Business Organizations and Corporate Governance

Directors are those, who are elected by members of the company to manage the assets and liabilities of the company.

In a co-operative society, member can vote not on the basis of number of shares he/she owns, rather he/she can contribute only one vote on his/her behalf.

All the companies are required to register with the Registrar of Companies (RoC) as per Companies Act.

An individual cannot become a corporate agent.  The corporate agent could be: (a) A firm (b) A company formed under Companies‟ Act, 1956 (c) A Banking Company (d) A Regional Rural Bank (e) A Co-op. Society/Co-op. Bank (f) A Panchayat/Local Authority 

Both the statements are true.  Code of conduct regulations apply to micro-insurance agents. Every micro insurance agent and specified person employed by him shall abide by Code of conduct as laid down in Regulation 8 of the Insurance Regulatory and Development Authority.

Advertisement regulations also apply to micro-insurance agents. Any violation by a micro-insurance agent of the code of conduct and/or advertisement or disclosure norms shall lead to termination of his appointment.

A company (corporation) is the only form of business organization that offers limited liability to its owners/shareholders. Limited liability means that shareholders' personal assets are protected - they can only lose the amount they invested in the company, not their personal property. In sole proprietorships and partnerships, owners have unlimited personal liability for business debts.

Limited liability means shareholders are only responsible for the company's debts up to the unpaid value of their shares. Their personal assets beyond this investment are protected. This is a key feature of corporations that encourages investment.

Statement 1 is incorrect - the Court of Directors of the East India Company continued to be elected every year even after various Charter Acts. The three-year election cycle was not introduced. Statement 2 is correct - the Charter Act of 1833 fixed the number of Directors at 24, with one-fourth (6 directors) retiring every three years by rotation. This reduced the number from the previous 24 directors with annual elections. Statement 3 appears to be an incomplete or incorrectly worded statement about judiciary reforms.

 Corporations created under the Special legislations of Parliament or State Legislatures are called statutory companies. Life Insurance Corporation of India is an example of a Statutory Company as it was created under a special legislation of Parliament. The act is Life Insurance Corporation of India, 1956.

 It is not necessary to put common seal on memorandum of association. It is like  constitution of company with name clause, objects clause etc..

 Statement in lieu of prospectus  for invitation of share capital from the private sources is not required to be submitted for registration. Statement in lieu of prospectus is issued only after registration of the company.

 A prospectus is required to be issued when a public company intends to raise or invites subscription to its share capital from public. 

 This privelege is not available to a private company. Whether the company is private or public, it must appoint directors. 

 When a private  company takes its members beyond 50, it is conversion by default. According to Sec3(1)(iii) if a private company takes its members to more than 50, it automatically becomes a public company and it has to fulfill the obligations of a public company.

 Issuing of prospectus is not a stage of formation of a company. A company issues prospectus only after it is formed. Secondly only the public company issues prospectus to raise its capital from the public. Private company does not issue prospectus.