ten weeks from the date of closure of subscription list, the allotment of shares done by the company shall become void and all money received from the applicants will have to be returned to them within eight days.<\/p>\n Multiple Choices One Mark Questions<\/span><\/p>\n Question 1. Question 2. Question 3. Question 4. Question 5. Question 6. Question 7. True\/False Answer Questions<\/span><\/p>\n Question 1. Question 2. Question 3. Question 4. Question 5. Question 6. Question 7. Question 8. Question 9. Question 10. Short Answer Questions<\/span><\/p>\n Question 1. Question 2. Question 3. It is issued by a public company that is seeking to raise the required funds from the public by means of the issue of shares and debentures. It is not necessary for every company to file a prospectus.<\/p>\n Question 4. Question 5. Long Answer Questions<\/span><\/p>\n Question 1. It involves conceiving a business opportunity and taking the initiative to form a company so that the available business opportunity can be turned into a real business project.<\/p>\n The legal position of promoters with respect to a company promoted by them: (b) Promoters undertake various activities to get a company registered and get it to the position of commencement of business. But they are neither the agents nor the trustees of the company. Legally they cannot be the agent of non-existing companies. It means that he is personally liable for the contracts, not legally.<\/p>\n (c) Also promoters are not the trustees they supposed to observe good faith in the promotion and must not make secret gains out of the dealings. If there is gain then it must be disclosed.<\/p>\n (d) Promoters are not legally entitled to claim the expenses incurred in the promotion of the company but the pre-incorporation expenses may be reimbursed. The company may also remunerate the promoters for their efforts by paying a lump sum amount or a commission on the purchase price of the property purchased through them or on the shares sold.<\/p>\n (e) Shares or debentures may also be allotted to the promoters or they may be given an option to purchase the securities at a future date.<\/p>\n Question 2. Question 3. (b) Objects Clause: It contains a detailed description of the objects and rights of the company, for which it is being established. A company can undertake only those activities which are mentioned in the objects clause of its memorandum.<\/p>\n (c) Capital Clause: It contains the proposed authorized capital of the company. It gives the classification of the authorized capital into various types of shares, (like equity and preference shares) with their numbers and nominal value. A company is not allowed to raise more capital than the amount mentioned as its authorized capital. However, the company is permitted to alter this clause as per the guidelines prescribed by the Companies Act.<\/p>\n (d) Liability Clause: It contains a financial limit up to which the shareholders are liable to pay off to the outsiders in the event of the company being dissolved or closed down.<\/p>\n Question 4. Question 5. (b) The Certificate of Incorporation is conclusive evidence of the regularity of the incorporation and legal existence of a company. Once a Certificate of Incorporation has been issued, the company has become a legal business entity irrespective of any flaw in its registration.<\/p>\n (c) On the issue of Certificate of Incorporation, a private company can immediately commence its business. It can raise necessary funds from friends, relatives, or through private arrangements and proceed to start a business. A public company, however, has to undergo two more stages in its formation.<\/p>\n Question 6. Incorporation Stage: The incorporation or registration of a company is the second stage in the formation of a company. A company cannot be formed or permitted to run its business without registration. In fact, a company comes into existence only when it is registered with the Registrar of Companies.<\/p>\n Raising Capital or Subscription of Capital: After the company is incorporated, the next stage is to raise the necessary capital. In the case of a private limited company, funds are raised from the members or through arrangements from banks and other sources. In the case of a public limited company, the share capital has to be raised from the public.<\/p>\n Commencement of Business: In the case of a private limited company, it can immediately start its business as soon as it is registered. However, in the case of the public limited company a certificate, known as \u2018certificate of commencement of business must be obtained from the Registrar of Companies before starting its operation.<\/p>\n Preliminary Contracts are signed: Preliminary Contracts are: Karnataka 1st PUC Business Studies Question Bank Chapter 7 Formation\u00a0of a Company One Mark Questions Question 1. Who are promoters? (March-S-2018) Answer: A person or group of persons who conceive the idea of setting up a new business, assess its feasibility and take necessary steps to arrange the basic requirements, and establish a business unit …<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[81],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts\/88197"}],"collection":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/comments?post=88197"}],"version-history":[{"count":0,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/posts\/88197\/revisions"}],"wp:attachment":[{"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/media?parent=88197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/categories?post=88197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kseebsolutions.guru\/wp-json\/wp\/v2\/tags?post=88197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nState any two functions of promoters.
\nAnswer:
\n(a) Feasibility Study or Detailed Investigation.
\n(b) Identification of Business Idea or Opportunity.<\/p>\n
\nName any two clauses of the memorandum of association.
\nAnswer:
\n(a) Objects Clause.
\n(b) Name Clause.<\/p>\n
\nGive the meaning of the liability clause of the memorandum of association.
\nAnswer:
\nIt contains financial limits up to which the shareholders are liable to pay off to the outsiders in the event of the company being dissolved or closed down.<\/p>\n
\nGive the meaning of qualification of shares.
\nAnswer:
\nWritten consent of each person named as a director is required confirming that they agree to act in that capacity and undertake to buy a certain number of shares and have to pay for these shares before the company obtains a certificate of commencement of business is known as qualification shares.<\/p>\n
\nWhat are articles of association?
\nAnswer:
\nThe Articles of Association is a document of a company that contains the various rules and regulations for the day-to-day management of the company. It covers various rights and powers of its members, duties of the management, and the manner in which they can be changed.<\/p>\n<\/p>\n
\nWhat is a prospectus?
\nAnswer:
\nAccording to Section 2 (70) of Companies Act 2013, a prospectus has been defined as \u201cany document described or issued as a prospectus and includes any notice, circular, advertisement or another document, inviting deposits from the public or inviting offers from the public for the. subscription or purchase of shares or debentures of a company or body corporate\u201d.<\/p>\n
\nGive the meaning of minimum subscription.
\nAnswer:
\nIn order to prevent companies from commencing business with inadequate resources, it has been provided that the company must receive applications for a certain minimum number of shares before going ahead with the allotment of shares. According to the Companies Act, this is called the \u2018minimum subscription\u2019.<\/p>\n
\nName any 2 stages of the formation of a company.
\nAnswer:
\n(a) Promotion stage.
\n(b) Incorporation stage.<\/p>\n
\nExplain the feasibility studies conducted by the promoters in the promotion stage of the company.
\nAnswer:
\n(a) Technical feasibility: Sometimes an idea may be good but technically not possible to execute. It may be so because the required raw material or technology is not easily available.<\/p>\n<\/p>\n
\nWrite a note on articles of association.
\nAnswer:
\n(a) The Articles of Association of a company contains the various rules and regulations for the day-to-day management of the company. It covers various rights and powers of its members, duties of the management, and the manner in which they can be changed.<\/p>\n\n
\nWrite a note on the prospectus.
\nAnswer:
\nAccording to Section 2 (70) of Companies Act 2013 a prospectus has been defined as \u201cany document described or issued as a prospectus and includes any notice, circular, advertisement or other documents, inviting deposits from the public or inviting offers from the public for the subscription or purchase of shares or debentures of a company or body corporate\u201d.<\/p>\n<\/p>\n
\n(a) To inform the public about the company.
\n(b) To induce people to invest in the shares or debentures of the company.
\n(c) To provide authentic information about the company and the terms and conditions of the issue of shares and debentures.<\/p>\n
\n(a) General information regarding the name, office of the company, stock exchange where shares are to be listed, date of opening and closing of the issue, credit rating information, name of underwriters, brokers, and bankers.
\n(b) Capital structure of the company.
\n(c) Terms of payment and application procedure.
\n(d) Company management and details of the project and project report.
\n(e) Other listed companies under the same management.
\n(f) Outstanding litigations and defaults.
\n(g) Management perception of risk factors.<\/p>\n
\nDistinguish between \u201cpreliminary contracts and provisional contracts’.
\nAnswer:<\/p>\n\n\n
\n Preliminary Contracts<\/strong><\/td>\n Provisional Contracts<\/strong><\/td>\n<\/tr>\n \n 1. Contracts signed by promoters with third parties before the incorporation of the company.<\/td>\n 1. Contracts signed after incorporation but before the commencement of business.<\/td>\n<\/tr>\n \n 2. These are not legally binding on the company and cannot be ratified after incorporation.<\/td>\n 2. These become enforceable only after the certificate of commencement of business.<\/td>\n<\/tr>\n \n 3. These contracts are the liabilities of promoters.<\/td>\n 3. These contracts are the responsibilities of the Company.<\/td>\n<\/tr>\n \n 4. Both private and public companies have the right to undertake these contracts.<\/td>\n 4. They can only be undertaken by a public company.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
\nExplain briefly the promotion stage information of the company.
\nAnswer:
\nPromotion of a business simply refers to all those activities that are required to be undertaken to establish a new business unit for manufacturing or distribution of any product or provide any service to the people. The whole process is called business \u2018promotion\u2019 and the person who does it is called the \u2018promoter\u2019.<\/p>\n
\n(a) Discovery of idea: The idea of starting the business enterprise is conceived by the promoter.
\nThe idea conceived should be applicable and feasible. At this stage, the promoter makes a rough estimate of probable incomes and expenditures of the business unit to be started. At the time of discovering the idea of starting the business, he makes an assessment about business risks, financial risks, investment risks, technical risks, and commercial risks of the venture. This stage of promotion is primarily meant for thinking of an idea to start a company.<\/p>\n<\/p>\n
\nWhat is the capital subscription information of the company? Explain the steps involved in it.
\nAnswer:
\nAfter the company is incorporated, the next stage is to raise the necessary capital. In the case of a private limited company, funds are raised from the members or through arrangements from banks and other sources. In the case of a public limited company, the share capital has to be raised from the public.<\/p>\n
\n(a) SEBI Approval: SEBI (Securities and Exchange Board of India) which is the regulatory authority in our country has issued guidelines for the disclosure of information and investor protection. This is necessary for protecting the interest of the investor. Prior approval from SEBI is, therefore, required before going ahead with raising funds from the public.<\/p>\n<\/p>\n
\nExplain briefly the incorporation stage information of the company.
\nAnswer:
\nThe incorporation or registration of a company is the second stage in the formation of a company. A company cannot be formed or permitted to run its business without registration. In fact, a company comes into existence only when it is registered with the Registrar of Companies.<\/p>\n
\n(a) Approval of Name: It has to be ensured that the name selected for the company does not match with the name of any other company. For this, the promoter has to fill in a \u201cName Availability Form\u201d and submit it to the Registrar of Companies along with necessary fees. The name must include the words(s) \u2018Limited\u2019 or \u2018Private limited\u2019 at the end. Once it is approved, the promoter can proceed with other formalities for the incorporation of the Company.<\/p>\n<\/p>\n\n
<\/p>\n
\nState the four documents required for the obtainment of a business commencement certificate for a public company.
\nAnswer:
\n(a) Memorandum of Association: The Memorandum of Association is the principal document in the formation of a joint-stock company. It contains the fundamental conditions upon which the company is allowed to be incorporated or registered. It defines the relationship of the company with the outside world.<\/p>\n<\/p>\n
\nExplain the functions of promoters in the promotion stages of the company.
\nAnswer:
\n(a) Identification of Business Idea or Opportunity: The first stage in the promotion of a company is the discovery of a new idea or prospection. It is the promoter who conceives the idea of starting a business for making a profit. With his experience, the promoter discovers the field of gainful investment. His knowledge enables him to judge the soundness of a particular proposal.<\/p>\n<\/p>\n<\/p>\n
\nWhat is the effect of conclusiveness of the \u2018Certificates of Incorporation and \u2018Commencement of Business’?
\nAnswer:
\nEffect of Certificates of Incorporation:
\n(a) A company becomes a legal entity with perpetual succession on the date printed on the Certificate of Incorporation. After the conclusiveness of the certificate of incorporation, the company becomes entitled to enter into valid contracts.<\/p>\n<\/p>\n
\nIs it necessary for a public company to get its share listed on a stock exchange? What happens if a public company going for a public issue fails to apply to a stock exchange for permission to deal in its securities or fails to get such permission?
\nAnswer:
\nA public company can raise the required funds from the public by means of an issue of shares and debentures. For doing the same, it has to issue a prospectus which is an invitation to the public to subscribe to the capital of the company and undergo various other formalities:
\n(a) It is necessary for the company to make an application to at least one stock exchange for permission to deal in its shares or debentures by getting its shares listed on the stock exchange.<\/p>\n1st PUC Business Studies Formation\u00a0of a Company Textbook Questions and Answers<\/h3>\n
\nThe minimum number of members to form a private company is (March-N-2019)
\n(a) 2
\n(b) 3
\n(c) 5
\n(d) 7
\nAnswer:
\n(a) 2<\/p>\n
\nApplication for the approval of the name of a company is to be made to
\n(a) SEBI
\n(b) Registrar of companies
\n(c) Government of India
\n(d) Government of the state in which the company is to be registered
\nAnswer:
\n(a) SEBI<\/p>\n<\/p>\n
\nA proposed name of the company is considered undesirable if
\n(a) It is identical to the name of an existing company
\n(b) It resembles closely the name of an existing company
\n(c) It is an emblem of the Government of India, the United Nations, etc.
\n(d) In case of any of the above
\nAnswer:
\n(d) In case of any of the above<\/p>\n
\nA prospectus is issued by
\n(a) A private company
\n(b) A public company seeking investment from public
\n(c) A public enterprise
\n(d) A public company
\nAnswer:
\n(d) A public company<\/p>\n
\nStages in the formation of a public company are in the following order
\n(a) Promotion, Commencement of Business, Incorporation, Capital subscription
\n(b) Incorporation, Capital Subscription, Commencement of Business, Promotion
\n(c) Promotion, Incorporation, Capital Subscription, Commencement of Business
\n(d) Capital subscription, Promotion, Incorporation, Commencement of Business
\nAnswer:
\n(c) Promotion, Incorporation, Capital Subscription, Commencement of Business.<\/p>\n
\nPreliminary Contracts are signed
\n(a) Before the incorporation
\n(b) After incorporation but before the capital subscription
\n(c) After incorporation but before the commencement of business
\n(d) After commencement of business
\nAnswer:
\n(a) Before the incorporation<\/p>\n
\nPreliminary contracts are
\n(a) Binding on the Company
\n(b) Binding on the Company, if ratified after incorporation
\n(c) Binding on the after incorporation Company
\n(d) Not binding on the Company
\nAnswer:
\n(d) Not binding on the Company.<\/p>\n
\nIt is necessary to get every company incorporated, whether private or public.
\nAnswer:
\nTrue<\/p>\n
\nStatement in lieu of prospectus can be filed by a public company going for a public issue.
\nAnswer:
\nFalse<\/p>\n<\/p>\n
\nA private company can commence business after incorporation.
\nAnswer:
\nTrue<\/p>\n
\nExpert who helps promoters in the promotion of a company is also called promoters.
\nAnswer:
\nFalse<\/p>\n
\nA company can ratify preliminary contracts after incorporation.
\nAnswer:
\nFalse<\/p>\n
\nIf a company is registered on the basis of fictitious names, its incorporation is invalid.
\nAnswer:
\nFalse<\/p>\n
\n\u2018Articles of association\u2019 is the main document of a company.
\nAnswer:
\nFalse<\/p>\n
\nEvery company must file Articles of Association.
\nAnswer:
\nFalse<\/p>\n
\nA provisional contract is signed by promoters before the incorporation of the company.
\nAnswer:
\nFalse<\/p>\n
\nIf a company suffers heavy losses and its assets are not enough to pay off its liabilities, the balance can be recovered from the private assets of its members.
\nAnswer:
\nFalse<\/p>\n<\/p>\n
\nName any two stages in the formation of a company.
\nAnswer:
\n(a) Promotion stage.
\n(b) Incorporation stage.<\/p>\n
\nState any two important documents for the incorporation of the company.
\nAnswer:
\n(a) Memorandum of Association.
\n(b) Articles of Association.<\/p>\n
\nWhat is a prospectus? Is it necessary for every company to file a prospectus?
\nAnswer:
\nAccording to Section 2 (70) of Companies Act 2013 a prospectus has been defined as \u201cany document described or issued as a prospectus and includes any notice, circular, advertisement or another document, inviting deposits from the public or inviting offers from the public for the subscription or purchase of shares or debentures of a company or body corporate\u201d.<\/p>\n
\nBriefly explain the term \u2018Return of Allotment\u2019.
\nAnswer:
\nReturn of Allotment is a statement submitted to the Registrar which contains the names and addresses of shareholders and the number of shares allotted to each shareholder. Return of allotment, signed by a Director or Secretary is filed with the Registrar of Companies within 30 days of allotment. Return of allotment shows that the company has received the minimum subscription.<\/p>\n<\/p>\n
\nAt which stage in the formation of a company does it interact with SEB1?
\nAnswer:
\nA company interacts with SEBI (Securities and Exchange Board of India) in the third stage of foundation that is, in the stage of Raising Capital or Subscription of Capital.<\/p>\n
\nWhat is meant by the term \u2018Promotion\u2019? Discuss the legal position of promoters with respect to a company promoted by them.
\nAnswer:
\nPromotion of a business refers to all those activities that are required to be undertaken to establish a new business unit for manufacturing or distribution of any product or provide any service to the people.<\/p>\n
\n(a) A promoter is said to be the one who undertakes to form a company with reference to a given project and to set it going and who takes the necessary steps to accomplish that purpose. It is the function of promoters to analyze the prospects and bring together the men, materials, machinery, managerial abilities, financial resources and commence the business.<\/p>\n<\/p>\n
\nWhat is a Memorandum of Association?
\nAnswer:
\nThe Memorandum of Association is the principal document in the formation of a joint-stock company. It contains the fundamental conditions upon which the company is allowed to be incorporated or registered.<\/p>\n
\nExplain any four clauses of the Memorandum of Association. (March-N-20l8) (March-S-2018) (March-N-2019) (March-S-2019)
\nAnswer:
\n(a) Name Clause: It contains the name by which the company will be established. The approval of the proposed name is taken in advance from the Registrar of the companies.<\/p>\n<\/p>\n
\nState any four differences between the Memorandum of Association and the Articles of association.
\nAnswer:
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<\/p>\n
\nWhat is the meaning of Certificates of Incorporation?
\nAnswer:
\n(a) A company becomes a legal entity with perpetual succession on the date printed on the Certificate of Incorporation. After the conclusiveness of the certificate of incorporation, the company becomes entitled to enter into valid contracts.<\/p>\n
\nDiscuss the stages of the formation of a company.
\nAnswer:
\nPromotion Stage: Promotion of a business simply refers to all those activities that are required to be undertaken to establish a new business unit for manufacturing or distribution of any product or provide any service to the people. It starts with conceiving an idea of business or discovers an opportunity for doing a business, assess its feasibility and then take the necessary steps to launch the business unit. The whole process is called business \u2018promotion\u2019 and the person who does it is called the \u2018promoter\u2019.<\/p>\n<\/p>\n
\n(a) Before the incorporation.
\n(b) After incorporation but before capital subscription.
\n(c) After incorporation but before the commencement of business.
\n(d) After commencement of business.<\/p>\n
\n(a) Binding on the Company.
\n(b) Binding on the Company, if ratified after incorporation.
\n(c) Binding on the after incorporation Company.
\n(d) Not binding on the Company.<\/p>\n1st PUC Business Studies Question Bank with Answers<\/a><\/h4>\n","protected":false},"excerpt":{"rendered":"