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Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 4 Forms of Business Organisation – I Textbook Exercise Questions and Answers.

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 4 Forms of Business Organisation – I

1. (A) Select the Correct option and rewrite the sentence

Question 1.
A sole trading concern ensures ……………….. business secrecy.
(a) maximum
(b) minimum
(c) limited
Answer:
(a) maximum

Question 2.
The members of Hindu undivided family business are called ………………..
(a) carpenter
(b) co-parcener
(c) parceners
Answer:
(b) co-parcener

Question 3.
The head of Joint Hindu Family Business is called as ………………..
(a) KARTA
(b) owner
(c) manager
Answer:
(a) KARTA

Question 4.
Registration of partnership firm is ………………. in Maharashtra.
(a) voluntary
(b) compulsory
(c) easy
Answer:
(b) compulsory

Question 5.
The liability of the shareholders in Joint Stock Company is ………………
(a) limited
(b) unlimited
(c) restricted
Answer:
(a) limited

Question 6.
A Joint Stock Company is an artificial person created by ………………….
(a) Law
(b) Articles
(c) Memorandum
Answer:
(a) Law

Question 7.
Registration of a Joint Stock Company is ………………..
(a) compulsory
(b) free
(c) not required
Answer:
(a) compulsory

Question 8.
Liability of member of a Co-operative Society is ………………
(a) limited
(b) restricted
(c) maximum
Answer:
(a) limited

Question 9.
Indian Co-operative Society’s Act was passed in ………………
(a) 1912
(b) 1913
(c) 1911
Answer:
(a) 1912

Question 10.
…………………. acts as a signature of the company.
(a) Common seal
(b) Common sign
(c) Common image
Answer:
(a) Common seal

1. (B) Match the pairs

Answer:

1. (C) Give one word/phrase/term.

Question 1.
An elected body of representatives of co-operative Society for its day to day administrations.
Answer:
Managing Committee

Question 2.
The owner is the sole manager and decision maker of his business.
Answer:
Sole Trader

Question 3.
One man show type of business organisation.
Answer:
Sole trading concern

Question 4.
The members of the Joint Hindu Family firm.
Answer:
Co-parceners

Question 5.
A partner who gives his name to partnership firm.
Answer:
Nominal partner

Question 6.
There is free transferability of shares in this company.
Answer:
Public Company

Question 7.
A partnership agreement in writing.
Answer:
Partnership Deed

Question 8.
The motto of the co-operative society.
Answer:
Service

Question 9.
An organization which is service oriented.
Answer:
Co-operatives Society

1. (D) State True or False

Question 1.
Sole trader is the decision maker of the business.
Answer:
True

Question 2.
Sole trading concern operates in local markets.
Answer:
True

Question 3.
Sole proprietorship is useful for small business.
Answer:
True

Question 4.
The liability of KARTA is unlimited.
Answer:
True

Question 5.
The maximum number of members is unlimited in Joint Hindu Family Firm.
Answer:
True

Question 6.
Joint Stock company can raise huge amount of capital.
Answer:
True

Question 7.
There is a separation of ownership and management in Joint Stock Company.
Answer:
True

Question 8.
Board of Directors manage the business of Joint Stock Company.
Answer:
True

Question 9.
Partnership agreement may be oral or written.
Answer:
True

Question 10.
In partnership firm, the liability of every partner is limited, joint and several.
Answer:
False

Question 11.
The main motto of co-operative society is to render services to its shareholders.
Answer:
False

Question 12.
The membership of a co-operative society is compulsory.
Answer:
False

1. (E) Find the odd one

Question 1.
Sole proprietorship, Joint Hindu Family, Non-Government Organization (NGO), Partnership firm.
Answer:
NGO

Question 2.
Active partner, Shareholder, Nominal partner, Secret partner.
Answer:
Shareholder

1. (F) Complete the sentences

Question 1.
Private sector enterprises are owned and managed by the …………………
Answer:
Private entities

Question 2.
There is only one owner in …………………
Answer:
Sole Trading Concern

Question 3.
Admission of new individual into existing business has given birth to …………………
Answer:
Partnership Firm

Question 4.
A partner who takes active participation in the day to day working of the business is known as …………………
Answer:
active partner

Question 5.
When there is no provision in partnership agreement regarding time period for partnership then it is known as …………………
Answer:
Partnership at will

Question 6.
The property of JHF business is jointly owned by the …………………
Answer:
KARTA

Question 7.
The management of Co-operative society is based on …………………
Answer:
democratic principles

Question 8.
The rule for voting in Co-operative society is …………………
Answer:
one member one vote

Question 9.
The rule for voting in Joint Stock company is …………………
Answer:
one share one vote

Question 10.
The face value of the shares of Co-operative society is very …………………
Answer:
less

Question 11.
Consumer’s co-operatives are formed by the …………………
Answer:
consumers

Question 12.
Registration of Joint Stock Company is compulsory according to the Companies Act …………………
Answer:
2013

1. (G) Complete the following table

Question 1.
(Public company, Private company, Co-operative Society, Partnership Firm, Sole Trading Concern)

Answer:

1. (H) Answer in one sentences

Question 1.
What is Sole Trading Concern?
Answer:
Sole Trading Concern is a type of business which is owned, managed and controlled by one person.

Question 2.
What do you mean by partnership firm?
Answer:
A business owned and managed by two or more persons sharing profits and losses is called a partnership firm.

Question 3.
What is the meaning of Joint Stock Company?
Answer:
Joint Stock Company is an artificial person created by law, having an independent legal status, owned by shareholders and managed by Board of Directors.

Question 4.
What is Joint Hindu Family business?
Answer:
A Joint Hindu Family is a form of business organization which runs from one generation to another according to the Hindu Law.

Question 5.
What do you mean by Co-operative Society?
Answer:
Co-operative Society is a voluntary association of individuals which is formed for providing services to members.

Question 6.
What do you mean by minor partner?
Answer:
A minor partner is a partner who is admitted into the partnership firm for the benefit of the firm with the consent of all partners.

Question 7.
What is Quasi Partner?
Answer:
Quasi partner is a partner of the partnership firm who has retired from the firm but has left his capital behind in the firm.

Question 8.
What do you mean by partner-in-profits only?
Answer:
A partner-in-profits only is a partner who gets into an agreement to share only the profits of the partnership firm and not the losses.

Question 9.
What do you mean by general partnership?
Answer:
General partnership is a form of partnership where, the liability of all the partners is unlimited, joint and several. Every partner has an equal right and it can be formed under the Partnership Act of 1932.

Question 10.
What is the meaning of Private company?
Answer:
A Private Limited company is a company which by its articles restricts the right to transfer share, limits the maximum number of members to 200.

Question 11.
What do you mean by Public company?
Answer:
A public company means a company which is not a private company.

1. (I) Correct the underlined word and rewrite the following sentences.

Question 1.
In Public company, shares are not freely transferable.
Answer:
In Private company, shares are not freely transferable.

Question 2.
In Private company, there are minimum 3 (Three) directors.
Answer:
In Private company, there are minimum 2 (Two) directors.

Question 3.
Registration of Joint Stock company is not compulsory.
Answer:
Registration of Joint Stock company is compulsory.

Question 4.
There is less secrecy in Sole Trading concern.
Answer:
There is maximum secrecy in Sole Trading concern.

Question 5.
In Partnership firm, minimum three members are required.
Answer:
In partnership firm, minimum two members are required.

Question 6.
In Joint Hindu Family business, the senior most member of family is called as Co-parcener.
Answer:
In Joint Hindu Family business, the senior most member of family is called as Karta.

Question 7.
Indian Partnership Act, 1940 is applicable in India.
Answer:
Indian Partnership Act, 1932 is applicable in India.

2. Explain the following terms/concepts

Question 1.
Sole Trading Concern.
Answer:

1. It is a form of business organization which is owned, managed and controlled by one person.
2. It need not be registered.
3. It does not have a legal status i.e. It does not have a stable life.
4. Maximum secrecy can be maintained in Sole Trading concern.

Question 2.
Partnership Firm.
Answer:

1. It is a voluntary association of two or more persons with a common objective.
2. It is formed by an agreement called Partnership deed.
3. It is governed by Indian Partnership Act, 1932.
4. Registration of partnership firm is optional as per Partnership Act, 1932.
5. In Maharashtra, registration of partnership firm is made compulsory.

Question 3.
Joint Hindu Family Firm.
Answer:

1. It is a form of business organization which is carried from one generation to another generation.
2. It comes into existence by operation of Hindu Law.
3. This form of organization is found in India only.
4. The seniormost member of the family is called ‘Karta’ while other members are called ‘Co-parceners’.

Question 4.
Co-operative Society.
Answer:

1. It is a voluntary association of individuals which is formed for providing services to members.
2. Its main motto is ‘service’ rather than ‘profit’.
3. It runs on principle of ‘One member One Vote’.
4. It enjoys an independent legal status, distinct from its members.

Question 5.
Joint Stock Company.
Answer:

1. It is an incorporated association created by law, having an independent legal status, owned by shareholders and managed by Board of Directors.
2. The main motive of Joint Stock company is maximisation of profit.
3. It works as principle of “One share One vote”.
4. It has to follow Indian Companies Act, 2013.

Question 6.
Karta.
Answer:

1. Karta is a seniormost member of the family, who runs the Joint Hindu Family Business.
2. The Karta has unlimited liability in such type of business.
3. Karta has the right to manage the business.
4. Karta need not consult any body about business decisions.

Question 7.
Managing Committee.
Answer:

1. Managing committee is a group of members of a Co-operative society, who looks after the working of Co-operative society.
2. They are elected by the shareholders of Co-operative society.
3. All important decisions are taken by the managing committee.
4. In short, they look after day to day administration of the Society.

Question 8.
Nominal Partner.
Answer:

1. A partner who only lends his name and reputation to the partnership firm is called as nominal partner.
2. He is simply obliging his friends by allowing the firm to use his name as a partner.
3. He may or may not be given any share in the profits of the firm.
4. He does not contribute to the capital of the business.
5. He is liable to the debts of the firm.

3. Study the following case/situation and express your opinion

1. Mr. Raghunath is running business from last 30 years. This business is ancestoral business of Mr. Raghunath. Kiran and Naman, two sons of Mr. Raghunath are helping him along with their wives.

Question 1.
Find out the type of business.
Answer:
Joint Hindu Family Firm.

Question 2.
Who is Raghunath?
Answer:
Raghunath is the Karta.

Question 3.
What Kiran and Naman are called?
Answer:
Kiran and Naman are called as co-parceners.

2. Mr. Sawant a Chartered Accountant by profession and Mrs. Tambe, an Architect by profession running a firm namely ‘ST Firms’ in Nagpur.

Question 1.
Identify the form of business organisation in the above examples.
Question 2.
Is it a registered organisation?
Question 3.
What is the Profession of Mr. Sawant?

4. Distinguish between the following

Question 1.
Private Limited Company and Public Limited Company
Answer:

Question 2.
Sole Trading Concern and Partnership Firm.
Answer:

Question 3.
Partnership Firm and Joint Hindu Family.
Answer:

Question 4.
Co-operative Society and Joint Stock Company.
Answer:

Question 5.
Joint Hindu Family Firm and Joint Stock Company.
Answer:

Question 6.
Co-operative Society and Partnership Firm.
Answer:

5. Answer in brief

Question 1.
State any four features of Sole Trading Concern.
Answer:
(i) Suitable for some Special Business : Sole trading concern is suitable for business where personal attention and individual skill is needed e.g., Beauty parlour, groceries, fashion designing, sweet shops, tailoring, restaurants etc.

(ii) Unlimited Liability : Liability of the sole trader is unlimited. In case business assets are not sufficient to meet business expenses, private property of the sole trader will be used. There is no difference made between private property and business property of sole trader.

(iii) No Sharing of Profits and Risks : A sole trader enjoys all the profits of business. As he is the single owner of business he assumes full responsibility in business. He alone bears all the losses or risks involved in business.

(iv) Business Secrecy : Maximum business secrecy can be maintained in a sole trading concern. A sole trader is responsible only to himself. He need not discuss any matter of business with outsiders. Moreover, there is no legal compulsion for sole trader to publish books of accounts of business.

Question 2.
State any four types of partners.
Answer:
The different types of partners are:
(i) Active or Working Partners : In practice one or two partners take active part in the management. Such partners are called active or working partners. They contribute capital, shares profits or losses, and has unlimited, joint and several liability. They take an active interest in the day to day working of the firm. These partners are also known as ordinary / general / actual partners.

(ii) Dormant or Sleeping Partners : A dormant or sleeping partner is one who contributes capital to the firm. He does not take any active part in the management of the firm. He shares the profits and losses of the firm like any other partner. He voluntarily surrenders the right of management. However, he is liable for the debts of the firm.

(iii) Nominal Partners : A nominal partner is one who does not contribute any capital to the firm. He lends his name to the firm. He is simply obliging his friends by allowing the firm to use his name as a partner. He may or may not be given any share in the profits of the firm. His goodwill is used to attract business. However, he is liable for the debts of the firm.

(iv) Minor as Partner : According to the Indian Contract Act 1872, a person below 18 years is called a minor. But according to the Indian Partnership Act 1932, a minor can be admitted for the benefit of the firm with the consent of all other partners. He has a right to inspect the books of accounts. Minor partner has limited liability and is not liable for losses. He has the option to continue as a full-fledged partner or discontinue as a partner on attaining the age of majority. If he wishes to discontinue, he must give a public notice within 6 months from the age of majority.

Question 3.
Describe any four types of Co-operative Society.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(ii) Credit Co-operative Societies : Members pool their savings together with the aim of obtaining loans from their pooled resources for productive purposes and non-productive purposes. They may be established in rural areas by agriculturist or artisans called as a Rural Credit Society. They may be established by salary earners or industrial areas called as Urban Banks, Salary Earners Society or Workers Society.

(iii) Marketing Co-operatives Societies : These co-operatives find better markets for members produce. They also provide credit and other inputs to increase members production levels. They perform marketing functions such as standardising, grading, branding, packing, advertising etc. The proceeds are then distributed among members depending on the quantities sold.

(iv) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

Question 4.
State any four merits of Joint Hindu Family Firm.
Answer:
Merits of Joint Hindu Family are as follows:
1. Easy Formation : Joint Hindu Family Firm can be easily formed. The formation is simple. Registration is also not compulsory. There is no limit on minimum or maximum members in the business. Family members become co-parceners by birth in the family.

2. Quick Decision : Only the Karta is involved in the decision making process. This helps to take quick decisions in business. If decisions are taken quickly there can be prompt actions.

3. Business Secrecy : Complete business secrecy can be maintained. All decisions are taken by Karta only. Co-parceners cannot even inspect books of accounts. There is no compulsion to publish books of accounts.

4. Co-parceners Liability : The liability of co-parceners is limited. It is to the extent of their share in Joint Family Business. Private property of co-parceners cannot be attached to business property.

Question 5.
State any four demerits of Joint Stock Company.
Answer:
The demerits of Joint Stock Company are as follows:
1. Rigid Formation : The formation of a joint stock company is lengthy, difficult and time consuming. There are many legal formalities for starting business. Promoters have to prepare documents like Articles of Association, Memorandum of Association, etc. A private company has to go through two stages in formation. A public company has to go through four stages in formation.

2. Delay in Decision Making Process : In company form of organization no single individual can make a policy decision. All important decisions are taken by Board of Directors. Decision taking process is time consuming. Business may lose opportunities because of delay in decision making.

3. Lack of Secrecy : The management of companies remain in the hands of many persons. Everything is discussed in the meetings of Board of Directors. All important documents are available at registered office for inspection. Thus, there is no secrecy in business matters.

4. Excessive Government Control: A large number of rules are framed for the working of companies. The companies will have to follow rules for internal working. The government tries to regulate the working of the companies because large public money is involved. In case regulations are not complied with, large penalties are involved.

6. Justify the following statements

Question 1.
The Liability of a ‘Sole trader’ is Unlimited.
Answer:

1. One of the main features of a sole traders is unlimited liability.
2. If the sole trader becomes insolvent and if his business assets are insufficient to pay off his business debts, he will have to use his private property in order to pay off his creditors.
3. There is no distinction between business property and private property in case of a sole trading concern.
4. Thus, liability of a sole trader is unlimited.

Question 2.
Karta is the sole manager of‘Joint Hindu Family Business’.
Answer:

1. The Karta is the eldest or senior most person in the family business.
2. Karta has unlimited liability.
3. He has the entire decision making power and he is not binding on the views of the co-parceners.
4. Thus, the Karta is the sole manager of Joint Hindu Family business.

Question 3.
The main objective of Co-operative society is to provide services to its members.
Answer:

1. The Co-operative Society is a voluntary association of persons formed for the purpose of promoting the interest of its members. It is different from all other organizations.
2. The main objective of a co-operative organization is not to make profit but to give service to its members.
3. The co-operative society is formed for the welfare of the people.
4. Co-operative societies are rightly called as service oriented organization. Maximisation of profit is not the aim.
5. Thus, the main objective of Co-Operative society is to provide services to its members.

Question 4.
A Joint Stock Company can raise huge capital.
Answer:

1. A Joint Stock Company is an incorporated association.
2. It has a legal status independent of its members.
3. A Joint Stock Company has large membership. There is no maximum limit.
4. Shares are available in the open market.
5. Large number of investors are interested in buying shares.
6. Shares are freely transferable and members have limited liability.
7. Thus, a Joint Stock Company can raise huge capital.
8. Capital can also be raised by company from financial institutions.

Question 5.
The liability of Co-parceners is limited in ‘Joint Hindu Family Business’.
Answer:

1. In a Joint Hindu Family Business, there are two types of members – Karta and Co-parceners.
2. The karta has unlimited liability and he is the only decision making authority. The co-parcerns have limited liability and therefore cannot take part in the management of the firm. They can only share the profit but cannot challenge decisions taken by the Karta.
3. The liability of co-parceners is limited upto the extent of their share in the Joint Hindu Family Business.
4. The personal property of co-parceners is not used for payment of the liability of the Joint Hindu Family business.
5. Thus, the liability of Co-parcerners is limited in ‘Joint Hindu Family Business’.

Question 6.
Sole proprietorship is useful for small business.
Answer:

1. Sole trading concern is owned by only one person.
2. He uses his own skill and intelligence for his business.
3. Sole trader brings capital from his own savings. He may borrow from friends and relatives. However, capital collected is limited.
4. He alone takes decisions of business. Therefore, managerial ability is also limited.
5. Because of limited capital and limited managerial ability, it is not possible to expand business beyond a certain limit.
6. Thus, sole proprietorship is useful for small business where limited capital and less managerial ability is needed.

Question 7.
Co-operative society follows democratic principles.
Answer:

1. The members of a Co-operative organisation form the general body which manages the co-operatives. This body exercises the power through annual general meetings. They elect their representatives who look after the day to day management which is collectively known as Managing Committee.
2. ‘One member One vote’ is the principle followed by Co-operative Societies.
3. All these denote that it follows democratic principles.
4. Thus, Co-operative society follows democratic principles.

Question 8.
There is separation of ownership and management in Joint Stock Company.
Answer:

1. The shareholders are the owners of the company. The company is managed by the Board of Directors who are elected representatives of the shareholders.
2. There is separation of ownership and management because of the following reasons:
   (a) Scattered membership (b) Large membership (c) Disinterested shareholder (d) Heterogenous members (e) Separate legal entity.
3. Thus, ownership is in the hands of shareholders and the management is with the Board of Directors who are paid employees of the company.

Question 9.
Shares of Private Limited company are not freely transferable.
Answer:

1. According to the Companies Act, the right to transfer shares is restricted by its articles.
2. Only a public limited company has right to transfer shares freely.
3. Thus, shares of Private Limited company are not freely transferable.

Question 10.
All partners are joint owners of Partnership firm.
Answer:

1. According to the Indian Partnership Act, 1932, all the partners are joint owners of the property of the partnership firm.
2. No partner can use the property of the firm for his personal interest.
3. No partner is allowed to take any decision without the consent of all the partners.
4. No partners can make any secret profit in the business.
5. Profits and losses are shared among the partners in the profit sharing ratio mentioned in the deed.
6. Thus all partners are joint owners of Partnership firm.

Question 11.
Active partners take active part in day to day management of partnership firm.
Answer:

1. Active partner is also called a working partner. He brings in capital and also takes active part in the business of the firm.
2. He has unlimited liability and shares the profits and losses of the firm. He is also called a managing partner.
3. Thus, active partners take active part in day to day management of partnership firm.

7. Attempt the following

Question 1.
Explain various types of Co-operative Society.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(ii) Credit Co-operative Societies : Members pool their savings together with the aim of obtaining loans from their pooled resources for productive purposes and non-productive purposes. They may be established in rural areas by agriculturist or artisans called as a Rural Credit Society. They may be established by salary earners or industrial areas called as Urban Banks, Salary Earners Society or Workers Society.

(iii) Producer’s Co-operatives : Producer’s Co-operatives are voluntary associations of small producers and artisans who come together to face competition and increase production. These societies are of two types:
(a) Industrial Service Co-operatives : This society supply raw materials, tools and machinery to the members. The producers work independently and sell their industrial output to the co-operative society. The output of members is marketed by the society.

(b) Manufacturing Co-operatives : In this type, producer members are treated as employees of the society and are paid wages for their work. The society provides raw material and equipment to every member. The members produce goods at a common place or in their houses. The society sells the output in the market and its profits is distributed among the members.

(iv) Marketing Co-operatives Societies : These co-operatives find better markets for members produce. They also provide credit and other inputs to increase members production levels. They perform marketing functions such as standardising, grading, branding, packing, advertising etc. The proceeds are then distributed among members depending on the quantities sold.

(v) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

(vi) Housing Co-operative Societies : Housing Co-operatives are owned by residents. The society purchases land and develops it. Houses are constructed for residential purpose on ownership basis. They aim at establishing houses at fair and reasonable rents to members. For construction purposes loans are made available from Governmental or Non-Governmental sources. The society also looks after the maintenance of its buildings.

Question 2.
Explain the features of Joint Stock Company.
Answer:
The features of Joint Stock Company are as follows:
(i) Common Seal : A company being an artificial person cannot sign on its own. The law requires every company to have a seal and have its name engraved on it. Common seal is a symbol of company’s incorporate existence. As common seal is the signature of the company, it has to be affixed on all important documents of the company. When the seal is used it has to be witnessed by two Directors of the Company. The common seal is under the custody of Company Secretary.

(ii) Registration : The registration of Joint Stock Company is compulsory. All the companies have to be registered under Indian Companies Act, 2013. A private limited company can start its business immediately after getting ‘Incorporation Certificate’ while public limited company has to obtain. “Certificate of Commencement of Business” before it starts business.

(iii) Artificial Legal Person : A company is an artificial person created by law. It has an independent legal status. It has a separate name. It can enter into contracts, buy and sell property in its name. The company is distinct from its members.

(iv) Membership : A company is an association of persons. A private limited company must have atleast two persons and a public limited company must have atleast seven persons. The maximum limit of members for private company is 200. A public company can have unlimited members.

(v) Perpetual Succession : A Joint Stock company enjoys a long and stable life. There is continuity in existence, which means perpetual existence. Life of the company is not affected by life of the shareholders. If a shareholder dies, becomes insolvent or insane, the company will not be closed down. “Members may come and members may go but a company goes on forever”.

(vi) Separation of Ownership and Management: Persons investing in the shares of the company are called as shareholders. They are the owners of the company. They receive a share in the profits of the company called “dividend”. The large number of shareholders cannot manage business. They elect representatives who are collectively called as Board of Directors. They manage business of the Company.

(vii) Registered Office : Registered office of the company is a place where all the important documents of the company are kept e.g., Register of Members, Annual Returns, Minute Books, etc. All correspondence work of the company is done through registered office. The address of the registered office has to be mentioned in the domicile clause of the company.

(viii) Transferability of Shares : Shareholders are the owners of the company. Shares of a public limited company are freely transferable. There is a high degree of liquidity involved in buying shares of the company. Members can buy or sell shares as needed. However, there are restrictions on transferability of shares of a private company.

(ix) Voluntary Association : Any person can purchase shares and become a member of the company. The company is a voluntary association. No difference is made on the basis of religion, caste, creed, etc.

(x) Limited Liability : The liability of shareholders is limited. It depends upon the unpaid amount of shares held by them. Shareholders cannot be held personally liable for the debts of the company.

(xi) Separate Legal Status : The company is created by law. It has a separate legal entity. A company acts independently. The company can take legal action against anybody in its individual capacity.

Question 3.
Describe the features of Co-operative Society.
Answer:
(i) Limited Liability : The liability of members is limited. It depends upon the value of shares purchased by members. Therefore, their personal property is not used for payment of society’s debt.

(ii) Management : Elected representatives of members form the Managing Committee. The Managing Committee works according to bye-laws. Collective decisions are taken after conducting meetings. The organisation is managed on democratic principles.

(iii) Service Motive : The main motive of co-operative organisation is to give service to the people. It is not profit oriented. Utmost importance is given to the welfare of the people. In that sense, a co-operative society differs from other forms of organisation.

(iv) Surplus Profit: Profits are made in the course of business after payment of dividend to shareholders. A percentage of profit is always used for welfare of the people. Bonus is given to employees and as bonus on purchase made by members.

(v) Separate Legal Status : A Co-operative Society is formed according to Co-operative Societies Act, 1912, which gives it independent legal status. It is distinct from its members. Therefore it can enter into contract purchase property, etc. in its name.

(vi) Equal Voting Rights : All the members in a Co-operative Societies have equal voting rights irrespective of number of shares held by them.

(vii) Number of Members : Minimum 10 members are required for the formation of Co-operative Society. There is no limit on maximum number of members.

(viii) Democratic Principle : Democracy is followed in the working of co-operatives. Equality of voting rights is the main principle of the organisation. The principle of ‘One member One vote’ is followed. All members are equal in society.

(ix) Voluntary Association and Open Membership : Co-operative organisation is a voluntary association of individuals. Membership is voluntary. Any person can become a member of the organisation. No difference is made on the basis of language, religion, caste, etc. There is open membership. A person can become a member on his own free will and terminate membership whenever he wants.

(x) Registration : Registration of a Co-operative organisation is compulsory under Co-operative Society’s Act, 1912. Registration is done according to the Act of every state. In Maharashtra, Societies are registered under Maharashtra State Co-operative Societies Act, 1960.

(xi) State Support : Co-operatives receive support from the government. They are under the control and supervision of the State. All of them are registered under the Co-operative Societies Act, 1912. They get a corporate status. They get concessions from government in purchase of land, payment of tax etc. They get legal and financial assistance also.

8. Answer the following

Question 1.
Explain the features of Sole Trading Concern.
Answer:
A sole trading concern is one of the oldest and simplest form of organisation. An individual owns the entire business. The individual is the owner, controller and manager of the firm. Such an individual is called a Sole Trader or Sole Proprietor. This type of business is a one-man show.
(1) According to Prof. J. Hanse, “Sometimes known as one man business, it is a type of business unit where one person is solely responsible for providing the capital, for bearing the risk of the enterprise and for the risk of ownership”.

(2) According to Prof. James Lundy : “The sole proprietorship is an informal type of business owned by one person.” The features of Sole Trading Concern are as follows:
(i) Suitable for some Special Business : Sole trading concern is suitable for business where personal attention and individual skill is needed e.g., Beauty parlour, groceries, fashion designing, sweet shops, tailoring, restaurants etc.

(ii) Unlimited Liability : Liability of the sole trader is unlimited. In case business assets are not sufficient to meet business expenses, private property of the sole trader will be used. There is no difference made between private property and business property of sole trader.

(iii) No Sharing of Profits and Risks : A sole trader enjoys all the profits of business. As he is the single owner of business he assumes full responsibility in business. He alone bears all the losses or risks involved in business.

(iv) Business Secrecy : Maximum business secrecy can be maintained in a sole trading concern. A sole trader is responsible only to himself. He need not discuss any matter of business with outsiders. Moreover, there is no legal compulsion for sole trader to publish books of accounts of business.

(v) Local Market Operations : A sole trader has limited capital and limited managerial skills, which forces him to operates in local are market only.

(vi) Individual Ownership : A sole trader is the single owner of business. He owns all the property and assets of the concern. He brings in the required capital for business. A sole trading concern is a ‘One man show”.

(vii) No separate legal status : Sole trader and his business are considered one and the same in the eyes of . law. Thus, it does not enjoy separate legal status.

(viii) Direct Contacts with Customers and Employees : A sole trader directly deals with customers and employees. A sole trader can pay personal attention to his customers. This helps him to maintain good relations with his customers. He can serve customers according to their likes and dislikes. As there are less number of employees, he can build good relations with them. He can listen to their grievances and try to solve them.

(ix) Self-employment : Such business form is best suitable for self-employment. Instead of being remaining unemployed one can start such business as it requires low capital and has less legal formalities.

(x) Freedom in Selection of Business : A sole trader has freedom to select any type of business. Business selected must be allowed legally. A sole trader can use any method of maintaining books of accounts.

(xi) Minimum Government Regulations : Sole trading concern need not follow any special Act. There are not much legal formalities needed for forming and closing a sole trading concern. Only the general law of the country has to be followed.

Question 2.
Explain different types of Partnership Firms.
Answer:

(i) General Partnership : These partnership can be formed under the Indian Partnership Act, 1932, where the liability of all partners are unlimited, joint and several.
General Partnership can be divided into three Kinds:
(a) Partnership at will: Such partnership are formed and continued as per the will of the partners. They are formed for an indefinite period. Any partner can terminate the partnership by giving a notice to the firm. Such firms exists so long as there is mutual trust and co-operation among the partners.

(b) Partnership for a particular period : Such partnerships are formed for a particular period of time. On the completion of the duration, the partnership firm automatically dissolves irrespective of the venture being complete.

(c) Partnership for a venture or particular partnership : Such partnerships are formed for a particular venture or job. It comes to an end on the completion of the venture. For e.g. construction of roads, dams, bridges, buildings, etc.

(ii) Limited Liability Partnership : This kind of partnership is formed under the Limited Liability Partnership Act 2008. There are 2 kinds of partners.

• Designated Partner : Limited liability partnership is one where there are atleast two partners of which one must be a resident of India.
• General Partner : In limited liability partnership a apart from the designated partners all other partners have limited liability. They are called general partners.

Question 3.
Explain different types of Partners.
Answer:
The different types of partners are:
(i) Active or Working Partners : In practice one or two partners take active part in the management. Such partners are called active or working partners. They contribute capital, shares profits or losses, and has unlimited, joint and several liability. They take an active interest in the day to day working of the firm. These partners are also known as ordinary / general / actual partners.

(ii) Dormant or Sleeping Partners : A dormant or sleeping partner is one who contributes capital to the firm. He does not take any active part in the management of the firm. He shares the profits and losses of the firm like any other partner. He voluntarily surrenders the right of management. However, he is liable for the debts of the firm.

(iii) Nominal Partners : A nominal partner is one who does not contribute any capital to the firm. He lends his name to the firm. He is simply obliging his friends by allowing the firm to use his name as a partner. He may or may not be given any share in the profits of the firm. His goodwill is used to attract business. However, he is liable for the debts of the firm.

(iv) Minor as Partner : According to the Indian Contract Act 1872, a person below 18 years is called a minor. But according to the Indian Partnership Act 1932, a minor can be admitted for the benefit of the firm with the consent of all other partners. He has a right to inspect the books of accounts. Minor partner has limited liability and is not liable for losses. He has the option to continue as a full-fledged partner or discontinue as a partner on attaining the age of majority. If he wishes to discontinue, he must give a public notice within 6 months from the age of majority.

(v) Partner in Profits only : A partner may clearly state that he will have a share only in the profits of the firm and that he will not share losses. Such a partner is known as “Partner in Profits Only”. He has no rights of management. He may not take active participation in the management of the firm.

(vi) Partner with Limited Liability : A limited partner has limited liability. A partner whose liability depends upon the extent of investment is called a limited partner. He has no right to take part in the day to day work. But such a partnership must have at least one partner having unlimited liability.

(vii) Secret Partner : A person is a partner of the firm and not known to general public is a secret partner. Secret partners have all the features like other partners. He brings capital to the firm and also gets a share in profit. He has unlimited liability. He can take part in the working of the business.

(viii) Sub-Partner : A partner when agrees to share his own profit derived from the firm with third person, it is known as sub-partner. A sub-partner cannot call himself as a partner in the firm.

(ix) Quasi Partner : A retired partner leaving his capital with the firm is called as Quasi Partner. He does not participate in the working of the firm, but share profit of the firm. He is also liable for the debts of the firm.

Question 4.
Explain the five features of Joint Stock Company.
Answer:
The features of Joint Stock Company are as follows:
(i) Common Seal : A company being an artificial person cannot sign on its own. The law requires every company to have a seal and have its name engraved on it. Common seal is a symbol of company’s incorporate existence. As common seal is the signature of the company, it has to be affixed on all important documents of the company. When the seal is used it has to be witnessed by two Directors of the Company. The common seal is under the custody of Company Secretary.

(ii) Artificial Person : A company is an artificial person created by law. It has an independent legal status. It has a separate name. It can enter into contracts, buy and sell property in its name. The company is distinct from its members.

(iii) Registration: The Registration of Joint Stock Company is compulsory. All companies have to be registered under Indian Companies Act, 2013.

(iv) Membership : A company is an association of persons. A private limited company must have atleast two persons and a public limited company must have atleast seven persons. The maximum limit of members for private company is 200. A public company can have unlimited members.

(v) O wnership and Management: Persons investing in the shares of the company are called as shareholders. They are the owners of the company. They receive a share in the profits of the company called “dividend”. The large number of shareholders cannot manage business. They elect representatives who are collectively called as Board of Directors. They manage business of the Company.

(vi) Limited Liability : The liability of shareholders is limited. It depends upon the unpaid amount of shares held by them. Shareholders cannot be held personally liable for the debts of the company.

Question 5.
Explain the merits of a Co-operative Society.
Answer:
The merits of a Co-operative Society are as follow:
(i) E asy Formation: It is easy to form a Co-operative organisation. Minimum ten members are needed to form the organisation. It does not involve much legal formalities. It is compulsory to register the organisation. However, the procedure for registration is simple and the fees are nominal.

(ii) Tax Concession : Co-operatives always get support of the government. As they play an important role in economic and social development, government gives them concessions in payment of tax.

(iii) Open Membership : Membership of a Co-operative organisation is open to all. A person can become a member by purchasing shares. No difference is made on the basis of language, religion, caste, etc. A person can become a member whenever he wants and terminate membership at his own will. Membership is voluntary.

(iv) Stability : A Co-operative organisation enjoys a long and stable life. The life of the organisation is distinct from the life of its members. If any member dies, becomes insolvent or insane, business is not closed.

(v) Self Financing and Charity : After providing 15% dividend to members, surplus amount is used for self-financing by the Co-operative Societies. Some amount of leftover profit is used for charity, social activities and for the growth of the co-operative society.

(vi) Less O perating Expenses: Cost of operation is low as salary is not paid to members who manage business. Members of Co-operative organisations work on honorary basis. They are not given any remuneration for their services. There are no expenses on advertising and publicity. This helps to increase profit.

(vii) Limited Liability : The liability of members is limited. It depends upon the value of shares purchased by members. Therefore, people are interested in investing in a Co-operative organisation.

(viii) Democratic Management: Democracy is followed in the management of co-operative organisation. All members are equal. The principle of “One member One vote” is followed. Members elect representatives who form the managing committee. They work according to bye-laws. The managing committee looks after day to day administration. Decisions are taken collectively in meetings.

(ix) Supply of Goods at Cheaper Rate : Goods are sold at lesser price through a Co-operative store. This is because the organisation is service – oriented. The store does not make use of services of middlemen and there are no expenses on advertising. So goods are sold at cheap rates.

Question 6.
Explain the demerits of Partnership firm.
Answer:
The demerits of Partnership firm are as follows:
(i) Non-transferability of Interest: In a partnership firm no one partner can transfer his share of interest to another outsider without the consent of all the partners.

(ii) Limited Capital: There is a limitation in raising additional capital for business. The business resources are limited to personal funds of the partners. Borrowing capacity of partners is limited. The maximum number of partners is fifty only. So financial capacity is less.

(iii) Absence of Legal Status : The Indian Partnership Act, 1932 does not give a legal status to a partnership firm. There is no independent legal status. The firm and its partners are one and the same.

(iv) Problem of Continuity : The partnership firm is not a separate legal entity. The firm is dependent oh mutual trust between partners. If a partner dies, becomes insolvent or insane, the firm has to be dissolved compulsorily whether the partners wish or not.

(v) Risk of Implied Authority : A partner works in two capacities. He has a dual role – Principal and Agent. He acts as an agent of the business. He can enter into contract with third party. However, a wrong decision can result in heavy losses, which has to be borne by all partners.

(vi) Limitations on Number of Partners : No partnership can go beyond maximum number prescribed (i.e. 50 members) by Indian Partnership Act. This restriction effects the raising of capital for further expansion.

(vii) Disputes : It is difficult to maintain harmony among partners. They may have different opinions and may not agree on certain matters. Partners may have conflicts if some partners work for self interest. This reduces team spirit and may finally lead to dissolution of the firm.

(viii) Difficulty in Admission of Partner : As consent of all partners is required to take any decision in the partnership firm, it becomes difficult to admit a new partner. This is a disadvantage to the firm as it cannot bring in new talent if the other partners are not agreeing to it.

(ix) Unlimited Liability : The liability of partners is unlimited. There is no difference between business property and personal property of partners. If business assets are not enough to meet business expenses, personal property can be used.

(x) Problem of Secrecy : Partnership firms lack complete business secrecy as some secrets may be disclosed by some partner to the competitor for personal benefit.

Question 7.
Explain the merits of Joint Stock Company.
Answer:
The merits of Joint Stock Company are as follows:
(i) Transferability of Shares : Shares of a public company can be transferred easily and freely. There is a high degree of liquidity in shares. Permission of directors or members need not be taken for buying and selling shares. This helps to attract investors to public company.

(ii) Relief in Taxation : The tax burden in the company is less. Provisions of Income Tax Act says that companies have to pay tax at flat rate. This is less than taxes paid by individuals earning very high income. If company is started in backward areas, the company gets relief in the form of tax holding.

(iii) More Scope for Expansion : The capital raising capacity of the company is high. The company has a lot of funds at its disposal. A part of the profit is also ploughed back for business. This enables growth and expansion of business.

(iv) Public Confidence : Joint Stock Company has to publish books of accounts. Which is audited by CA. Annual reports of the company have to be published. The activities of the Company are regulated by the provision of Companies Act, 2013. Therefore, the company gets public support.

(v) Limited Liability : The liability of shareholders is limited. It is to the extent of unpaid value of shares. Shareholders cannot be liable for the debts of the company. Features of limited liability attract more investors to business.

(vi) Expert Services : Joint Stock Company an appoint experts for managing their huge business operations. They appoint experts like Legal advisors, management experts, auditors, consultants, etc.

(vii) Democratic Management: Management of a company is democratic. Shareholders elect representatives called as Board of Directors. They manage business. Directors are accountable to shareholders. Policy decisions are taken by Directors but have to be approved by shareholders. The shareholders can also remove inefficient Directors.

(viii) Perpetual Succession : Joint Stock Company enjoy long and stable life. Its stability is not affected by death insolvency or retirement, of any of its members.

(ix) Professional Management : Large funds are at the disposal of the companies. Therefore, experts can be appointed in different areas of business. As good salaries can be paid, highly qualified personnel like Cost Accountants, Sales Experts, Market Experts, etc. can be appointed. Even Board of Directors have competent persons who manage business efficiently.

(x) Large Amount of Capital: A company can collect large amount of capital. There is no limit on maximum number of members. Due to features of limited liability, transferability of shares and liquidity, many investors are attracted to become shareholders of the company. Loans are also available to Joint Stock Companies.

Question 8.
Explain the features of partnership firm.
Answer:
The features of partnership firm are as follows:
(i) Lawful Business : Business undertaken by partnership should be lawful. It cannot undertake business forbidden by state. The definition of partnership also does not permit any association like club or charitable institution. Illegal business like smuggling or gambling is not allowed.

(ii) Agreement : Partnership is a result of agreement between partners. There could be a written or oral agreement between partners. A written agreement is preferred so that it can be used as a proof in the court of law if needed.

(iii) Number of Partners : Minimum two members are needed to start a partnership firm. The maximum number of members is 50.

(iv) Dissolution : A Partnership Firm can be dissolved through agreement between partners. If a partner wants, he can dissolve the firm by giving 14 days notice to the firm. The firm can be dissolved if a partner dies, becomes insolvent or insane.

(v) Sharing of Profits and Losses : The purpose of partnership is to earn profit. Its object cannot be a charitable one. Partners have to share profits and losses according to the ratio given in the agreement. If the agreement is silent about the proportion then profit and loss sharing will be equal.

(vi) Termination of Partner : A partner may resign by giving proper notice in writing to the other partners. A partner can also be removed if he has been found doing any fraudulent activities.

(vii) Joint Ownership : Each partner is the joint owner of the property of the firm. All partners are equal owners of business property. No partner can use property for personal use.

(viii) Registration : It is not compulsory as per Indian Partnership Act, 1932. However, in the State of Maharashtra, it has been made compulsory to get register with ‘Registrar of Firms’ of the state.

(ix) Joint Management: All partners have equal rights in managing the firm. Some partners take interest in management of the firm and others voluntarily surrender their management rights. However, all partners are jointly responsible for the management of the firm.

(x) Unlimited Liability : The liability of partners is unlimited joint and several. If assets of business is not sufficient to pay liabilities, personal property of partners can be used. If any one of the partners is declared insolvent, his liability will be borne by the solvent partners.

(xi) Principal and Agent : Each partner works in two capacities – Principal and Agent. A partner acts as principal when within the firm and acts as an agent while dealing with outsider. The partners play a dual role.

(xii) Restriction on Transfer of Interest : A partner cannot transfer or sell his interests in the firm to outsider without the prior consent of all other partners in the firm.

Question 9.
Explain the types of co-operative societies.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(ii) Credit Co-operative Societies : Members pool their savings together with the aim of obtaining loans from their pooled resources for productive purposes and non-productive purposes. They may be established in rural areas by agriculturist or artisans called as a Rural Credit Society. They may be established by salary earners or industrial areas called as Urban Banks, Salary Earners Society or Workers Society.

(iii) Producer’s Co-operatives : Producer’s Co-operatives are voluntary associations of small producers and artisans who come together to face competition and increase production. These societies are of two types:
(a) Industrial Service Co-operatives : This society supply raw materials, tools and machinery to the members. The producers work independently and sell their industrial output to the co-operative society. The output of members is marketed by the society.

(b) Manufacturing Co-operatives : In this type, producer members are treated as employees of the society and are paid wages for their work. The society provides raw material and equipment to every member. The members produce goods at a common place or in their houses. The society sells the output in the market and its profits is distributed among the members.

(iv) Marketing Co-operatives Societies : These co-operatives find better markets for members produce. They also provide credit and other inputs to increase members production levels. They perform marketing functions such as standardising, grading, branding, packing, advertising etc. The proceeds are then distributed among members depending on the quantities sold.

(v) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

(vi) Housing Co-operative Societies : Housing Co-operatives are owned by residents. The society purchases land and develops it. Houses are constructed for residential purpose on ownership basis. They aim at establishing houses at fair and reasonable rents to members. For construction purposes loans are made available from Governmental or Non-Governmental sources. The society also looks after the maintenance of its buildings.

Question 10.
Explain the demerits of Joint Stock Company.
Answer:
The demerits of Joint Stock Company are as follows:
1. Rigid Formation : The formation of a joint stock company is lengthy, difficult and time consuming. There are many legal formalities for starting business. Promoters have to prepare documents like Articles of Association, Memorandum of Association, etc. A private company has to go through two stages in formation. A public company has to go through four stages in formation.

2. Delay in Decision Making Process : In company form of organization no single individual can make a policy decision. All important decisions are taken by Board of Directors. Decision taking process is time consuming. Business may lose opportunities because of delay in decision making.

3. Lack of Secrecy : The management of companies remain in the hands of many persons. Everything is discussed in the meetings of Board of Directors. All important documents are available at registered office for inspection. Thus, there is no secrecy in business matters.

4. Excessive Government Control: A large number of rules are framed for the working of companies. The companies will have to follow rules for internal working. The government tries to regulate the working of the companies because large public money is involved. In case regulations are not complied with, large penalties are involved.

5. High Cost of Management : The management of joint stock company form of organization is costly. Services of experts like share brokers, underwriters, solicitors, bankers is needed which is costly. Highly qualified staff is needed. They are paid good salaries. Dissolution of the firm is also costly.

6. Reckless Speculation: Directors look after management of the company. They have full information about the progress of the company. They use these details for speculation in shares. This results in fluctuations in share prices. This affects public confidence.

7. No Personal Contact : There are large number of employees in the organization. There is no personal contact of owners and managers with employees. Lack of appreciation demotivates employees. Similarly, managers and directors are not able to maintain personal contacts with their customers. Thus, customers likes and dislikes are ignored.

8. No Direct Effort Reward Relationship : Joint Stock Company is owned by shareholders and managed – by Board of Directors. Board of Directors are paid for managing and profit is shared by shareholders. There is no direct relation between efforts and rewards. Directors may not take a lot of interest in the working of the company.

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 5 Members of a Company Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 5 Members of a Company

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
____________ is a person whose name is entered in the Register of Members.
(a) Member
(b) Creditors
(c) Registrar
Answer:
(a) Member

Question 2.
A person can be called as a Member when the name is entered in ____________
(a) Register of charges
(b) Register of Members
(c) List of Members
Answer:
(b) Register of Members

Question 3.
A ____________ cannot be a member of a company.
(a) foreigner
(b) woman
(c) minor
Answer:
(c) minor

Question 4.
When a person buys shares of a company by filling up an application form, a person becomes a member by ____________
(a) Application and Allotment of shares
(b) Subscribing to Memorandum
(c) Transmission of Shares
Answer:
(a) Application and Allotment of shares

Question 5.
____________ means a person ceases being a member of the company of membership.
(a) Termination of membership
(b) Acquisition of membership
(c) Subscription to membership
Answer:
(a) Termination of membership

Question 6.
A member has right to participate in General Meetings means, he has a right to ____________
(a) receive dividends
(b) receive notice and agenda of a meeting
(c) to transfer his shares
Answer:
(b) receive notice and agenda of a meeting

1B. Match the pairs.

Question 1.

Answer:

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
End of membership of a person.
Answer:
Termination of membership

Question 2.
A person whose name is entered in the Register of Members.
Answer:
Member

Question 3.
Book in which names of all members are entered.
Answer:
Register of Members

Question 4.
Becoming a member of a company.
Answer:
Acquisition of membership

Question 5.
The subscribers of this document are considered Members of the company.
Answer:
Memorandum of Association

1D. State whether the following statements are True or False.

Question 1.
Buying shares is the most common way to become a Member of the company.
Answer:
True

Question 2.
Both individuals and body corporates can be members of the company.
Answer:
True

Question 3.
Legal competency to enter into contracts is one of the criteria to become a member of the company.
Answer:
True

Question 4.
Limited Liability Partnership cannot be a member of the company.
Answer:
False

Question 5.
Karta of HUF can be a member of the company.
Answer:
True

Question 6.
Member of the company is conferred with several rights.
Answer:
True

Question 7.
Member is entitled to profits of the company when a dividend is declared.
Answer:
True

Question 8.
Members of the company can attend general and Board meetings of the company.
Answer:
False

Question 9.
The right to appoint Director is given to Members.
Answer:
True

Question 10.
Minor can be a member of the company.
Answer:
False

1E. Find the odd one.

Question 1.
Subscribing to Memorandum, Forfeiture of Shares, Application, and allotment of shares.
Answer:
Forfeiture of shares

Question 2.
Death or insolvency of member, Application, and allotment of shares. Surrender of shares.
Answer:
Application and Allotment of shares

1F. Complete the sentences.

Question 1.
A person whose name is entered in the Register of Member of a company is called ____________
Answer:
Member

Question 2.
In case of death or insolvency of a member, he will cease to be a ____________
Answer:
Member of a Company

Question 3.
Members have a right to appoint and remove the ____________
Answer:
Director

1G. Select the correct option from the bracket.

Question 1.

(Partnership firm, Cannot become a member of a company, Can become a member of a company)
Answer:

1H. Answer in one sentence.

Question 1.
Which individuals cannot become a member of a company?
Answer:
Minor, insolvent, insane, or lunatic cannot become a member of a company.

Question 2.
What is the common way of becoming a member of a company?
Answer:
Buying shares is the common way of becoming a member of a company.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
A Minor can be a member of a company.
Answer:
A Guardian/Mai or person can be a member of a company.

Question 2.
Partnership Firm can be a member of the company.
Answer:
The Partnership firm cannot be a member of a company.

2. Explain the following terms/concepts.

Question 1.
Member
Answer:
A person who is a subscriber to the Memorandum of Association of a Company is called a member.
OR
A person whose name is entered in the Register of Members of the company is called a member of a company.

Question 2.
Transmission of shares
Answer:
Transmission of shares refers to the transfer or passing of property or titles in shares by the operation of law from a member to his legal representative. When transmission of shares takes place the membership of the original shareholder is terminated.

Question 3.
Cessation of Membership
Answer:
Cessation of Membership of a company means the discontinuation of membership. The name of the old member is removed from the Register of the member.

Question 4.
Acquisition of Membership
Answer:
Any person who is competent to contract can become a member after fulfilling certain requirements for the membership of the company.

Question 5.
Eligibility of Membership
Answer:
Buying shares amount to making a contract, so any entity i.e. person/organization competent to make contact can be a member of the company.

3. Study the following case/situation and express your opinion.

1. Mrs. & Mr. A work in a Bank. They have a daughter named Ms. Z who is 11 years old.

Question (a).
Can Mrs. & Mr. A invest in shares of the company?
Answer:
Yes, Mrs & Mr. A can invest in shares of the Company.

Question (b).
Can they buy shares in the name of their daughter Ms. Z?
Answer:
Yes, Mrs. A and Mr. A can buy shares in the name of their daughter Ms. Z.

Question (c).
Justify your answer in (a) & (b) in one sentence only.
Answer:
Justification:
Mrs. A and Mr. A can invest in shares of the Company as they are major citizens.
Similarly, they can buy shares on behalf of their daughter as they are guardians of Ms. Z.

2. M/s. ABC is a Partnership firm owned by Dr. A, Dr. B, Dr. C. The doctors want to invest the profits of ABC in the shares of a company.

Question (a).
Can M/s ABC buy the shares of the company?
Answer:
Yes M/s ABC can buy the shares of the company.

Question (b).
Can profits of M/s. ABC be invested in shares held in the names of Dr. A or Dr. B or Dr. C?
Answer:
They can invest profit of M/s ABC in the names of Dr. A or Dr. B or Dr.C.

Question (c).
Are the doctors eligible to invest in shares of the company?
Answer:
Yes, doctors are eligible to invest in shares of the company.

3. ZEN Limited has some investible profits. Please guide Zen limited with respect to the following?

Question (a).
Can ZEN Limited invest in the shares of itself?
Answer:
No, ZEN Limited cannot invest in the shares of itself.

Question (b).
Can ZEN Limited invest in the shares of TEN Limited?
Answer:
Yes, ZEN Limited can invest in the shares of TEN Limited.

Question (c).
Justify your answers in (a) & (b) in one sentence only.
Answer:
Justification:
ZEN limited being a legal person can be a member of another company TEN Limited. It cannot be a member of its own company as per the Companies act.

4. Answer in brief.

Question 1.
State any four ways of acquiring membership of a company.
Answer:
Any person who is competent to contract can become a member after fulfilling certain requirements for membership in a company.
The different ways to acquire membership of a company are explained below:
(i) By Subscription:

• The subscriber to the Memorandum of Association of a company, who are signatories to the Memorandum of the company is deemed to have agreed to become the members of the company.
• When the company is registered, their names are entered as the members in the Register of Members. In this case, neither an application nor the allotment of shares is important to become a member.

(ii) By Application and Allotment of shares:

• This is one of the methods of acquiring membership. An application for shares is made by an applicant in response to the invitation given by the company through its prospectus.
• The company then allots the shares as an acceptance to his application and offers the shares. The applicant then becomes the shareholder and his name is entered in the ‘ Register of Members’.

(iii) By Transfer of shares:

• After acquiring the shares by way of sale or gift, the buyer (transferee) is required to get the shares registered in his name in the Register of Members of the company.
• For this an instrument of transfer signed by the buyer and the seller accompanied by the share certificate is to be lodged (sent to) with the company.
• When the company approves the transfer, the name of the transferee is entered in the Register of Members and thus, be becomes a member of a company. The name of the earlier member is struck off from the Register.

(iv) By Transmission of shares:

• In the event of the death or lunacy of a member, his legal heir or representative automatically becomes the shareholder.
• He is entitled to have his name entered in the Register of Members. He can do so by making an application to the company, supported by legal evidence of his title.
• When the company approves the title the name of the legal representative is entered in the Register of Members and thus, he becomes a member of a company.
• This transfer of shares by the operation of law is called the transmission of shares.

Question 2.
State any four ways of cessation of membership of a company.
Answer:

• Cessation/Termination of a member means the discontinuation of membership. His relationship with the company comes to an end.
• The name of the members is removed from the Register of Members as cessation.
• The original member is thus prevented from exercising his rights of membership.

The membership of a person may be terminated in any one of the following ways:

• Winding up of a company: When a company is ‘winding up’ or exists no more due to the process of law, the membership of all the members stands terminated or cessation automatically.
• Surrender of shares: When the company accepts surrender of partly paid-up shares, if permitted by its Articles, the membership of the shareholder is terminated.
• Transmission of shares: Transmission of shares refers to the transfer or passing of property or titles in shares by the operation of law from a member to his legal representatives. Such an automatic transfer of shares takes place in the event of the death or lunacy of a shareholder. When the transmission of shares takes place, the membership of the original shareholder is terminated.
• Transfer of shares: The transfer of shares is effected by registering an instrument called ‘Instrument of Transfer’ with the company. When the company approves the transfer, the Secretary cancels the name of the seller from the Register of Members and thus the membership of the shareholder is terminated.
• Forfeiture of shares: When the company forfeits the shares on account of non-payment of call money, the membership of the shareholder whose shares are forfeited comes to an end.

Question 3.
State the rights of members with regard to participation in general meeting.
Answer:
As an integral part of a company, a member enjoys certain rights and has to fulfill certain duties and liabilities.
Following are the rights of members:

• Right to receive the notice and agenda of all general meetings, attend them in person or appoint a proxy, speak and vote at the meeting, demand to call Extra-Ordinary General meeting and pass resolutions.
• Right to receive the copy of annual reports, auditors’ reports, statutory reports, and the annual account are on his registered address.
• Right to transfer shares, if any, imposed by the Article of Association.
• Right to receive bonus shares whenever issued by the company.
• Right to get the name entered in the Register of members and be registered as a member of the company,
• Right to receive a share in the surplus property and assets of the company on winding up of the company after all other claims have been paid.

5. Justify the following statements.

Question 1.
Member and Shareholder are interchangeable terms.
Answer:

• A person whose name is entered in the register of members of a company is called a member and a person who owns shares of a company and holds actual possession of shares is called a shareholder of a company.
• A shareholder becomes a member of a company only when his name is recorded in the Register of Members. A person who buys a share in an open market is a shareholder. But he cannot be called a member until the procedure of transfer of shares in his name is completed.
• In the case of death, or lunacy of a member of a company, his legal representative becomes the shareholder but he cannot be called a member until the procedure for transmission of shares in his name is completed.
• A shareholder who transfers his share to another person is not a member until the transfer is registered and the name of the transferee is recorded in the Register of Members.
• A person who subscribes to the Memorandum of Association may not be called a member until the shares are actually allotted to them. Thus, I agree with the above statement.

Question 2.
A foreigner can invest in shares of an Indian company.
Answer:

• A foreigner can enter into contract.
• Foreigners can buy shares and become a member of an Indian company, subject to provisions of FEMA Act 1999.
• ‘FEMA’ aims at facilitating external trade and promote the foreign exchange market in India.
• Foreigner falls under the category of individual eligibility to be a member of a company.
• Thus, I agree with the above statement.

Question 3.
The insolvent person ceases to be a member of the company.
Answer:
Yes, I agree with the statement.

• On, becoming insolvent, a person’s beneficial rights of shareholders passes to Official Receiver or Assignee.
• Thus, the insolvent person stops being a member of the company on his insolvency.
• Official Receiver is an officer appointed by the court, to deal with the property and assets of the insolvent person.
• On being insolvent a member ceases to be a member of the company and thus he can neither attend Annual General
• Meeting nor can he vote on matters of the company.
• Thus, I agree with the above statement.

Question 4.
The Co-operative Society is eligible to be a member of the company.
Answer:

• The Co-operative Society falls under the category of Organizations eligible for membership of a company.
• Co-operative Societies are registered under the State Co-operative Societies Act of respective states.
• A Co-operative Society is a registered entity, it can become a member of the company.
• Thus, it can invest in shares of the company and also enjoys all the rights of membership.
• It also has a right to receive notice of meeting, attend the meeting, vote in meeting, etc.
• Thus, I agree with the above statement.

Question 5.
Subscribers to the Memorandum of Association are the first members of the Company.
Answer:

• There are different ways for the acquisition of membership in a company.
• Subscribing to Memorandum of Association is one is of the way of acquiring membership in a company,
• Subscribers to the Memorandum of Association of companies are different in different cases i.e. Seven (7) members in the case of a Public Company, Two (2) members in the case of a Private company, and One (1) in case of One Person Company.
• Thus, I agree with the above statement.

Question 6.
The nominee of the member of OPC becomes its member on the death of the member.
Answer:

• In an acquisition of membership, there are different ways to become a member of the company.
• In the case of One Person Company, the name of the nominee is given beforehand in the Memorandum of One Person Company.
• So, in case of the death of a member, his nominee automatically becomes the sole owner of the company.
• But he cannot be called as a member of the company until all procedure of transmission of shares is completed.
• Thus, I agree with the above statement.

Question 7.
Members of the company are entitled to several rights.
Answer:

• Being an integral part of a company, members enjoy certain rights and have to fulfill the duties and liabilities.
• Member has the right of accessing books and documents of a company. He can make copies of the Memorandum and Article of Association. He has the right to appoint Auditors and Directors and decide their salary and remuneration.
• He can inspect the Register of Members and Debentureholders register.
• He has right to make a Fundamental Corporate Decision like – Change of Registered office of the company, increase authorized capital, change in the object of the company, make amendment in Articles of Association, right of winding up the company, etc.
• He has the right to receive the notice and agenda of a meeting. He can attend the Annual General Meeting in personal or he can send his proxy to attend the meeting.
• Thus, I agree with the above statement.

Question 8.
Members of the company have some fundamental corporate decision-making rights.
Answer:

• Members hold powers to decide at meetings on important matters.
• He has certain fundamental rights like a change of registered office of the company.
• He can increase the authorized capital of the company.
• He can change the objects of the company because he is a member of the company as well as the owner of the company.
• He also has a right to amend the Articles of Association.
• He also has a right to acquisitions, mergers, and takeovers by the company. He can appoint sole selling agents for the company.
• He also has a fundamental right to close or wind up the company.
• Thus, I agree with the above statement.

Question 9.
Transfer of shares results in termination of membership.
Answer:

• On termination of membership, the name of the member is removed from the Register of Members.
• Companies Act empowers every shareholder to transfer his share in the manner laid down in the Articles and in accordance with the provisions of the law.
• A transfer of share takes place when a registered shareholder transfers his shares by sale or gift to another person voluntarily.
• Transfer of shares by operation of law in event of death or insolvency of members is called the transmission of shares. The legal representative/heir in case of death, official receiver in case of insolvency, and administrator in case of insanity replaces the concerned member.
• When the company approves the transfer, the Secretary cancels the name of the seller i.e. (transferor) from the Register of Members, and the membership of the shareholder stands terminated after transferring the shares.
• Thus, I agree with the above statement.

6. Answer the following questions.

Question 1.
Explain the circumstances when Member is not a shareholder and vice-versa.
Answer:
An organization is formed for purpose of education, sports, health, business with well-defined objectives and relationships. The organization is by ‘members’ and ‘only for members.’
“Member means a person whose name is entered in the Register of Members of the company and are the holder of equity shares and are a beneficial owner in the records of Depository.
Buying shares is the most common and easy way where a person becomes a member of the company.

Following are different circumstances when Member is not a shareholder:

• Member without being a shareholder:
  • Signatories to the Memorandum of Association: They are members of the company but not shareholders till the shares are not allotted to them.
  • Company Limited by Guarantee Amount: This company does not have any share capital. Therefore, it has only members, not the shareholders.
  • Transfer of shares: Transferor (seller) of shares continue to be a member of the company, till his name is removed from the Register of Members and is replaced by transferee’s (buyer)name.
  • On the death of a member: On the death of a member, his legal heir becomes the holder of deceased member shares. But he is not a member of a company until the procedure of transmission of shares is completed.
  • On insolvency of member: Shares of insolvent member are held by court-appointed Official Receiver.
    So the insolvent person continues to be a member but not the shareholder.
• Shareholder without being a member: The buyers of the shares, Official Receiver in case of insolvency; legal heir in case of death as explained above are shareholders but not the members of the company.

Question 2.
Explain the eligibility of memberships of a company.
Answer:

• The organization is formed and managed by persons termed as ‘Member’.
• So it is rightly said organization is by ‘member’ and ‘only for members’.
• Any entity i.e. person or organization who is competent to make a contract can become a member of the company.
• Subject to provisions of the Companies Act, 2013, Memorandum of Association, and Articles of Association, any person who is legally competent to manage their own affairs (‘Sui-Juris) can become a member of the company.

Eligibility Criteria:
(A) Individuals:

• Major person: Any person domiciled (staying) in India, having completed 18 years of age, having a sound mind, and not be disqualified by law can become a member of the company.
• Minor: A minor cannot be a member of a company but a guardian can be a member of a company on behalf of a minor.
• Insolvent: Insolvent person cannot be a member of a company as his beneficial rights of shareholding are held by the Official Receiver, an officer appointed by the court.
• Insane/Lunatic: Insane/Lunatic person is unable to enter into a contract which makes him ineligible to be a member of a company.
• Foreigner: A foreigner or Non-resident Indian can become a member of a company, subject to provisions of FEMAAct, 1999.

(B) Organizations:

• Company: A company being a legal person can be a member of another company if authorized by its Memorandum of Association. It cannot be a member of its own company.
• Co-operative Society: Since co-operative societies are registered entity, they can be a member of the company.
• Limited Liability Partnership (LLP): Such, firms are treated as a juristic person, hence it can be a member of the company.
• Hindu Undivided Family: HUF firm is prohibited to be a member of a Company, but ‘Karta’ can buy a share in his name on behalf of Hindu Undivided Family firm.
• Partnership Firm: Since the partnership firm is not a registered entity. It cannot be a member of the company. But partners themselves can buy shares in their individual names.
• Trust: Registered trust can become a member of a company in its own name.

Question 3.
Explain different ways to acquire membership of the company briefly.
Answer:
Any person who is competent to contract can become a member after fulfilling certain requirements for membership in a company.
The different ways to acquire membership of a company are explained below:
(i) By Subscription:

• The subscriber to the Memorandum of Association of a company, who are signatories to the Memorandum of the company is deemed to have agreed to become the members of the company.
• When the company is registered, their names are entered as the members in the Register of Members. In this case, neither an application nor the allotment of shares is important to become a member.

(ii) By Application and Allotment of shares:

• This is one of the methods of acquiring membership. An application for shares is made by an applicant in response to the invitation given by the company through its prospectus.
• The company then allots the shares as an acceptance to his application and offers the shares. The applicant then becomes the shareholder and his name is entered in the ‘ Register of Members’.

(iii) By Transfer of shares:

• After acquiring the shares by way of sale or gift, the buyer (transferee) is required to get the shares registered in his name in the Register of Members of the company.
• For this an instrument of transfer signed by the buyer and the seller accompanied by the share certificate is to be lodged (sent to) with the company.
• When the company approves the transfer, the name of the transferee is entered in the Register of Members and thus, be becomes a member of a company. The name of the earlier member is struck off from the Register.

(iv) By Transmission of shares:

• In the event of the death or lunacy of a member, his legal heir or representative automatically becomes the shareholder.
• He is entitled to have his name entered in the Register of Members. He can do so by making an application to the company, supported by legal evidence of his title.
• When the company approves the title the name of the legal representative is entered in the Register of Members and thus, he becomes a member of a company.
• This transfer of shares by the operation of law is called the transmission of shares.

(v) By holding shares in the Dematerialized form:
The person holding shares in dematerialized form and has his name as a beneficial owner in the records of Depository is treated as a member of the company.

(vi) Nominee of One Person Company (OPC):
In the case of One Person Company, the name of the nominee is given beforehand in the Memorandum of One Person Company. He becomes the sole owner of the shareholdings of the deceased member.

(vii) By Acquiescence:
If a person is wrongly entered in the Register of Members or holds or allows his name as the Register of Members without informing the company about its mistake, he is treated and made liable as a member in the event of liquidation of a company.

Question 4.
Explain how membership of the company terminates.
Answer:
Cancellation of membership of a shareholder is called Termination or Cessation of membership. On termination of membership, all rights of a member are canceled.

Following are the ways of Termination of membership:
(i) Transfer of shares: Transfer of shares is effected by registering an instrument called Instrument of Transfer with the company. The secretary cancels the name of the seller from the Register of Members and thus the membership of the shareholder is terminated.

(ii) Transmission of shares: Transmission of shares refers to the transfer of shares by operation of law. This is an automatic transfer of a share in the event of death or lunacy of a shareholder. When the transmission of shares takes place, the membership of an original shareholder is terminated.

(iii) Winding up: When a company is winding up, the membership of all the members stands terminated automatically.

(iv) Forfeiture of shares: When a company forfeits the shares on account of non-payment, of calls on shares, shareholder’s shares are forfeited and he ceases to be a member of the company.

(v) Surrender of shares: When a company accepts surrender of partly paid-up shares if permitted by its Articles, the membership of the shareholder is terminated.

(vi) Redemption of Preference shares: When the redeemable preference shares are redeemed (repaid) to the shareholder by the company as per the terms of issue, the membership comes to an end.

(vii) Right of lien as shares: When a shareholder has some obligation towards the company, it is said to be lien on shares by the company. It means shareholders cannot sell their shares until they clear their dues or obligations if any. In case of his failure to pay his dues company cancels his shares and his membership comes to an end.

Question 5.
Explain the Rights of a Member of a company.
Answer:
Being a part of a company, a member enjoys certain rights and has to fulfill certain duties.
Right of members are as follows:

1. Right of accessing books and documents: A member can get copies of Memorandum and Articles of Association, Auditors and Directors Reports, Balance Sheet and Profit and Loss A/c. Members can also check the Register of members.
2. Right to participate in General meetings: Members have the right to receive notice and agenda of all general meetings, attend the meeting personally or appoint a proxy, vote at the meeting, etc.
3. Right to appoint and remove a Director: Member of a company has the right to appoint and remove the directors.
4. Shareholding rights: Shareholders have the right to receive a share certificate, transfer his shares, to get right issue and bonus issue shares.
5. Right to Class Action Suit: The Act confers the right of Class Action Suit to members against the company or their directors in the time of any unlawful or wrongful act. They can file a petition to wind up the company.
6. Right to receive surplus assets: In the event of the winding-up of the company, the member has the right to get a share in surplus assets of the company.
7. Right with respect to the company’s accounts and its audit: Members have the right to approve the annual accounts at the Annual General Meeting. He can appoint auditors, fix their salary, and has a right to remove the auditors.
8. Right to participate in the profit of the company: Members invest money in the company and expect a certain return in form of dividends. They have the right to receive dividends within 30 days of its declaration in the Annual General Meeting.
9. Right to make Fundamental Corporate Decision: Members hold powers to decide at a meeting on important matters like a change of Registered office of the company, increase authorized capital of the company, change the objects of the company, to amend an Articles of Association, right of acquisitions, mergers and takeovers by the company, appoint a sole selling agents for the company, rights to close or wind up the company.

Activity (Textbook Page No. 72)

Find the composition of shareholding of a listed public company.
Answer:
“Listed Public Companies” means a public company that has any of its securities listed in any recognized stock exchange. One of the advantages to the shareholder(s) of a Public Company is free transferability of shares and in the case of Listed Companies such free transferability also ensures quick liquidity of the investment. However, such liquidity is only possible when there is an existence of buyers and sellers in the market. In many Listed Companies, a large chunk of the paid-up capital is held by the promoter group which reduces the public shareholding to a great extent.

The promoter group usually refrains from trading in their shares which in turn reduces the number of buyers and sellers in the market and the liquidity factor also gets affected. In order to ensure a minimum level of Public Shareholding in Listed Public Companies and to provide liquidity to the investors, the Ministry of Finance amended the Securities Contracts (Regulation) Rules, 1957 [SCCR, 1957] twice in the year 2010. The press note released by the Ministry of Finance upon the first amendment of SCCR, 1957 stated “A dispersed shareholding structure is essential for the sustenance of a continuous market for listed securities to provide liquidity to the investors and to discover fair prices”.

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 6 Directors and Key Managerial Personnel of a Company Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 6 Directors and Key Managerial Personnel of a Company

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
_____________ comprises of a team of Directors.
(a) Board of Directors
(b) Board of Trustees
(c) Board of Managers
Answer:
(a) Board of Directors

Question 2.
_____________ can be a director.
(a) An Individual
(b) A Firm
(c) A Body corporate
Answer:
(a) An individual

Question 3.
Upto _____________ as maximum directors are allowed to a company.
(a) five
(b) fifteen
(c) fifty
Answer:
(b) fifteen

Question 4.
A maximum of _____________ Directorships is allowed to a person.
(a) two
(b) ten
(c) twenty
Answer:
(c) twenty

Question 5.
A maximum of _____________ Directorships of a public company is allowed to a person.
(a) one
(b) ten
(c) twenty
Answer:
(b) ten

Question 6.
_____________ is a unique identification number required to be a Director.
(a) PIN
(b) DIN
(c) TIN
Answer:
(b) DIN

Question 7.
_____________ powers are the powers given to Board under the Act.
(a) Statutory
(b) Managerial
(c) Administrative
Answer:
(a) Statutory

Question 8.
Director represents company in his role as _____________
(a) Agent
(b) Managing Partner
(c) employee
Answer:
(a) Agent

Question 9.
Managing Director is appointed for a period of _____________ years
(a) 5
(b) 10
(c) 15
Answer:
(a) 5

Question 10.
_____________ is required to work under superintendence, control, guidance of the Board.
(a) Government
(b) ROC
(c) Managing Director
Answer:
(c) Managing Director

Question 11.
_____________ is an employee of the company.
(a) Alternate director
(b) Non-executive Director
(c) Whole-time director
Answer:
(c) Whole time Director

Question 12.
_____________ need not be a director of the company.
(a) Manager
(b) Managing Director
(c) Whole-time director
Answer:
(a) Manager

Question 13.
_____________ needs a whole time director.
(a) Listed company
(b) Partnership
(c) OPC
Answer:
(a) Listed company

Question 14.
To provide guidance to Board is _____________ duty of Company Secretary.
(a) Personal
(b) General
(c) Statutory
Answer:
(c) Statutory

Question 15.
Only a member of _____________ can be a practicing Company Secretary.
(a) ICAI
(b) ACCA
(c) ICSI
Answer:
(c) ICSI

Question 16.
_____________ is to be prepared in prescribed form MR-3.
(a) Annual Report
(b) Auditors Report
(c) Secretarial Audit Report
Answer:
(c) Secretarial Audit Report

1B. Match the pairs.

Question 1.

Answer:

Question 2.

Answer:

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
The organization with distinct features of separate ownership and management.
Answer:
Joint-stock company

Question 2.
The officer is responsible for the company’s finances.
Answer:
Chief Financial Officer

Question 3.
The body of elected representatives of the company.
Answer:
The Board of Directors

Question 4.
The officer is a statutory and administrative officer and also acts as co-ordinator of the company.
Answer:
Company Secretary

Question 5.
Qualification required to be a Company Secretary.
Answer:
Member of ICSI

Question 6.
Agents, Trustees, and Managing Partners of the company.
Answer:
The Board of Directors

Question 7.
The audit which checks compliances of different legislations.
Answer:
Secretarial audit

Question 8.
This KMP signs documents of the company requiring authentication by the company.
Answer:
Company Secretary

Question 9.
The nature of the relationship of Directors with the company.
Answer:
Fiduciary

Question 10.
Name the Secretarial Standard – 1.
Answer:
Secretarial Standards on meetings of the BOD

Question 11.
Name the Secretarial Standard – 2.
Answer:
Secretarial Standards on General Meeting

Question 12.
Name the Secretarial Standard – 3.
Answer:
Secretarial Standards on Dividend

1D. State whether the following statements are True or False.

Question 1.
A large number of shareholders necessitates the company to have a separate managerial body.
Answer:
True

Question 2.
The maximum number of Directors allowed to a company is 15 (fifteen).
Answer:
True

Question 3.
A public company should have a minimum of 10 (ten) directors.
Answer:
False

Question 4.
DIN is required for Secretaryship.
Answer:
False

Question 5.
Executive Director is called an outside Director.
Answer:
False

Question 6.
The promoter of a company cannot be the Independent Director.
Answer:
True

Question 7.
Only individuals can be directors.
Answer:
True

Question 8.
The casual vacancy of the Board is filled by the members.
Answer:
False

Question 9.
To function as per Articles of Association of the company is the statutory duty of the Board.
Answer:
True

Question 10.
A Director is an employee of the company.
Answer:
False

Question 11.
The Managing Director is appointed by a resolution.
Answer:
True

Question 12.
The minimum and maximum age to be a Managing Director is 21 and 70 respectively.
Answer:
True

Question 13.
A company may appoint more than one M.D.
Answer:
True

Question 14.
Indian companies prefer a Managing Director over a Manager.
Answer:
True

1E. Find the odd one.

Question 1.
Woman Director, Promoter, Executive Director.
Answer:
Promoter

Question 2.
Absent at Board Meeting, failure to disclose an interest, DIN.
Answer:
DIN

1F. Complete the sentences.

Question 1.
Separate ownership and management is a unique feature of _____________
Answer:
Company

Question 2.
Minimum number of Directors for a private company should be _____________
Answer:
Two

Question 3.
Minimum number of Directors for a public company should be _____________
Answer:
Three

Question 4.
Minimum number of Directors for an OPC should be _____________
Answer:
One

Question 5.
First Directors of a company are appointed by _____________
Answer:
Promoter

Question 6.
At least one Woman Director is required by _____________ company.
Answer:
Listed Company

Question 7.
Casual vacancy on Board is filled by _____________
Answer:
Board

Question 8.
Director is the guardian of interest of company as _____________
Answer:
Trustees

Question 9.
First Secretary is appointed by _____________
Answer:
Promoters

Question 10.
The audit which checks the compliance of Companies Act is called as _____________
Answer:
Secretarial Audit

1G. Select the correct option from the bracket.

Question 1.

(Every Listed Company, Appointee by Promoters, Appointed in Place of a director who is absent, Retire by Rotation)
rotation)
Answer:

1H. Answer in one sentence.

Question 1.
Who is the officer responsible for the company’s financial plan?
Answer:
Chief Financial Officer is responsible for the company’s financial plan.

Question 2.
What is the importance of Secretarial Standards?
Answer:
The main aim of Secretarial Standards is to standardize all diverse secretarial practices prevailing in the corporate world.

Question 3.
Who provides guidance to the Board of Directors?
Answer:
Company Secretary provides guidance to the Board of Directors.

Question 4.
What is the tenure of ‘Managing Director?
Answer:
The tenure of the Managing director is Five Years.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
A public company must have a minimum of 15 directors.
Answer:
A public company must have a minimum of 03 directors.

Question 2.
First Directors are appointed by ROC.
Answer:
First Directors are appointed by Promoters.

Question 3.
Secretarial Standards are given by the Companies Act, 2013.
Answer:
Secretarial Standards are given by the Institute of Company Secretaries of India.

2. Explain the following terms/concepts.

Question 1.
Director
Answer:
Director is a person appointed to manage, direct and supervise the company. According to Sec-2(34) of the act, “Director means a director appointed to the Board of the company”.

Question 2.
Managing Director
Answer:
Managing Director is a director appointed by virtue of an agreement with the company; or by passing a resolution in the general meeting or by its Board of Directors or by virtue of Memorandum of Associations or Articles of Association. He is entrusted with substantial powers of management of the affairs of the company. He is appointed for a period of 5 years.

Question 3.
Independent Director
Answer:
As per section 149 of the Companies Act, 2013, any director other than a managing director, whole-time director, or a nominee director is termed as an independent director.

Question 4.
Executive Director
Answer:
Executive Director is also called as ‘Whole Time Director’, He is in full-time employment with the company. He plays an important role in the day-to-day management of the company.

Question 5.
Non-Executive Director
Answer:
Non-Executive Director is known as ‘Outside Director’. Non-Executive Director is not involved in the day-to-day management of the company. He is appointed to get second opinions from the board.

Question 6.
Alternate Director
Answer:
Alternate Director is a director who is nominated by the board in the place of absence director. He is appointed for a minimum of 3 months.

Question 7.
Casual vacancy of Director
Answer:
The casual vacancy is created due to the death of a director, which is filled by the board at the board meeting. It is valid till the vacating director’s incomplete term.

Question 8.
Chief Financial officer
Answer:
An officer responsible for the company’s finances is called Chief Financial Officer. He need not be a director of the company. He has to compulsory sign the audited financial statements of the company.

Question 9.
Company Secretary
Answer:
The company secretary is appointed to perform functions of the company and he is appointed by a resolution of the Board. He has to follow the terms and conditions decided by the board. He should be a member of ICSI.

Question 10.
Secretarial Standard
Answer:
It is formulated by ICSI and approved by Central Government through the Ministry of Corporate Affairs (MCA). The main purpose of setting Secretarial Standards is to standardized fine corporate government practices prevailing in companies.

Question 11.
Secretarial Audit
Answer:
It is an audit that monitors the compliance requirements of the company. The main aim of such an audit is to detect errors and mistakes in compliance with the rules and regulations of the Companies Act. It builds confidence among regulators, management, and shareholders of the company.

Question 12.
The Board of Directors
Answer:
Representatives elected by the Equity Shareholder in their Annual General Meeting are called as Board of Directors. They are allotted certain powers to control and manage the business of the firms.

3. Study the following case/situation and express your opinion.

1. Mr. A is a commerce graduate. He has vast experience in the field of finance and the financial market. He wishes to become a director of PQR Co. Ltd.

Question (a).
Is he required to obtain DIN?
Answer:
He was required to obtain DIN. It is compulsory to acquire DIN for every Director.

Question (b).
Can PQR Co. Ltd. object to his directorship on lack of specialized qualification?
Answer:
The company act has not prescribed any academic or professional qualification for directors, so he can obtain directorship.

Question (c).
If he is appointed as director of PQR Co. Ltd, is he entitled to remuneration?
Answer:
The managerial position entitles him to get managerial remuneration so if Mr. A is appointed as director of PQR Co. Ltd then he is entitled to remuneration.

2. Mr. Z is a member of the Institute of Company Secretaries of India.

Question (a).
Can Mr. Z be appointed as pro-tem Secretary of LMN Ltd. which is under formation?
Answer:
Yes, Mr. Z can be appointed as pro-tem secretary of LMN Ltd. which is under formation. The First Secretary is appointed by the promoters of the company.

Question (b).
Can Mr. Z work as Secretarial Auditor?
Answer:
Yes, Mr. Z can work as Secretarial Auditor because he is a member of ICSI.

Question (c).
Mr. Z wishes to be employed as whole time Secretary in companies ABC Ltd. and OPC Ltd. Is he allowed?
Answer:
Mr. Z, as a whole-time secretary, cannot hold office in more than one company. So, Mr. Z can be employed either in ABC Ltd or One Person Company and not in both.

3. Mr. M wishes to be the Managing director of QRS Ltd.

Question (a).
The age of Mr. M is 30 years. Can he be appointed as MD of a company?
Answer:
Yes, Mr. M is 30 years old and the age required to be completed for MD’s post is 21 years. So he can be appointed as MD of a Company.

Question (b).
Is it necessary that Mr. M should be one of the directors on the Board of QRS Ltd?
Answer:
Yes, It is necessary that Mr. M should be one of the directors on the board of QRS Ltd. He should be appointed by the board.

Question (c).
For how long a period QRS Ltd. can appoint Mr. M. as a Managing Director?
Answer:
QRS Ltd can appoint Mr. M. as a managing director for a period of 5 years.

4. Distinguish between the following.

Question 1.
Director and Managing Director
Answer:

Question 2.
Managing Director and Manager
Answer:

Question 3.
Managing Director and Whole Time Director
Answer:

5. Answer in brief.

Question 1.
What is DIN?
Answer:

• It means Director Identification Number.
• DIN is a Unique Identification Number for an existing director or person intending to be the director of a company.
• It is compulsory to acquire DIN by Director.
• It helps in the detection and handling of offenses committed by a director.
• It is obtained through an online process by filing an application.

Question 2.
State any four powers of the Board of Directors.
Answer:

• Director is a person appointed to manage, direct and supervise the affairs of the company.
• The power of the Board of Directors are as follows:
• To appoint or remove key managerial personnel: The Board of Directors has the power to appoint and remove key managerial personnel.
• To recommend dividend: The board of directors recommends the dividend to the shareholders.
• To fill a casual vacancy in the Board: Casual vacancy in the board arises due to different reasons such as the death of a director who is filled by the Board at the Board meeting.
• To issue securities whether in India or abroad: Board of Director’s issue securities means shares, debentures, bonds) in India and abroad also.

Question 3.
Mention any four ways in which the office of a director becomes vacant.
Answer:
The office of a Director shall automatically become vacant in the following ways:

• Any disqualification: A person cannot be appointed as a director if he is of unsound mind or insolvent or convicted by the court.
• Absentee at Board meeting: Director who has been absent in the meeting of the board of directors held during the period of 12 months with or without taking leave of absence of the Board.
• Disqualification by Court or Tribunal: Director has to vacate office if he has been disqualified by an order of a court or the Tribunal.
• Provision of the Act: Director has to vacate office if he is removed under the provisions of the Companies Act.

Question 4.
State the powers of a Managing Director.
Answer:
As it is stated in the definition itself the Managing Director is entrusted with the substantial powers of management, which clearly indicates that he has been given certain important powers of routine business matters of a company.
The powers exercised by him are fellows:

• To act as a link between the Board of Directors and the managerial staff.
• To look after the management and administration of a company.
• To appoint the company employees.
• To participate in policymaking as well as policy execution.
• To sign contracts on behalf of a company.
• To decide about the investment of funds of a company.
• To receive remuneration from a company.

Question 5.
State the statutory duties of a company secretary.
Answer:
Secretary is an employee of the company. He enjoys the power and advises the management.
Statutory duties of a company secretary are as follows:

• To organize meetings and be present at all the meetings of the company.
• To maintain the minutes of all meetings.
• To issue notices and circulars to the members of the company.
• To maintain and update the Register of members and debenture holders and other books of the company.
• To file all necessary returns with the Registrar of Companies.
• To communicate with the shareholders on various matters.

6. Justify the following statements.

Question 1.
Directors are managing partners.
Answer:

• Directors have to work as a team as Board of Directors, not as an individual.
• The powers by Board are subject to provisions of the Companies Act and Memorandum and Articles of Associations.
• Director is required to perform his functions.
• He represents shareholders to conduct and manage the business of the company on their behalf.
• They are entrusted with vast powers of management and perform several functions which are proprietary in nature like allotment of shares, raising of loans, investing funds of the company.
• This is because they themselves are significant shareholders of the company.
• In fact, they are the most active shareholders of the company.
• Thus, Directors are the managing partners of the company.

Question 2.
A Director is an agent of the company.
Answer:

• Since the company is an artificial person, it needs to be represented by the Director.
• They deal on behalf of the company.
• Directors should deal skillfully, carefully, and diligently.
• Directors are held liable as an, while company is held liable as the principal.
• A Director is an agent as he acts between the company and shareholders.
• Thus, a director is an agent of the company.

Question 3.
The company has a distinct feature of separate ownership and management.
Answer:

• The company has a unique feature of separate ownership and management.
• Shareholders are its owner and Directors are its managers.
• Being an artificial person, it needs a human agent to manage and control the working of the company.
• Shareholders are scattered all over therefore management of the company by them is not possible.
• Also, the shareholders are not interested in the management of such a big organization.
• The company as an artificial person having no physical existence needs humans to control its affair.
• Thus, the company has a distinct feature of separate ownership and management.

Question 4.
DIN helps investors of the company.
Answer:

• DIN is a unique identification number for an existing director or person intending to be the director of the company.
• It is compulsory to acquire DIN by every Director.
• Din is Pre-require for e-filling of company’s documents.
• It helps the investors of the company to make a more accurate and informed decisions because they get to known the composition of the top management of the company.
• It also helps to handle the problems created due to a company after collecting or raising money from the public.
• Thus, I agree with the given statement.

Question 5.
Directors have to work as a team.
Answer:

• Directors have to work as a team of “Board of Directors” and not individually.
• He exercises the power as a Board which is subject to provision of the Act.
• Director is a representative of shareholders so he has to work collectively in the best interest of the company and its shareholders.
• He cannot take decisions alone on behalf of the company.
• Thus, directors have to work as a team.

Question 6.
Directors play a triple role.
Answer:

• Directors play a triple role i.e. in the form of an agent, as a managing partner, and as a trustee.
• As an agent, the director deals skillfully, carefully, and elegantly while representing the company with outsiders.
• As a managing partner, the director acts as a representative of the shareholder and manages the company on their behalf.
• As a trustee, the director acts as a guardian of the interest of shareholders and a company.
• They use the company’s funds in the most appropriate manner and cautiously.
• They are also the trustee of all the assets of the company.
• Thus, directors play a triple role.

Question 7.
Company Secretary plays a triple role.
Answer:

• Company Secretary plays a three-fold role in the form of – as a statutory officer, as a coordinator, and as an administration officer.
• As a statutory officer, the secretary signs the document for authentication, files annual returns to ROC, maintains various statutory registers and ensures compliance with the law.
• As a coordinator, the secretary acts as a network between the Board of Directors and other executive officers at different levels. He acts as an internal as well as external coordinator for the company.
• As an administrative officer, the secretary ensures the implementation of various policies of the company and also supervises and controls the functioning of various departments of the company.
• Thus, Company Secretary plays a triple role.

Question 8.
A director cannot be called an employee of the company.
Answer:

• Directors are elected representatives of the company’s shareholders.
• The status of an employee is within the limits of his contract and service.
• His employer holds the ultimate control to guide his activities and functions.
• These limits of an employee cannot be applied to a director.
• So a director cannot be called an employee of the company.
• Thus, a director cannot be called an employee of the company.

Question 9.
The managing Director has substantial powers of management.
Answer:
As it is stated in the definition itself the Managing Director is entrusted with the substantial powers of management, which clearly indicates that he has been given certain important powers of routine business matters of a company.
The powers exercised by him are as follows:

• To act as a link between the Board of Directors and the managerial staff.
• To look after the management and administration of a company.
• To appoint the company employees.
• To participate in policymaking as well as policy execution.
• To sign contracts on behalf of a company.
• To decide about the investment of funds of a company.
• To receive remuneration from a company.

Question 10.
Indian companies prefer to appoint a Managing Director than a Manager.
Answer:

• Indian company prefers to appoint managing director rather than manager because Managing Directors holds dual authorities and he is able to influence the board of director in a better way.
• Manager need not be a director of a company while the managing director has to be director of a company,
• The company cannot have more than one manager, while it can have more than one managing director.
• Thus, Indian companies prefer to appoint a managing director than a manager.

Question 11.
Pro-tem secretary is helpful to the company.
Answer:

• The first secretary of the company is appointed by the promoters of the company.
• The first secretary is called as ‘pro-tem’ secretary.
• Pro-tem secretary appointed by promoters may or may not be appointed as full-time or regular Secretary.
• Pro-tem secretary helps in fulfilling different formalities during the formation of the company.
• Thus, the Pro-tem secretary is helpful to the company.

Question 12.
Secretarial Standards should be in conformity with the Act.
Answer:

• The Secretarial Standards are formulated by the Institute of Company Secretaries of India and approved by the Central Government through the Ministry of Corporate Affairs.
• The Companies Act, 2013, makes compliance with the Secretarial Standard mandatory.
• It leads to provide better monitoring of compliances of law, strengthening the process of the Board, and create confidence in investors.
• The Secretarial Standards aim at achieving integrating, harmonizing, and standardizing fine corporate governance practices across all companies.
• Thus, Secretarial Standards should be in conformity with the Act.

Question 13.
Secretarial Standards lead to better legal compliance.
Answer:

• Companies follow diverse practices based on differing business cultures and varied usages over a period of time.
• The Secretarial Standards aim at achieving integrating, harmonizing, and standardizing fine, corporate governance across all companies
• It leads to provide better monitoring of compliance of the law, strengthening the process of the Board, and create confidence in investors.
• Secretarial Standards are reviewed by Secretarial Standard Board (SSB) once a year or whenever changes are made in the law.
• Thus, Secretarial Standards lead to better legal compliance

Question 14.
A secretarial Audit is required under the laws.
Answer:

• It is an audit that checks the compliance of various legislation including the Companies Act, other Corporate Acts, and economic laws.
• It aims at detecting errors and mistakes in the compliance mechanisms.
• It gives confidence to regulators, management authorities, and shareholders that the company is following a disciplined approach of evaluation and improve effectiveness and risk management.
• Thus, Secretarial Audit is required under the laws.

7. Answer the following questions.

Question 1.
Explain the Role of Directors.
Answer:
Director is a person appointed to manage, direct and supervise the affairs of the company.
The elected representatives of the shareholders are called Directors.

Role of the Directors:

• He helps the investors to take accurate decision.
• He has to fill casual vacancies on the board.
• He has to recommend dividends.
• He has to issue securities in India or abroad.
• He manages a company on behalf of the shareholder.
• He appoints the first auditor of the company.
• He can appoint or remove Key Managerial Personnel.
• He can borrow the money on behalf of the company.
• His role is full of trust, loyalty, care, and good faith.
• Directors act as a trustee, agent and managing partner for the company.

Question 2.
Explain the duties of a Director.
Answer:
A director’s relationship with a company is regarded as fiduciary in nature. It means his duty is full of trust, care, and good faith.
The duties of directors can be categorized into two heads:

1. Statutory Duties:
   • To file a return of Allotment.
   • To act in accordance with the Articles of the company.
   • To disclose an interest in a transaction.
   • To attend Board meetings.
   • To appoint first Auditors of the company.
2. General Duties:
   • Duty of good faith i.e. he must act in the best interest of the company.
   • Duty of care i.e. he must take utmost care in the performance of work assigned.
   • Duty not to delegate i.e. he is required to perform his function personally. He may delegate in case of emergency.

Question 3.
Explain the Managing Director.
Answer:
Definition: The Companies Act, has defined a Managing Director as “A Director who by virtue of an agreement with the company or of a resolution passed by a company in the general meeting or by its Board of Directors or by virtue of its Memorandum or Articles of Association, is entrusted with substantial powers of management of the company”.

Disqualification:

• Any person less than 21 years of age and more than 70 years of age.
• A person who is an undischarged insolvent person or has at any time been adjudged as an insolvent.
• A person who has suspended payment to his creditors or made a composition with them.
• A person who is, or has been convicted by a court of an offense with a sentence of more than 6 months period.

Appointment:
A Managing Director may be appointed by any one of the following ways:

• by an agreement with a company.
• by the resolution passed at the general meeting.
• by the Board of Directors.

Term of office:
The term of office of the Managing Director cannot exceed 5 years at a time, but he can be reappointed as such for a further period of five years.

The number of Managing Directorship:
A Managing Director can not act as such for more than two companies at the same time.

Remuneration:
The remuneration paid to the Managing Director is subject to the maximum limit of 5% of the net profit of a company or a monthly salary. If a company has more than one Managing Director then total remuneration paid to them (all) shall not exceed 10% of the net profit.

Powers of a Managing Director:

• To act as a link between the Board of Directors and the managerial staff.
• To look after the management and administration of a company.
• To appoint the company employees.
• To participate in policymaking as well as policy execution.
• To sign contracts on behalf of a company.
• To decide about the investment of funds of a company.
• To receive remuneration from a company.

Duties of a Managing Director:

• To act on behalf (agent) of the Board of Directors.
• To implement the decision of the Board.
• To supervise, direct, control, and guide the day-to-day affairs of the business.
• To guide the senior executives in their administrative work.
• To report to the Board about programmes made or any problem faced by a company.
• To chair the Board meetings and general meetings, if necessary.
• To manage routine work of a company.
• To sign all the contracts and documents on behalf of the company.

Question 4.
Explain the Company Secretary.
Answer:
Meaning:

• Secretary is an employee of the company and he is appointed to perform functions of a company secretary,
• He should be a member of the Institute of Company Secretaries of India (ICSI).
• The first secretary is appointed by the promoter of the company and he is called a ‘pro-tem’ secretary.
• He holds liable for non-compliance with the provisions of the Act.

Duties of a Company Secretary:
It is categorized as (A) Statutory Duties and (B) General Duties.

(A) Statutory Duties:

• To organize and attend meetings of the company.
• To prepare minutes of meetings.
• To communicate with shareholders on various matters.
• To issue notices and circulars to the members of the company.
• To maintain various Registers and books of the company
• To file returns with the ROC.

(B) General Duties:

• To provide guidance to the Board of Directors as needed.
• To discharge duties towards regulators and authorities of the company.
• To assist the Board of Directors in conducting the business of the company.
• To perform duties allotted by the Board.

Rights of a Secretary:

• To control and supervise the working of departments of the company.
• To get indemnified by the company, if any loss is suffered by the secretary.
• To sign documents requiring authentication.
• To get remuneration from the company.

Question 5.
Explain the role of the Company Secretary.
Answer:
The company secretary plays a crucial and important role in the administration of the company.
The emphasis on good governance has increased the role of the secretary in protecting the interest of investors.

Role of Company Secretary:

• Secretary as a Statutory officer:
• To sign documents for authentication.
• To sign and deliver Annual Returns and other documents and to the Registrar of Companies.
• To maintain different statutory registers like
  • Minutes of General and Board meetings of the company.
  • Registers of Members and Debenture holders Register of Directors and KMP and their shareholdings.
• To ensure compliance with the law

(ii) Secretary as a Co- ordinator:

• To implement policies framed by the Board.
• To act as a link between the Board and other executives at different levels.
• To act as a mouthpiece or spokesperson of the Board.
• To act as an internal and external coordinator.

(iii) Secretary as an Administration officer:

• To ensure implementation of the policies of the company.
• To supervise and control the functioning of different departments of the company.
• To take an overall view of different aspects of the company’s administration and develop a strong and efficient organizational setup.
• To contribute to the administration of the company.

Balbharti Maharashtra State Board 11th Biology Textbook Solutions Chapter 1 Living world Textbook Exercise Questions and Answers.

Maharashtra State Board 11th Biology Solutions Chapter 1 Living world

1. Choose correct option.

Question (A)
Which is not a property of living beings?
(a) Metabolism
(b) Decay
(c) Growth
(d) Reproduction
Answer:
(b) Decay

Question (B)
A particular plant is strictly seasonal plant. Which one of the following is best suited if it is to be studied in the laboratory?
(a) Herbarium
(b) Museum
(c) Botanical garden
(d) Flower exhibition
Answer:
(a) Herbarium

Question (C)
A group of students found two cockroaches in the classroom. They had a debate whether they are alive or dead. Which life property will help them to do so?
(a) Metabolism
(b) Growth
(c) Irritability
(d) Reproduction
Answer:
(c) Irritability

Question 2.
Distinguish between botanical gardens, zoological parks and biodiversity parks with reference to characteristics.
Answer:

3. Answer the following questions

Question (A)
Jijamata Udyan, the famous zoo in Mumbai has acclimatised Humboldt penguins. Why should penguins be acclimatised when kept at a place away from their natural habitat?
Answer:

1. Zoological park (zoo) is a type of ex-situ conservation in which wild animals are kept in captivity.
2. Humboldt penguins are native to South America and the surrounding environment differs significantly at Jijamata Udyan (zoo) in Mumbai.
3. In order to ensure that these penguins survive longer and are healthy they need to be acclimatised (adjust) to their new environment slowly.
4. If they are not acclimatised or the facilities in the zoo where the penguins are kept are not optimal/ suitable, they may develop abnormal stress and exhibit unusual behaviours due to it.
5. These penguins may also be more prone to contracting certain diseases, since they are suited to living in a particular climatic condition.
6. The enclosure of these penguins consists of water pool, air handling units and a chiller system to maintain temperatures between 12 – 14°C, where the penguins were kept for around 8 to 10 days to get acclimatised to their new environment before allowing any visitors inside the zoo.

Hence, Humboldt penguins need to be acclimatised to their new surroundings, when kept at a place away from their natural habitat.

Question (B)
Riya found a peculiar plant on her visit to Himachal Pradesh. What are the ways she can show it to her biology teacher and get information about it?
Answer:

1. Riya can press and mount the plant specimen on a herbarium sheet and preserve the dried plant material, until she returns back from her visit.
2. She can also write any available information regarding the collected specimen on the herbarium sheet, which can be useful for further studies with her biology teacher.
3. Various taxonomical aids can be useful to get information about this peculiar plant.

[Note: In order to conserve the local flora, Riya can collect photographs ofplant and describe it’s structure to her teacher.]

Question (c)
At Andaman, authorities do not allow tourists to collect shells from beaches. Why must it be so?
Answer:

1. Seashells are an important part of the coastal ecosystem and are crucial for the survival of various marine creatures.
2. They provide material for building nests of birds and also act as a substratum for attachment of algae, sea grass, sponges and various microbes.
3. Fishes use shells for hiding from predators, whereas hermit crabs use shells as temporary shelters.
4. Removal of seashells from seashores may also indirectly affect the rate of shoreline erosion.

Hence, in an attempt to protect the ecosystem, authorities in Andaman do not allow tourists to collect shells from beaches.

Question (D)
Why do we have greenhouse in botanical gardens?
Answer:

1. Greenhouse is a structure with suitable walls and a roof in which plants are grown under regulated climatic conditions.
2. Most botanical gardens exhibit ornamental plants which require stringent/ optimum climatic conditions for their growth and/or flowering.
3. The greenhouse associated with botanical gardens are also used to grow and propagate those plants that may not survive seasonal changes.

Question (E)
What do you understand from terms like in situ and ex situ conservation?
Answer:
1. In situ conservation: It includes conservation of species in their natural habitats. Grazing, cultivation and collection of products from the forests is banned in such areas. Legally protected areas include national parks, wildlife sanctuaries and biosphere reserves.
2. Ex situ conservation: It includes conservation of species outside their natural habitats. Species are conserved in botanical gardens, culture collections and zoological parks.

4. Write short notes

Question (A)
Write a short note on role of human being in biodiversity conservation.
Answer:

1. Due to rapid increase in human population and industrialization, humans have over-utilized natural resources; leading to degradation of the environment and hence only humans can help conserve the ecosystem.
2. Humans are capable of conserving and improving the quality of nature and thus, can play a major role in biodiversity conservation.
3. In order to conserve biodiversity and its environmental resources, humans must use the resources rationally and avoid excessive degradation of environment.
4. Human beings are stakeholders of the environment and need to come together to overcome pollution and improve the environment quality in order to conserve biodiversity. E.g. Ban or limit on use of harmful products (plastic, chemicals, etc.) that are toxic to various birds, animals, etc.
5. Human beings also play a role in conservation of biodiversity by establishment of various sites for in situ (national parks, wildlife sanctuaries and biosphere reserves) and ex situ (botanical gardens, culture collections and zoological parks) conservation.

Question (B)
Importance of botanical garden
Answer:
The importance of botanical gardens is as follows:

1. It is a place where there is an assemblage of living plants maintained for botanical teaching and research purpose.
2. Botanical gardens are important for their records of local flora.
3. Botanical gardens provide facilities for the collection of living plant materials for botanical studies.
4. Botanical gardens also supply seeds and material for botanical investigations.
5. The development of botanical gardens in any country is associated with its history of civilization, culture, heritage, science, art, literature and various other social and religious expressions.
6. Botanical gardens besides possessing an outdoor garden may contain herbaria, research laboratory, greenhouses and library.
7. Botanical gardens are not only important for botanical studies, but also to develop tourism in the country.

Question 5.
How can you, as an individual, prevent the loss of biodiversity?
Answer:
As individuals, we can prevent loss of biodiversity in the following ways:

1. Increasing awareness about environmental issues. Making posters that provide more information about biodiversity conservation, to raise public awareness.
2. Increased support and/ or active participation in government policies and actions laid down for conservation of biodiversity.
3. Protect various plant and animal species in our surrounding.
4. Set up bird and bat houses wherever possible.
5. Prevent felling of trees especially native plants or trees in a particular area.
6. Reduce, recycle and reuse resources. Especially, reduce pollution and use of plastic bags and other materials that are potential threats for the environment.
7. Use environment friendly products, segregate and dispose garbage correctly.
8. Convince people about the importance of trees and the need to participate in tree plantation campaign.
9. Obey the rules that fall under Biodiversity Act.

[Students can use the given points as reference and mention additional preventive measures on their own.]

Practical / Project:

Question 1.
Make a herbarium under the guidance of your teacher.
[Students are expected to perform the given activity by themselves under the guidance of their teacher.]

Question 2.
Find out information about any one sacred grove (Devrai) in Maharashtra.
Answer:
Sacred groves in Maharashtra are located in districts like Ahmednagar, Bhandara, Chandrapur, Jalgaon, Kolhapur, Nashik, Pune, Raigad, Ratnagiri, Sangli, Satara, Sindhudurg, Thane, Yavatmal.
[Source: Data as per C.P.R. Environment Education Centre, Chennai.]
e. g. Sacred grove of Parinche valley, Pune district of Maharashtra:

The Parinche valley region is comprised of the inaccessible rear part of the Purandhar fort and its surrounding valley region and is situated about 63 km to the southeast of Pune city and 18 km from Saswad town. The total area of the valley region is about 132 sq. km. Parinche is the biggest village and a nodal place in the valley. The majority (12) of the documented groves are located in the Kaldari and Pangare zones. The size of the sacred groves has however reduced due to various human related activities that have taken place in recent years.

The biggest sacred grove in the Parinche valley belongs to Buvasaheb of Tonapewadi and spreads over an area of 4.80 hectares. The forest types are unique to the groves. Presence of key species in the sacred groves varies from region to region. Two key tree species, i.e. Terminalia bellerica and Ficus spp., are present in these sacred groves which have almost disappeared from the surrounding areas.

Large buttressed trees are another important feature of well-preserved sacred groves. The presence of these tree species indicates the vegetation of the past and also the type of potential vegetation that can be regenerated in these regions.
[Source: Waghchaure, C. K., Tetali, P., Gunale, V. R., Antia, N. H., & Birdi, T. J. (2006). Sacred Groves of Parinche Valley of Pune District of Maharashtra, India and their Importance. Anthropology & Medicine, 13(1), 55-761
[Students can refer the given answer and search for more information about other sacred groves on their own.]

11th Biology Digest Chapter 1 Living world Intext Questions and Answers

Can you recall? (Textbook Page No. 01)

Whether all organism are similar? Justify your answer.
Answer:
No, all organisms are not similar.

1. Organisms on the earth exhibit great diversity.
2. Organisms are grouped as microbes, plants (autotrophs), animals (heterotrophs) and decomposers.
3. Different microbes and decomposers have various shapes and sizes.
4. Plants can be further classified on their shape, size, structure, mode of reproduction, etc. Plants also differ greatly based on the locations in which they are found, e.g. Snowy, desert, forest, aquatic, etc.
5. Even animals show a high degree of variation. They are classified as unicellular, multicellular, invertebrates, vertebrates, etc. Also, based on the environment in which they live, they are classified as terrestrial, aerial, aquatic and amphibians.

Can you tell? (Textbook Page No. 01)

Whether all organisms prepare their own food?
Answer:
No, all organisms do not prepare their own food. Organisms that prepare their own food are known as autotrophs (e.g. Green plants, certain microbes). These organisms prepare their own food in the presence of sunlight, water and carbon dioxide.

Can you recall? (Textbook Page No.01)

what is the difference between living and non-living things?
Answer:

Can we call? (Textbook Page No. 01)

Can we call reproduction as inclusive character of life?
Answer:
No, we cannot call reproduction as an inclusive character of life. Certain organisms like mules and worker bees do not reproduce and are still living. Thus, reproduction cannot be considered as an all inclusive defining characteristic of living organisms.

Can you tell? (Textbook Page No. 01)

Which feature can be considered as all-inclusive characteristic of life? Why?
Answer:
Metabolism can be considered as an all-inclusive (defining) feature of life since it is exhibited by all living organisms and does not take place in non-living things. Another all-inclusive characteristic of life is responsiveness or irritability. This is a unique property of living beings since all living beings are conscious of their surroundings.

Think about it. (Textbook Page No. 01)

(i) Can metabolic reactions demonstrated in a test tube (called ‘in vitro’ tests) be called living?
Answer:
(a) The sum total of all the chemical reactions occurring in the body is known as metabolism and no non-living object exhibits metabolism.
(b) However, metabolic reactions can be demonstrated outside the body in a test tube (cell-free medium).
(c) Thus, isolated metabolic reaction (s) outside the body of an organism, performed in a test tube is neither living nor non-living.
(d) Metabolic reactions occurring in vitro are living reactions but not living things.

(ii) Now a days patients are declared ‘brain dead’ and are on life support. They do not show any sign of self-consciousness. Are they living or non-living?
Answer:
The brain controls all life processes. Hence, when a patient is declared as ‘brain dead’, he does not carry out any of the inclusive defining characters of living things (e.g. metabolism, consciousness, etc.) and is completely dependent on machines. Since, such patients do not show any sign of self-consciousness, these patients cannot exactly be called as living.

Can you tell? (Textbook Page No. 01)

How can we study large number of organisms at a glance?
Answer:
Systematic study of organisms with the help of taxonomical aids can be used to study a large number of organisms at a glance.

Can you tell? (Textbook Page No. 03)

What are the essentials of a good herbarium?
Answer:
The essentials of a good herbarium are as follows:

1. It is essential to identify and label the collected specimen correctly.
2. Specimens should be stored in a dry place.
3. The plants are usually pressed and mounted on the sheet of paper known as herbarium sheets. Some plants are not suitable for pressing or mounting, like succulents, seeds, cones, etc. They need to be preserved in suitable liquid like formaldehyde, acetic alcohol, etc.
4. In order to preserve the specimen for longer durations, acid-free paper, special glues and inks must be used to mount the specimen so that the specimen does not deteriorate.
5. The specimens should be dried well before preparing a herbarium in order to prevent rotting of specimen.
6. It is also essential to record the date, place of collection along with detailed classification and highlighting with its ecological peculiarities, characters of the plant on a sheet.

Local names of plant specimens and name of the collector may be added. This information is given at lower right comer of sheet and is called ‘label’.

Why does the loss of biodiversity matter? (Textbook page no. 03)
Answer:

1. The loss of biodiversity is an moral and ethical issue.
2. Biodiversity helps to maintain stability in an ecosystem.
3. Humans share the environment with various other organisms and harm to these species can result in loss of biodiversity.
4. The loss of even one variety of organisms can affect the entire ecosystem. Hence, due to all these reasons, loss of biodiversity matters.

Find out. (Textbook Page No. 04)

Human being is at key position in maintaining biodiversity of earth. Find out more information about the following.

(i) Laws to protect and conserve biodiversity in India.
Answer:
a. Forest (Conservation) Act, 1980
b. Biological Diversity Act, 2002
c. Wildlife (Protection) Act, 1972
d. Environment Protection Act, 1986
[Students can find out more laws to protect and conserve Biodiversity in India]

(ii) Environmental effects of ambitious projects like connecting rivers or connecting cities by constructing roads.
Answer:
Connecting rivers or connecting cities by constructing roads have the following environmental effects:
(a) They form barriers to animals.
(b) Construction of roads requires cutting down of trees and results in large scale deforestation.
(c) They occupy large land resources resulting in loss of habitat of various species.
(d) It can alter the water flow pattern and damage many ecosystems.
(e) Increase in air, water, soil and noise pollution can disturb various animals and birds, thus affecting their behavioural pattern.

(iii) Did bauxite mining in Western Ghats affect critically endangered species like – Black panther, different Ceropegia spp., Eriocaulon spp. ?
Answer:
(a) The Western Ghats, is one of the global biodiversity hotspots and retains more than 30% of all plant, aquatic, reptile, amphibian and mammal species found in India.
(b) Recently, this ecologically sensitive region has been subjected to various developmental activities that have adversely affected the flora and fauna of the region.
(c) Bauxite mining is one such activity which has had significant negative impact on the local environment. To access bauxite ore deposits, the above-ground vegetation needs to be completely removed, causing large scale deforestation. The vegetation in the adjoining area is also affected due to dumping.
(d) The major threats of this activity include vegetation loss, forest fragmentation and biodiversity loss.
(e) Since most mines fall in Eco-Sensitive Zones (ESZ), it has seriously affected the flora and fauna of the Western Ghats.
(f) Black panthers have frequently been spotted at various locations in the Western Ghats and mining in these areas can seriously affect their health and numbers.
(g) Certain species of Ceropegia and Eriocaulon that are endemic in the area have been reported to be critically endangered.
[Source: Chandore A. (2015) Endemic and threatened flowering plants of Western Ghats with special reference to Konkan region of Maharashtra. Journal of Basic Sciences. 2 (21-25)]
Hence it is most likely that bauxite mining in Western Ghats has adversely affected the critically endangered species like – Black panther, different Ceropegia spp., Eriocaulon spp.

Internet my friend. (Textbook Page No. 02)

Collect information about Prof. Almeida, Prof. V. N. Naik, Dr. A. V. Sathe, Dr. P. G. Patwardhan with reference to their taxonomic work and biodiversity conservation.
Answer:
1. Prof. Almeida:
Prof. (Dr.) Marselin R. Almeida was a renowned Plant Taxonomist and Medicinal Plant Consultant of India. He was a curator at the Blatter Herbarium (Mumbai). He discovered four new species of pteridophytes from Bombay presidency. His work includes – Pteridophytes of Maharashtra and Flora of Mahabaleshwar. He has contributed to the Flora of Maharashtra, Sawantwadi and its adjoining areas along with Dr. S. M. Almeida.

2. Prof. V. N. Naik:
Prof. V. N. Naik is a renowned ‘Angiosperms Taxonomist’ of India. He completed the Flora of Marathwada. He has produced 15 Ph.D., 110 research articles and 6 books. His book on ‘Taxonomy of Angiosperms’ (Tata McGraw-Hill Education, 1984) is widely used throughout the world. He is currently a faculty of Dr. Babasaheb Ambedkar Marathwada University, Aurangabad.

3. Dr. A. V. Sathe:
Collection and taxonomic studies of mushrooms in Maharashtra started around 1974. Prof. A.V. Sathe and his team were amongst the first to begin these studies. They recorded 75 species distributed in 43 genera. These species were collected from Maharashtra, Karnataka and Kerala. The collection of these species was documented in the form of a Monograph on Agaricales.
[Source: Borkar P., Doshi A., Navathe D. (2015) Mushroom diversity of Konkan region of Maharashtra, India. Journal of Threatened Taxa. 7(10): 7625-7640]

4. Dr. P. G. Patwardhan:
Dr. Patwardhan and his associates at the M.A.C.S. Research Institute, Pune-renamed as Agharkar Research Institute (ARI), Pune have performed detailed studies on lichens. His school is in possession of over 600 species of crustose lichens, obtained after intensive collection programmes. These specimens have been deposited in the Ajarekar Mycological Herbarium in the Department of Mycology and Plant Pathology at the M.A.C.S. Research Institute, Pune.
[Source:
http://lib.unipune.ac.in:8080/xmlui/bitstreamfhandle/l23456789/7451/07_introduction.pdf? sequence=7&is Allowedly]
[Students are expected to find more information on their own.]

Can you tell? (Textbook Page No. 03)

Why should we visit botanical gardens, museums and zoo?
Answer:

1. Botanical gardens, museums and zoos are taxonomical aids which can be used to study biodiversity.
2. Botanical gardens have a wide range of plant species that are protected and preserved which can be observed and studied.
3. Museums help gain information about various plants and animals that are preserved and may even be extinct. They act as reference hubs for biodiversity studies.
4. Zoos provide information about various animals.

They also harbour certain endangered animals and help us understand the role of biodiversity conservation. They can also be visited to study the food habits and behaviour of animals. Hence, we should visit botanical gardens, museums and zoos.

Can you tell? (Textbook Page No. 03)

What is ‘ex-situ’and ‘in-situ’ conservation?
Answer:
1. In situ conservation: It includes conservation of species in their natural habitats. Grazing, cultivation and collection of products from the forests is banned in such areas. Legally protected areas include national parks, wildlife sanctuaries and biosphere reserves.
2. Ex situ conservation: It includes conservation of species outside their natural habitats. Species are conserved in botanical gardens, culture collections and zoological parks.

Internet my friend. (Textbook Page No. 04)

(a) Collect information about botanical gardens, zoological parks and biodiversity hotspots in India.
Answer:
a. Botanical gardens in India:

b. Zoological Parks in India:

c. Biodiversity hotspots in India:

[Students are expected to use the given table as reference and collect more information on their own.]

(ii) Collect information of endemic flora and fauna of India.
Answer:
(a) Endemic flora:
Albizia sikharamensis (Mimosaceae), Argvreia arakuensis (Convolvulaceae), Arundinella setosa (Poaceae), Acacia diadenia (Mimosaceae), Citrus assamensis (Rutaceae), Magnolia bailloni (Magnoliaceae), etc.

(b) Endemic fauna:
Bare Bellied Hedgehog (Paraechinus nudiventris), Andaman Shrew (Crocidura andamanensis), Aruanchal Macaque (Macaca munzala), Car Nicobar Rat (Rattus palmarum), Peter’s Tube-nosed Bat (Harpiola grisea) etc.
[Source: http://faunaofindia.nic.in/PDFVolumes/spb/056/index.pdf]
[Students are expected to use the given sources and find more information on their own.

Balbharti Maharashtra State Board 12th Chemistry Textbook Solutions Chapter 3 Ionic Equilibria Textbook Exercise Questions and Answers.

Maharashtra State Board 12th Chemistry Solutions Chapter 3 Ionic Equilibria

1. Choose the most correct answer :

Question i.
The pH of 10^-8 M of HCl is
(a) 8
(b) 7
(c) less than 7
(d) greater than 7
Answer:
(c) less than 7

Question ii.
Which of the following solution will have pH value equal to 1.0?
(a) 50 mL of 0.1M HCl + 50mL of 0.1 M NaOH
(b) 60 mL of 0.1M HCl + 40mL of 0.1 M NaOH
(c) 20 mL of 0.1M HCl + 80mL of 0.1 M NaOH
(d) 75 mL of 0.2M HCl + 25mL of 0.2 M NaOH
Answer:
(d) 75 mL of 0.2M HCl + 25mL of 0.2 M NaOH

Question iii.
Which of the following is a buffer solution ?
(a) CH₃COONa + NaCl in water
(b) CH₃COOH + HCl in water
(c) CH₃COOH + CH₃COONa in water
(d) HCl + NH₄Cl in water
Answer:
(c) CH₃COOH + CH₃COONa in water

Question iv.
The solubility product of a sparingly soluble salt AX is 5.2 x 10^-13. Its solubility in mol dm^-3 is
(a) 7.2 × 10^-7
(b) 1.35 × 10^-4
(c) 7.2 × 10^-8
(d) 13.5 × 10^-8
Answer:
(a) 7.2 × 10^-7

Question v.
Blood in human body is highly buffered at pH of
(a) 7.4
(b) 7.0
(c) 6.9
(d) 8.1
Answer:
(a) 7.4

Question vi.
The conjugate base of [Zn(H₂O)₄]²⁺ is
(a) [Zn(H₂O)₄]²⁺ NH3
(b) [Zn(H₂O)₃]²⁺
(c) [Zn(H₂O)₃OH]⁺
(d) [Zn(H₂O)H]³⁺
Answer:
(c) [Zn(H₂O)₃OH]+

Question vii.
For pH > 7 the hydronium ion concentration would be
(a) 10^-7 M
(b) < 10^-7 M
(c) > 10^-7 M
(d) ≥ 10^-7 M
Answer:
(b) < 10^-7 M

2. Answer the following in one sentence :

Question i.
Why cations are Lewis acids ?
Answer:
Since cations are deficient of electrons they accept a pair of electrons, hence they are Lewis acids.

Question ii.
Why is KCl solution neutral to litmus?
Answer:

1. Since KCl is a salt of strong base KOH and strong acid HCl, it does not undergo hydrolysis in its aqueous solution.
2. Due to strong acid and strong base, concentrations [H₃O⁺] = [OH^–] and the solution is neutral.

Question iii.
How are basic buffer solutions prepared?
Answer:

1. Basic buffer solution is prepared by mixing aqueous solutions of a weak base like NH₄OH and its salt of a strong acid like NH₄Cl.
2. A weak base is selected according to the required pH or pOH of the solution and dissociation constant of the weak base.

Question iv.
Dissociation constant of acetic acid is 1.8 × 10^-5. Calculate percent dissociation of acetic acid in 0.01 M solution.
Answer:
Given : K_a = 1.8 x 10^-5; C = 0.01 M
Percent dissociation = ?

∴ Percent dissociation = α × 100
= 4.242 × 10^-2 × 10²
= 4.242%
Percent dissociation = 4.242%

Question v.
Write one property of a buffer solution.
Answer:
Properties (or advantages) of a buffer solution :

• The pH of a buffer solution is maintained appreciably constant.
• By addition of a small amount of an acid or a base pH does not change.
• On dilution with water, pH of the solution doesn’t change.

Question vi.
The pH of a solution is 6.06. Calculate its H⁺ ion concentration.

Question vii.
Calculate the pH of 0.01 M sulphuric acid.
Answer:
Given : C = 0.01 M H₂SO₄, pH = ?
\(\mathrm{H}_{2} \mathrm{SO}_{4(\mathrm{aq})} \longrightarrow 2 \mathrm{H}_{(\mathrm{aq})}^{+}+\mathrm{SO}_{4(\mathrm{aq})}^{2-}\)
∴ [H₃O⁺] = 2 × 0.01 = 0.02 M
PH = -log₁₀ [H₃O⁺]
= -log₁₀ 0.02
= –\((\overline{2} .3010)\)
= 2 – 0.3010
= 1.6990
pH = 1.6990.

Question viii.
The dissociation of H₂S is suppressed in the presence of HCl. Name the phenomenon.
Answer:
The weak dibasic acid H₂S is dissociated as follows :

When HCl is added, it increases the concentration of common ion H₃O⁺.
\(\mathrm{HCl}_{(\mathrm{aq})}+\mathrm{H}_{2} \mathrm{O}_{(\mathrm{l})} \rightarrow \mathrm{H}_{3} \mathrm{O}_{(\mathrm{aq})}^{+}+\mathrm{Cl}_{(\mathrm{aq})}^{-}\)
Hence by Le Chaterlier’s principle, the equilibrium is shifted from right to left, suppressing the dissociation of weak electrolyte H₂S.

Question ix.
Why is it necessary to add H₂SO₄ while preparing the solution of CuSO₄?
Answer:
CuSO₄ is a salt of strong acid H₂SO₄ and weak base Cu(OH)₂. CuSO₄ in aqueous solution undergoes hydrolysis and forms a precipitate of Cu(OH)₂ and solution becomes turbid.
CuSO₄ + 2H₂O ⇌ CU(OH)₂↓ + H₂SO₄
OR
CuSO₄ + 4H₂O ⇌ Cu(OH)₂ + 2H₃O⁺ + \(\mathrm{SO}_{4}^{2-}\)
When H₂SO₄ is added, the hydrolysis equilibrium is shifted to left hand side and Cu(OH)₂ dissolves giving clear solution.

Question x.
Classify the following buffers into different types :
a. CH₃COOH + CH₃COONa
b. NH₄OH + NH₄Cl
c. Sodium benzoate + benzoic acid
d. Cu(OH)₂ + CuCl₂
Answer:
(a) Acidic buffer (CH₃COOH + CH₃COONa)
(b) Basic buffer (NH₄OH + NH₄Cl)
(c) Acidic buffer (Sodium benzoate + benzoic acid)
(d) Basic buffer (Cu(OH)₂ + CuCl₂)
[Note : Cu(OH)₂ being insoluble is not used to prepare a buffer solution.]

3. Answer the following in brief :

Question i.
What are acids and bases according to Arrhenius theory ?
Answer:
According to Arrhenius theory :
Acid : It is a substance which contains hydrogen and on dissolving in water produces hydrogen ions (H⁺) E.g. HCl
\(\mathrm{HCl}_{(\mathrm{aq})} \rightleftharpoons \mathrm{H}_{(\mathrm{aq})}^{+}+\mathrm{Cl}_{(\mathrm{aq})}^{-}\)

Base : It is a substance which contains OH group and on dissolving in water produces hydroxyl ions (OH^–). E.g. NaOH
\(\mathrm{NaOH}_{(\mathrm{aq})} \rightleftharpoons \mathrm{Na}_{(\mathrm{aq})}^{+}+\mathrm{OH}_{(\mathrm{aq})}^{-}\)

Question ii.
What is meant by conjugate acid-base pair?
Answer:
Conjugate acid-base pair : A pair of an acid and a base differing by a proton is called a conjugate acid-base pair.

Question iii.
Label the conjugate acid-base pair in the following reactions
a. HCl + H₂O ⇌ H₃O⁺ + Cl^–
b. \(\mathrm{CO}_{3}^{2-}\) + H₂O ⇌ OH^– + \(\mathrm{HCO}_{3}^{-}\)
Answer:

Question iv.
Write a reaction in which water acts as a base.
Answer:

Since water accepts a proton, it acts as a base.

Question v.
Ammonia serves as a Lewis base whereas AlCl₃ is Lewis acid. Explain.
Answer:

• Since ammonia molecule, NH3 has a lone pair of electrons to donate it acts as a Lewis base.
• AlCl₃ is a molecule with incomplete octet hence it is electron deficient and acts as a Lewis acid.

Question vi.
Acetic acid is 5% ionised in its decimolar solution. Calculate the dissociation constant of acid.
Answer:
Given : C = 0.1 M; Dissociation = 5%, K_a=2 Percent dissociation

Dissociation constant of acid = K_a = 2.63 × 10^-4

Question vii.
Derive the relation pH + pOH = 14.
Answer:
The ionic product of water, Kw is given by,
Kw = [H₃O⁺] × [OH^–]
At 298 K, K_w = 1 × 10^-14
∴ pK_w = -log₁₀K_w = log₁₀ 1 x 10^-14 = 14
∵ [H₃O⁺] × [OH^–] = 1 × 10^-14
Taking logarithm to base 10 of both sides,
log₁₀ [H₃O⁺] + log₁₀ [OH^–] = log₁₀ 1 x 10^-14
Multiplying both the sides by -1,
-log₁₀ [H₃O⁺] -log₁₀ [OH^–] = -log₁₀ 1 x 10^-14
∵ pH = -log₁₀ [H₃O⁺]; pOH = -log₁₀ [OH^–];
pKw = – log₁₀ K_w
∴ pH + pOH = pK_w
OR pH + pOH =14

Question viii.
Aqueous solution of sodium carbonate is alkaline whereas aqueous solution of ammonium chloride is acidic. Explain.
Answer:
(A) (i) Sodium carbonate is a salt of weak acid and strong base.
(ii) In aqueous solution it undergoes hydrolysis.

(iii) Strong base dissociates completely while weak acid dissociates partially since [OH^–] > [H₃O⁺], the solution is basic.

(B) (i) Ammonium chloride is a salt of strong acid and weak base.
(ii) In aqueous solution it undergoes hydrolysis

(iii) Since [H⁺] or [H₃O⁺ ] > [OH^–] the solution is acidic.

Question ix.
pH of a weak monobasic acid is 3.2 in its 0.02 M solution. Calculate its dissociation constant.
Answer:
Given : pH = 3.2; C = 0.02 M; K_a = ?
pH = -log₁₀ [H⁺]
∴ [H⁺] = Antilog – pH
= Antilog – 3.2
= Antilog \(\overline{4} .8\)
= 6.31 × 10^-4M

K_a = cα²
= 0.02 × (0.0315)²
= 1.984 × 10^-5
Dissociation constant = K_a = 1.984 × 10^-5

Question x.
In NaOH solution [OH^–] is 2.87 × 10^-4. Calculate the pH of solution.
Answer:
Given : [OH^–] = 2.87 × 10^-4 M, pH = ?
pOH = -log₁₀ [OH^–]
= -log₁₀ 2.87 × 10^-4
= –\((\overline{4} .4579)\)
= (4 – 0.4579)
= 3.5421
∵ pH + pOH = 14
∴ pH = 14 – pOH = 14 – 3.5421 = 10.4579
pH = 10.4579.

4. Answer the following :

Question i.
Define degree of dissociation. Derive Ostwald’s dilution law for the CH₃COOH.
Answer:
(A) Degree of dissociation :
It is defined as a fraction of total number of moles of an electrolyte that dissociate into its ions at equilibrium.
It is denoted by a and represented by,
α = \(\frac{\text { number of moles dissociated }}{\text { total number of moles of an electrolyte }}\)
Or α = \(\frac{\text { Per cent dissociation }}{100}\)
∴ Per cent dissociation = α × 100

(B) Consider V dm³ of a solution containing one mole of CH₃COOH. Then the concentration of acid is, C = \(\frac{1}{V}\) mol dm³. Let α be the degree of dissociation


This is Ostwald’s dilution law.

Question ii.
Define pH and pOH. Derive relationship between pH and pOH.
Answer:
(1) pH : The negative logarithm, to the base 10, of the molar concentration of hydrogen ions, H⁺ is known as the pH of a solution.
pH = -log₁₀ [H⁺]

(2) pOH : The negative logarithm, to the base 10, of the molar concentration of hydroxyl ions, OH^– is known as the pOH of a solution.
pOH = -log₁₀ [OH^–]

Relationship between pH and pOH:
The ionic product of water, Kw is given by,
K_w = [H₃O⁺] × [OH^–]
At 298 K, K_w = 1 × 10^-14
∴ pK_w = -log₁₀K_w = log₁₀ 1 x 10^-14 = 14
∵ [H₃O⁺] × [OH^–] = 1 × 10^-14
Taking logarithm to base 10 of both sides,
log₁₀ [H₃O⁺] + log₁₀ [OH^–] = log₁₀ 1 x 10^-14
Multiplying both the sides by -1,
-log₁₀ [H₃O⁺] – log₁₀ [OH^–] = -log₁₀ 1 x 10^-14
∵ pH = -log₁₀ [H₃O⁺]; pOH = -log₁₀ [OH^–];
pK_w = – log₁₀ K_w
∴ pH + pOH = pK_w
OR pH + pOH =14

Question iii.
What is meant by hydrolysis ? A solution of CH₃COONH₄ is neutral. why ?
Answer:
Hydrolysis : A reaction in which the cations or anions or both the ions of a salt react with water to produce acidity or basicity or sometimes neutrality is called hydrolysis.

A salt of weak acid and weak base for which K_a = K_b:
Consider hydrolysis of CH₃COONH₄.

Since K_a = K_b, the weak acid CH₃COOH and weak base NH₄OH dissociate to the same extent, hence, [H₃O⁺] = [OH^–] and the solution reacts neutral after hydrolysis.

Question iv.
Dissociation of HCN is suppressed by the addition of HCl. Explain.
Answer:
The weak acid HCN is dissociated as follows :
\(\mathrm{HCN}_{(\mathrm{aq})}+\mathrm{H}_{2} \mathrm{O}_{(\mathrm{l})} \rightleftharpoons \mathrm{H}_{3} \mathrm{O}_{(\mathrm{aq})}^{+}+\mathrm{CN}_{(\mathrm{aq})}^{-}\)
The dissociation constant K_a is represented as,
K_a = \(\frac{\left[\mathrm{H}_{3} \mathrm{O}^{+}\right] \times\left[\mathrm{CN}^{-}\right]}{[\mathrm{HCN}]}\)
When HCl is added, it increases the concentration of H₃O⁺, hence in order to keep the ratio constant, then by Le Chatelier’s principle, the equilibrium is shifted from right to left, suppressing the dissociation of HCN.

Question v.
Derive the relationship between degree of dissociation and dissociation constant in weak electrolytes.
Answer:
Expression of Ostwald’s dilution law in the case of a weak electrolyte : Consider the dissociation of a weak electrolyte BA. Let V dm³ of a solution contain one mole of the electrolyte. Then the concentration of a solution is, C = \(\frac{1}{V}\)mol dm^-3. Let α be the degree of dissociation of the electrolyte.

Applying the law of mass action to this dissociation equilibrium, we have,

As the electrolyte is weak, α is very small as compared to unity, ∴ (1 – α) ≈ 1.

This is the expression of Ostwald’s dilution law. Thus, the degree of dissociation of a weak electrolyte is directly proportional to the square root of the volume of the solution containing 1 mole of an electrolyte.

Question vi.
Sulfides of cation of group II are precipitated in acidic solution (H₂S + HCl) whereas sulfides of cations of group IIIB are precipitated in ammoniacal solution of H₂S. Comment on the relative values of solubility product of sulfides of these.
Answer:
(1) In qualitative analysis, the cations of group II are precipitated as sulphides, namely HgS, CuS, PbS, etc., while cations of group IIIB are precipitated as sulphides, namely, CoS, NiS, ZnS.

(2) The sulphides of group II have extremely low solubility product (K_sp) about 10^-29 to 10^-53 while the sulphides of group IIIB have slightly higher K_sp values about 10^-20 to 10^-23.

(3) In group II, sulphides are precipitated by adding H₂S in acidic solution while in IIIB group they are precipitated in a basic solution like ammonical solution.

(4) In acidic medium due to common ion H⁺, H₂S is dissociated to very less extent but gives sufficient S^2- ion to exceed solubility product of group II sulphides of cations and precipitate them.
\(\mathrm{HCl}_{(\mathrm{aq})} \longrightarrow \mathrm{H}_{(\mathrm{aq})}^{+}+\mathrm{Cl}_{(\mathrm{aq})}^{-} ; \mathrm{H}_{2} \mathrm{~S}_{(\mathrm{aq})} \rightleftharpoons 2 \mathrm{H}_{(\mathrm{aq})}^{+}+\mathrm{S}_{(\mathrm{aq})}^{2-}\)

(5) In basic medium, H⁺ from H₂S are removed by OH^– in solution, or by NH₄OH, increasing the dissociation of H₂S and concentration of S^2-, so that IP > K_sp.

(6) Therefore group II cations are precipitated in an acidic medium while cations of group IIIB are precipitated in ammonical solution.

Question vii.
Solubility of a sparingly soluble salt get affected in presence of a soluble salt having one common ion. Explain.
Answer:
Consider the solubility equilibrium of a sparingly soluble salt, AgCl.
\(\mathrm{AgCl}_{(\mathrm{s})} \rightleftharpoons \mathrm{Ag}_{(\mathrm{aq})}^{+}+\mathrm{Cl}_{(\mathrm{aq})}^{-}\)
The solubility product, K_sp is given by,
K_sp = [Ag⁺] × [Cl^–]
Consider addition of a strong electrolyte AgNO₃ with a common ion Ag⁺.
\(\mathrm{AgNO}_{3(\mathrm{aq})} \longrightarrow \mathrm{Ag}_{(\mathrm{aq})}^{+}+\mathrm{NO}_{3(\mathrm{aq})}^{-}\)
The concentration Ag⁺ in the solution is increased, hence by Le Chatelier’s principle the equilibrium of AgCl is shifted to left hand side since the value of K_sp is constant.
Thus in the presence of a common ion, the solubility of a sparingly soluble salt is suppressed.

Question viii.
The pH of rain water collected in a certain region of Maharashtra on particular day was 5.1. Calculate the H₃O⁺ ion concentration of the rain water and its percent dissociation.
Answer:
Given : pH = 5.1, [H₃O⁺] = ?
PH = -log₁₀ [H₃O⁺]
∴ log₁₀ [H₃O⁺] = -pH
∴ [H₃O⁺] = Antilog – pH
= Antilog – 5.1
= Antilog \(\overline{6} .9\)
= 7.943 × 10^-6 M
(H₃O⁺ in rainwater is due to dissolved gases, CO₂, SO₂, etc. forming acids which dissociate giving H₃O⁺ and acidity to rainwater.)
[H₃O⁺] = 7.943 × 10^-4 M

Question ix.
Explain the relation between ionic product and solubility product to predict whether a precipitate will form when two solutions are mixed?
Answer:
If ionic product and solubility product are indicated by IP and K_sp respectively then,
(I) When IP = K_sp, the solution is saturated.
(II) When IP > K_sp, the solution is supersaturated and hence precipitation will occur, when two solutions are mixed.
(Ill) When IP < K_sp, the solution is unsaturated and precipitation will not occur, when two solutions are mixed.

12th Chemistry Digest Chapter 3 Ionic Equilibria Intext Questions and Answers

Use your brain power (Textbook Page No. 47)

Question 1.
Which of the following is a strong electrolyte ?
HF, AgCl, CuSO₄, CH₃COONH₄, H₃PO₄.
Answer:
CH₃COONH₄ is a strong electrolyte since in aqueous solution it dissociates completely. Sparingly soluble salts AgCl, CuSO₄ are also strong electrolytes.

Use your brain power (Textbook Page No. 49)

Question 1.
All Bronsted bases are also Lewis bases, but all Bronsted acids are not Lewis acids. Explain.
Answer:
NH₃ is a Bronsted base since it can accept a proton while it is also a Lewis base since it has a lone pair of electrons to donate.

(2) HCl is a Bronsted acid since it can donate a proton but it is not a Lewis acid since it can’t accept a pair of electrons.

Use your brain power (Textbook Page No. 53)

Question 1.
Suppose that pH of monobasic and dibasic acid is the same. Does this mean that the molar concentrations of both acids are identical ?
Answer:
Even if monobasic acid and dibasic acid give same pH, their molar concentrations are different. One mole of monobasic acid like HCl gives 1 mol of H⁺ while one mole of dibasic acid gives 2 mol of H⁺ in solution. Hence the concentration of dibasic acid will be half of the concentration of monobasic acid. For example, for same pH. [Monobasic acid] = [Dibasic acid]/2

Question 2.
How does pH of pure water vary with temperature ? Explain.
Answer:
Since the increase in temperature, increases the dissociation of water, its pH decreases.

Can you tell ? (Textbook Page No. 54)

Question 1.
Why (i) an aqueous solution of NH₄Cl is acidic.
(ii) while that of HCOOK basic ?
Answer:
(i) (i) Ammonium chloride is a salt of strong acid and weak base.
(ii) In aqueous solution it undergoes hydrolysis

(iii) Since [H⁺] or [H₃O⁺] > [OH^–] the solution is acidic.

(ii) HCOOK is a salt of weak acid HCOOH and strong base KOH. In aqueous solution it undergoes hydrolysis giving weak acid and strong base KOH which dissociates completely,

∴ [OH^–] > [H₃O⁺], and the solution reacts basic.

Can you think ? (Textbook Page No. 56)

Question 1.
Home made jams and jellies without any added chemical preservative additives spoil in a few days whereas commercial jams and jellies have a long shelf life. Explain. What role does added sodium benzoate play ?
Answer:
Sodium benzoate added to jams and jellies in commercial products maintains the pH constant and acts as a preservative. Hence jams and jellies are not spoiled for a very long time unlike homemade products.

Can you tell ? (Textbook Page No. 56)

Question 1.
It is enough to add a few mL of a buffer solution to maintain its pH. Which property of buffer is used here ?
Answer:
The important property of reserve acidity and reserve basicity of a buffer solution is used to maintain constant pH. Weak acid or weak base along with ions (cations or anions) from salt react with excess of added acid (H⁺) or base [OH^–] and maintain pH constant.

Use your brain power (Textbook Page No. 59)

Question 1.
What is the relationship between molar solubility and solubility product for salts given below : (i) Ag₂CrO₄ (ii) Ca₃(PO₄)₂ (iii) Cr(OH)₃.
Answer:

Can you tell ? (Textbook Page No. 60)

Question 1.
How is the ionization of NH₄OH suppressed by addition of NH₄Cl to the solution of NH₄OH ?
Answer:
Ionisation of NH₄OH is represented as follows :
\(\mathrm{NH}_{4} \mathrm{OH}_{(\mathrm{aq})} \rightleftharpoons \mathrm{NH}_{4(\mathrm{aq})}^{+}+\mathrm{OH}_{(\mathrm{aq})}^{-}\)
It has ionisation constant,
K_b = \(\frac{\left[\mathrm{NH}^{4+}\right] \times\left[\mathrm{OH}^{-}\right]}{\left[\mathrm{NH}_{4} \mathrm{OH}\right]}\)
K_b has constant value at constant temperature. When strong electrolyte NH₄Cl is added to its solution, it dissociates completely.
\(\mathrm{NH}_{4} \mathrm{Cl}_{(\mathrm{aq})} \longrightarrow \mathrm{NH}_{4(\mathrm{aq})}^{+}+\mathrm{Cl}_{(\mathrm{aq})}^{-}\)
Due to common ion \(\mathrm{NH}_{4}^{+}\), by Le Chatelier’s principle, the equilibrium is shifted from right to left, suppressing the ionisation of NH₄OH.

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 3 Formation of a Company Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 3 Formation of a Company

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
A company is ____________
(a) a human being
(b) an artificial person created by law
(c) a natural individual
Answer:
(b) an artificial person created by law

Question 2.
____________ are the persons who undertake the process of formation of a company.
(a) Promoters
(b) Directors
(c) Registrar of companies
Answer:
(a) Promoters

Question 3.
A ____________ company needs minimum two or more members.
(a) Public
(b) Private
(c) One person Company
Answer:
(b) Private

Question 4.
In a public company there must be minimum ____________ or more members.
(a) one
(b) two
(c) seven
Answer:
(c) seven

Question 5.
____________ refers to contracts entered into by the promoters on behalf of a proposed company.
(a) Pre-incorporation/Prehminary contracts
(b) Fiduciary contracts
(c) Memorandum of Association
Answer:
(a) Pre-incorporation/Preliminary contracts

Question 6.
A Director must have a ____________ to be appointed as a Director of a company.
(a) PAN
(b) DIN
(c) CIN
Answer:
(b) DIN

Question 7.
____________ has 21 digit alpha-numeric code which is a unique number assigned to every company at the time of
Incorporation.
(a) DIN
(b) PIN
(c) CIN
Answer:
(c) CIN

Question 8.
____________ is a document that invites the public to buy the shares of a company.
(a) Articles of Association
(b) Prospectus
(c) Certificate of Incorporation
Answer:
(b) Prospectus

1B. Match the pairs.

Question 1.

Answer:

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
A term which means registering a company as per provisions of Companies Act, 2013.
Answer:
Incorporation

Question 2.
Persons who undertake the necessary steps to set up a company.
Answer:
Promoters

Question 3.
The term refers to contracts entered into by Promoters with third parties on behalf of the proposed company.
Answer:
Preliminary contracts

Question 4.
The Birth Certificate of a company.
Answer:
Certificate of Incorporation

D. State whether the following statements are True or False.

Question 1.
A company is an artificial person.
Answer:
True

Question 2.
To form a Public company, there must be minimum of 2 persons/promoters.
Answer:
False

Question 3.
Promoters are persons who take the necessary steps to set up a company.
Answer:
True

Question 4.
Promoters can make secret profits while setting up a company.
Answer:
False

Question 5.
In India, companies have to be incorporated as per the provisions of the Companies Act, 2013.
Answer:
True

Question 6.
DSC is needed by Directors when they have to sign documents for e-filing.
Answer:
True

Question 7.
A company can be registered even without submitting a Memorandum of Association and Articles of Association.
Answer:
False

Question 8.
Every Director has to quote his DIN while giving his consent to be a Director of a company.
Answer:
True

Question 9.
ROC issues CIN only to certain companies.
Answer:
False

Question 10.
All companies need a Certificate of Incorporation.
Answer:
True

Question 11.
All companies need a Certificate of Commencement of business.
Answer:
False

1E. Find the odd one.

Question 1.
CIN, DIN, PAN
Answer:
PAN

Question 2.
Promoter, Prospectus, Incorporation of a company
Answer:
Prospectus

1F. Complete the sentences.

Question 1.
Promoters are the persons who undertake the process of ____________
Answer:
Formation of a company

Question 2.
The document issued by the Registrar of Companies when a company is incorporated is called as ____________
Answer:
Certificate of Incorporation

Question 3.
On incorporation of a company the ROC allows a unique identity number called as ____________
Answer:
Corporate Identity Number (CIN)

Question 4.
On behalf of a proposed company, preliminary contracts with third parties are entered by ____________
Answer:
Promoters

1G. Select the correct option from the bracket.

Question 1.

(Corporate Identity Number, Reserving name of a company, Formation of a company, Birth certificate of a company)
Answer:

1H. Answer in one sentence.

Question 1.
Who is a Promoter?
Answer:
A person/a group of persons who take initiative efforts for a formation of a company is/are called as ‘Promoter/s’.

Question 2.
What is CIN?
Answer:
It is the Corporate Identity Number, issued by ROC at the time of incorporation of the Company.

Question 3.
Which company needs a Certificate of Commencement of Business?
Answer:
Public and Private companies having share capital and which are incorporated after 2nd November 2018 need a Certificate of Commencement of Business.

Question 4.
What are Preliminary Contracts?
Answer:
Promoter entering into a contract with third parties on behalf of the company before incorporation is called as Preliminary Contracts.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
ROC prepares draft Memorandum and Articles of Association.
Answer:
Promoter prepares draft Memorandum and Articles of Association.

Question 2.
Certificate of Commencement of Business is like a birth certificate of a company.
Answer:
Certificate of Incorporation is like a birth certificate of a company.

1J. Arrange in proper order.

Question 1.
(a) Appoint First Directors
(b) Prepare Draft Memorandum of Association and Articles of Association.
(c) Come up with the business idea
Answer:
(a) Come up with the business idea
(b) Appoint first Directors
(c) Prepare draft Memorandum of Association and Article of Association.

Question 2.
(a) Incorporation of a company
(b) Commencement of a company
(c) Promotion
Answer:
(a) Promotion
(b) Incorporation of a company
(c) Commencement of Business

2. Explain the following terms/concepts.

Question 1.
Promoters
Answer:
A person who take lead to form the company is called a “Promoter”. As per Companies Act, 2013; Section 2(69) Promoter is defined as,

• A person, who has been named in the prospectus or identified by the company in Annual Return or
• Who has control on company’s affairs directly or indirectly whether as a shareholder, director or otherwise or
• In accordance with whose advice, directions, or instructions, the Board of Directors is accustomed to act.

Question 2.
Promotion
Answer:
It is the first stage of Company formation. It means taking necessary steps to incorporate a company as per the provisions of the Companies Act, 2013.

Question 3.
Certificate of Incorporation
Answer:
It is a certificate issued by the ROC, after verifying all the documents and information provided by the promotors. It is like the Birth Certificate of the company. The company becomes a legal person or a body corporate having perpetual succession on getting incorporation certificate.

Question 4.
Simplified Proforma for Incorporating Company Electronically (SPICe)
Answer:
As per new rule 38 of Companies (Incorporation) (Fourth Amendment) Rules, only one form like FORM INC-32 (SPICe) needs to be submitted at the time of incorporation.
SPICe is to be filed for applying for:

• Reservation of Name of Company
• Incorporation of the new company
• DIN for Directors
• PAN and TAN for a new company.

Question 5.
Corporate Identity Number (CIN)
Answer:
The company needs to incorporate with the Registrar of Companies. Such ROC gives CIN to the company. It is a unique identity number. CIN is a 21 digit alphanumeric code. It is to be quoted in every form and correspondence. CIN includes details of the company like listed or unlisted, industry code, state of the location, year of registration, type of ownership, and registration number.
E.g. CIN of Air India Ltd. – U62100DL1992GOI048581

3. Study the following case/situation and express your opinion.

1. Mr. Ram, Mr. Sam, and Mr. Tom who are partners have come together to convert their business into a company. They have finalized all the details about the business they want to do, the capital needed, etc. However, they do not know how to proceed with the legal formalities. Hence they appoint Mr. Shah who is a Practicing Company Secretary to help them prepare documents needed for incorporating the proposed company.

Question (a).
Can Mr. Ram, Mr. Sam, and Mr. Tom convert their partnership firm into a company?
Answer:
Mr. Ram, Mr. Sam, and Mr. Tom can convert their partnership firm into a company easily.

Question (b).
Name 2 most important documents needed to incorporate a company.
Answer:
Memorandum of Association and Articles of Association are the two most important documents for the Incorporation of the Company.

Question (c).
Will Mr. Shah be considered a Promoter of the Company? Why?
Answer:
Mr. Shah will not be considered a Promoter. Mr. Shah is an advising company secretary and will help to prepare documents needed for incorporation. Promoter means a person or group of persons who take initiative efforts for the formation of the company. Here Mr. Ram, Mr. Sam, and Mr. Tom are in the role of Promoter.

2. Mr. T along with his 5 friends have submitted all the necessary documents for incorporation of TRIM private limited company.

Question (a).
How many minimum promoters are needed to incorporate a private company?
Answer:
Minimum 2 promoters/persons are needed to incorporate a private company.

Question (b).
When can TRIM Private limited company be said to have come into existence?
Answer:
After getting Incorporating Certificate, TRIM Private limited company be said to have come into existence.

Question (c).
Name the two most important documents that must be submitted at the time of Incorporation of a company.
Answer:
There are various documents, which are needed for the Incorporation of a company like Memorandum of Association, Articles of Association, Director’s consent, etc.

3. Sagar company limited got its Certificate of Incorporation on 1st September 2018. The application for Incorporation was submitted on 16th August 2018. There were 10 promoters who took the steps to incorporate the company.

Question (a).
State the date on which Sagar company limited came into existence legally?
Answer:
Sagar Company Limited came into existence legally after receiving an incorporation certificate on 1st September 2018.

Question (b).
On which date will the company get its Corporate Identity Number?
Answer:
At the time of issuing the Incorporation Certificate, ROC allows a CIN to the company, which is 1st September 2018.

Question (c).
How many minimum promoters are needed for incorporating a public company?
Answer:
There are three types of companies like Public Company, Private Company and One Person Company, in which Public Company needs minimum 7 Promoters/Persons for incorporating.

4. Answer in brief.

Question 1.
State the contents of the Certificate of Incorporation.
Answer:
Contents of Certificate of Incorporation:

• The name of the company.
• Date of issue of Certificate of Incorporation.
• Corporate Identity Number (CIN).
• Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) of the company.
• Signature of Registrar with the date and his seal.

Question 2.
State the importance of the Certificate of Incorporation.
Answer:
Importance of Certificate of Incorporation:

• Certificate of Incorporation is like a Birth Certificate of a Company.
• It is proof by which company comes into existence.
• After getting an Incorporation Certificate, the company becomes a legal person distinct from its members.
• It is a document that gives status to the company about its perpetual succession from its date of Incorporation.
• After getting such a certificate, the company can sue and be sued by others.

Question 3.
Write a note on – Role of the Promoter.
Answer:
Role of Promoter:

• To conceive (discover) the idea of forming a business.
• To decide aims and objects of business, amount of capital, scale/size of business, etc.
• Drafting the ‘Memorandum of Association’ and ‘Articles of Association’.
• Drafting Prospectus to invite investors.
• To appoint first directors and first subscribers to Memorandum of Association and Articles of Association.
• To enter into ‘Preliminary Contract’ like hiring office premises, preparing and drafting Memorandum of Association and Articles of Association.

Question 4.
Draw the flow chart of steps in the promotion of a company.
Answer:
Steps in promotion of a company:

5. Justify the following statements.

Question 1.
Certificate of Incorporation is like a Birth Certificate of a company.
Answer:

• Certificate of Incorporation is issued by ‘Registrar of Companies, after successful completion of the Incorporation step of formation.
• It is proof by which company comes into existence.
• An incorporation Certificate brings legal status to the company.
• After getting the Incorporation Certificate company achieves the status of ‘Perpetual Succession’.
• The company can sue and can be sued after getting an Incorporation Certificate.
• The company can enter into various contracts.
• After getting an Incorporation Certificate, the company is considered an artificial person.
• Thus, a Certificate of incorporation is like a Birth Certificate of a company.

Question 2.
Every Company on incorporation gets a CIN.
Answer:

• CIN means Corporate Identity Number.
• ROC allots CIN to every company at the time of issue of Incorporation Certificate after completion of all formalities.
• It is a unique identification number that is given to every company.
• It shows details like whether a company is listed or unlisted, industrial code, state-wise location, year of incorporation, type of ownership, and registration number.
• All correspondence with ROC is conducted on basis of such CIN.
• It is compulsory given to all types of companies.
• Thus, every company gets CIN on incorporation.

Question 3.
Promoters play important role information of a company.
Answer:

• Promoter discovers the idea of business formation.
• Promoter decides aims and objects of business, amount of capital, scale/size of business.
• Drafting the ‘Memorandum of Association’ and ‘Articles of Association’.
• Drafting prospectus to invite investors.
• To appoint first directors and first subscribers of Memorandum of Association and Articles of Association,
• To enter into ‘Preliminary Contracts’ like hiring office premises, etc.
• To protect and promote the interest of the proposed company.
• Thus, promoters play important role in theformation of a company.

6. Answer the following questions.

Question 1.
Explain briefly the steps involved in the incorporation of a company.
Answer:
(i) Obtaining Digital Signature Certificate (DSC): Promoters and the proposed first directors has to obtain a DSC for e-filing.

(ii) Register DSC in the name of the Director with MCA: DSC has to be registered with MCA (Ministry of Corporate Affairs). MCA maintains details of every Director including their DIN, personal details, etc.

(iii) Obtain Director Identification Number (DIN): Proposed first Directors must apply for DIN in electronic form SPICe-32 at the time of incorporation. Every director must have DIN.

(iv) Apply for Reservation of Name: Promoter has to get the name of company approved from Central Registration Centre (CRC) by filling form RUN (Reserve Unique Name) along with prescribed fees on MCA portal. Promoters have to suggest more than one name in order of their preference. CRC will approve the name within 20 days from the date of application.

(v) Finalize Memorandum of Association and Articles of Association: It states the aims and objectives of the business. It contains legal and technical information. The promoter should finalize it. The promoters finalize both the documents with the help of the Company Secretary, legal experts, etc.

(vi) Signing, Stamping, and Dating of Memorandum and Articles of Association: Both documents must be signed by each subscriber and shall add his name, detailed address, occupation, etc. The signature of at least one witness is needed. Due stamp duty as per the Indian Stamp Duty Act, 1899 is required to be paid at the time of incorporation.

(vii) Preparation of other necessary documents for incorporation:

• Consent of Directors: Directors should give written consent in the prescribed format, about their approval to act as a director.
• Details of manager, secretary, etc Articles of Association include the names of the manager, secretary, etc.
• Declaration by subscribers to the Memorandum and First Directors: A declaration by first Directors should be taken who has subscribed to Memorandum of Association stating that he is not convicted of any offense in connection with the promotion, formation of company and has not found guilty of any fraud, etc.

(viii) Address for communication and notice of Registered office address: A company is required to have a Registered office within 30 days of incorporation. The promoter has to provide an address for communication at the time of incorporation.

(ix) Obtain a statutory declaration from Declaration by Company Secretary, Chartered Accountant, advocates, etc. is also necessary to be obtained along with Director, manager, etc. declaration status that all necessary requirements are fulfilled related to incorporation.

(x) Filing of application and document for incorporation of a company: Finally, after preparation of all documents, it has to be submitted to ROC in the prescribed form along with necessary prescribed fees for incorporation.

Question 2.
Promoters play an important role in the formation of a company. Explain.
Answer:
Promoters:
A person who take lead to form the company is called a “Promoter”.
As per Companies Act, 2013; Section 2(69) Promoter is defined as.

• A person who has been named in the prospectus or identified by the company in Annual Return or
• Who has control on company’s affairs directly or indirectly whether as a shareholder, director or otherwise or
• In accordance with whose advice, directions, or instructions, the Board of Directors is accustomed to act.

Role of Promoters:

• To conceive (discover) the idea of forming a business.
• To decide aims and objects of business, amount of capital, scale/size of business, etc.
• Drafting the ‘Memorandum of Association’ and ‘Articles of Association’.
• Drafting Prospectus to invite investors.
• To appoint first directors and first subscribers to Memorandum of Association and Articles of Association.
• To enter into ‘Preliminary Contract’ like hiring office premises, preparing and drafting Memorandum of Association and Articles of Association.

Activity (Text Book Page No. 42)

From the following CIN, identify the type of companies:

Question 1.
U74999TN20140PC098340
Answer:

Question 2.
L28920MH1945PLC004520
Answer:

Question 3.
U72900KA2003PTC033028
Answer: