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Questions and Answers
What is the structure called when there is a separation of ownership and management?
What type of liability does the karta in a Joint Hindu family business have?
In a cooperative society, what principle is followed regarding voting rights?
Who elects the board of directors in a joint stock company?
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Which of the following statements is true regarding profit sharing?
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What is the role of every partner in a partnership?
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What is the minimum number of adult members required to form a cooperative society?
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Which authority is responsible for issuing the Certificate of Registration to a partnership firm?
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What is the maximum number of members allowed in a private company?
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In which form of business is it possible to maintain 100% secrecy and confidentiality?
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Which of the following is considered a merit of Sole Proprietorship?
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Under which Act may a partnership firm be registered in India?
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Which type of company has no restrictions on the transfer of shares?
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Which partner does not take part in the day-to-day activities of the business?
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What is the term for a partner who allows the use of his name and goodwill for the benefit of the firm?
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Under what condition are Preliminary Contracts binding on the Company?
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With what consent can a minor be admitted to the benefits of an existing partnership?
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In the event of losses or company debt failures, how much is Akash liable to pay if he holds 200 shares at $10 each?
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Which clause in the Memorandum of Association defines the purpose for which the company is formed?
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Which document is described as the Charter of the Company?
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Qualification shares are subscribed by whom?
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Study Notes
Business Organization Structures and Legal Aspects
- Every partner acts as both an agent and a principal of the firm.
- A cooperative society requires a minimum of 10 adult members to form.
- The Certificate of Registration for a partnership firm is issued by the Registrar of Firms.
- A private company has a maximum membership limit of 200 members.
- Sole Proprietorship offers 100% secrecy and confidentiality compared to other business forms.
Advantages of Sole Proprietorship and Partnership
- Key merits of Sole Proprietorship include quick decision-making, direct incentives, and ease of formation and closure.
- A partnership firm can be registered under the Indian Partnership Act of 1932.
Company Types and Share Transferability
- In a public company, there are no restrictions on the transfer of shares.
- In the absence of Articles of Association, Table A is adopted as the default governing document for the company.
Types of Partners and Their Roles
- A sleeping partner does not participate in the day-to-day activities of the business.
- A nominal partner allows the use of their name and goodwill but does not actively participate in management.
Corporate Governance and Obligations
- Preliminary contracts are not binding on the company unless ratified after incorporation.
- A minor can be admitted to the benefits of an existing partnership firm only with the consent of all existing partners.
Shareholder Responsibilities
- In case of company losses, Akash, holding 200 shares at ₹10 each, may face a liability of ₹800, calculated based on unpaid debt obligations.
Company Documents and Governance
- The object clause in the Memorandum of Association states the purpose of the company.
- The Memorandum of Association is often referred to as the Charter of the Company.
- Qualification shares are required to be subscribed by company directors.
Ownership and Management Structures
- A company structure distinctly separates ownership and management roles.
- The karta in a Joint Hindu family business bears unlimited liability for debts.
- In a cooperative society, the principle of "one man, one vote" is applied, ensuring each member has equal voting rights.
Profit Distribution in Different Organizations
- The statement "Profits do not have to be shared" refers specifically to a Sole Proprietorship.
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