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

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

i. Forfeiture of shares

ii. Application and Allotment of shares

1. Management

2. Top level management

Top level management

Correct option is (b) import

i. Sole Trader

ii. Karta

iii. Co-parceners

iv. Joint Stock company

v. Partners

Minor, insolvent, insane, or lunatic cannot become a member of a company.

i. True

ii. True

iii. True

iv. False

v. True

Being a part of a company, a member enjoys certain rights and has to fulfill certain duties.

Right of members are as follows:

1. Right of accessing books and documents: A member can get copies of Memorandum and Articles of Association, Auditors and Directors Reports, Balance Sheet and Profit and Loss A/c. Members can also check the Register of members.

2. Right to participate in General meetings: Members have the right to receive notice and agenda of all general meetings, attend the meeting personally or appoint a proxy, vote at the meeting, etc.

3. Right to appoint and remove a Director: Member of a company has the right to appoint and remove the directors.

4. Shareholding rights: Shareholders have the right to receive a share certificate, transfer his shares, to get right issue and bonus issue shares.

5. Right to Class Action Suit: The Act confers the right of Class Action Suit to members against the company or their directors in the time of any unlawful or wrongful act. They can file a petition to wind up the company.

6. Right to receive surplus assets: In the event of the winding-up of the company, the member has the right to get a share in surplus assets of the company.

7. Right with respect to the company’s accounts and its audit: Members have the right to approve the annual accounts at the Annual General Meeting. He can appoint auditors, fix their salary, and has a right to remove the auditors.

8. Right to participate in the profit of the company: Members invest money in the company and expect a certain return in form of dividends. They have the right to receive dividends within 30 days of its declaration in the Annual General Meeting.

9. Right to make Fundamental Corporate Decision: Members hold powers to decide at a meeting on important matters like a change of Registered office of the company, increase authorized capital of the company, change the objects of the company, to amend an Articles of Association, right of acquisitions, mergers and takeovers by the company, appoint a sole selling agents for the company, rights to close or wind up the company.

1. Supervisory or Operational level

2. Middle level management

(i) True

(ii) True

(iii) False

(iv) True

(v) False

It means the contents and clauses of the Articles of Association of the company.

i. True

ii. True

iii. True

iv. False

v. False

The merits of sole proprietorship are: 

1. As the sole proprietor can get all the profits of the business, he is encouraged to work had for the efficient running of the business. 

2. The sole proprietor is the master of his business. He need not consult and other persons, while taking decisions relating to business matters.

According to Wheeler,” The sole proprietorship is that form of business ownership which is owned and managed, controlled by single individual. He receives all the profits and risks all”.

The features of a sole proprietorship are as follows:

1. As it is owned by a single owner, he invests all the capital himself. However, if his capital is insufficient for the business, he borrows from his relatives, friends or bands. 

2. The sole proprietor puts his own labour in conducting his business. If necessities arise, he makes use of the services of the members of his family. He may also employ a few paid assistants to help him in his business. 

3. The sole proprietorship is the oldest and the simplest form of business organisation. 

4. No legal formalities are required for the formation and. the closure of a sole proprietorship. 

5. It is owned and managed by a single person.

Sole proprietorship refers to a form of business organization which is owned, managed and controlled by an individual who is the incipient of all profits and bearer of all risks. The word “sole” implies “only” and “proprietor” refers to “owner”. Hence, a sole proprietor is the only owner of a business. This form of business is particularly common in small scale business and areas of personalized services.

Features of Sole Proprietorship

(i) Formation and Closure Very few legal formalities are required to start a sole proprietary business, except in the fields where a license is required. Closure of the business can also be done easily.

(ii) Unlimited Liability Sole proprietors have unlimited liability. This implies that the owner is personally responsible for payment of debts in case the assets of the business are not sufficient to meet all the debts.

(iii) Sole Risk Bearer and Profit Recipient The sole proprietor bears the risk of failure of business all alone and also receives all the business profits which are a reward for his risk bearing.

(iv) Control and Decision Making The sole proprietor has the absolute right to run the business and make all decisions regarding the business without any interference from others. He is the king in all aspects.

(v) No Separate Entity No distinction is made between the sole proprietor and his business in terms of law as business does not have an identity separate from the owner. The owner is, therefore, held responsible for all the activities of the business.

(vi) Lack of Business Continuity Sole proprietorship lacks continuity as death, insanity, imprisonment, physical ailment or bankruptcy of the sole proprietor. It will have a negative effect on the business and may even cause closure of the business.

Merits of Sole Proprietorship

(i) Prompt Decision making: Making The decision making is prompt under sole proprietorship as there is considerable degree of freedom in making business decisions and there is no need to consult others. This results in timely capitalization of market opportunities.

(ii) Confidentiality All the information related to business operations is kept confidential and secrecy is maintained as the sole decision making authority rests with the proprietor. A sole proprietor is also not bound legally to publish firm’s accounts.

(iii) Direct Incentive The sole proprietor receives all the business profits as a reward for bearing the business risk. He/she is the single owner and does not need to share profit. This provides an incentive to the sole proprietor to work hard.

(iv) Sense of Accomplishment There is a sense of personal satisfaction involved in working for oneself. It instills a sense of accomplishment and confidence in the individual. 

(v) Ease of Formation and Closure An important merit of sole proprietorship is the possibility of entering into business with minimal legal formalities. There is no separate law that governs sole proprietorship. As sole proprietorship is the least regulated form of business, it is easy to start and close the business as per the wish of the owner.

Limitations of Sole Proprietorsltip

(i) Limited Resources Resources of a sole proprietor are limited to his/her personal savings and borrowings from others. Banks and other financial institutions hesitate to provide long term loan to a sole proprietor and hence, the size of the business generally remains small. 

(ii) Limited Life of a Business Concern Death, insolvency or illness of a proprietor has detrimental effects on the business and can lead to its closure.

(iii) Unlimited Liability A major disadvantage of sole proprietorship is the unlimited liability of the owner. In case of failure of business, the creditors can recover their dues not only from the business assets but also from the personal assets of the proprietor. 

(iv) Limited Managerial Ability Ability An individual may not be good in all managerial tasks such as purchasing, selling, financing, etc. Thus, decision making of a sole proprietor may not be effective in all the cases. Though sole proprietorship suffers from certain limitations, many entrepreneurs opt for this form of organization because it requires less amount of capital and is best suited for small businesses and where customers demand personalized services.

Correct option is (c) all over the world.

(i) Karta of HUF cannot be a member of a company.

(ii) A foreigner can buy shares subject to provisions of FEMA, 1999.

(iii) Limited Liability Partnership is a juristic person.

(iv) Depository is an institution that held a share in electronic form.

1. A Person: Any person who is competent to enter into a contract i.e. he is above the age of 18 years, and not an insane/lunatic or not an insolvent can become a member of a company.

2. Partnership Firm: A partnership firm can not be registered as a member of the company but the partners may hold the shares of a company in their individual name or as Joint Shareholders. 

3. Hindu Undivided Family: As Karta is the head of the Hindu Undivided family business, he can buy shares of the company on behalf of the Hindu Undivided Family, but HUF itself cannot be a member of the company. 

4. A Company: If the Memorandum of Association grants, then one company can buy the shares of another company and become a member, but the company itself cannot invest in the shares of its own company. 

5. Society: A society that is registered under the Societies Act, can buy the shares of a company and become a member.

6. Trust: A registered trust can become a member of a company in its own name. 

7. Non-Resident/Foreigner: A nonresident Indian (NRI) can buy shares in a company. It has to fulfill the conditions specified in the FEMA Act, 1999. 

8. Limited Liability Partnership: LLP can become a member of a company as it is a juristic person.

(i) Membership of a company

(ii) Partnership Firm

(iii) Wrongly entered in the Register of member

Superintendent is an example of lower level management.

(i) dividend

(ii) all General Meeting

(iii) Auditors

(iv) the Register of Members

(v) Beneficial owner

The proprietor alone invests capital to start and develop it and looks after all the activities like sale and purchase, marketing, inventory management, etc. He alone reaps the profit and bears the loss.

A sole proprietor remains in direct contact with the customer, employees, market and market trends. This direct and close and constant contact helps him to understand his customers and market better.

(a) global corporation

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

Eligibility Criteria:

(A) Individuals:

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

(B) Organizations:

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

1. False

2. False

Companies from the point of view of domination:
1. Government company:

• A company whose 51 % or more capital is held by either
  1. Central government or
  2. State government or
  3. more than one state governments or
  4. Central government and one or more than one state governments is called a government company.
• For example, Ashok Hotels Limited, Bharat Heavy Electricals Limited (BHEL), Bharat Sanchar Nigam Limited (BSNL), etc. are government companies.

2. Holding company:
A company which holds more than 50% shares of another company and holds the right to appoint majority of directors of that company is called a holding company.

3. Subsidiary company:
A company whose more than 50% shares are with the holding company and the right to appoint majority of its directors also lie with the holding company is called a subsidiary company.

Types of companies with the view point of place of registration.
1. Indian company:

• A company which is registered in India under the Indian Companies Act or under the special act passed by the parliament is called an Indian company.
• An Indian company can be private company, public company or government company.

2. Foreign company:
A company which is registered outside India and whose registered office is also outside India, but whose place of business is in India is called a foreign company. For example, Vodafone.

Correct option is (D) None of these

Correct Answer is: c. corporation.

(b) areas where return is maximum

1. Co-operative organization

2. Co-operative organization

Correct Answer is: d. all of the above.

1. False

2. False

(A) Indian company and
(B) Foreign company

• A Joint Stock Company is controlled and supervised by the Government.
• A company has to follow numerous provisions of the Companies Act and other Acts.
• The company has to follow all rules and regulations of the Government.
• If any of the legal provisions are violated, various charges are levied on the company.
• Government control protects the financial interest of a large number of investors.
• If any of the business of a company is carried out illegally, strict actions are taken by the Government authorities on the working of the company.
• So, there is more Government control and supervision over the working of Joint Stock companies.

• A company requires large capital to carry out its activities.
• This capital is being collected from the public as it is not possible for an individual to contribute such a big amount.
• A company issues shares, debentures, bonds and also accepts public deposits for raising its capital.
• A company can also take loans from banks and financial institutions.
• a Large number of members bring in a large number of funds that can be profitably invested in the expansion of the company.
• So, for a large-scale business, large capital is collected by the Joint Stock Company.
• Thus, the Joint Stock Company collects huge capital from the public.

• A Joint Stock Company is an incorporated association, which is an artificial person created by law, having a separate name, a separate legal entity, and perpetual succession.
• It is an artificial person because it is the creation of law.
• It does not have a physical existence but has legal existence.
• It enjoys certain rights and also conducts business like any human being.
• A company is an artificial person because it is not developed by the process of a natural person.
• It is the law of the land that gives birth to a company, hence, it is an artificial but legal person.
• A company has a distinct name and a common seal.
• It can make contracts, appoint staff, borrow money, open an account in the bank, acquire assets and conduct other business activities by its office bearers and staff.
• It can sue and be sued by others. So, a Joint Stock Company is an artificial person, created by law.
• Thus, a Joint Stock Company is an artificial person.

When the inclusion of an individual into the business occurs due to the birth in the Hindu Undivided Family (HUF) is known as Minor. On the other hand, partnership is based on legal contract between two persons who agree to share the profits or losses of a business carried on by them and a minor is incompetent to enter into such a valid contract with others. Hence, a minor cannot become a partner in any firm. However, a minor can be admitted to the benefits of a partnership firm with the mutual consent ‘ of all other partners.

• In India, the Joint Stock Companies are governed by the Companies Act, 2013.
• Every company has to be registered under the Companies Act, 2013.
• Registration gives birth to a company.
• On registration, the company gets a separate legal entity/identity.
• Without registration, no company can come into existence.
• After getting a registration certificate, it becomes a corporate body.
• So, the registration of a Joint Stock Company is compulsory and not optional.
• Thus, registration of a Joint Stock Company is compulsory.

• After the industrial revolution the demand of newly produced goods went up drastically. To meet these demands there arose need of setting up huge factories and very large business establishments. A very large scale production was the need of the hour.
• Due to limited capital, unlimited liability, short life of the business firm, etc. sole proprietorship and partnership forms of business were unable to set-up such large establishments.

Correct Answer is: a. profits are not subject to income tax.