Meaning of Prospectus:
According to Section 2(36) of the Companies Act, any document inviting the public to buy its shares or debentures comes under the definition of prospectus. It also applies to advertisements inviting deposits from the public.
Contents of Prospectus:
A prospectus is "the only window through which a prospective investor can look into the soundness of a company's venture". Hence it must specify at least the following matters as per Schedule II:
1. The prospectus contains the main objectives of the company, the name and addresses of the signatories of the Memorandum of Association and the number of shares held by them.
2. The name, addresses and occupation of directors and managing directors.
3. The number and classes of shares and debentures issued.
4. The qualification share of directors and the interest of directors for the promotion of company.
5. The number, description and the document of shares or debentures which within the two preceding years have been agreed to be issued other than cash.
6. The name and addresses of the vendors of any property acquired by the company and the amount paid or to be paid.
7. Particulars about the directors, secretaries and the treasurers and their remuneration.
8. The amount for the minimum subscription.
9. If the company carrying on business, the length of time of such businesses.
10. The estimated amount of preliminary expenses.
11. Name and address of the auditors, bankers and solicitors of the company.
12. Time and place where copies of balance sheets, profits and loss account and the auditor's report may be inspected.
13. The auditor's report so submitted must deal with the profit and loss of the company for each year of five financial years immediately preceding the issue of prospectus.
14. If any profit or reserve has been capitalized, the particulars of such capitalization will be stated in the prospectus.

PRIMARY FUNCTIONS:
The primary functions of a commercial bank are of three types. They are:
i. Accepting Deposits
ii. Granting Loans and Advances
iii. Creation of Credit
1. Accepting Deposits:
The basic deposit accounts offered by commercial banks are listed below. In these days banks compete with each other to attract customers by adding facilities to these deposit accounts. Broadly deposit accounts can be classified into demand deposits and time deposits.
A.Demand Deposits :
These deposits are repayable on demand on any day. This consists of savings deposits and current deposits.
a) Savings Deposits:
General public deposit their savings into this account. This account can be opened in one individual's name or more than one name. Section 25 companies also can open savings accounts. Whereas Business firms are not permitted to open savings account.
b) Current Deposits:
This account is suitable for business institutions. Individuals too can open this account. A higher minimum balance should be kept in this account. If not penal interest is charged. No interest is paid for the balance in this account.
B.Time Deposits:
They include fixed deposits and recurring deposits which are repayable after a period.
a) Fixed Deposits (FD):
Certain amount is deposited for a fixed period for a fixed rate of interest. FDR (fixed deposit receipt) is given to the depositor. Rate of interest is higher than savings account. On the date of maturity the principal along with interest for the fixed period is paid. A customer can obtain loan by depositing FDR.
b) Recurring Deposits (RD):
Certain sum is deposited into the account every month for one year or five years or the agreed period. Interest rate is more than savings deposits and almost equal to fixed deposits. At the end of the period the deposited amounts along with interest are returned to the customer.
2. Granting Loans and Advances:
The second primary function of commercial banks is lending money in order to earn interest income. Banks provide specific sums as loans which are repayable along with interest. Demand loans should be repaid whenever demanded. Term loans can be repaid after the agreed period. Advances are credit facilities provided for short period (within a year) to business community. But both terms are used interchangeably.
A. Advances:
a) Overdraft:
It is a credit facility extended mostly to current account holding business community customers. It is an arrangement reached between the banker and the credit worthy customers.
b) Cash Credit:
It is a secured credit facility given mostly to business institutions. Stock in hand, raw materials, other tangible assets, etc. are provided as collateral. A certain sum is allowed as credit for a short period.
c) Discounting of Bills:
Business customers approach banks to discount the commercial bills of exchanges and provide money. It is a short term credit instrument. Banks deduct the discount (interest) for the period mentioned in the bill and release the balance amount to the traders.
B.Loans:
Short term and medium term loans are provided by commercial banks against eligible collaterals to business concerns. It is a definite sum of money lent for a definite period. It is repayable in one lump sum or in instalments. Interest is payable on the entire loan amount. Generally commercial banks provide the following loans.
a) Housing Loan:
Taking the title deeds of the house as collateral security, based on the monthly income of the borrowing customer, banks advance medium and long term loans. The customer has to repay the loan in equated monthly instalments (EMI consists of principal and interest).
b) Consumer Loans:
Consumer durables like refrigerator, air conditioner, laptop, washing machine, television, etc. can be purchased by customers with consumer loans from banks. The product purchased is hypothecated (secured loan arrangement where the movable asset remains with the borrower) as security for the consumer loan amount. The customer pays in equated monthly instalments for a specified period.
c) Vehicle Loans:
Two wheelers, cars, buses and other vehicles can be purchased by individuals as well as institutions obtaining vehicle loans from the banks. Vehicles are hypothecated to the bank until the entire loan amount is repaid. Vehicle registration book is deposited with the bank and on full payment of loan amount it will be handed over to the customer.
d) Educational Loan:
Loan is provided by banks to students for studying undergraduate, post graduate or professional courses. Loan may be received in instalments to pay the educational fees every year. After completion of the course one year is allowed for the student to get employed. Afterwards, the student should repay the loan with interest for the entire period. Interest is charged from the date of first instalment of loan amount payment.
e) Jewel Loan:
Customers pledge their gold jewels and obtain loans from banks. The margin (percentage of value per gram that can be given as credit) requirement is fixed by the RBI. Interest should be paid every month. Otherwise interest on interest is charged. Within 12 months the customer can redeem or else can re-pledge. Jewels not redeemed even after reminders are sold in auction by banks to recover their dues.
3. Creation of Credit:
Apart from the currency money issued by the RBI, the credit money in circulation created by commercial banks influence economic activities of a country to a large extent. Credit money of commercial banks is far greater in volume than the currency money. The volume, the purposes and the sector to which this credit money is to be channelised - all these are implemented by commercial banks under the guidance of the RBI.

Comparison between Industry, commerce and Trade

Basis	Industry	Commerce	Trade
(1) Meaning	Extraction, reproduction, conversion, processing and construction of useful products.	Activities involving distribution of goods and services.	Purchase and sale of goods and services.
(2) Scope	Consists of all activities involving conversion of materials and semi-finished products into finished goods.	Comprises trade auxiliaries to trade.	Comprises exchange of goods and services.
(3) Capital	Generally large amount of capital is required.	Need for capital is comparatively less.	Small capital is needed to maintain stock and to grant credit.
(4) Risk	Risk involved is usually high.	Relatively less risk is involved	Relatively less risk is involved
(5) Side	It represents supply side of goods and services.	It represents demand side of goods and services	It represents both supply and demand
(6) Utility Creation	It creates form utility by changing the form or shape of materials.	It creates place utility by moving goods from producers to consumers	It creates possession utility through exchange.

Causes of Business Risks:
Business risks arise due to a variety of causes, which are classified as follows :
(i) Natural Causes:
(1) Human beings have little control over natural calamities like flood, earthquake, lightning, heavy rains, famine, etc.
(2) These result in heavy loss of life, property, and income in business.
(ii) Human Causes:
Human causes include such unexpected events like dishonesty, carelessness or negligence of employees, stoppage of work due to power failure, strikes, riots, management inefficiency, etc.
(iii) Economic Causes:
(1) These include uncertainties relating to demand for goods, competition, price, collection of dues from customers, change of technology or method of production, etc.
(2) Financial problems like rise in interest rate for borrowing, levy of higher taxes, etc., also come under this type of causes as they result in higher unexpected cost of operation of business.
(iv) Other Causes:
These are unforeseen events like political disturbances, mechanical failures such as the bursting of boiler, fluctuations in exchange rates etc. Which lead to the possibility of business risks.

a) Special Statute:
A public corporation is created by a special Act of the Parliament or the State Legislature. The Act defines its powers, objectives, functions and relations with the ministry and the Parliament (or State Legislature).
b) Separate Legal Entity :
A public corporation is a separate legal entity with perpetual succession and common seal. It has an existence, independent of the Government. It can own property; can make contracts and file suits, in its own name.
c) Capital Provided by the Government:
The capital of a public corporation is provided by the Government or by agencies controlled by the government. However, many public corporations have also begun to raise money from the capital market.
d) Financial Autonomy:
A public corporation enjoys financial autonomy. It prepares its own budget, and has authority to retain and utilize its earnings for its business
e) Management by Board of Directors:
Its management is vested in a Board of Directors, appointed or nominated by the Government. But there is no Governmental interference in the day-to-day working of the corporation.

Based on the functions of banks:
a) Central Bank:
1. RBI was the Central Bank of India. The functions of the RBI
2. RBI regulates and supervises the whole banking system in the country.
3. It controls the credit in the country
4. RBI has the sole right of note issue.
5. It acts as the banker for the government.
6.It acts as bankers bank.
b) Commercial Banks:
1. Banks which accept deposits from the public and grant loans to traders, individuals, agriculture, industries, transport, etc. in order to earn profit.
2. Their lending is in comparatively small amounts and mostly for short and medium period.
3. They also provide other services like remittance of funds, safe keeping of valuables, collection of cheques, issue of letters of credit, etc.
Examples:
i. State Bank of India
ii. Karur Vysya Bank
iii. Standard Chartered Bank
c) Development Banks:
1. Huge finance required for investment, expansion and modernisation of big industries and others are granted by a separate type of banks called development Banks.
2. They are also called industrial banks. The objective of development banks is not profit.
3. Their aim is to develop the country and create employment opportunities. Finance is provided by them for medium and long terms ranging from five to twenty years.
4. Development banks do not accept deposits from the public.
Examples:
Industrial Finance Corporation of India - IFCI
Small Industries Development Bank of India -SIDBI
d) Cooperative Banks:
All cooperative banks in India are owned by its customers or members who are farmers, small traders and others.
Cooperative banks in India are either urban based or rural based.
Rural cooperative banking structure in India has three tier structure for short term loans and two tier structure for long term loans (refer chart).
For both these structures the apex body is National Bank for Agricultural and Rural Development - NABARD.
Examples:
i. National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED) was set up in 1958 and registered under the Multi State Co-operative Societies Act.
ii. Tamil Nadu State Apex Cooperative Bank - Head Office, Chennai.
iii. Madurai District Central Cooperative Bank Ltd.
iv. Batlagundu Cooperative Urban Bank Ltd. Dindigul District.
e) Foreign Banks:
1. Banks which have registered office in a foreign country and branches in India are called foreign banks.
2. These banks open their offices in big cities and port towns only. Mostly they serve the interests of the multinational companies, employees and other business institutions.
3. Their profitability is higher than Indian banks. In 2017, there were 42 Foreign Banks in India and all of them were scheduled banks.
4. They have to oblige both their home country banking regulations and the RBI regulations.
Examples:
i. Bank of America - The USA
ii. Barclays Bank- The UK
iii. Deutsche Bank - West Germany
f) Regional Rural Banks - RRBs:
1. The RRBs were formed under the Regional Rural Bank Act 1976, jointly by the Central Government, State Government, and a sponsor bank.
2. Their share capital is contributed by these sponsors in the ratio of 50:15:35.
3. They are established as low cost institutions in rural areas.
4. Their objective is to develop rural economy and play supplemeñtary role to cooperative societies.
Examples:
i. Pandian Grama Bank, Tamil Nadu
ii. Pallavan Grama Bank, Tamil Nadu
g) Specialised Banks:
1. Some banks are created for special purposes by the Government.
2. Export and Import Bank of India was set up through Export-Import Bank of India Act, 1981.
3. Its main objective is to facilitate international trade of Indian businessmen.
4. EXIM Bank provides finance for import of technology export product development, pre-shipment and post-shipment and overseas investment.
Example
i. Export - Import Bank of India (EXIM Bank)
h) Local Area Banks:
1. Local Area Bank (LAB) scheme was introduced by the RBI in August 1996.
2. LABs are small private sector banks established in rural and semi-urban areas.
3. Each bank serves two or three adjoining districts only.
4. Their main objective is to mobilise rural savings (accept deposits) and invest them in the same areas.
Examples:
i. Coastal Local Area Bank, Vijayawada, Andhra Pradesh.
ii. Krishna Bhima Smruddhi Local Area Bank, Mahabubnagar, Andhra Pradesh.
iii. Subhadra Local Area Bank Limited, Kolhapur, Maharashtra.
i) Small Finance Banks:
1. Small Finance Banks (SFBs) are private sector banks set up in unbanked and underbanked regions of the country to achieve financial inclusion.
2. The objectives are; mobilising rural savings (accepting deposits) and providing credit to:
i. small and marginal farmers
ii. to micro and small industries and
ii. other unorganised sector entities.
j) Payment Bank:
1. Payment banks are formed to widen the spread of payment and financial services to small businesses, low-income households, and migrant labourers.
2. These banks should be fully networked from the beginning.
3. They offer doorstep banking payment for a small fees prescribed on the basis of the amount.
Examples:
i. Airtel Payment Bank Limited
ii. Paytm Payment Bank Limited and
iii. India Post Payment Bank Limited -IPPBs (Public Sector Bank).
k) Multilateral Development Banks - MDBs:
A Multilateral Development Bank is formed by the Governments of a group of countries. The member countries consist of developed donor countries and borrower countries. International Bank for Reconstruction and Development, Asian Development Bank, African Development Bank, and European Investment Bank are some of the MDBs.

Basis Business Profession Employment (1) Mode of Establishment Promoter's decision registration and other formalities as
prescribed by law. Membership of a professional body or certificate of practice. Service contract or letter of appointment. (2) Nature of Work Goods and services provided to the public Personalized service of expert nature Performing work assigned by the employer (3) Qualification No minimum qualification is essential Education and training in specialized field. Minimum qualification is essential. (4) Basic Motive Earning profits by satisfying needs of society. Rendering service. Earning wages or salary by serving the employer. (5) Capital Capital investment required as per size of the firm. Limited capital necessary for establishment. No capital required. (6) Reward Profits Professional fee Salary or wages (7) Risk Profits are uncertain and irregular. Fee is regular and certain, never negative Fixed and regular pay, no risk. (8) Transfer of Interest Transfer possible with
some formalities Not possible Not transferable (9) Code of Ethics No specific code of
conduct, moral and
ethical dealings only Professional code of ethics Rules and regulations
of the employing
organization

Advantages of railway transport:
1. Railways are well suited for carrying heavy and bulky goods over long distances.
2. It can provide long distance travel throughout the day and night with unbroken Services.
3. It can provide better production and safety to the goods than motor transport.
4. The goods generally carried in closed wagons are not exposed to sun, rain, etc.
5. Though initial investment is large, in the long run the operating expenses will be very low in railways and it will prove a cheaper mode of transport.
6. It requires less time than motor transport for carrying goods over long distance with greater speed.
7. It has regular schedule of timing and is available throughout the year.
8. It provides unaffected services whether rainy or shiny weather conditions.

Benefits:
a) Focusing on Core Activities:
Companies can focus on their core competence, a few areas where the company has distinct capability. The rest of the activities (non core) can be outsource to outside agencies.
b) To Fillip Economic Development:
Outsourcing stimulates entrepreneurship, encourages employment opportunities, expands exports, enables tremendous growth of the economy.
c) Encourages Employment Opportunities:
Companies that are outsourcing their non core activities provide chances for other small business units to take up the activities. This paves way for more job opportunities and new employment avenues.
d) Reduction in Investment:
Companies through outsourcing avails the services of outsiders which in turn reduces the investment requirements. The amount so available can be utilized productively and this increases the profits.
e) Quest for Excellence:
Outsourcing enables the firms to pursue excellence in two ways namely excelling themselves in the activities they do and excel outsiders by extending their capabilities through contracting out.

Dissolution of a partnership firm is taken place in two ways.
(a) without the order of the court and
(b) By order of the court.
Without the order of the court
a) By agreement or mutual consent:
A firm may be dissolved when all the partners agree to close the affairs of the firm. Just as a partnership is created by contract, it can also be terminated by contract.
b) By insolvency of all the partners but one:
If any of the partners adjudged an insolvent (or if all the partners become insolvent) it is necessary to dissolve the firm.
c) When the objective becomes illegal:
When the business carried on by the partnership becomes illegal, the partnership firm is automatically dissolved.
d) By notice of dissolution :
In the case of partnership at will when any partner gives in writing to all the other partners indicating his intention to dissolve the firm, the firm will be dissolved.
e) On certain contingencies:
Dissolution of the partnership itself may involve the dissolution of the firm unless parties agree to continue it otherwise, it will take place.
i. On the expiry of a specified period in case of partnership for a fixed term.
ii. On the completion of a particular adventure for which it has been formed in case of particular partnership.
iii. On the death of a partner.
iv. On the retirement of a partner.
v. On the insolvency of a partner.
In all the above cases if the business is not continued by the remaining partners, dissolution of the firm takes place automatically.
Dissolution through court:
(a) When a partner becomes insane
(b) Permanent incapacity of any partner
(c) Misconduct of any partner
(d) Breach of the agreement which makes the business impracticable
(e) Transfer of interest to third person
(f) Continued loss
(g) When the court finds that it is just and equitable to dissolve the firm

Advantages :
The following are some of the important advantages of co-operative societies.
a) Voluntary organization :
1. The membership of a co-operative society is open to all. Any person With common interest can become a member.
2. The membership fee is kept low so that everyone would be able to join and benefit from cooperative societies.
3. At the same time, any member who wants to leave the society is free to do so. There are no entry or exit barriers.
b) Easy formation:
1. Cooperatives can be formed much easily when compared to a company.
2. Any 25 members who have attained majority can join together for forming a cooperative society by observing simple legal formalities.
c) Democracy:
1. A co-operative society is run on the principle of "one man one vote'.
2. It implies that all members have equal rights in managing the affairs of the enterprise.
3. Members with money power cannot dominate the management by buying majority shares.
d) Equal distribution of surplus:
1. The surplus generated by the cooperative societies is distributed in an equitable manner among members.
2. Therefore all the members of the cooperative society are benefited.
3. Further the society is also benefited because a sum not exceeding 10 per cent of the surplus can be utilized for promoting the welfare of the locality in which the cooperative is located.
e) Limited liability:
1. The liability of the members in a cooperative society is limited to the extent of their capital contribution.
2. They cannot be personally held liable for the debts of the society.
f) Separate Legal entity:
1. A cooperative society enjoys separate legal entity which is distinct from its members.
2. Therefore its continuance is in no way affected by the death, insanity or insolvency of its members. It enjoys perpetual existence.

Advantages of warehousing:
1. It safeguards the stock of the merchants who do not have storing place.
2. Warehouses reduce distribution cost of the traders by storing the goods in bulk and allow the trader to take the goods in small lots to his shop.
3.  It helps in selection of channel of distribution. The producer will prefer whether to appoint a wholesaler or retailer.
4. It assists in maintaining the continuous sales and avoids the possibilities of "out of stock" position.
5.  It creates employment opportunities for both skilled and unskilled workers, to improve their standard of living.
6. It ensures price stabilization by supplying goods as and when demanded.
7. In case of damage to the goods, warehouse keeper compensates the loss caused to the owner of the goods.
8. Warehousing is needed for making the goods suitable for sale.
9. Its widens the market for the goods.
10. Warehouse provides, goods are repacked and labelled again at the time of inspection by prospective buyers.

Commerce and Trade in North India:
1. India was prosperous even during medieval period from 12th to 16th centuries despite political upheavals.
2. Balban was first sultan who paved the way in the dense forest and helped traders and their commercial caravans to move from one market place to others.
3. Alauddin Khilij brought the price to a very low ebb.
4. He encouraged import of foreign goods from Persia and subsidised the goods.
5. Arabs were dominant players in India's foreign trade.
6. They never discouraged Indian traders like Tamils, Gujaratis, etc.
7. The trade between the coastal ports were in the hands of Marwaris and Gujaratis.
8. The overland trade with central and west Asia was in the hands of Multanis who were Hindus and Khurasanis who were Afghans, Iranians and so on.
9. During Sultanate period, trade flourished due to the establishment of currency system based on silver and copper.
10. Moorish traveller described the teeming market of big cities in the Gangetic plains, Malwar, Gujarat and South India.
11. The important trade centres were Delhi, Mumbai, Ahmedabad, Sonar, Sonargoon, Jaunpur, Lahore and so on. The burgeoning foreign trade led to the development of market place in the towns and villages.
12. India's handicraft commanded a good foreign market. India imported horses, dry fruits, precious stones, glassware, high grade textiles, raw silk, corals, scented oil, velvets, etc.. from Kabul, Arabia, Europe, West Asia and China.
13. Indian products were exported to East Africa, Malaya, China and Far East.
14. Trade was conducted through overland routes with Afghanistan, Central Asia and Persia. India conducted foreign trade via land route with Quetta, Khyber pass, Iraq and Bukhara.
15. The traders of Malabar, Gujarat and foreign settlers in the ports of Calicut, Khumbat and Mangalore controlled a major business sector in port cities.

The functions of RBI can be grouped into under three heads.
(i) Leadership and supervisory functions
(ii) Traditional functions; and
(iii) Promotional functions
Leadership and Supervisory Functions:
RBI being the banking institutional head of India has to be a part of global institutions. It has to transform the quality and size of banks in India to the level of banks in developed countries.
a) India's Representative in World Financial Institutions:
In order to maintain consistency and harmony with international banking standards the RBI is associated with Basel Committee on Banking Supervision (BCBS, Switzerland) since 1997. RBI represents Government of India in International Bank for Reconstruction and Development (IBRD i.e. World Bank) and International Monetary Fund (IMF) in which India is a member since December 27, 1945.
Traditional Functions:
a) Banker and Financial Advisor to the Government:
The RBI accepts money into the Central and State Governments' accounts and make payments on their behalf. It manages Government debt and is responsible for issue of new loans.
b) Monopoly of Note Issue:
The RBI is the sole authority for the printing and issue of all currency notes in India except one rupee note. It is the duty of the RBI to ensure that sufficient number of good quality currency notes is available to the public.
Promotional Functions :
The RBI performs a wide range of promotional functions to support national objectives.
a) Nurturing Banking Habits among the Public:
It protects the depositors' interest and aim at providing cost-effective banking services in order to include more people to avail banking services. It has also taken up the task of extending the banking system territorially and functionally to the unbanked areas.
b) Grievance Settlement Measures:
RBI has appointed 20 (up to 2017) Banking Ombudsman in 20 state capitals. Banking Ombudsman Scheme is a speedy and inexpensive forum for resolution of customer complaints relating to certain services rendered by banks in India.

The following are the advantages of a Sole trader:
a) Easy Formation:
No legal formalities are required to initiate a sole trading concern. Any person capable of entering into a contract can start it, provided he has the necessary resources for it.
b) Incentive to Work hard:
There is a direct relationship between effort and reward. The fact that the entire profit can be taken by himself without sharing with anybody else induces him to work ceaselessly.
c) Small Capital:
Small capital is an important as well as the specific advantage of the sole proprietorship. The sole proprietor can start the business with small capital.
d) Credit Standing:
Since his private properties are held liable for satisfying business debts, he can get more financial assistance from others.
e) Personal Contact with the Customers:
Since sole proprietor knows each and every customer individually he can supply goods according to their taste and preferences. Thus he can cultivate personal relationship with the customers.
d) Flexibility:
The sole trader can easily adjust himself to the changing requirements of his business.