Balbharti Maharashtra State Board Class 11 Secretarial Practice Important Questions Chapter 2 Joint Stock Company Important Questions and Answers.
Maharashtra State Board 11th Secretarial Practice Important Questions Chapter 2 Joint Stock Company
1A. Select the correct answer from the options given below and rewrite the statements.
Question 1.
A joint stock company has ___________ life.
(a) short
(b) limited
(c) continuous
Answer:
(c) continuous
Question 2.
A Joint Stock Company has independent ___________
(a) survival
(b) legal status
(c) capital
Answer:
(b) legal status
Question 3.
Shares of company are ___________
(a) transferable
(b) non-transferable
(c) none of these
Answer:
(a) transferable
Question 4.
In a small company, paid-up share capital does not exceed ₹ ___________ or such higher amount as may be prescribed.
(a) ₹ 100 lakh
(b) ₹ 20 lakh
(c) ₹ 50 lakh
Answer:
(c) ₹ 50 lakh
Question 5.
In general business partnership firm maximum ___________ partners are allowed.
(a) 2
(b) 20
(c) 50
Answer:
(c) 50
Question 6.
A Joint Stock company is ___________ person.
(a) real
(b) an artificial
(c) a natural
Answer:
(b) an artificial
Question 7.
Registration is ___________ for every company.
(a) voluntary
(b) compulsory
(c) optional
Answer:
(b) compulsory
1B. Match the pairs.
Question 1.
| Group ‘A’ | Group ‘B’ |
| (a) Sole Trading Concern | (1) Hindu Succession Act, 1956 |
| (b) Joint Hindu Family Business | (2) Unlimited liability, joint, and several |
| (c) Partnership Firm | (3) ‘One Many Army’ |
| (d) Reserve Bank of India | (4) Limited liability |
| (e) Foreign Company | (5) ‘One Man Business’ |
| (6) Statutory Company | |
| (7) Hindu Succession Act, 1932 | |
| (8) Public company | |
| (9) Company incorporated outside India | |
| (10) Company incorporated within India |
Answer:
| Group ‘A’ | Group ‘B’ |
| (a) Sole Trading Concern | (5) ‘One Man Business’ |
| (b) Joint Hindu Family Business | (7) Hindu Succession Act, 1932 |
| (c) Partnership Firm | (2) Unlimited liability, joint, and several |
| (d) Reserve Bank of India | (6) Statutory Company |
| (e) Foreign Company | (9) Company incorporated outside India |
1C. Write a word or a term or a phrase that can substitute each of the following statements.
Question 1.
The place for dealing with shares of the company.
Answer:
Share market/Stock exchange
Question 2.
A company has continuous life.
Answer:
Perpetual succession
Question 3.
The form of commercial organization suitable to carry large scale business operations.
Answer:
Joint Stock company
Question 4.
A company opposite to a holding company.
Answer:
Subsidiary company
Question 5.
A company incorporated outside India.
Answer:
Foreign company
Question 6.
A company that is not a private company.
Answer:
Public Company
Question 7.
A company having no limit on the liability of its member.
Answer:
Unlimited Liability company
1D. State whether the following statements are True or False.
Question 1.
A Joint Stock company is an artificial person created by law.
Answer:
True
Question 2.
A joint-stock company is a superior form of business organization.
Answer:
True
Question 3.
The Joint Stock company collects huge capital from the public.
Answer:
True
Question 4.
Part of the profit of the company distributed among the shareholders is known as Dividends.
Answer:
True
Question 5.
There is no Government control and supervision over the working of Joint Stock companies.
Answer:
False
Question 6.
In a private company maximum number of membership is restricted to up to 50.
Answer:
False
1E. Complete the sentences.
Question 1.
A business that is owned and managed by one person is called as ___________
Answer:
Sole Trading Concern
Question 2.
A company incorporated outside India, but having a place of business in India is called ___________
Answer:
Foreign company
Question 3.
An organization in which management is based on democratic nature and ‘One member One vote’ is called as ___________
Answer:
Co-operative society
Question 4.
A feature of Joint Stock company, by which member can sell shares as and when he desires, called as ___________
Answer:
transferability of shares
Question 5.
A business organization owned and manages by family members is called ___________
Answer:
Joint Hindu Family Business
Question 6.
A business organization owned and manages by two or more person collectivity is called as ___________
Answer:
Partnership firm
Question 7.
An incorporated association which is an artificial person created by law having perpetual succession is called ___________
Answer:
Joint Stock Company
Question 8.
A voluntary association of individual formed for providing service to member is ___________
Answer:
Co-operative Society
Question 9.
The liability of ‘Karta’ in JHF business is ___________
Answer:
Unlimited
Question 10.
Life Insurance Corporation of India is an example of ___________
Answer:
Statutory Company
Question 11.
Companies which are incorporated under the Companies Act, 2013 are ___________
Answer:
Registered Company
1F. Select the correct option from the bracket.
Question 1.
| Group ‘A’ | Group ‘B’ |
| (1) Holding Company | ……………………. |
| (2) Bharat Heavy Electrical Limited | …………………… |
| (3) ………………… | Signature of a company |
| (4) ……………….. | Long and stable life |
| (5) ……………….. | Combination of Partnership and Joint Stock Company. |
(Common seal, Government company, more than 50% share capital of another company, Perpetual succession, Limited Liability Partnership (LLP))
Answer:
| Group ‘A’ | Group ‘B’ |
| (1) Holding Company | more than 50% share capital of another company |
| (2) Bharat Heavy Electrical Limited | Government company |
| (3) Common seal | Signature of a company |
| (4) Perpetual succession | Long and stable life |
| (5) Limited Liability Partnership (LLP) | Combination of Partnership and Joint Stock Company. |
1G. Answer in one sentence.
Question 1.
What is a Limited Liability Partnership (LLP)?
Answer:
LLP means where partners have limited liability and the personal assets of partners are not attached.
Question 2.
What is Sole Trading’s concern?
Answer:
It is a form of business organization that is owned, managed, and controlled by one person. It is also called ‘One Man Business’ or ‘One Man Show’.
Question 3.
Who controls the Joint Hindu Family business?
Answer:
‘Karta’ the head of the family controls the business of the Joint Hindu Family.
Question 4.
Which Act controls Joint Hindu Family business?
Answer:
Joint Hindu Family business is governed by Hindu Succession Act, 1956.
Question 5.
What is a Partnership firm?
Answer:
A business organization that is owned, managed, and controlled by 2 or more persons is called a Partnership firm.
Question 6.
What is a Co-operative Society?
Answer:
A cooperative society is a voluntary association of persons formed to achieve certain economic objectives and is governed under Maharashtra State Co-operative Societies Act, 1960. The nature of such a society is service-oriented.
Question 7.
What are the Articles of Association?
Answer:
Articles of Association is a document that describes the internal rules and regulations to manage the company.
Question 8.
What is a Joint-Stock company?
Answer:
A Joint Stock company is an incorporated association, which is an artificial person created by law, having a separate name, a separate legal entity, and a perpetual succession.
Question 9.
What is SEBI?
Answer:
Securities and Exchange Board of India (SEBI) is a body that is established to protect the interest of investors in securities and regulate the security market.
Question 10.
What is an Unlimited Liability company?
Answer:
A company not having any limit on the liability of its members is called an Unlimited Liability company It can be either a private company or a public company or a one-person company.
Question 11.
What is a Private company?
Answer:
A private company is a company that by its articles restricts the right to transfer its share, limits the maximum number of members to 50, and prohibits the issue of prospectus.
1H. Correct the underlined word and rewrite the following sentences.
Question 1.
The liability of shareholders of the company is unlimited.
Answer:
The liability of shareholders of the company is limited.
Question 2.
The member of the Joint Hindu family business is called as partners.
Answer:
The member of the Joint Hindu family business is called as co-parceners.
Question 3.
A Joint Stock Company is a natural person created by law.
Answer:
A Joint Stock Company is an artificial person created by law.
Question 4.
A partnership firm is governed by the Co-operative Societies Act, 1960.
Answer:
Co-operative Society is governed by the Co-operative Societies Act, 1960.
Question 5.
Partnership firm enjoys separate legal entity.
Answer:
The joint Stock company enjoys a separate legal entity.
Question 6.
A dormant company is opposite to a Holding company.
Answer:
A subsidiary company is opposite to a Holding company.
2. Explain the following terms/concepts.
Question 1.
Small company
Answer:
- The amount of paid-up capital is not more than ₹ 50 lakh or such a higher amount as may be prescribed.
- The turnover of its last Profit and Loss account does not exceed 2 crores or such a higher amount as may be prescribed.
- A small company means, company other than a public company.
- A small company is formed as per section 2(85).
Question 2.
Public company
Answer:
- A minimum of 7 members is needed for incorporation and no maximum limit.
- The shares of a public company are easily transferable.
- The minimum paid-up capital is prescribed by the Articles.
- It can invite and accept deposits from the public.
- A company, which is not a private company is called a Public Company.
Question 3.
Statutory company
Answer:
- These companies are incorporated by Special Act.
- Such Special Act is passed in Central or State legislative.
- E.g. Reserve Bank of India, SBI, Unit Trust of India. LIC, etc.
Question 4.
Company Limited by shares
Answer:
- Such companies have share capital.
- The liability of every member is limited to the unpaid amount of face value of shares.
- At the time of winding up of the company, the remaining unpaid amount can be called upon by a member.
- Public and Private companies both may be companies limited by shares.
Question 5.
Unlimited Liability company
Answer:
- The liability of members of such a company is unlimited.
- The members are liable to pay the debts of the company.
- Private property may be used to pay the companies debts.
- Private company Public companies and even One Person, a private company may be formed as unlimited Liability company.
Question 6.
Subsidiary company
Answer:
- Such companies are controlled by holding companies.
- Holding company purchases more than half of the total share capital of the Subsidiary company.
- Holding Company has the power to appoint or remove all or a majority of its directors.
- A subsidiary company is just the opposite of a Holding company.
Question 7.
Evolution of Joint Stock company
Answer:
- In 1760, the industrial revolution took place. Before that production was dependent on manpower.
- Sole Trading concern, Joint Hindu Family Business, and Partnership firm became inadequate to face a new era of production.
- LocaPSmall markets turned into regional, national, and international markets.
- This led to the evolution of the Joint Stock company.
3. Study the following case/situation and express your opinion.
1. Mr. Vishal and Mr. Rahul came together and formed a business under the agreement. They contributed capital by carrying unlimited liability.
Question (a).
What is the form of business in the above case?
Answer:
This is a partnership firm.
Question (b).
Explain the type of agreement and relation between Mr. Vishal and Mr. Rahul.
Answer:
Mr. Vishal and Mr. Rahul both are partners in this partnership firm.
Question (c).
State the liability of partners.
Answer:
The liability of partners is unlimited, joint, and several.
4. Distinguish between the following.
Question 1.
Joint Hindu Family Business and Joint Stock Company.
Answer:
| Basis | Joint Hindu Family Business (JHFB) | Joint Stock Company |
| 1. Meaning | It is a business organization owned and managed by members of the Joint Hindu Family. | It is an association of persons formed under the Companies Act, 2013 to run a business. |
| 2. Number of members | There is no limit on the minimum and maximum number of members. | Private Company minimum 2 members and maximum 200 members. Public Company minimum 7 members and maximum unlimited. |
| 3. Registration | Registration is not necessary. | Registration is compulsory under the Indian Companies Act, 2013. |
| 4. Liability | Karta has unlimited liability while Co-parceners have limited liability. | The liability of all members is limited. |
| 5. Stability | It has no stability. Death or insolvency of members may affect stability. | It has a stable business. Death or insolvency of a member will not affect the stability. |
| 6. Capital | Comparatively, it requires limited capital. | It requires a huge amount of capital. |
| 7. Secrecy | It maintains maximum secrecy. | It maintains less business secrecy. |
| 8. Management | Karta is responsible for the management of the business. | The Board of Directors is responsible for the management of the Joint Stock company. |
| 9. Government Control | There is less government control. | There is more government control on working of the Joint Stock company. |
5. Answer in brief.
Question 1.
How is a Joint Stock Company is different from Joint Hindu Family Business?
Answer:
Joint Stock Company:
- It is an association of persons formed under the Companies Act, 2013 to run a business.
- Private Company minimum 2 members and maximum 200 members.
- Public Company minimum 7 members and maximum unlimited.
- Registration is compulsory under the Indian Companies Act, 2013.
- The liability of all members is limited.
- It has a stable business. Death or insolvency of a member will not affect the stability.
- It requires a huge amount of capital.
- It maintains less business secrecy.
- The Board of Directors is responsible for the management of Joint Stock company.
- There is more government control on working of the Joint Stock company.
Joint Hindu Family Business (JHFB):
- It is a business organization owned and managed by members of the Joint Hindu Family.
- There is no limit on the minimum and maximum number of members.
- Registration is not necessary.
- Karta has unlimited liability while Co-parceners have limited liability.
- It has no stability. Death or insolvency of members may affect stability.
- Comparatively, it requires limited capital.
- It maintains maximum secrecy.
- Karta is responsible for the management of the business.
- There is less government control.
Question 2.
What are the other types of companies?
Answer:
Other Types of Companies are as follows:
- Government Company: A government company means a company in which more than 51% of paid-up capital is held by
- Central Government or
- one or more State Governments or
- partly by Central and partly by State Government or
- Subsidiary Company of Government Company. It may be a private or a public company.
- Foreign Company: It means a company that is incorporated outside of India, but having business in India.
- Dormant company: A company that is registered for a future project or has not made any significant accounting transactions in the last two years or has not filed financial statements or annual returns in the last two years is called a Dormant company.
- Listed Company: A company that has listed any of its securities on any recognized stock exchange is called a Listed Company. Such a company has to follow SEBI’s guidelines and the provisions of the Companies Act, 2013.
6. Justify the following statements.
Question 1.
A Joint Stock company is a voluntary association of individuals.
Answer:
- A company is an association or group of persons.
- A large number of people invest in the company.
- So, there are no restrictions for any person irrespective of caste, creed, sex, etc. The membership is open to all.
- A person at his own wish can become a member of the company.
- A shareholder/member can leave his membership by transferring shares.
- The company neither forces anyone to become a member nor to give away his membership.
- So, a Joint Stock company is a voluntary association of individuals.
Question 2.
A Joint Stock Company is a superior form of business organization.
Answer:
- Commercial organizations like Sole Trading Concern, Partnership firms, Joint Hindu Family are not able to meet all the challenges and various increasing needs of the market.
- The Joint Stock company, therefore, acquires a higher position, as it can fulfill the challenges and increasing needs of the markets.
- The Joint Stock company operates not only at the national level but also at the international level.
- It is managed by specialized or professional persons which bring higher returns to the company.
- This leads to the growth and long existence of the company.
- As the Joint Stock company conducts its activities on a large scale, it provides employment to a large number of members.
- Due to all the above reasons, Joint Stock Company is superior to other forms of business organization.
Question 3.
A Joint Stock Company is not a natural person.
Answer:
- A Joint Stock Company is an artificial person, created by law.
- It has no physical existence, but it has legal existence.
- It is not created by natural birth but can act as a natural person.
- It can enter into a contract in its own name.
- It can purchase and sell property, appoint persons as employees, etc.
- It can open a bank account in its own name and can also raise loans.
- It can file a suit against third parties and can also be sued in a court of law.
- All the above acts are done in the name of the company and the members are not responsible for any of this.
- Thus, a Joint Stock Company is not a natural person.
Question 4.
A Joint Stock company has a long and stable life.
Answer:
- Being an artificial person, the company cannot die by natural death.
- New members join, old members, go, but the company carries its business forever.
- The company is not affected due to the death, insolvency of its members or directors.
- A company has a separate legal status. So it has continuous life.
- As long as a company has sufficient capital and efficient management, it can continue its business for years together.