Forms of Business Organization


1.1     Introduction
1.2     Sole Proprietorship
1.3     Joint Hindu Family Business
1.4     Partnership Firm
1.5     Co-Operative Society
1.6     Joint Stock Company
1.7     Basic Factors to Start a Business
1.8     Choice of forms of business organization
1.9     Distinguish between
1.10   Summary
1.11   Exercise

Rajesh graduated with a professional degree from a reputed institute and joined his family business of manufacturing shoes. His grandfather and his uncles already working jointly in Krishna Joint Hindu Family Business. After joining the family business, he was not able to adjust with the other members. He decided to start a new business as a sole owner. He started very well with the trading business and very soon felt the need to expand the business, but he was short of finace, so he has decided to take finance from his two friends (Manoj and Suresh) who are always willing to do some business together some day. So the three of them started with a new partnership firm. The business was flourishing and once again they felt the need to expand and modernize their business. They were in need of a huge capital which could be obtained from the public issuing shares so they formed a Public Limited Company after completing all legal formalities. Company started is doing well and earning good profit. Rajesh, the chairperson of the company and few directors wished to do something good for the society and started with a Co-operative Store where people could get the things at a cheaper price. So the purpose of "service for the poor" was served.

1.1     INTRODUCTION
         The institution or commercial organization is engaged in some type of commercial activity. It is an institution which is engaged in manufacturing and providing service to the society.
         A commercial organization can be defined as, "the framework or structure of efficiently conducting industrial and commercial activities to earn profit or with a view to gain it through production and supply of goods and services".

COMMERCIAL ORGANIZATIONS
Private Sector Undertaking
  • Sole Trading concern
  • Joint Hindu family business
  • Partnership firm
  • Joint Stock Companies
  • Co-Operative Societies

Public Sector Undertaking
  • Departmental Undertakings
  • Statutory Corporation
  • Government Companies    

1.2     SOLE TRADING CONCERN
1.2.1  Introduction
Sole Trading Concern is popular not only in India, but in foreign countries also. A Sole Trading concern is a form of private sector enterprise that is owned, managed and controlled by an individual entrepreneur. This type of business organization is also called one man business or Individual proprietorship or Individual Entrepreneurship and owner of the business is commonly called the Sole Proprietor or Sole Trader. Sole Trading concern is a form of organization having only one owner. The word proprietor means owner and sole means single. It is the oldest and simplest form of organization.
Usually the word 'Sole Trader' is used when the owner is also a manager of the business and when it is a one man show. It then usually operates, in a local market due to the smallest scale of business, a sole trader can maintain good relations with his customers and provide personalized services.
Sole Trader invests his own capital into the business and manages all the business. The full control of business rests in him. He bears the entire risk and derives the total benefits. He may engage in any business he chooses without much legal formalities, unless he wishes to engage in certain types of business requiring licences e.g. if a man wishes to open General stores, he may do so, if he can find good location and have sufficient money for that business. On other hand, to open a medical store, he will have to obtain a licence from Government authorities.
Features
1.       Minimum Government Regulations
2.       Unlimited Liability.
3.       Freedom in selection of Business.
4.       Secrecy.
5.       Individual Ownership
6.       Direct contacts with customers and employees.
7.       Suitable for some special business.
8.       No sharing of profit and risk.
Merits
1.       Easy formation
2.       Benefit of Secrecy.
3.       Direct Motivation
4.       Quick Decisions.
5.       Lower Costs.
6.       Development.
7.       Flexibility in operation.
8.       Limited Government control.
9.       Credit standing.
10.     Efficiency.
Limitations of Demerits
1.       Limited Managerial ability.
2.       Limited amount of capital.
3.       Unlimited liability
4.       Not suitable for large scale operations.
5.       Lack of stability
6.       Absence of specialization
7.       Unprofessional Decisions

1.2.2  Definitions of Sole Trading Concern – Prof. James L. Lundy, "The sole proprietorship is an informal type of business owned by one person". Prof. J. L. Hanson, "sometimes known as a 'one man business." It is a type of business unit where one person is solely responsible for providing the capital, bearing the risk of the enterprise and management of the business.

1.2.3  FEATURES OF SOLE TRADING CONCERN
The following are the main features of the Sole Trading concern.
1.       Minimum Government Regulations: There are minimum government regulations on the activities of a sole trader. Proprietary concerns are not governed by any separate law and are easy to form, because no rigid legal formality has to be followed for either forming, running or closing down the organization. Only the tax laws and labour laws have to be followed.
2.       Unlimited Liability : The liability of a proprietor is unlimited. The, liability of the Sole Trader can be more than the capital invested by him. Unlimited liability means, there is no distinction between his personal and private property and the property of the business. In the case of heavy loss and if it is not possible to make the payment with the help of the assets of the business, then the personal assets of the proprietor can be attached for paying or setting that liability.
3.       Freedom in Selection of Business: A Sole Trader can select any business as per his desire. There is no restriction on the type of business, which may be conducted by a proprietary concern. Any legal business can be conducted by the concern. Any method of keeping books of accounts may be followed by him. Generally Sole Traders in India adopt the Single Entry system of book-keeping.
         4.       Secrecy : Secrecy plays the most important role in the sole trading concern. The information about all the important matters concerning the business rests only with the owner and no outside party can take any undue advantage out of it. The proprietor can ensure maximum business secrecy.        
5.       Individual Ownership : Sole Trader is the sole owner of all the assets and resources of business. There is no other person who shares in the profit or loss of the sole trading concern.
6.       Direct contacts with customers and Employees: Since a proprietor usually deals directly with his customers and employees, he can maintain good relations with his employees and provide personal attention to his customers.
7.       Suitable for some special Business : There are some­ special business and trades which require individual attention and service and can only be started as a sole trade for example, Beauty Parlour, Cake shop and Agricultural products.
8.       No sharing of profits and risks: A proprietor gets all the profits of the business concern and. assumes all the losses and risks involved in business. There is nobody to share in his profits or losses.

1.2.4  MERITS OF SOLE TRADING CONCERN.
1.       Easy Formation : It is very easy to establish Sole Trading concern, because very few legal formalities are involved in formation. This business can be started without getting it registered. Any body who is a major at age, has a sound mind and has not been disqualified to conduct business under any law, can start proprietary concern. Due to simple formation, there is a direct relationship between efforts 'and rewards.
2.       Benefit of Secrecy : The owner and manager being the same person, the sole trader does not need to disclose his business secrets with any third person, neither does he need to publish his accounts, nor he is answerable to third parry. Since the ownership as well as the management of the business are in the hands of the sole proprietor, he can maintain vital business secrets e.g. the exact formula used to make a product.
         3.       Direct Motivation : The proprietor himself is the owner as well as the manager, there is a direct relationship between the efforts and rewards he puts in and the profits he makes. Since all the profit or losses are directly vested with himself, the sole trader is more aware of the efforts put in and can thus grow very fast.
         4.       Quick Decisions : Sole trader takes quick decisions on various matters relating to business operations. As this business has one owner and decision maker, the proprietor can take quick decisions and implement them immediately without consulting others. Therefore this form of organization is suitable for such business, which requires quick decisions such as speculation and trading.
         5.       Lower costs : The sole trader has a complete control over the business and he is also manager himself. He controls all aspects of the business organization, so he ensures that there is less waste arid better control on the expenses incurred as all expenses goes out his own pocket.
         6.       Development : The risk and rewards are directly connected with only one person and due to the reason that he is completely responsible and involved with every aspect of his business. The sole trader takes extra efforts to update his skills and learns through his experience constantly. He tries to keep improving his personality, leadership qualities and take better decisions.
         7.       Flexibility in Operations : Since only one person has to take decisions, the owner or sole trader can be very flexible. Being the only decision maker of business, he can make quick change in decision as per the. changing circumstances. This may involve expansion or existing business, adding new business, reduction of business activities, etc. This is very important for the success of any business.
         8.       Limited Government Control : The activities of a sole trader are regulated by government and law to the minimum extent. Sole Trading business is not required to get registered. There are no laws for operation, functioning or dissolution of sole trading concern. It has only to follow the routine tax rules and general laws, otherwise government interference is minimum.
         9.       Credit Standing : Close contacts with customers help sole trader to build up goodwill for himself. Banks and institutions can give loans easily due to the unlimited liability of the owner depending on his assets: Also it is easier for him to apply for such facilities since he does not have to consult anyone else or taken permissions from other owners.
         10.     Efficiency : As he is directly gaining from profits and is directly liable & responsible for losses, the proprietor runs his business with. maximum efficiency with least wastage of time, efforts and resources. He also makes sure that productivity is maximum and maximum skill is used in every aspect of business leading to higher profitability and better reputation.         
1.2.5  LIMITATIONS OF SOLE TRADING CONCERN
         1.       Limited Managerial Ability : The sole trader, though capable cannot be expected to have complete knowledge like other type. of business. Neither can he give equal attention to all aspects of the business as a professional nor expansion of the business. Being a lone owner, he has to look after every phase of business. Sometimes, scope of his business, enlarged and he is expected to face many difficulties, in such situation, his decisions may be wrong which would be a cause of reducing profit.
                  Sole Trader is a good manager and take quick decisions with prompt action. He has self motivation. Why?
                  Discuss with your teacher.
         2.       Limited Amount of Capital : As only one person is the owner and provider for all the resources required for the business, a proprietary concern has a limitation on the amount of capital. The owner can get in his own money or borrow from various sources. Such as, banks or friends and relatives, but still he cannot expand his business.
         3.       Unlimited Liability : The greatest disadvantage of the sole trader is the unlimited liability. Higher risk due to the unlimited liability causes the proprietor to be over cautious. He may, be personally the sufferer if things go wrong. So there is always threat for him to undertake new ventures even when they can be very profitable, because of only one thing that the liability of a sole proprietorship is unlimited: This can affect the growth of the business negatively.
         4.       Not Suitable for large scale operations : Sole Proprietorship is not suitable for large scale business, operations. Due to small scale, the business cannot be extended beyond a certain limit. Thus a proprietor has to conduct business on a small scale. He cannot fully utilize adequate resources.
         5.       Lack of Stability : There is a continuous uncertainty in running a sole trade. If anything happens unexpectedly, the entire organization can collapse. Not being a legal entity, it is linked directly to the owner, i.e. there is no difference between the sole owner and the business. The organization can be dissolved with the death or insolvency of the owner occurs.
         6.       Absence of Specialization : A Sole Trader himself is the owner, manager, supervisor and controller of his business. Moreover, due to small scale business and division of labour and specialization, he cannot conduct business efficiently.
         7.       Unprofessional Decisions : As a sole owner he is not answerable to any person. He may end up taking decisions which may be based on limited knowledge. This can result in poor business policies likely to fluctuate without any reason and result into huge losses.
1.3     JOINT HINDU FAMILY BUSINESS
1.3.1  Introduction
According to the Hindu law, Joint Hindu Family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. Within this joint family there is a narrower body which includes only those persons who acquire by birth, an interest in the joint or co-parcenary property. Co­-parcenary means a common ownership in the ancestral property. A member in joint Hindu family is known as co-parcener. According to law, Ancestral property is that property which is-created with the help of the ancestral and personal property treated as the property of the family is called common or joint property.
1.3.2  School of thoughts Under Hindu Law:
There are two Schools of thoughts in Hindu Law.
Mitakshara : According to Mitakshara school of thoughts an undivided family is the normal condition. The moment a son is born he, gets all the equal rights, along with his father in the ancestral­ property. He has a right to ask for a division of the family property. This community is popular in the country except Assam, Bengal, and some parts of Orissa.
Dayabhaga : Dayabhaga, School of thoughts which is applicable in Bengal, Assam, and some parts of Orissa, Under this law a son does not get any right in the property with his birth. Ancestral property remains with father throughout his life time. Only son gets rights in property after the death of his father.
1.3.3  MEANING OF JOINT HINDU FAMILY BUSINESS
When a business enterprise is run by the family member and they run the business as family business is called Joint Hindu Family Business. It is said that the Joint Hindu Family firm conies into existence by the law of inheritance. It is important to note that the Joint Hindu Family firm with the Joint ownership of the business is created by the operation of Hindu law and not by the contract between the co-parceners.
Therefore, the rights and liabilities of co-parcenres are determined by the provisions of the Hindu law. It is governed by the Hindu Succession Act 1956 and the law has extended the line of co-parcenery interest to the female members born in Joint Hindu Family. In Maharashtra, the female members of a Joint Hindu family, enjoy the co-parcenary interest since 1994.
In Joint Hindu family business, authority of controlling the business lies in the hands of the 'Karta' or the manager of the family. The other members cannot question his Judgement in running the business. On the other hand he is liable to make good to them their shares of all sums which he has misappropriated or which he has spent for the purposes other than those in which the joint family is interested.
The other members only can demand partition otherwise, they cannot claim for any account of the profit and loss. The Karta has an implied authority to borrow money for family business, but the other members will be liable only to the extent of their share in the joint family property. Hindu family business organization is run only in India and its name indicates only the Hindus can establish such a business.
1.3.4 Definition : When a Joint Hindu family (Hindu Undivided family or HUF) conducts business inherited by it as per Hindu law, it is called Joint Hindu family firm. Thus in a Joint Hindu Family firm, the business is passed on from one generation to another.

1.3.5  FEATURES OF JOINT HINDU FAMILY BUSINESS
1.       Formation : Joint Hindu family firm is formed as per the operation of Hindu law. Each member of the family becomes the co-parcener in the family business by birth and not by the virtue of an agreement with other co-parceners.
2.       Karta and Co-parceners : The senior most member of the Hindu Joint family becomes head of the firm who manages the business on behalf of the other members. He is known as Karta.
3.       Joint Ownership : The property of a Hindu is jointly owned by the three generations after him jointly. Karfa is the custodian of the joint property of the Joint Hindu family firm. The liability of co-parceners is limited but that of Karta is unlimited. Unlimited liability of Karta means that, if the property of Joint Hindu family firm is not sufficient to pay off, the third party liabilities, his personal property can be utilized for the purpose. If the Karta takes any wrong or irrational decision, he has to take the responsibility for it and pay off the liabilities even by using his personal property if the need arises.
4.       Membership : The-membership of Joint Hindu family frim' is unlimited. In other words, there is no limit for membership in Joint Hindu family business. Every child (even girls in the Maharashtra state) born in the Joint Hindu family becomes the co-parcener in the Joint Hindu family firm by his/her birth. No agreement is required to be entered into by a family member to become the co-parcener of the firm. There is not restriction on the number of members and membership keeps on changing depending upon the birth and death in the family.
5.       Management : The joint Hindu family business managedbythe senior most member of the Joint Family is called Karta: Karta is only manager; controller aco-ordinator of the business. He can enter into contracts with third parties, draw bills of exchange; issue receipts, sell or mortgage the property of Joint Hindu Family firm in the interest of the co-parceriers, during the course of conducting the business.
6.       Profit Sharing : The Hindu law does not specify the ratio of the profits and losses shared by Karta and co-parceners in a Hindu family firm. The profit sharing ratio keeps on changing depending upon the births and deaths in the family.
7.       Quick Decisions : Karta, being the sole decision maker, can take quick decisions and act upon them immediately. It is assumed that Karta's decisions- are always correct.
8.       Good Relations : Small scale business, which is operated in local market with a few employees. It is possible for a Joint Hindu family firm to maintain personal contact with its customers and good relations with employees.
* Joint Hindu family business is established only in India, why?
* Visit any Big Joint Hindu family and discuss with them about their Joint Hindu Family business.
1.3.6  MERITS OF JOINT HINDU FAMILY FIRM
         1.       Easy to start : Joint Hindu family business is very easy to form. It comes into existence as per Hindu law. Family members become co-parceners in the firm by virtue of their birth, in the family. Moreover no registration is required for a Joint Hindu family firm in respect of minimum or maximum members.
         2.       Prompt Decision : The Karta has complete control over his business. He takes all the business decisions. Therefore, Karta takes the right decisions at the right time.
         3.       Good Relations with Employees : Joint Hindu family has few employees with whom good and personal relations are maintained as in case of a sole trading concern. These motivated employees extend their complete support for conducting business successfully.
         4.       Flexibility : Due to quick decisions, Karta can bring about the required changes in business viz, expansion of the business activities or diversification of business as per the changing. business trends quickly.
         5.       Secrecy : Karta of the Joint Hindu family business is the manager of the business himself and all the. family members are co-parceners of the business, so the secrecy of the business remain with the family.
         6.       Co-parcener's Liability : Karta is the head of the family. The liability of co-parceners is limited to the extent of their share in the Joint Hindu family business. Karta is the custodian of the Joint property of the Joint Hindu family firm. If the property of Joint Hindu family firm is not sufficient to pay off the third party liabilities, his personal Property can be utilized for the purpose.
         7.       Good Credit Standing: A Joint Hin4u family firm enjoys a good credit standing in the market. Since the business is being conducted for a longer period of time and is being passed on from one generation to another, it enjoys goodwill in the market. Moreover, the liability of Karta is unlimited. As a result banks and other financial institutions are willing to grant the loans.
         8.       Continuity and stability : Joint Hindu family business does not come to an end by take over the business. Thus, continuity and stability of business is ensured, which is crucial for the success of any business organization.
1.3.7  LIMITATIONS OF JOINT HINDU FAMILY BUSINESS
         1.       Limited Resources : The funds of Joint Hindu family business are limited. Because of limited funds, business cannot be established on a large scale.
         2.       Limited Managerial Skills : Only the managerial skills of Karta are used for running of the business to be very successful in this competitive business world. It cannot be expected from any co-parcener however intelligent he may be, to know all the intricacies of the business.
         3.       Unlimited liability of Karta : Karta always faces the risk of his personal property being used for paying the third party liabilities, if the business assets are not sufficient to pay them off. He therefore becomes over cautious and may not be prepared to take any business risk. This may adversely affect the profitability of the firm.
         4.       Breaking of Joint Family: The firm is always exposed to the risk of the breaking of the Joint Family, in such a case, the family business may also come to an end to the extent, the stability and continuity of the firm is endangered.
         5.       Lack of Direct Effort : Though Karta is the only family member who put in all his managerial skills for running the business efficiently and successfully, the profits are shared by all the co-parceners. Therefore, they may not be motivated to give the best to the firm.
         6.       Restricted Expansion : Due to limited financial and managerial resources of the firm and over cautious nature of Karta, it is not possible for the firm to expand the business beyond a certain limit. The firm is forced to conduct business on the same scale and deal in the local market.
         7.       Unlimited co-parceners : Since the membership in the joint family business is on the basis of birth, there is no limit on membership. The number increases as per births in the family. Thus the number cannot be predicted and it may be unlimited. There is no upper limit for number of membership.
1.4     PARTNERSHIP FIRM
1.4.1  Introduction :
Because of lack of capital and limited managerial skills, sole proprietorship may not reach to a great height. The sole trader establishes his trade in the beginning as a single individual. When his business establishes, he appoints another person in order to increase the managerial capability. However, when sole proprietorship expands beyond limits at that time sole trader admits some outsider as a partner,, that time sole proprietorship comes to an end and new organization emerges is called as partnership firm.
In short the limitations of the sole proprietorship concern and to bring in more capital as well as managerial ability, two or more persons come together and contribute their resources as well as share in the profits. This creates an organization with more than one owner. This form of organization is called a partnership firm.
1.4.2  Meaning :
Partnership firm comes to existence because of limitations and failures of the sole proprietorship mainly due to limited finance and managerial skill. A .business owned and managed by more, than, one person where all the owners share in the profit and losses of the business as well as the liability is called a partnership firm. The owners are called partners and the organization is called a firm. This form of organization is governed by the Indian Partnership Act 1932.
1.4.3  Definitions :
         Indian Partnership Act 1932 (sec. 4) : "Partnership is the relation between the persons who have agreed to share the profits of a business carried on by all or any one of them acting for all"
         Prof. Haney : "The relation existing between persons competent to make contracts, who agree to carry on a lawful business, in common, with a view to private gain".
         Dr. J. A. Shubin : "Two or more individuals may form a partnership by making a written or oral agreement that they will jointly assume full responsibility for the contduct of a business"
1.4.4  FEATURES OF PARTNERSHIP FIRM
         1.       Agreement : A partnership is formed when two or more persons voluntarily agree to do business. This agreement may be oral or written. In France and Italy, a written agreement among partners is a legal requirement. However in U.S.A., U.K. and India, the partnership agreement may be oral or written. If the firm is not registered, it is however, advisable to have a written agreement due to the following reasons.
                               Partnership agreement spells out the terms and conditions regarding internal management, profit sharing and roles of partners.
               2.       Lawful Business : Partnership business cannot undertake any business activity which is illegal e.g. smuggling or gambling.
         3.       Sharing profits and losses : Partners share profits and losses in the agreed ratio as mentioned in partnership deed. If the partnership deed does not mention the profit sharing ratio, it is assumed that all partners are equal partners.
         4.       Number of partners : The minimum number of partners required for forming a partnership firm is Two. The maximum number of partners for conducting banking business is Ten and maximum number of partners for conducting ordinary business is Twenty.
         5.       Joint Ownership : All partners are Joint owners of business, therefore all the business assets and properties must be utilized for conducting business and not for personal use.
         6.       Unlimited liabilities : The liability of every partner of a firm is unlimited, joint and several. Thus if the business assets are not sufficient to pay off the third party debts, no distinction will be made between the business and person. Property of partners may be attached to fully settled liabilities.
                  The partners of a firm are jointly liable to third parties for liabilities. At the same time each partner is severally liable to third parties for liabilities. If any one of the partners is declared insolvent, his liability will be borne by the solvent partners.
         7.       Dissolution : The death, insolvency or insanity of any partner results into dissolution of partnership unless specified. Otherwise the remaining partners may continue to conduct business on the basis of a fresh agreement among them.
                  The partnership at will is compulsorily dissolved when any partner serves at 14 days notice to other partners regarding his unwillingness to continue the business.
         8.       Joint Management : All the partners have equal managerial rights as per the Act. However for convenience, some partners act as managing partners and other partners voluntarily surrender their managerial right in favour of managing partners. However, the responsibility of partners is joint and several.
         9.       Principal agent Relationship : Every partner of the firm works in two capacities - viz - As a principal and as a agent. When he is with other partners, he is known as a principal and when he is working with third parties on behalf of the firm he is known as an agent.
1.4.5 REGISTRATION OF PARTNERSHIP
According to the Indian Partnership Act, 1932, it is not necessary to get the firm registered for its formation. Registration of a partnership firm is not compulsory under any law or no any penalty for non registration of partnership firm. But it is always useful to get the firm registered. In Maharashtra, registration of partnership firms is compulsory with the effect from 1st April .1985.
Procedure for Registration : An officer is appointed for a registration of a partnership firm is called Registrar of firms. The steps involved in the registration of a firm are given below.
Obtain all prescribed forms from the office of the Registrar of firms of the area in which the place of business of the firm is situated. Then fill up the forms with the following information.
a.       The name of the firm.
b.       The principal place of the firm (Head Office).
c.       Name of the other places where the firm has business (Branches)
d.       The date when each partner joins the firm.
e.       The name in full and addresses of the partners.
f.        The duration of the firm (In case of partnership at will / for particular period).
Then get the statement fully signed by all partners and then this form along with the prescribed fee, has to be deposited in the office of Registrar.
After proper scrutiny of the forms, if Registrar is satisfied, he enters the information in the register and sanctiones it.
Then Registrar issues a certificate which is called the Certificate of Registration.
EFFECTS OF NON REGISTRATION
Under the Indian partnership Act, 1932, the registration of a firm is not compulsory. But an unregistered firm suffers the consequences. Following are the effects of non registration of partnership firm.
1.       A partner of an unregistered firm cannot file a suit against the firm or any other partner of the firm.
2.       An unregistered firm cannot file a suit against a third party to enforce any right arising from contract, but third party can file a suit in the court of law against the partnership firm.
3.       Firm also cannot start legal proceeding against any partner.
Benefits of Registration
         Registered firm gets the right of filing a suit against third party in the court. The partners of the firm can also file a suit against the firm or outside parties. Registered firm is useful for incoming partner for his rights. On the death or retirement of a partner registered firm is benefited.
1.4.6  MERITS OF PARTNERSHIP FIRM
         1.       More Financial Resources : a Since more than one persons are contributing resources the capital of the firm is larger than a sole proprietorship. One of the most important reasons for formation of a partnership firm is to have more capital. Moreover, new partners may be, admitted if the business is to be expanded.
         2.       More Manpower Resources : The skills and abilities of all the partners are combined to run the business. There can be a higher degree or division of labour and specialization. As a result, the business can be conducted more. efficiently.
It is not necessary to get the firm registered form its formation. But is always useful to get the firm Registered.
Discuss with your teacher.
         3.       Easy formation : There is no need to fulfill many legal formalities for the establishment of partnership. Only written agreement is necessary to start any lawful business on partnership basis. Registration of partnership firm is compulsory in Maharashtra from April 1985.
         4.       Simple Dissolution : The procedure involved in dissolution of partnership firm is also simple. Partnership at will gets dissolved when a partner serves a 14 days' notice to other partners. A particular partnership gets dissolved on completion of the specified venture or period for which it was formed.
         5.       Rational Decisions : Since every partner bears unlimited liability and is at risk for losses, the partners are very cautious and careful. Each one contributes to his fullest and keeps a check on the other partners to try to minimize the wastage. The decisions taken are based in the consultations among all the partners.
         6.       Secrecy : Partnership firms are not required to publish their annual accounts like profit and loss account and balance sheet. Therefore, the third parties including competitors cannot take undue advantage of the inner information of the firm.
         7.       Personal Contacts : Partnership firms, business can maintain personal contacts with customers and supply them goods and services as per their needs and requirements. This helps in customer's satisfaction and the firm earns goodwill in the market similarly good relations can be maintained with employees.
         8.       Division of Risk: In sole trading concern all the responsibilities and risks belong concerns to the sole trader, but in partnership firms risk is divided among all the partners.
         9.       Flexible organization : There is no strict rule on the management of business, changes can be brought in the terms and conditions of the partnership deed easily. Moreover the business activities can be expanded or curtailed or diversified as per the changing business circumstances easily and quickly. Due to a limited number of active partners, rational and sound decisions can be taken immediately.
1.4.7  DEMERITS OF PARTNERSHIP FIRM                             
         1.       Unlimited Liability : In general partnership the liability of partners is unlimited, joint and several. If the business assets are not sufficient to pay off the third party liabilities of the firm even the personal property of partners can be used for the purpose.
         2.       Limited Resources : The upper limit of partner in a firm conducting banking business is 10 and non banking business is 20, so the financial resources remain confined to the capital of the partner and their capacity to raise loans. At the time of expansion of business financial resources prove to be insufficient. Due to limited number of partners, a partnership firm can have limited financial and managerial resources.
         3.       Disputes Among Partners : There can be constant conflicts and disputes among partners. Some partners prefer working for self interest at the cost of the interest of the firm. Partners often put the blame on other partners for wrong decisions. Thus mutual conflicts and lack of team spirit among partners may lead to loss of reputation and finally to dissolution of the firm.
         4.       Risk of Implied Authority : Each partner works in two capacities as a principal and as an agent. Every partner has an authority to act on behalf of the firm i.e. any partner can enter into contracts with third parties. A wrong decision of a single partner may lead to have losses and due to unlimited liability, all partners will have to make those losses good. In case of huge debts of the firm; even the personal property of partners may be utilized.
         5.       No Separate Legal Status : The Indian partnership Act 1932 does not give an independent legal status to partnership firms distinct from the partners.
         6.       No Succession : Not being a legal entity the firm is dependent on the mutual undertaking of the partners and the death or insolvency of the partners can lead to an end of the firm. If all the partners except one dies, retires, becomes insane or insolvent, the partnership is compulsorily dissolved.
1.4.8  TYPES OF PARTNERS
When a person who deals with the firm, must know the partners of the firm and to what extent each partner is liable. Some partners in a partnership take active part in firm and they are also directly related with the firm. They invest money in the firm and have a share in its profits and loss. Some partners who do not have full interest in the partnership firm. It is compulsory to make investment in the business, so they don't get any share in the profit: Following are the types of partners.
1.       Active partners/Actual Partners : The partners who take active participation in the day to day work of the firm or take active part in the conduct of the business are called Active Partners. They contribute money in the firm and have a share in its profit or loss. These partners act as agent of the firm and they have unlimited liabilities. Active partners must give public notice of their retirement. These partners are also known as Ordinary or General partners.
2.       Sleeping or Dormant Partners : Sleeping or Dormant partners are those who do not take active part in the conduct of business. They have invested money in the business and have share in profit and loss. They do not give public notice of their retirement. They have unlimited liability.
3.       Nominal Partners : They lend their names to the firm without having any real interest in the firm. They neither contribute to the capital nor share the profits or take part in the conduct of the business of the firm. The firm make them partners to join form, to use personal goodwill. So they have no direct attachment with the firm and not answerable to any other party.
4.       Minor Partner : According to the Indian Contract Act, 1872, a person below 18 years is called minor. But according to the provisions in the Indian Partnership Act, 1932, a minor can be a partner in the profit of the firm if all of the other partners give their consent. Minor has liability and is not liable for losses.
5.       Partners in Profits only : He can share the profits of the firm. But his liability is unlimited like other partners. He must give public notice of his retirement. Such partners have no right to take part in the daily work.
6.       Limited Partners : A person whose liability of the firm is limited to the extent of his investment is called limited partner. He has no right to take part in day to day work. But such a partnership must have at least one partner having unlimited liability.
7.       Partner by Holding out : A person who is not a partner in the firm but he represents himself to be a partner by word spoken or written or by his conduct is called a partner by holding out. If the other person acting on the faith of such representation and have given loan to the firm, then he will be liable to discharge debts in the same manner as other partners will be.
8.       Secret Partner : When the relation of the partner with the firm is unknown to the general public is known a secret partner. Secret partners have all the features like other partners. His liability is unlimited and he has to, invest capital into firm and also get the shares in profit. He also takes part in daily working or management.
Can a minor partner take active part in daily working in partnership firm ?
1.4.9  TYPES OF PARTNERSHIP FIRM
On the basis of duration and the nature of partnership can be divided in the following types.
         1.       Partnership at will and Particular Partnership : When there is no provision in partnership agreement for the duration of the partnership is called 'Partnership at will'. A partnership firm at will may be dissolved by any partner by giving notice in writing to all partners of his intention.
                  Some partnership firm formed for some specific object or for a particular period the partnership is called a "particular partnership." Such partnership comes to an end on the completion of the venture or on the expiry of the period.
         2.       General and Limited Partnership : In a partnership when the liability of partners is unlimited is called general partnership. There are two types of partners, General partner and the special partner. The General partner's liability is unlimited whereas special partner's liability is limited.
         3.       Registered & unregistered Partnership : Initially it is not compulsory to get the partnership registered under Indian partnership Act, 1932, except in Maharashtra State. In Maharashtra State registration of partnership firm is compulsory since April, 1985. Partnership which works according to the partnership Act is called Registered partnership.
                  When a partnership is established for general purpose, it may not be registered then it is called unregistered partnership.
1.5     CO-OPERATIVE SOCIETY
1.5.1  Introduction
         Co-operative organization is a voluntary association of persons who come together to collect small savings of difference people through a society. This fund is utilized to help the needy members by giving them loan or to promote their common economic interests through the principle of self help and mutual help formation of a large number of joint stock companies resulted m concentration of economic power and wealth. in the hands of a few persons and exploitation of consumers and workers.
Therefore, consumers decide to come together and form an organization on co-operative basis.
A co-operative organization is a voluntary organization of individuals formed in order to achieve certain economic objective. The nature of co-operative organization is service oriented. Each for all and all for each is the principle of a co-operative society.
1.5.2  Definitions
         1.       International labour organization, "An association of persons, usually of limited means, who have voluntarily joined together to achieve a common economic end through the formation of democratically controlled business organization, making equitable contribution to the capital required and accepting a fair share of risks and benefits of the undertaking."
         2.       Indian Co-operative societies Act, 1912, "Co-operative society is a society which has its objectives for the promotion of economic interests of its members in accordance with co-operative principles."
         3.       Prof. H. Calvert, "Co-operation is a form of organization, wherein persons voluntarily associate together as human beings on a basis of equality for the promotion of the economic interests of themselves."
                  The registration takes place under the co-operative societies Act, 1912 or under the state co­operative societies Act. Bengal, Bihar, Orissa, Maharashtra and Chennai have their own societies Act. A minimum of 10 persons are required to form a co-operative society. There is no maximum limit for membership.
1.5.3  TYPES OF CO-OPERATIVE SOCIETIES
Co-operative societies are classified into different types according to the nature of the services rendered, them. Followings are the main types of co-operative societies.
         1.       Consumer's Co-operative Societies : Consumer's co-operative societies make their purchases in bulk from wholesalers and supply them in small quantities to members at very reasonable prices and also provide various services to them. Members are given bonus and share in profit in proportion to their investment.
         2.       Credit Co-operative Societies : It is formed with the objective of granting loans to members at a reasonable rate of interest for productive as well as non-productive purpose. They may be established in rural areas by agriculturist or artisans called as rural credit societies or by salary earners or industrial workers in urban areas, called as Urban Banks, Salary Earner's Societies, worker's societies.
         3.       Producer's Co-operative Societies : Producer's co-operative societies are also called industrial co-operatives which provide raw material, implement tools, technical guidance, to the members on easy terms so that they can produce superior quality products.
         4.       Marketing Co-operative Societies : Marketing co-operatives undertake centralized sale of the products produced by their members. They perform all the marketing functions standardizing, grading, branding, packing, advertising, transportation etc. and after selling the product, distribute the proceeds among members depending upon the quantity sold for each member.
         5.       Farming Co-operative Societies : These societies are formed by farmers who voluntarily come together and pool their land to jointly conduct agricultural operation using scientific methods of cultivation.
         6.       Housing Co-operative Societies : Housing co-operative societies purchase land and develop it. Co-operative housing societies are formed by members for the construction and maintenance of building for residential purpose on ownership basis.
* Visit to the Co-operative Bank in your city, see the working of bank and prepare a report.
* Visit to the Vividh Karyakari Sahakari Society and Note the daily working of the society.
1.5.4  FEATURES OF CO-OPERATIVE SOCIETY
         1.       Voluntary Association and open Membership : Co-operative organization is a voluntary association of individuals. In other words the membership of a co-operative society is voluntary i.e. the membership is open to all. Because co-operative society is managed and controlled on democratic principles, there is a common goal for all the members which is to work together for the benefits of all the members and any person of any, caste, creed or religion can join the organization.
         2.       Equal Voting rights :There is equality in voting rights. The principle of voting is 'one member one vote' unlike a company which follows the principles of 'one share one vote'. Thus the co-operative society members having a very large capital cannot dictate their terms. Similarly, while providing services, all members are treated.
         3.       Service Motive : Co-operative organization differs from other forms of organization in the sense that the main purpose of co-operative organization is not to maximize profit but to provide services to its members. Its main motto is not to accumulate wealth and exploit consumers but to work in the interests of members and provide goods and service to them by treating every member at par with others. Moreover, there is no distinction among members based upon the number of shares held by them.
         4.       Limited Liability : The liability of a member in a co-operative organization is limited to the extent of the unpaid amount of shares held by him i.e. if the business assets are not sufficient to pay off its debts, the personal property of members cannot be utilized for the purpose.
         5.       Democratic Management : The management of a co-operative organization is based on democratic principles. Each member is given an opportunity to express his opinion. The principles of voting is 'One member One vote'. Decisions. are taken by majority of votes. Managing committee is an elected body of representatives of members of a co-operative organization for its day to day administration.
         6.       Independent Existence : According be Co-operative Societie's Act, 1912, a co-operative society has an independent legal status different from its members. Therefore, it enjoys a stable and continuous life.
         7.       Registration : The registration of a co-operative operative society is compulsory as per the. relevant act in the concerned state e.g. A Co-operative organization in the state of Maharashtra has to be registered under Maharashtra State Co-operative Societie's Act, 1960.
         8.       Surplus Profit : After payment of dividend and bonus, a part of the profit is transferred to the statutory reserve and remaining is utilized for the welfare of the locality where the co-operative society is situated.
         9.       State control : Every co-operative organization must be compulsorily registered as per the relevant act of the state according to the Co-operative Societie's Act, 1912. The co-operative societies are subjected to state control and supervision. At the same time, they are given various concessions and facilities by the Government.
1.5.5  MERITS OF-CO-OPERATIVE SOCIETIES
         1.       Easy Formation : A Co-operative society can be formed easily. Minimum ten members are required for the registration of co-operative society. Then any adult member can join hands to start a co-operative society. Though the registration of a co-operative society is compulsory, the procedure for registration is simple and the fees for registration are nominal.
         2.       Democratic Management : The management of co-operative organization is democratic in nature. Each member enjoys an equal right to vote. The principle of voting is `one member one vote.' Thus each member is involved in decision making. The managing committee which manages the day-to-day administration of the co-operative society which is elected by members from themselves and it works for providing services to members.
         3.       Limited liability : The liability of the members of the co-operative society is limited to their shares or to the extent of the unpaid amount of the shares held by them or the guarantee given by them, i.e. their personal property cannot be used even if the assets of the society are insufficient to pay of its debts to the third parties.
         4.       Stability : Since a co-operative society enjoys an independent legal status different from its members. It enjoys a stable and a continuous life, i.e. its continuity does not get affected by the death, insolvency or insanity of any members. Any member may leave or join the organization but the, co-operative society remains unaffected.
         5.       Open Membership : The membership of a co-operative society is voluntary. It is open to all, i.e. any person of any caste, creed, religion etc. can become a member by purchasing shares in the society. There is no force or compulsion on any person to join or leave the organization. People join the organization at their free will and become members. Similarly, any member can leave the organization any time as per his wish.
         6.       Tax concession : Since co-operative societies play an important role in the economic and social development of the country, the government gives many concessions to them which include exemption of payment of income tax upto a certain limit. This helps in increased profitability.
         7.       Less Operating Expenses : The operating expenses of co-operative societies are very little because members offer administrative services without any remuneration. There are no advertisement expenses and no middlemen are involved. Various concession, reliefs and privileges related to registration fees, stamp duty, income tax, etc. are given to co-operative organizations by the government.
         8.       Supply of goods at cheaper Rate: Co-operatives society makes bulk purchases directly from manufacturer or wholesale trader, so goods are available at cheaper rate. Co-operative societie's main aim is to provide services to members rather than earning profits.
         9.       Self financing and charity : After paying maximum dividend of 15% p.a. (as per the latest amendment to the act) on the shares of members and bonus as per their purchase, the surplus profit is utilized for financing growth and development of the organization and also for charitable and social activities.
1.5.6  DEMERITS OF A CO-OPERATIVE SOCIETY ,
         1.       Lack of capital : The members of co-operative society belong to lower and middle income group. Hence they can invest only a limited capital in the co-operative society. Buying more shares does not help the members in dictating their terms in the management since the principle of voting is 'one member one vote' unlike a company where it is 'one share one vote'. There is no capital appreciation. A maximum dividend of 15% p.a. is paid on the shares.
         2.       Rigid Government Rules and Regulations : There is strict control and supervision by the state government on the working of co-operative organizations. Registration is compulsory as per tile co-operative society act of the concerned state. The concentration of power is in the hands of Registrar. Various statements are required to be sent to the Government from time to time. Due to excessive Government interference, the spirit of co-operation is lost.
         3.       Incompetent Management : Members constitute Managing committee which is responsible for day to day administration of the society, Members may not possess the required skills, abilities, time and experience for managing the affairs efficiently. Members work in an honorary capacity. Therefore they lack motivation. Due to limited funds, the services of experts cannot be engaged for efficient management. There is unnecessary interference by government officials and politicians in the working of the co-operative society.
         4.       Lack of Public Confidence : It is observed that only some particular members become members of the managing committee and they are politically motivated. Co-operative society do not enjoy, public confidence as many co-operative societies have failed miserably in achieving their objectives. This is because unnecessary interference by politicians, corrupt government officials in the working of co-operatives.
         5.       Lack of Motivation : The managing committee members work in an honorary capacity. There is no incentive for them to work hard. There is direct effort reward relationship. This may reserve in lack of interest by the management in affairs of the co-operative society.
         6.       Mutual Disputes : There are constant conflicts among members as they lack the maturity and experience in handling the affairs of the society. Some members purchases their requirement from other sources rather than from the co-operative society of which, they are members. Moreover, some members try to set concessions and privileges enjoyed by co - operatives for their personal gain. These matters result in further disputes and may also result winding up of the co-operative society.
         7.       Limited Scope for Expansion : Due to limited financial and managerial resources, a co-operative society cannot expand the business beyond certain limit.
1.6     JOINT STOCK COMPANY
1.6.1  Introduction
Sole proprietorship or partnership firm can not raise large amount of capital or unable to handle large scale business. So it becomes necessary to have another form of business organization, through which large capital could be collected form large number people who have no time to run a business or they are not capable of doing it.
The industrial Revolution took place in 1760. There was a need for high production capacities and management which could not be offered by the previously existing forms of organization. The technology in commerce and industry had grown phenomenally and the period after 1760 was known as the Machine Age. Large scale production was taking place all over the world. To keep up with the rising needs of capital, managerial skills, professional specialization etc. it was necessary to organize business in a new form. This led to the corporate or company forms of organization.
1.6.2  Meaning
A joint stock company is a separate entity formed by a number, of persons contributing a fixed capital in the formation of shares (sharing the ownership of the company) with liability of each share holder being limited to his investment in the company only. The management of the company is done professionally by experts who are not the owners and are controlled by the representatives of the shareholders are called the board of Directors.
1.6.3  Definition
Indian Companies Act, 1956 Sec. 566. "A company having a permanent paid up or nominal share capital of fixed amount, divided into - shares, also of fixed value, held, and transferable as stock, or divided and held partly in one way and partly in the other and formed on the principle of having for its members, only the holders of those shares or that stock and not other persons".
Prof. Haney : "A joint Stock Company is a voluntary association of individuals for profit having capital divided into transferable shares, the ownership of which is the condition on membership."
Chief Justice Marshal: A company is a person, artificial invisible, intangible and existing only in the eyes of law. Being a more creature of law it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental. to its very existence.      
         Thus a Joint stock company is an incorporated association which is an artificial person, created by law, having a common seal, ensuring perpetual succession. It has a large number of share holders with limited liability, who elect their representatives known as board of directors to run the business on their behalf.
1.6.4  TYPES OF COMPANIES (For brief idea)

COMPANY LIMITED BY SHARES CAN BE OF TWO TYPES
1.       Private limited Company: According to Sec 3(I)(iii) of the. Companies Act, 1956.
"A private company is a company which by its articles, restricts the right to transfer its shares, if any, limits the number of its members to 50 and prohibits any invitation to the public to subscribe for any shares or debentures of the company."
·                     Restrict the number of its members up to 2 to 50.
·                     Restrict the right of members to transfer its shares if any.
·                     Put a ban on inviting to the public to subscribe for any shares in or debentures of the company.
·                     Prohibits any invitation or acceptance of deposits from persons other that its members, directors or their relatives.
·                     Must have a minimum paid up share capital of one lakh rupees.      
It is important that all the above said condition should be in order to remain a private company: If any one of the condition is not fulfilled by the company, shall be considered as public company. In the case of private company is a limited company, then it must add the words 'Private Limited' at the end of its name. A private company may be a company limited by shares or a company limited by guarantee or an unlimited company.
2.       Public Company
According to Sec 3(I)(iv) public company means a company which is not a private company. A public company may be said an association which.
Has no restriction on the transfer of its shares.
There should be a minimum number of members are seven.
Has a minimum paid up share capital of Rs. 5,00,000/- or such higher paid up capital as may be prescribed.
Does not prohibit any invitation or acceptance of deposits.
There are minimum 7 members required for establishment of public company but there is no restriction of the maximum number of members. In the case of a public company is limited company, then it must be 'Limited' word at the name of company. The public limited company must have a list 3 directors.
Classify the following companies into public company and private company, Kundan Rice Mills, Bank of India, Godrej Appliances, Bharat Heavy Electrical Ltd., Reliance Industries, Ashok Leyland, Parle Product.

1.6.5  FEATURES OF JOINT STOCK COMPANY
         1.       Artificial Legal Person: A company is artificial person created by law. It has a separate name and uses a common seal as a substitute for its signature, It dosen't have a physical existence because it is not a natural person. However, it can enter into contracts with third parties e.g. it can buy and sell property, borrow money, etc.
         2.       Separate Legal Entity: A Joint stock company is created by law and enjoys an independent legal status different from its members. Therefore the company's, liabilities are its own i.e. share holders are not liable for the debts of the company. Similarly share holders cannot act on behalf of the company or bind person or persons.
         3.       Limited Liabilities: The most important advantages of a joint stock company is limited liability to the extent of unpaid amount on shares held by them. They cannot be held liable for debts of the company. Their personal property under no circumstances be used for satisfying the claims of creditors of the company.
         4.       Common Seal: The company is an artificial person, which cannot sign as a human being. Therefore a common seal is used as a substitute for the signature of the company. It is the symbol of the company incorporate existence. The common seal shows the name of the company which is engraved in a particular manner. It is to be affixed on all the important documents of the company and is to be witnessed by the signature of two directors of the company.
         5.       Registration : The registration of Joint Stock Company is compulsory. Every Indian company should be registered with the Registrar of companies as per Indian companies Act, 1956.
         6.       Transferability of Shares: The ownership capital of the company is divided into shares, the ownership of which is the pre-condition on membership. These shares are freely transferable in a public limited company, i.e. members can buy or sell these shares without seeking permission from the company or other members of the company. Thus there is a high degree or liquidity involved in buying shares of the company. The shares of private limited company however cannot be transferred freely.
         7.       Separation between ownership and Management: The shareholder in the company is large and they are spread all over the country. Therefore they cannot take part in the day to routine of the company. So in order to run the affairs of the company they elect their representative who are called directors and Directors form the `Board of Directors' to run the business on their behalf. Thus, ownership of joint stock company is separated from its management.
Who are the owners of the company?
·         Shareholders
·         Members
·         Directors
Discuss with your teacher
         8.       Membership: In the case of public limited company, minimum number of members is seven. However there is no maximum limit on the number of members. Such large membership helps in raising large capital. In private companies minimum 2 and maximum 50 shareholders can come together.
         9.       Registered Office: The address of the registered office of the company must be mentioned in the domicile clause of Memorandum of association. The registered office of the company is very important since it is such a place, where all the important documents of the company like Register of Members, Annual returns, Minute Books etc. are kept, to be inspected by the members and general public. Moreover, all the correspondence between the Registrar and the company on one hand and between the company and shareholders, creditors and third parties on the other hand take place through the registered office.
What do you mean by Registered office of the company and Head office of the company?
         10.     Voluntary Association: A joint stock company is a voluntary association of persons. To become a member, any person of any caste, creed, religion can buy number of shares at any time. At the same time the shares may be sold by a member at his free will (expect in a private limited company) moreover, the company business is managed on democratic principles.
         11.     Perpetual Succession: Joint stock company ensures perpetual succession, i.e. it enjoys continuous and stable life. Joint Stock Company is an artificial person created by law, having a common seal which acts as a substitute for its signature. It enjoys an independent legal status different from its members. The death, retirement, insolvency or insanity of any of its member does not result into dissolution of company.
1.6.6  MERITS OF JOINT STOCK COMPANY
         1.       Large Capital: It is possible for a joint stock company to raise huge financial resources. There is not maximum limit on membership in a public limited company. Shares issued are available in small denominations. Therefore people can invest any small amount as per their needs & capacity. Due to the features of limited liability, free transferability of shares etc. many investors are attracted to become shareholders of the company. Loans can be taken from banks and other financial institutions by the company.
         2.       Democratic Management: Though shareholders elect the Board of Directors, who manage the business efficiently, the directors are accountable to shareholders, their activities are supervised and controlled by shareholders indirectly. Though policy decisions are taken by the board, it must be approved by share holders. If shareholders are not satisfied with the performance of a director, he can be removed and a new one will be, appointed in his place by members.
         3.       Transferability of shares: There is free transferability of shares in a public limited company. No permission is required to be sought from the directors or members of the company for buying or selling shares. Thus there is a high degree of liquidity involved in shares of company. A private limited company, however does not permit free transferability of shares.
         4.       Limited Liability: The liability of a member.in a public limited company is limited to the extent of the unpaid amount of the shares held by him. Since the company has an independent legal status, its liabilities are its own. Shareholders cannot he held liable for debts of the company and there is no question of using their personal property for the purpose. This debts of limited liability attracts a large number of investors.
         5.       Expert Services : Due to large financial resources available with joint stock company, it can appoint experts for managing each area or function of the company business, by paying attractive salaries to them, these brings in a great degree of professionalism and thereby, efficiency in management of business. The turnover of the company goes up and the profit rises.
         6.       Relief in Taxation: The companies are required to pay taxes at flat rate. The amount of tax on a high taxable income therefore may be less for a joint stock company than individuals in a same tax bracket.
         7.       Public confidence : Joint stock company enjoys public confidence. The working of joint stock companies in India is governed by the provisions of Indian companies Act, 1956. As per the act the company has to get its annual accounts audited by a practicing Chartered Accountant.
         8.       Scope for Growth and Expansion: There is possibility of growth and expansion in the company business. The company can raise large financial resources. Attractive salaries can be paid to engage the services of experts for business expansion and for managing the business professionally. A part of profit is kept aside in the form of reserves and ploughed back for bus 'mess expansion. Loans can be raised from banks and other financial institutions by hypothecating some assets of the company.
1.6.7  DEMERITS OF JOINT STOCK COMPANY
         1.       Difficulty in Formation: The formation of the company is in itself a very difficult and involves too many formalities. Promoters have to prepare and submit various documents to the registrar of companies for approval i.e. Articles of Association, Memorandum of Association etc. The public limited company cannot, commence business without obtaining a certificate of commencement of business. Registration of Joint stock companies is compulsory as per Indian companies Act, 1956. Thus the formation is complicated, costly and time consuming.
         2.       Delay in Decisions: In sole trading concern and partnership firms decisions can be taken quickly. Company business is managed by Board of Directors who are not owners of the company.
                  Therefore, there is no direct motivation for directors to give their best to the company, Moreover, for taking various decisions and getting them approved from share holders, they have to hold board Meeting and share holders meetings, for which a proper procedure has to be followed. That results into delay in decision making, good business opportunities may be lost.
         3.       Excessive Government Control: There is a lot of government interference in the working of the company. Various rules and regulation of companies Act have to be strictly followed by the company, the non-compliance of any of these provision results into penalties for the officers involved.
         4.       High cost of management: The management of joint stock company form of organization is costly. The formation involves availing of the expert services of many professional like underwriters, financial and technical experts, share brokers, solicitors, bankers etc. Moreover, the compliance of the management appoints highly qualified staff to managers for various functional areas of business to whom attractive salaries are required to be paid. Even the process of dissolution of company is lengthy and costly.
         5.       Undue Speculation: Since directors are responsible for the rnan4gement of the company, they sometime use the confidential information for speculation and for personal gains. This results in sudden fluctuations in prices of shares in stock exchange, adversely affecting the public confidence.
         6.       No Personal contact : Due to very large size of the organization, employees feel that their efforts are not recognized and appreciated, their work related problems are not taken care of. As a result they feel demoralized and their productivity declines.
         7.       Lack of secrecy: There is no business secrecy involved in the company form of organization since it has to fulfil various statutory requirements, e.g. As per Indian companies Act, 1956, every company must publish its annual accounts and certain other important documents. Due to this the competitors may take undue advantage of the inner information for their benefit.
         8.       No Direct Effort Reward Relationship: Since the ownership and management are separate, there is no direct, relationship between the efforts and rewards. This can be demotivating for the owners of the company.
1.7.    FACTORS TO BE CONSIDERED FOR STARTING BUSINESS
         1.       Identification of Business Opportunity : An Important tool in the identification of business opportunity is the 'SWOT' analysis. A systematic approach to understand the environment is the SWOT analysis i.e. strength, weaknesses, opportunities, and threats. An understanding of the external environment, in terms of opportunities and threats and the internal environment, in terms of strengths and weaknesses, is important for the existence, growth and profitability of an organization.
         2.       Raw Material: While starting a new business the availability of raw material is basic question. What type of raw material is required? What is the quality and what quantity of raw material is to be purchased?             
         3.       Technology and Equipment: The equipment is more important for better production; and for that technology is also important. Proper selection of equipment results in good production. While starting a new business latest technology must be used for production to get superior quality of goods.
         4.       Human Resources: Without human factor, all the factors of production are useless. Man power is the most important factor in the management of any organization so when starting a new business should be considered the requirement of skilled, semi-skilled personnel for production and where they are easily available.         
         5.       Financial Planning: No one can start any business without capital. The business can be run successfully and without obstruction only after the availability of sufficient capital. The capital is required to purchase for fixed assets and working,-capital for daily working expenses. So starting a new business it is necessary to have new resources of financial sources.
         6.       Utilities: When starting a new business it is known that requirements of power, water, fuel, steam; and other consumables quantity and their value. It is essential to get the clearance certificate, from government authority i.e. pollution control Board.
         7.       Selection of location: Every place is not suitable for every type of business. For the manufacturing that place should be suitable where raw material is easily available and labour is cheaply and easily available. Other factors also affects the site of business i.e. Transportation, market, banking facilities.
         8.       Form of Business organization: When choosing a specific ,form of business organization following factors are to be taken into consideration. Enterpreneur's personal capacity to manage and control the business at any time. Investment capacity, professional background and technical support for business are essential factors.
1.8.    CHOICE OF FORMS OF BUSINESS ORGANIZATION
         We have already discussed the features, merits and demerits of the various forms of business organization. The main purpose of discussing above is to select proper form of business organization so that it can effectively fulfill the business objectives. Each forms of organization is good in some respect and not for other respect. So comparison of the various forms of business organization shows that none of these forms is suitable in all respects. The selection of a suitable form of organization can be made after discussing the following factors.
         1.       Requirement of capital: The choice of suitable form of organization is also influenced by the capital requirement of the business. When there is small amount of capital required then the sole proprietorship form of business is suitable. If the capital is medium then partnership or private company form of business is suitable and if the capital is required on a very large scale, then the company organization of business is appropriate.
         2.       Risk factors & liability : The second factor is risk & liability taking capacity of entrepreneur decides the form of business organization. If the risk is low and owner desires to bear the risk, the sole proprietorship or partnership is suitable and if the risk is very high and owners are not ready to bear the risk, then company organization is suitable, because in company organization owners liability is limited.
         3.       Continuity and stability : There is little continuity and stability in the partnership business. In sole proprietorship continuity and stability ends with the death of the owner. But the entity of the company is entirely separate from that of its shareholders, so from the point of view of continuity the company organization has to be more suitable.
         4.       Government Control : When the businessman wishes to be free from the Government control and legal procedure the sole propriety concern is most useful, Because there is no complicated procedure to start a sole proprietor. But in company organization there is government rule that must be followed by the organization. So such a business organization should be selected in which government rules can be easily followed and that is partnership firm.
         5.       Managerial Needs : If the business running on local level and single owner takes decisions about the business, then sole proprietorship is good. When the scope of business is wide and more than one person will be required for that business, then partnership business is useful. When business is to be carried on large scale, expert knowledge and managerial skill are required, then company organization is most useful.
         6.       Flexibility : It. is the ability of an organization to adopt the necessary changes. The sole trading concern enjoys maximum flexibility due to adopted changes.
         7.       Tax Liability: The Tax Liability of a company is more as compared to partnership or Sole Trading. The small size of business is small tax liability. An ideal business organization should have minimum tax liability. Sole Trading concern generally is an ideal form in this regard:
         8.       Business Secrecy: Maintain vital business secrets is very important for success of any organization. Sole Trading concern enjoys maximum business secrecy. Partnership firms and private companies also have this advantage to some extent.
1.9     DISTINGUISH BETWEEN
1.9.1 Sole Trading Concern and Partnership Firm
Sr. No.
Basic of Difference
Sole Trading Concern
Partnership Firm
1
Meaning
Owned and controlled by only one person
In this form of business organization two or more persons come together to undertake a business activity and share profits
2
Formation
It can be formed at any time when proprietor decides
In can be formed by an agreement between two more competent persons.
3
Ownership
Sole trading concern has only one owner.
Minimum numbers of members are 2 and maximum 10 in banking and 20 in other firm.
4
Registration
Registration is not necessary
Registration is not necessary, but it is useful. (compulsory in Maharashtra)
5.
Secrecy
A sole trading concern ensures maximum secrecy
Secrecy is shared by the partners.
6.
Managerial
The entire burden of management lies on owner.
All partners contribute these skill so there is division of work and expertise.
7.
Capital
Because of only one owner, amount of capital is very small.
Contribution of all partner's capital increases.
8.
Profit & Loss
A Proprietor is himself receiver all the profit or loss.
Profit is shared by partners as per their agreement.

1.9.2 Proprietorship and Joint Hindu Family Firm
Sr. No.
Basic of Difference
Proprietorship
Joint Hindu Family firm
1.
Meaning
It is a form of commercial organization which is owned and managed by a single person.
It is a form of commercial organization. The ancestral business is conducted by the family members of a joint Hindu family.
2.
Membership
There can not be more than one owner.
There is no maximum limit on membership.
3.
Ownership
The business assets and properties are owned by the proprietors.
All the family members are joint owners of business properties.
4.
Liability
The liability of sole trader is unlimited.
Karta's liability is unlimited. Co-parcener's liability is limited.
5.
Financial Resources
The financial resources are available.
The funds are more than that of a proprietor.
6.
Stability
It lacks stability since the existence of sole trading concern depends upon the survival of the sole traders.
It is comparatively more stable since after the death of Karta, the next senior family member takes over as Karta and continues business activities.
7.
Profit and losses
All the profit of the concerned belong to the sole trader and all losses are to be borne by him.
The profit and losses are shared by all the co-parceners.

1.9.3 Partnership Firm and Joint Hindu Family Firm
Sr. No.
Basic of Difference
Proprietorship
Joint Hindu Family firm
1.
Meaning
When two or more persons come together to undertake some business activity and agree to share that profit, it is called a partnership firm
When joint Hindu family conducts business, inherited by it as per Hindu law, it is called a Joint Hindu family firm.
2.
Creation
Partnership firm emerges out of contract between the partners.
Joint Hindu family firm is created by the operation of Hindu law.
3.
Membership
There can be a minimum of 2 partners and a maximum of 10 partners in banking business and 20 in non-banking business.
There is no limit on the number of members since the membership keeps on changing depending upon the birth and death in the family.
4.
Management
All partners in partnership firm have equal managerial rights. The business is jointly managed by all the partners.
Karta is the key manager of business who may be assisted by co-parceners to a limited extent.
5.
Minor Members
A minor member can be admitted to the benefits of partnership with the consent of all the partners.
A male minor becomes a member merely by his birth
6.
Regulating law
It is governed by the Indian partnership Act, 1932
It is governed by the Hindu law.
7.
Liability of Members
The liability of all the partners is unlimited
Only Kart's liability is unlimited, co-parcener's liability is limited.

1.9.4 Partnership Firm and Joint Stock Company
Sr. No.
Point of Distinction
Proprietorship firm
Joint Stock Company
1.
Meaning
When two or more persons join hands to undertake a business activity, it is called a partnership firm.
It is voluntary association of individuals for profit having capital divided into transferable shares, the ownership which is the condition of membership.
2.
Membership
The minimum number of partners are 2, the maximum for banking business is 10, while for non banking business, it is 20.
The minimum of number of members are 2 in private limited company and a maximum of 50. In a public limited company, minimum number of members are 7 and there is no maximum limit
3.
Formation
The formation is comparatively simple and less costly. Only a partnership deed is required to be prepared. Even registration is optional (Except in Maharashtra)
The formation involves many complicated legal formalities. Therefore it is tedious, costly legal formalities. Therefore it is tremendously time consuming.
4.
Liability
The liability of partners is unlimited. It is joint as well as several.
The liability of every shareholder is limited to the extent of the unpaid amount on shares held by him.
5.
Act
Partnership is controlled under partnership Act, 1932
Joint stock company is controlled under the Indian companies Act, 1956

1.9.5 Co-operative Society and Joint Stock Company
Sr. No.
Point of Distinction
Co-operative Society
Joint Stock Company
1.
Formation
Formation of a co-operative society is comparatively cheaper.
Formation of a joint stock company involves many legal formalities. It is lengthy, complicated and costly process.
2.
Motive
The main motto of a co-operative society is to provide services to members. Profit making is its secondary objective.
The main motto of a joint stock company is to earn profit. Providing service is the secondary motive.
3.
Transferability of shares
Shares are not transferable to other members though they can be surrendered to the society.
Shares are freely transferable in a public limited company.
4
Number of Members
A minimum of 10 members are required for formation of a co-operative society though there is no maximum limit.
A private company must have at least 2 members and a maximum of 50 members. A public company has a minimum 7 members but there is no maximum limit.
5.
Management
Managing committee is the managing body of co-operative society. How ever the management is not very efficient.
Board of Directors constitute the management of company. Directors run the business very efficiently since they possess the required expertise.
6.
Capital Raising capacity
It can raise limited capital since the dividend is fixed and there is no capital appreciation
It can raise large capital since attractive dividend is paid and there is capital appreciation.
7.
Voting Rights
The principal of voting is one member one vote.
The principle of voting is one share one vote.
8.
Remuneration
Managing committee works honorary capacity
Directors are paid fees (allowances) for vote.

1.9.6 Co-operative Society and Joint Stock Company
Sr. No.
Point of Distinction
Co-operative Society
Joint Stock Company
1.
Meaning
It is voluntary association of individuals which is formed for providing services to members.
When two or more persons join hands to undertake certain activities with the objective of earning profits, it is called a partnership firm.
2.
Motive
The main motive is to provide services to its members
The main motive is to earn profits.
3.
Membership
A minimum of ten members are required to form a co-operative society. No maximum limit.
A minimum of 2 members are required to form a partnership firm However the maximum limit is 10 for banking business and 20 for non banking business.
4.
Transferability of share
Shares can be transferred in favour of the society at any time by the members.
No partner can transfer his share in favour of others without the consent of other partners.
5.
Transferability of shares
Shares can be transferred in favour of the society at any time by the members.
No partner can transfer his share in favour of others without the consent of other partners.
6.
Legal status
Co-operative society enjoys an independent legal status different form its members.
Partnership firm does not enjoy an independent legal status. Legally there is no difference between the partnership firm and its partners.

1.9.7 Private Company and Public Company
Sr. No.
Point of Distinction
Private Company
Public Company
1.
Definition
A private company is a company which by its articles restricts the right to transfer its shares, if any, limits the number of its members to 50.
A public company means a company which is not a private company.
2.
Numbers of Directors
In a private limited company a minimum number of 2 directors is essential.
In public limited company a minimum number of 3 directors is essential.
3.
Transfer of share
Shares in Private company are not transferable.
Public company can invite public for issuing its shares and debentures.
4.
Number of Members
The minimum number of members are 2 and maximum 50
The minimum numbers of members are 7 and there is no maximum limit of members.
5.
Name
It is compulsory to add the word 'Private Limited' after the name of private company.
It is compulsory to add the word 'limited' after the name of public company.
6.
Issue of Prospectus
It is not compulsory to issue the prospectus and statement in lieu of prospectus.
It is compulsory to issue of prospectus and in the absence of prospectus to sent statement in lieu to the registrar.
7.
Minimum Capital
Minimum paid-up capital is one lakh rupees.
Minimum paid up capital is five lakh rupees.

1.10 SUMMARY
Sole trading concern is popular not only in India but in foreign countries also. A sole trading concern is a form of private sector enterprise that is owned, managed and controlled by an individual entrepreneur. This type of business organization is also called one man business, or individual proprietorship. "The sole proprietorship is an informal is an informal type of business owned by one person."
Features of Sole Trading Concern
1.    Minimum, Government regulation      5.    Individual ownership
2.    Unlimited Liability.                          6.    Direct contacts with customers
3.    Freedom in selection of business.             and employees.
4.    Secrecy.                                         7.    Suitable for some special business.
                                                           8.    No sharing of profit and risk.
Merits of Sole Trading Concern
1.    Easy formation.                               6.    Development
2.    Benefit of secrecy.                           7.    Flexibility in operation
3.    Direct motivation.                           8.    Limited government control.
4.    Quick decisions.                              9.    Credit standing.
5.    Lower costs.                                   10.   Efficiency.
Limitations of Sole Trading Concern
1.    Limited managerial ability.               5.    Lack of stability­
2.     Limited amount of capital.               6.     Absence of specialization
3.     Unlimited liability.                           7.    Unprofessional decisions.
4.     Not suitable for large scale operations
Joint Hindu Family Business : According to the Hindu law, Joint Hindu family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters.
Mitakshara : According to Mitakshara law an undivided family is the normal condition. The moment a son is born, he gets all the equal rights along with his father in the ancestral property.
Dayabhag : Under this law a son does not get any right in the property with his birth. Ancestral property remains with father throughout his life time.
Definition : When a joint Hindu Family conducts business inherited by it as per Hindu law it is called Joint Hindu family firm.
Features of Joint Hindu Family Firm
1.    Formation.                                     5.    Management.
2.    Karta and co-parceners.                   6.    Profit sharing.
3.    Joint ownership.                             7.    Quick decisions.
4.    Membership.                                   8.    Good relations.
Merits of Joint Hindu Family Firm
1.    Easy to start.                                  5.    Secrecy.
2.    Prompt decision.                             6.    Co-parcencer's liability
3.    Good relation with employees.         7.    Good credit standing.
4.    Flexibility.                                      8.    Continuity and stability.
Limitations of Joint Hindu Family Business                           
1.    Limited Resources,                          5.    Lack of Direct Efforts.
2.    Limited material skill.                       6.    Restricted Expansion.
3.    Unlimited liability.                           7.    Unlimited co-parcencers.
4.    Breaking of Joint family.                 
Partnership Firm : Two or more individuals may form a partnership by making a written or oral agreement that they will jointly assume full responsibility for the conduct of a business.
Features of Partnership Firm
1.    Agreement                                     6.    Unlimited liabilities.
2.    Lawful business                               7.    Dissolution.
3.    Sharing profit & losses.                    8.    Joint management.
4.    Number of partners.                        9.    Principal agent relationship.
5.    Joint ownership
Registration of Partnership : According to partnership Act, 1932, it is not necessary to get the firm registered for its formation. But is always useful to get the firm registered. In State of Maharashtra, as per Indian partnership Act, 1932, registration of a partnership firms has been made compulsory since April 1985.
Merits of Partnership Firm
1.    More financial Resources.                 6.    Secrecy.
2.    More Manpower resources.               7.    Personal contact.
3.    Easy formation.                               8.    Division of risk.
4.    Simple dissolution.                          9.    Flexible organization.
5.    Rational Decisions.
Demerits of Partnership Firm
1.    Unlimited liability.                           4.    Risk of implied authority..
2.    Limited resources.                           5.    No separate legal status.
3.    Disputes among partners.                6.    No succession.
Types of Partners
1.    Active partners/Actual partners.        5.    Partners in profit only.
2.    Sleeping or dormant partners.          6.    Limited partners.
3.    Nominal partners.                           7.    Partners by Holding out.
4.    Minor partners.                               8.    Secret partner.
Type of Partnership Firm
1.    Partnership at will and particular partnership
2.    General and limited partnership.
3.    Registered & unregistered partnership.
Co-operative Society : An association of persons, usually of limited means who have voluntarily jointed together to achieve a common economic and through the formation of a democratically controlled business organization, making equitable contribution to the capital required and accepting a fair share of risks and benefits of the undertaking.
Types of Co-operative Society
1.    Consumer's co-operative society
2.    Credit co-operative society
3.    Producer's co-operative societies.
4.    Marketing co-operative societies.     
5.    Farming co-operative societies.
6.    Housing co-operative societies.
Features of Co-operative Societies
1.    Voluntary association and                5.     Democratic management.                     
      open Membership.                           6.    Independent existence.
2.    Equal voting rights.                         7.    Registration
3.    Service motive.                               8.    Surplus profit.
4.    Limited liability.                              9.    State control
Merits of Co-operative Societies
1.    Easy formation.                               6.    Tax concession.
2.    Democratic management..                7.    Lesser operating expenses.
3.    Limited liability.                              8.    Supply of goods at cheaper rate.
4.    Stability                                         9.    Self financing and charity
5.    Open membership
Demerits of Co-operative Society
1.    Lack of capital                                 5.    Lack of motivation.
2.    Rigid Government Rules &                6.    Mutual disputes.
      Regulations.                                   7.    Limited Scope of Expansion
3.    Incompetent Management.
4.    Lack of Public confidence
Joint Stock Company : A company having a permanent, paid up or nominal shares capital of fixed amount, divided into shares, also of fixed amount held and transferable as stock or dividend and held partly in one way and partly in the other and formed on the principle of having for its members only the holders of those shares of that stock and no other persons.
Private Limited Company : A private company is- a company which by its articles restricts the right to transfer its share if any, limits the number of its members to 50 and prohibits any invitation to the public to subscribe for any shares or debentures of the company.
Public Limited Company : According to see 3 (I) (iv) public company means a company which is not a private company. There are minimum 7 members required for establishment of public company but there is no restriction on the maximum number of members.
Features of joint stock company:
1.    Artificial legal person                       7.    Separation of ownership and
2.    Separate legal entity.                              management.
3.    Limited liabilities                             8.    Membership
4.    Common seal.                                 9.    Registered office
5.    Registration.                                   10.   Voluntary association.
6.    Transferability of shares.                  11.   Perpetual succession
Merits of Joint stock company :
1.    Large capital.                                  5.    Expert Services.
2.    Democratic Management.                 6.    Relief in taxation
3:    Transferability of shares.                  7.    Public Confidence
4.    Limited liability                               8.    Scope for growth and expansion
Demerits of Joint Stock Company :
2.    Difficulty in formation                      6.    Undue speculation
3.    Delay in decisions                            7.    No personal contact
4.    Excessive government control:         8.    Lack of secrecy.
5.    High cost of management.               9.    No direct effort reward relationship.
Factors to be Considered for Starting Business
1.    Identification of Business opportunity.  5.    Financial Planning.
2.    Raw, material.                                6.    Utilities.
3.    Technology and Equipment              7.    Selection of location
4.    Human Resources.                           8.    Form of business organization.
Choice of Forms of Business Organization
1.    Requirement of capital.                    5.    Managerial needs.
2.    Risk factors & liability.                     6.    Flexibility.
3.    Continuity and stability.                   7.    Tax liability.
4.    Government control.                       8.    Business secrecy.

1.11 EXERCISE
Q 1    A)      Select the proper option from the options given below and rewrite the completed sentences.
         1.       A sole proprietorship is the .................... form of organization.
                  a) private sector b) public sector c) none of
         2.       A sole proprietorship has .................... owner/owners.
                  a) one b) two c) unlimited.
         3.       A proprietor has .................... liability.
                  a) unlimited b) limited c) restricted.
         ­4.       A sole trading concern ensures .................. business secrecy.
                  a) minimum b) maximum c) limited.
         5.       Business organization which is controlled by Hindu succession Act is known as ....................
                  a) Joint stock company b) partnership firm b) Joint Hindu family firm
         6.       The members of Hindu Undivided family business are called ..................  
                  a) Karta b) partners c) co-parceners
         7.       Limited managerial skill is the .................... of Joint Hindu family business.
                  a) feature b) limitation c) advantage
         8.       The Karta in 'Joint Hindu family Business has .................... Liability.
                  a) Unlimited b) limited c) joint                              ,
         9.       The Head of Joint Hindu family Business is called as ....................
                  a) Proprietor b) Karta c) Director
         10.     The maximum number of partners for a firm carrying on banking business is ....................
                  a) Ten b) Twenty c) Seven
         11.     Indian partnership Act was passed in the year ....................
                  a) 1932 b) 1923 c) 1942
         12.     Registration of partnership firm is .................... in Maharashtra.
                  a) Compulsory b) no compulsory c) optional
         13.     In partnership firm the liability of partners is ....................
                  a) limited b) unlimited c) non of above.
         14.     In a partnership firm every partner is the principal as well as the .....................
                  a) agent b) karta c) partner
         15.     At least ................... Persons are required to form a partnership firm. a) two b) one c) three
         16.     The maximum numbers of members in a private limited company are ....................
                  a) 50 b) 40 c) 20
         17.     The liability of the shareholders in the public limited joint stock company is ....................
                  a) limited b) unlimited c) collectively
         18.     The elected representatives of shareholders are called ....................
                  a) Directors b) Members c) Owners
         19.     A joint stock company is an Artificial person created by .................... a) law b) public c) directors
         20.     Registration of a Joint stock company is ....................
                  a) compulsory b) not necessary c) optional
         21.     The minimum numbers of persons required for the registration of a private company is....................
                  a) 5  b) 2  c) 7
         22.     The minimum number of Directors in a public company are ....................
                  a) two b) three c) five.
         23.     The minimum amount of paid up capital for public company is ....................
                  a) Five lakhs b) one lakh c) ten lakhs
         24.     The minimum of members allowed in a co-operative society is .................
                  a) 20  b) 10  c) 7
         25.     In a co-operative society the principle followed is ...................
                  a) One share one vote b) one man one vote  c) no vote.
         26.     The co-operative societies Act was passed in the year ...................... a) 1932 b) 1912 c) 1956
         27.     The Maharashtra State co-operative societies Act was came in force in ....................
                  a) 1956 b) 1960 c) 1932
         28.     While selecting the place of business .................... is important.
                  a) locality b) region c) capital
         29.     From the point of continuity .................... business organizations is the most suitable.
                  a) company b) partnership c) sole proprietorship

         B) 1.  Match the correct pairs.
                         Group "A"                                Group "B"
                  a.     Private company                 1.    Compulsory    
                  b.    Public company                   2.    Minimum 7 members
                  c.     Common seal                      3.    Maximum 50 members
                  d.    Registration of company      4.    61% share capital
                  e.     Government company          5.    51% share capital
                                                                  6.    Symbol of a company
                                                                  7.    Optional
                                                                  8.    Simple formation
                                                                  9.    Easy dissolution
                                                                  10.   Hindu succession Act 1956

1.       Match the correct pairs.
                         Group "A"                                Group "B"
                  a.     Sole proprietorship              1.    No legal status
                  b.    Joint stock company            2.    Partner
                  c.     Partnership Act                   3.    1956
                  d.    Co-operative Society           4.    1960
                  e.     Joint Hindu family firms       5.    One member one vote
                                                                  6.    Karta
                                                                  7.    Maximum business secrecy
                                                                  8.    Common seal
                                                                  9.    1932
                                                                  10.   member

         C)      Write a word or a phrase or a term which can substitute each one of the following.
         1.       The business organization which has minimum ten members.
         2.       The type of commercial organization established for providing services to its members.
         3.       An elected body of representatives of a co-operative organization for its day-to-day administration.
         4.       The rules and regulati8ks laid down by the managing committee of a co-operative organization.
         5.       The owner is the sole manager and decision maker of his business
         6.       The commercial organization which has maximum secrecy.
         7.       'One man show' type of business organization.
         8.       An artificial person created by law.
         9.       The senior most family member of joint Hindu family firm.
         10.     The members of the Joint Hindu family firm.
         11.     A partner who gave his name to partnership firm.
         12.     A partner in partnership firm who takes active participation in day to day work.
       
Q.2    Distinguish between the following.
         1.       Sole Trading concern and partnership firm.
         2.       Joint Hindu family firm and Sole Trading concern
         3.       Joint Hindu Family firm and Partnership.                            
         4.       Partnership firm and Joint Stock company.
         5.       Joint Hindu family firm and Joint stock company.
         6.       Private Limited company and Public limited company.
         7.       Sole trading concern and Joint stock company.
        
Q.3    Write short notes on the following.
         1.       Features of a proprietorship.
         2.       Merits of a proprietorship
         3.       Features of partnership firm.
         4.       Type of partners.
         5.       Merits of partnership firm.
         6.       Type of partnership firm.
         7.       Features of Joint Hindu family.
         8.       Merits of Joint Hindu family.
         9.       Features of Joint Stock company.
         10.     Merits of Joint stock company.
         11.     Features of Co-operative society
         12.     Merits of Co-operative society.
         13.     Demerits of Co-operative society.
        
Q.4    State with reasons whether the following statements are true or false.
         1.       There is no limit for membership in Joint Hindu family Business.
         2.       The liability of a Karta in a Joint Hindu family firm is limited.
         3.       The maximum number of members in a Joint Hindu family is 20.
         4.       Company form of-organization has developed before industrial revolution.
         5.       A joint stock company can raise huge capital.
         6.       Share holders can manage the business              
         7.       The ownership and management are not separate in Joint stock company.
         8.       The main purpose of a co-operative organization is to earn profit.
         9.       The membership of a co-operative society is voluntary.
         10.     Co-operative society differs form other forms of commercial organizations.
         11.     Maximization of profit is the main motto of co-operative society.
         12.     In partnership agreement may be oral or written.
         13.     In a partnership the liability of every partner of a firm is unlimited.
         14.     The owner of the sole proprietorship is the sole decision maker of his business.
         15.     Sole Proprietorship is useful for small business.
         16.     A sole trading concern is easiest to form.
        
Q.5    Write short answer of the following.
         1.       State the demerits of proprietorship.
         2.       State the features of Proprietorship.
         3.       Define partnership and state its important features.
         4.       State the types of partners.
         5.       State the types of partnership firm.
         6.       State any five features of partnership firm.
         7.       State the merits of partnership firm.
         8.       State the Registration of partnership and its procedure.
         9.       State the types of Co-operative societies.
         10.     State the features of co-operative society.
         11.     State the merits of co-operative societies.
         12.     What are demerits of co-operative society?
         13.     State features of Joint Stock Company.
         14.     State merits of Joint Stock Company.
         15.     State demerits of Joint Stock company.
         16.     State factors to be considered for starting business.                            ..
         17.     State the point of choice of forms of business organization.
       
 Q.6    Long answer type question.
         1.       Define Joint Stock Company and explain its features.
         2.       Define a sole Trading concern. Explain its merits and demerits.
         3.       Define partnership firm. Explain its merits and demerits.
         4.       Explain the features of partnership firm.
         5.       Define a Joint Hindu family firm. Explain its merits and demerits.
         6.       Define a Joint Hindu family firm. Explain features of joint Hindu family firm.
         7.       Define Co-operative society. Explain its features.
         8.       Define Co-operative society. Explain its merits and demerits.
         9.       Define Joint Stock Company. Explain its merits and demerits.





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