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Questions:

Generic 5

5 x 5 = 25

Bring out the distinction between a company and partnership?

Enumerate the advantages of company.(Any five).

Collect any 10 items of daily use (Packed items) and list the names of the companies manufacturing those items. Classify those companies as public and private limited companies. Which of them are Multinational Companies?

Classify the Companies According to its Incorporation.

What are Disadvantages of the Company form of organization?

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Answers Key:

Generic 5

5 x 5 = 25

S.No	Basis of Difference	Partnership Firm	Joint-Stock company
(i)	The Acts	Partnership firm is governed by the Indian Partnership Act, 1932.	Companies are governed mainly by the provisions of the Companies Act, 1956.
(ii)	Registration	Registration with the registrar of firms is only optional.	Registration with the registrar of companies is compulsory.
(iii)	Number of members	A rrurumum of two persons is necessary to form a partnership. The maximum number is restricted to 10 in the case of banking business and to 20 in other types of businesses.	The minimum number of persons required for starting a private limited company is 2, while it is 7 in the case of a public limited company. The maximum number of members is restricted to 50 exclusive of present or past employeemembers in the case of a private limited company and it is limitless for a public limited company.
(iv)	Legal status	Partnership firm has no separate existence. Partners collectively constitute the firm.	It is an artificialperson created by law. Its existence is independent of its members.
(v)	Liability	The liability of a partner is joint, several and unlimited. Personal assets of the individual partners can also be attached for satisfying the firm's debts. Anyone partner can also be sued for this purpose.	The liability of the shareholder is limited to the unpaid amount of shares held. If the shares are fully paid up,.no further liability is attached to the shareholders, however rich they may be.
(vi)	Transfer of Shares	Apartner cannot transfer his interest in the firm without the consent of all other partners.	In a public limited company, shares are fully transferable. However,certain restrictions are placed on transfer of shares in the case of private limited companies.
(vii)	Management	Management of a firm is carried on by all or by any of them acting for all. In other words, every partner is entitled to participate in the management.	Direct participation of shareholders in the management of the company is not allowed. It is entrusted to the Board of Directors elected by the members.
(viii)	Stability	A partnership firm is not stable. Its continuity is threatened by certain death.insanity insolvency of any or all its partners.	A company is. stable as it is totally unaffected by any such contingencies.
(ix)	Procedural complexities	Both for formation and dissolution, the procedures are simple.	Both the formation and winding up are subject 'to many legal formalities.
(x)	Financial resources	The capital contribution as well as the finance that can be raised tend to be limited.	The scope for mobilising larger resources is very wide.
(xi)	Membership	In a partnership only individuals can become its members	In a company, an institution can also become a member by purchasing its, shares.
(xii)	Separation from members	The existence of partnership is not separate from its partners.	Being established and registered under the Companies Act, the company acquires a legal existence and thus remains separate from its members.
(xiii)	Nature	Partnership is the relation between persons who have agreed to share the profits or losses of a business.	A company is an artificial person.
(xiv)	Mutual relationship of the members	In the partnership, each partner is an agent of the others and everyone of them has a right to take active part in the conduct of business. Thus, for the acts performed by one partner rest of the partners become liable.	The members of the company are not its agents or representatives nor they have direct right to take active part in the management and control of the company. Thus, a member of the company cannot make liable other members for his own act.
(xv)	Audit	Auditing is not compulsory.	It is essential for every company to get its accounts and account books annually audited by chartered accountant
(xvi)	Dissolution	Partnership, can be mutually, dissolved at any time.	Company comes to an end by operation of law.

Advantages of a joint stock company are:
(i) Large capital:
A company can secure large capital compared to a sale trader or partnership. Large amount of capital is necessary for conducting business on a large scale. For ego Reliance has invested more than Rs.25,000 crore in its telecom venture. Raising such huge amount of funds would be utter impossible in a soletradership or partnership.
(ii) Limited liability:
The liability of a shareholder is limited. In 'the case of a company limited by guarantee, his liability is restricted to the amount that he has guaranteed to contribute in the event of winding up of the company.
(iii) Transferability of shares:
Transaction of Shares between two individuals is easy. So there is liquidity of investment. Any shareholder can easily convert his shares into money by selling his shares.
(iv) Perpetual succession:
A company has perpetual or continuous existence. Members may go or new members may come in, but the company continues to exist. This ensures continuity in operations and the company can undertake long term investments.
(v) Promotion of saving and investment habit:
Joint stock company system encourages people to save. Even small amount can be used for the purchase of shares. A person can buy even one share of a company.
(vi) Risk Bearing capacity:
The loss of the company is distributed over a large number of shareholders. So each shareholder bears a very little amount of loss. Hence the company form of organisation has risk bearing capacity.
(vii) Economies of Large-scale Operation:
A joint stock company can undertake business on large scale. As a result it can derive all the advantages of large scale production. For e.g. Hero Moto Corp Ltd. 2015, the world's largest seller of twowheelers, manufactures motorbikes on a large scale and is able to enjoy cost efficiency.
(viii) Economic Development:
Joint stock company system has been responsible for the rapid growth of industries and trade in many countries. Since Joint Stock Companies have large financial resources, they are able to undertake large scale production, satisfy the needs of more number of consumers, create large scale employment opportunities, promote balanced regional development and contribute substantially to the government by way of taxes.

Edible items:
1. Milk- AAVIN FSSAT, Cherinai -98.
2. Tea powder- Brook Bond - Red Label Hindustan Unilever Ltd., (HUL) Mumbai-400099
3. Bread- Modern Foods Enterprises Private Ltd. Haryana, India - 122002
4. Biscuit- Britannia Industries Ltd., Chennai
Other uses:
1. Toothpaste - Anchor Health & Beauty Care Private Ltd., Uttarkhand - 249404
2. Tooth Brush - Anchor Health & Beauty Care Private Ltd., Uttarkhand - 249404
3. Soap - Hamam Hindustan Unilever Limited Himachal Pradesh - 174103
4. Detergent powder - Ariel- The Procter & Gamble Home Products Private Ltd., Mumbai-400099
5. Shampoo - Oriflame, Oriflame India Private Ltd., New Delhi- 110076
6. Hand wash - Cosmic Product Private Ltd., Palghar (E) - 401404.

Chartered Companies:
Chartered companies are established by the King or Queen of a country. Powers and privileges of these companies are specified in the charter. The cancellation of power is in the hands of King/Queen. E.g East Indian Company, Bank of England etc.
Statutory Companies:
Companies are established by a Special Act made in the Parliament/State Assembly. The Constitution of the company is specified in the Memorandum of Association. The rules are specified in the Articles of Association. Statutory companies enjoy autonomous status. It need not use the word 'Limited' next to its name.
Association Not for Profit:
According to section 25, the Central Government may, by license, grant that an association may be registered as a company with the limited liability, without using the words 'Limited' or 'private limited' as part of its name. The license will be granted only in the case of 'association not for profit'. Such companies may be public or private companies and may or may not have share capital.

(i) Costly and difficult to form:
(1) Number of legal formalities must be observed in the formation of the company.
(2) To observe these legal formalities,promoters have to spend much time and money.
(ii) Scope for dishonest and unscrupulous management:
(1) The directors manage the company with the help of paid officers.
(2) If the directors are dishonest,they may make the personal gain at the expense of the company.
(iii) Management oligarchy:
(1) A few rich persons may secure control over the affairs of the company.
(2) Thus, the management of a joint stock company might become oligarchic in character.
(iv) Speculation:
A few individuals may corner the shares to gain control over the company.
(v) Lack of interest:
(1) The officers of the company do not have the incentive to work hard.
(2) They are not usually' inclined to take risks. They lack initiative.
(vi) Lack of good labour relations:
(1) In sole trading business personal supervision is possible.
(2) But in company form of organization, there is lack of personal contact between owners and workers.
(vii) High taxation:
Joint stock companies have to pay tax at higher rates compared to other forms of organizations