Tag: joint stock company - formation

Questions Related to joint stock company - formation

A private company does not issue prospectus.
elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. True

  2. False

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Correct Option: A
Explanation:
(i) Prospectus is a document which invites offers from public to purchase shares or debentures of a company. 
(ii) It gives all essential information about every aspect of the company. 
(iii) Prospectus of a company is a written request to the investors to purchase (subscribe) its shares and debentures of a public limited company by shares.
(iv) A copy of prospectus must be filed with the Registrar of Companies. 
(v) Prospectus must be issued to the public within 90 days from the date of filing it with Registrar of Company. 
(vi) The main purposes of a prospectus is to raise the requited capital for business of a compy
(vii) Prospectus is issued by 'Public Limited' company by shares only. 
(viii) 'Private Ltd' company cannot issue prospectus since it cannot invite general public to purchase its shares. 
(ix) In case, no prospectus is issued a statement-in-lieu of prospectus must be filed with Registrar of Companies. 
A private company can adopt Table 'A' in place of its Articles.
elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. True

  2. False

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Correct Option: B
Explanation:
(i) A company is a private company, which by its articles 
    (a) limits the maximum membership to 50, excluding present and past employees. 
    (b) prohibits public (subscription) investment to its shares and debentures. 
    (c) restricts the transfer of its shares. 
(ii) The Articles of Association is a document regulating the right of members of the company among themselves and the manner in which the business of the company shall be conducted
(iii) Table 'A' is a model set of articles given by the Companies Act, 1956 in its schedule I.I. contains in all 99 articles. 
(iv) Normally, all private companies prepare their own articles and file the same with the Registrant 
(v) If a private company has prepared its own articles, there is no need for it to adopt Table 'A'. 
(vi) Generally, all these (99) articles are applicable to a public company. 
(vii) That is why, a public company may adopt Table 'A' fully or partially and in addition ma adopt its own articles. 
(viii) In case, no Articles of Association is filed at the time of incorporation by a public company limited by shares, Table 'A' automatically becomes applicable to such a company. 
(ix) Hence, a private company does not adopt Table `A' as it prepares its own Articles.

Rajeev is a member (a type of owner) of a marine supply business with many shareholders.
Rajeevs business is __________.

elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. a sole proprietorship.

  2. a limited liability partnership.

  3. a limited liability company.

  4. a general partnership.

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Correct Option: C

Minimum no. of directors in case of private company is ________.

elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. 1

  2. 2

  3. 3

  4. 4

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Correct Option: B

Select out the feature which is NOT found in a private limited company?

elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. Raising capital for the business is easier

  2. Shares can be bought and sold on the Stock Exchange

  3. Subscribers of the business have limited liability

  4. The business continues after the death of shareholders

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Correct Option: B

Which of the following statements suits best to private limited company?

elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. It is owned by the government

  2. It is owned by shareholders who can sell their shares in the Stock Exchange

  3. It is formed for the benefit of society at large

  4. Its accounts can be kept private and it receives little coverage in the business

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Correct Option: D

State the following statement is True or False:
A public company can commence (start) its business only after obtaining the trading certificate.

elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. True

  2. False

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Correct Option: A
Explanation:
A public company, has to goes through the capital subscription stage and then receives the certificate of commencement. Only after obtaining the trading certificate, a public company can commence its business.

State the following statement is True or False:
A public company can start business after getting 'Trading Certificate'.

elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. True

  2. False

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Correct Option: A
Explanation:

 A public company can start business after getting "trading certificate". Without trading certificate, all the contracts would be considered void in the eyes of law and operations of business cannot be carried out.

State the following statement is True or False:
Underwriter purchase unsold shares of the company.

elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. True

  2. False

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Correct Option: A
Explanation:

It is true. A company must have an underwriter, who helps the companies in introducing their securities to the market. An underwriter is required to sell securities and if he is not able to sell, then underwriter is liable to purchase the unsold shares of the company.

Legal controls, restrictions are more & strict on public companies ____________.

elements of business joint stock company - formation meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

  1. True

  2. False

  3. Not relevant

  4. Nothing applicable

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Correct Option: A