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O    O     

O Investing in Stock Market
O     O Hospital
   O Educational Institutions
O Daily Trading in Stock Market
O      O Charity Institutions
 O Co-operative Society
O Religious Institutions
O Cogeneration of Power in Sugar
O Advertisement
O Working in a Company
O Working for a Company

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 "" Yes Yes Yes Yes —o

#   —o Yes Yes Yes —o

  —o Yes Yes Yes —o

$! Yes Yes Yes Yes Yes

—o Yes Yes Yes —o

    Yes Yes —o Yes Yes

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Place -
Time - Warehousing
 !( Risk - Insurance
%  (
Finance - Bank
 Possession - Trade

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%oordination of activities of
number of people for the a    
achievement of common a Clubs
purpose / Objective a Churches / Temples
a Hospitals
through a division of labour a Family
a Educational Institutions
and function and through a a Charity Institutions
hierarch of authority and a Co-operative Society
a Political Parties
responsibility a Government agencies
  a Business Concerns
a Community Groups
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# !(w  !
(  )  !

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    ! !

    Yes Yes Yes Yes Yes Yes
#   Yes Yes Yes Yes Yes Yes

  yes Yes Yes Yes Yes yes

, ! Yes —o —o —o Yes Yes

% ! Yes Yes Yes Yes Yes Yes

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ÿ —ature of Business
  )  !
ÿ Motive
ÿ Risk
ÿ Capital Requirement
ÿ Scale of operation
ÿ Legal Requirement
ÿ Government Control
ÿ Tax Considerations

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m Professional jobs like
accounting, legal and
ÿ Except Bank & health
ÿ High Risk & High profit 2 Small retail stores
ÿ —o Registration 3 To satisfy purely local
ÿ —ot legal entity needs
ÿ Own Capital 4 To satisfy the tastes of
ÿ Own Labour customers (Beauty
parlours, saloons
 Business involving
frequent changes ± share

m   m mm
Merits: Demerits:
m Limited capital
m Easy formation
2 Limited skill
2 Simple and
flexible 3 nlimited liability
3 Strong motivation 4 ncertain future
4 Personal contact  Limited scope ±
Absence of economies
 —o dispute
of large scale
6 Self employment
6 —o scope for much of
7 Less overheads diversification ± —o
place of economies of
8 uick decision
making m   m m
#  *
%   )!
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      . &7/
m. Arises from Contract Cox V Hickman
2. Agree to share Profit m. Terms of agreement
3. Agent-Principal relation 2. Conduct of the
- Max. —o. of Partners not mentioned parties
- Companies Act :Bank ± m, others- 3. Mode of doing
2 business
- Sharing of loss not mentioned 4. Who controls the
-Each partner has to contribute / property
Knowledge . Mode of keeping
-Firm is dissolved on death of a accounts
partner 6. Manner of
-General partner ± nlimited Liability distribution of
-Limited Partner ± Limited Liability profits
-—ot a Legal Entity 7. How loses are
ÿ Called Firm
m   m m
#  *
ÿ     $ 
3 Agreement can be verbal ,written or may be inferred
from the conduct of the parties
2. Legally Deed or Written agreement is not required
3. Partnership Deed - Written agreement duly Stamped and
%  $ *
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% ) %   )! 
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a % 9 
a —o suit can be brought by
#  * partner against each other
or against third party
  )   a The partner suing must
    $  appear in the register of
    w &3456 firm maintained at
  ! Registrar of firms
O Equal share in Profit & Loss a Can not sue third party to
O Each partner can take part in recover claim more than
management of business Rs.m
O —o partner shall be eligible for a Third part can sue any
remuneration partner and firm
O —o new partner can be
introduced or existing to be
expelled without majority
O All members can inspect , take
copy of accounts
O The firm must indemnify the
partner who incurred liability

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#  *

   , )! !     


O —ame of the firm & —ature of Business

O $     + 
O $   

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6 Right to act as an
m Right to take part
agent of the firm
in business
7 Right to prevent the
2 Right to be
introduction of a new
3 Right to have
8 Right to retire
access to
accounts 9 Right to continue in
the business.
4 Right to share
 Right to interest
on capital
m   m m
Merits: Demerits:
m nity among partners
m Easy formation
in essential
2 More capital and
2 —ot adequate capital
efficiency. 3 nlimited liability.
3 Division of labour 4 Lacks continuity of
4 Discussion of
business  Does not enjoy public
problems. confidence
6 —o strict
control. m   m m
 )  !*

Accounting, medical and legal professions


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 , !:0 #, !
O  " #- O $!)#-
O Except Bengal , Assam O Bengal , Assam
O It consists of all males lineally O Son does not acquire
descended from common ancestral property by birth
ancestor including minor, male , O However acquire the right on
wife & nmarried daughters & death of Father
daughter-in-laws. All of them O Father has absolute right to
are  )  of HF. dispose the property
O All male members acquire according to his desire
ownership to property by birth-
%&   :%&  O -------------------------
O Three generations next to the -----
holder in nbroken male O 08"8  
descendent constitute a 
   ! #-
O Senior member is O ,4 4 6;;<=
å :  $  
)  %    )!
) = # 
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O    % 
a —ot terminated on death or
O Ownership share fluctuates
insolvency of coparcener
with the birth and the
a  "*
death of its coparseners.
a Karta has unlimited liability
O -     *
a Karta has personal liability
O —o separate legal entity
a Others ± limited liability
O Registration not required
a   *
O %   *
a Equal share
O Supplied by HF /
a Share of profit fluctuates ±
Inherited property
increase by death and
O    *
decrease by birth
O , 
a Surplus ± under the
O  )  !*
custody of Karta !
 , !:0 #,
O Continue as long as HF
does not break m   m m
m Greater stability
2 —o restriction on the number of co ±owners
3 Karta can take quick decisions
4 Scope for division of labour
 Limited liability for co-owners
6 Family training
7 Flexibility
8 Protection of old, sick and disabled members.


 , !
m   m 
m Limited financial resources.
2 Limited managerial ability only karta.
3 —o innovative spirit.
4 Frequent conflicts.


 , !
m   m 
o Money lending business
o Retail trade
o Jewellery


 , !
m   m 
0 %å%w a —eed not possess fixed
capital divided into number
of units
Highlights a A share holder is not
entitled to actively take
  !     part in Management
 )  a Management is vested with
a team
O It is an artificial person created
by law. a A share holder can work as
an employee
O Perpetual succession
(continuous existence a Shares of Public limited
companies are transferable
O Limited liability.
a Required to comply with
O Transferability of shares. various statutory
O Separation of ownership from obligations like Filing of
management. balance sheet, Maintaining
O Power of the company are accounts ,audit by CA etc.
regulated by Memorandum of
O The rights and duties of
Directors are regulated by
Articles of Association
m   m 
 -  a ) - 
a Min. 2 to Max. Members a Min. 7 to Max. limited by no. of
a Min 2 Directors shares
a —ame Suffix ± Private a Min 3 Directors
Limited a —ame Suffix - Limited
a On incorporation can a On incorporation should apply
commence business for CCB
a —eed not issue Prospectus ± a Shares to be issued to public
Private placement a Shares can be transferred
a Shares cannot be issued to a Meeting compulsory
public a Remuneration mm of net profit
a Shares cannot be a Mini. 3 persons for meeting
transferred a Index of members to be
a Statutory meeting need not maintained.
be held   
a Remuneration not limited
a Proxy can be appointed for a
Board meeting minimum 2 a Directors should retire by
persons rotation
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      % ! )!%
.   8   8  = 
 - 8- 8
>  /


8      /

  w  w  

.          /

%      by ROC

.          /

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) -  *5  8?    

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  %      by ROC

 - *%  )    !

) -  *3/   

ROC will issue        )  



)   = w   & ) %%

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3/      *
O It describes the proposed company and defines Objective
and powers of the company proposed to be incorporated.
O It has to be registered with Registrar of Companies. It
a —ame clause
b Situation
c Objects
d Liability
e Capital
- Company cannot exceed the powers mentioned and
cannot alter the provisions except —ame , Jurisdiction
, Object, Capital
m   m 
6/ w     *
Subordinate to the Memorandum of
a Share capital
b Rights of share holders
c Transfer of shares
d Shareholders meetings
e Voting system


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3    :
It is a document issued to the public for raising capital by
the issue of Shares or for raising loan by the issue of Debenture..
³ Any notice , circular, advertisement or other documents inviting
offer from public for the Subscription of share or purchase of
debenture of a body corporate ³ ( sec-2(36
-Objective ± To draw attention , interest
- Should make full disclosure, Printed , signed
-- Directors will be held responsible for misrepresentations
--Having furnished prospectous to ROC to be made public in the
-Contents ± Objective , Signatories to the memorandum, no. of
shares subscribed
-Mini.Subscription, Premium on share, nderwriters, particulars of
directors, voting & divident rights, particulars of auditors,balanse
sheet, P&L accounts m   m m
w     *
Directors can allot shares under the following conditions:
m. A prospectus or a statement in lieu is submitted to ROC
2. At least   of the share value is received and deposited in a
scheduled bank and
3. Minimum no. of shares are subscribed.

) %   %    *

When minimum subscription is raised, either the Director or
Secretary has to declare to ROC that :
m. Shares have been allotted not less than the ³ Minimum
Subscription ³
2. The prospectus or statement in lieu thereof had been filed
3. Directors have duly paid to their shares
m   m 
On verification CCB is issued..

Merits of Company:

m Limited liability
2 Business continues.
3 Transfer of shares
4 Huge capital
 Legal protection and regulation
6 Professional management.
7 More employment and business.
m   m 
m Company formation is difficult.
2 It is expensive
3 Many legal formalities
4 Lacks unity of management ±
Management is in the hands of
a Board of Directors

m   m 
 uick changes cannot be made
6 Lacks initiative and enterprise.
7 —o secrecy
8 May promote frauds.


m   m 

A voluntary association on the basis of equality for the

promotion of economic interests of members.

m   m 
Features Equal voting rights
Voluntary association —on profit motive
Open membership & Subscribe Registration is not compulsory
to objective Registration under Co-
Membership unlimited operative Societies Act -
Capital equally divided among
members Legal entity
Managing committee elected
If liability is limited ³ Limited ³
should be included and max. Policy decided in GB to be
value of share Rs.2/- implemented by Committee
Exception from Income tax,
2 of profit to reserve fund stamp, Registration fees
m to Charitable purposes It has priority over other
nlimited ± Profit sharing Govt. creditors in realising dues
% from debtors
ww Strict government control
Shares cannot be transferred to
3rd party m   m 
! *   %&  

%    *
  * By Cottage & small industries
To grant Credit or Loan for to sell
agriculture, Artisans     %&  

  * To meet economic and social
To have a common selling needs of villagers.
organisation to sell
their products
%   %&  

To buy goods from traders &
wholers at cheap price
m   m 
, *   %&  

m Members submit joint   *
application to the By Cottage & small industries
Registrar of Co- to sell
operatives with bye-
laws.     %&  

8 members for Housing
Societies To meet economic and social
needs of villagers.
—o registration, Stamp duty
Can be Limited or nlimited
Annual accounts are audited
%& by government auditors
free of cost.
m   m 
m Formation is simple
2 Continuity of existence.
3 Pool of resources
4 Suitable to the weaker sections of
 —ot profit motive but service
% motive
6 Democratic. m   m 
m —eed of co-operative spirit.
2 Loyalty of members.
3 —o scope for large scale operations
because of limited resources.
4 Insufficient motivation to members
because of the low rate of return to the
members ± staff salary is low.
 Lack of public confidence because of the
failure of many co-operative societies.
% 6 Excessive state interference.
m   m m
0 %

Joint sector is a form of partnership between the

private sector and the government.

m   m 
,  ) ! *
m Existing private enterprises can be
brought under joint sector
2 Existing public sector companies can be
transformed into joint sector.
3 —ew companies can be set up with equity
participation by the government.
4 The state governments can set up new
enterprises with private sector.

m   m 
m Social control over industries
2 Failure of private and public sectors.
3 Acceleration of economic growth.
4 State sponsored industrialization.
 Mobilization of financial resources
6 Mobilization of technical and managerial

m   m 
Examples of joint sector:
Cochin Refineries
Madras Refineries
Madras Fertilizers.
Gujarat state Fertilizer company.

m   m