Trust accounts:-

a) In case of public trust, registration certificate of charity commissioner is

necessary and in case of private trust it is optional.
b) If any one trustee dies the provisions of trust deed will operate. If the sole
trustee dies, further operation in the account will be stopped and cheques
already signed by him should be paid.
c) Any trustee can give stop payment instructions including those who is not
authorised to operate the account.
d) Trustee can not delegate his powers unless it is provided in trust deed.
e) Trustee can not borrow unless it is specifically mentioned in the trust
deed.
f) In case of death/insolvency/ insanity of the trustee, the
Cheques issued by him will be paid if otherwise in order.

Partnership firms:-

a) Partnership firms are governed by Indian partnership Act-1932.

b) Minor can be admitted to the benefits of partnership with the consent of all the
partners. He is not personally liable but his share of property is liable.
c) Registration of partnership firms is done with Registrar of firms. Bank’s normally
do not grant any type of credit facility to the non-registrar firms as unregistered
firms can not enforce any suit against the third/ third parties.
d) Number of partners: mini- 02 and maxi- 10 in case of banking business and 20 in
case of other business. Maximum number of partners has been specified in section
11 of companies act.
e) A partnership consisting of 20 partners plus two minors is a legal association.
f) HUF cannot be a partner. However since the company has separate legal entity, it
can become the partner if permitted by Articles of association.
g) Under section 19(1), the acts of a partner to carry on business of the firm in a usual
way, binds the firm and a partner is an agent of the firm for the purpose of business
of the firm. In order to bind the firm by his acts, a partner must sign for and on
behalf of the firm.
h) As per section 18 of Partnership act, every partner is the agent of firm for the
purpose of the business of the firm. Therefore, act of a partner is known as the act
of the firm. This is known as the implied authority of the partner. This rule has
certain exceptions.

Joint stock companies:-

Partnership Pvt Ltd Public Ltd.

Mini.members Two Two Seven
Maxi. Members 10 banking Fifty No limit
20 others
Directors Not applicable Mini. 2 Mini. 3
Maxi. No limit Maxi. No limit
Some important features of a company:-

a) Memorandum of Association: is the constitution of the company and it

establishes the relationship of the company with the world.
b) Articles of Association: are bye- laws and internal rules and regulations of the
company.
c) Certificate of incorporation: issued by the Registrar of Companies, under
section 35 of co’s act-1956. The legal existence of the company begins from the
date of issue of certificate.
d) Certificate of commencement of business: A public limited company having a
share capital and issuing a prospectus can not commence the business until the
registrar issues the certificate of commencement of business.
e) Borrowing powers of the company: The board of directors of private limited
company has unlimited powers to borrow. However the Board of Public limited
company can borrow up to paid up capital plus free reserves of the company. If
they intent to borrow more than that, general body resolution under sec.
293(1)(D) is required to be passed.
f) Death of director: As the company has a separate entity, the death of any
director does not effect the operations of the account. Even if cheque signed by
the authorised director who has died, is presented after death, the banker cannot
return the cheque for that reason.
g) Conversion: A cheque payable to the company should never be deposited in
the personal account of directors, as it would amount to conversion under section
131 of the N.I. Act.
h) Section 125 of Companies Act: Provides that all charges created on a
company’s assets except pledge, lien, and set-off, appropriation, trust
receipt have to be registered with the Registrar of Companies with in 30 days of
creation of the charge. Otherwise, the charge is void.