NAME: IRMA BAIG

COURSE: FINANCIAL ACCOUNTING 2

COURSE INSTRUCTOR: SANAM IQBAL
STUDENT ID: 15614
PROGRAM: BBA 3
 QUESTION NO.1: Give at least two examples of each any public listed company and government
company.

Public Limited Company (PLC)

Definition: A Public Limited Company (PLC) is a separate legal body that
sells its shares to the general public to be exchanged on the stock market. A PLC
needs to present its financial stats and status publicly in order to preserve integrity
in compliance with the laws of corporate law.
EXAMPLES:
 The fashion retailer Burberry is Burberry Group PLC. Automaker
Rolls-Royce is Rolls-Royce Holdings PLC.

 The biggest PLCs by market capitalization in the Footsie, as of early

2020, included Royal Dutch Shell, HSBC Holdings, BP,
GlaxoSmithKline, and British American Tobacco. The formal names
of all of these companies include the PLC designation.

GOVERNMENT COMPANY
Definition: If the majority of the paid-up share capital (not less than 51
percent) of any corporation is owned by the central or any state government, it is
considered a government corporation. By executive order, government firms are
formed. Under the Corporations Act, 1956, they are incorporated. As they enjoy
greater versatility, they are safer than departmental organizations.
EXAMPLES:
1. Habib Bank Limited (Completed)

2. United Bank Limited (Completed)

3. Allied Bank Limited (Completed)

4. National Investment Trust Limited

5. Small and Medium Enterprise (SME) Bank

6. First Women Bank Ltd

7. National Bank of Pakistan and so on……

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Question 2:- What are the prerequisites that should be followed for calling different types
of meetings according to the companies’ ordinance 1984?
DEFINITION:
A joint stock company may be defined as an artificial person recognized by law, with a
distinctive name, a common seal, a common capital compromising transferable shares carrying
limited liability and having a perpetual existence

MEMORANDUM OF ASSOCIATION:
Memorandum of Association Under the existing law a limited company can be formed by
preparing certain legally specified documents and filing the same with the registrar of companies
the first essential document to be prepared and filed with the registrar and without which a
company cannot be incorporated is named as Memorandum of Association.
Purpose: The main purpose of memorandum of association is to enable shareholders, creditors
and all those who concerned with the company to know what is permitted range of the enterprise.

Requirement of Memorandum of Association:

1. Memorandum must be printed • It should be divided into paragraphs • Each paragraph
should be consecutively (serially) numbered • It should be signed by the required number
of subscribers (three in case of public company and one in case of private company) •
Subscriber must sign in the presence of at least on witness
2. Signature of each subscriber must be attested by witness • every subscriber must add his
address, description and occupation • Witness should write his address, description and
occupation • Memorandum must be stamped to Stamp Act.

ARTICLE OF ASSOCIATION:

 Articles of association form a document that specifies the regulations for a company's
operations and defines the company's purpose. The document lays out how tasks are to be
accomplished within the organization, including the process for appointing directors and
the handling of financial records. The content and terms of the "articles" may vary by
jurisdiction, but typically include provisions on the company name, its purpose, the share
structure, the company's organization, and provisions concerning shareholder meetings.

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Purpose:
The articles of association set out how the company is run, governed and owned. The articles can
put restrictions on the company’s powers – which may be useful if shareholders want comfort
that the directors will not pursue certain courses of action, at least without shareholder approval.
In addition to the articles, which is a public document, the shareholders may enter into
a shareholders’ agreement to augment the articles in relation to the running, governance and
ownership of the company that they want to keep out of the public domain.
Annual General Meeting (AGM):

 The case of a listed company, the AGM is required to be held in the town in which the registered office of the
company is situated. However, the Commission, for any special reason, may, on the application of such
company, allow the company to hold a particular meeting at any other place. The notice of AGM is required to
be sent to the shareholders at least twenty-one days before the date fixed for the meeting. In the case of a listed
company, such notice, in addition to its being dispatched in the normal course, is also required to be published
at least in one issue each of a daily newspaper in English language and a daily newspaper in Urdu language
having circulation in the Province in which the stock exchange on which the company is listed is situate.

Extra-Ordinary General Meeting (EOGM):

All general meetings of a company, other than the annual general meeting and the statutory meeting are called
extraordinary general meetings.

 The directors may at any time call an extraordinary general meeting of the company to consider any
matter which requires the approval of the company in a general meeting, and shall, on the requisition
of members representing not less than one-tenth of the voting powers on the date of the deposit of the
requisition, forthwith proceed to call an extraordinary general meeting.
 The requisition shall state the objects of the meeting, be signed by the requisitionists and deposited at
the registered office of the company, and may consist of several documents in like form, each signed
by one or more requisitionists.
 If the directors do not proceed within twenty-one days from the date of the requisition being so
deposited to cause a meeting to be called, the requisitionists, or a majority of them in value, may
themselves call the meeting, but in either case any meeting so called shall be held within three months
from the date of the deposit of the requisition.
 Any meeting called under by the requisitionists is called in the same manner, as nearly as possible, as
that in which meetings are to be called by directors.

Question 3: Explain advantages and disadvantages of corporation, and also explain the
Characteristics of corporation.

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ADVANTAGES OF CORPORATION:

 Limited liability:
The shareholders of a corporation are only liable up to the amount of their investments.
The corporate entity shields them from any further liability, so their personal assets are
protected.
 Source of capital:
A publicly-held corporation in particular can raise substantial amounts by selling shares
or issuing bonds.
 Ownership transfers:
It is not especially difficult for a shareholder to sell shares in a corporation, though this
is more difficult when the entity is privately-held.
 Perpetual life:
There is no limit to the life of a corporation, since ownership of it can pass through
many generations of investors.

DISADVANTAGES OF CORPORATION:

 Double taxation:
It will pay taxes on its revenue, based on the form of company, after which owners pay
taxes on any dividends earned, meaning that revenue can be taxed twice.
 Excessive tax filings:
The different forms of income and other taxes that must be collected will include a
significant amount of documentation, depending on the form of company. As noted
earlier, the S company is the exception to this situation.
 Independent management:
If there are multiple buyers with no strong controlling stake, a corporation's management
team will run the organization without any particular control by the founders.

CHARACTERSTICS OF CORPORATION:

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  Capital acquisition. It can be easier for a corporation to acquire debt and equity, since it
is not constrained by the financial resources of a few owners. A corporation can sell
shares to new investors, and larger entities can issue bonds to obtain a significant amount
of debt financing.
 Dividends. A corporation pays its investors by issuing dividends to them. This differs
from the distributions made from a partnership or sole proprietorship to pay their owners.
 Double taxation. A corporation pays income tax on its earnings. If it also pays a
dividend to its investors, the investors must pay income tax on the dividends received.
This constitutes double taxation of the earnings of the corporate entity.
 Life span. A corporation can theoretically operate forever, outlasting its owners.
Conversely, the owners may decide to terminate the corporation at any time.
 Limited liability. Any liabilities incurred by a corporation are not also transferred to its
shareholders. Instead, anyone trying to enforce a liability can only pursue the corporate
entity for satisfaction.
 Ownership. Ownership in a corporation is based on the number of shares owned. Buying
or selling these shares shifts the ownership of a corporation to a different investor. A
public company that has its shares traded on an active stock exchange may have
thousands or millions of owners.
 Professional management. In many cases, the investors who own a company are not
actively engaged in its management. Instead, they hire professional managers to handle
the oversight of the business on their behalf.
 Separate entity. A corporation is considered to be an entirely separate operating and
legal entity. It operates separately from its owners, and has many of the rights and
responsibilities of a person.

Question 4: Salman Ltd. was registered with an authorized capital of Rs. 1000, 000 Divided
into 100, 000 ordinary shares of Rs.10 each. On June 1, 2015 Salman Ltd. issued 20, 000

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ordinary shares @ Rs. 10 par value per share. Out of these 20, 000 shares, 3, 000 shares
were issued to the directors and remaining to the general public. On 15th June (the
subscription date) applications were received for 15, 000 shares. On 30th June, the
company allotted the shares to the public and the remaining shares were taken up by the
underwriters as per agreement.
Requirement: Pass the journal entries in the books of the company.

DATA:

Invited apps: 20, 000

Received apps: 15,000
Under subscription 5000
@ Par value = 10

M/s Salman ltd

General journal entries
For the month of June, 2015

DATE PARTICULARS P DEBIT CREDIT

R
15 Bank (15000 * 10) 1,50,000
JUNE Ord.shares capital 1,50,000

Ord.shares apps (15000 * 10) 1,50,000

Ord. shares capital 1,50,000

Bank ( 5000 * 10) 50,000

Ord.shares capital 50,000

Preliminary expense ( 3000 * 10) 30,000 30,000

Ord. share capital

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