Q. Write two features of Public sector enterprise. (2marks) (2015/2018)
-> 1. It is owned, controlled and managed by the central or state government.
2. It is managed by persons appointed by the government.
Q. What is global enterprise? What are its features? (2+6=8) (2015/2017)
-> Global enterprises are the companies that operate around the world. There are categories based on their huge size, a large number of products, and advancements in technology, marketing, strategy and network of operations all over the world.
A global enterprise is one which owns and manages the functions in two or more countries, for example- Unilever Ltd, Coca-Cola, Samsung etc.
Features of Global enterprise:-
- Huge capital resources- These enterprises are characterised by possessing huge financial resources and the ability to raise funds from different source. They are able to tap funds from various sources.
- Foreign collaboration- Global enterprises usually enter into agreements with Indian companies pertaining to the sale of technology production of goods, use of brand names for the final products, etc. These MNCs may collaborate with companies in the public and private sector.
- Advanced technology- These enterprises possess technological superiorities in their methods of production. They are able to conform to international standards and quality specifications. This leads to industrial progress of the country in which such corporations operate since they are able to optimally exploit local resources and raw materials.
- Product innovation- These enterprises are characterised by having highly sophisticated research and development departments engaged in the task of developing new products and superior designs of existing products.
- Marketing strategies- The marketing strategies of global companies are far more effective than other companies. They use aggressive marketing strategies in order to increase their sales in a short period. They possess a more reliable and up-to-date market information system.
- Expansion of market territory- Their operations and activities extend beyond the physical boundaries of their own countries. Their international image also builds up and their market territory expands enabling them to become international brands. They operate through a network of subsidiaries, branches and affiliates in host countries. Due to their giant size they occupy a dominant position in the market.
- Centralised control- They have their headquarters in their home country and exercise control over all branches and subsidiaries. However, this control is limited to the broad policy framework of the parent company. There is no interference in day-to-day operations.
Q. Explain the steps involved in formation of a private limited company. (5marks) (2017/2019)
-> There are four stages in the formation of a company:
1) Promotion- Promotion is the first stage in the formation of a company. It involves conceiving a business opportunity and taking an initiative to form a company so that practical shape can be given to exploiting the available business opportunity. Following are the steps of promotion:-
a) Discovery of ideas.
b) Finding the promoters to launch the company.
c) Assembling the preposition.
d) Preparing important documents.
e) Formation or getting the company registered.
2) Incorporation- Incorporation of a company means the registration of a company as a corporate body under the provisions of Companies Act’ 2013. A Company comes into existence from the date of incorporation. After completing the aforesaid formalities, promoters make an application for the incorporation of the company. The application is to be filed with the registrar of companies of the state within which they plan to establish the registered office of the company. These may be briefly mentioned again:-
1. The memorandum of Association duly stamped, signed and witnessed. In case of a public company, at least seven members must sign it. A private statement in lieu of the prospectus is submitted, instead of an Article of Association.
2. The Articles of Association duly stamped and witnessed as in case of the Memorandum. However, as stated earlier, a public company may adopt Table A, which is a model set of Articles, given in the Companies Act. In that case a statement in lieu of the prospectus is submitted, instead of Articles of Association.
3. Written consent of the prospectus directors to act as directors and an undertaking to purchase qualification shares.
4. A copy of the Registrar’s letter approving the name of the company.
3) Capital Subscription- A public company can raise the required funds from the public by means of issue of shares and debentures. The following steps are required for raising funds from the public:-
a) SEBI Approval.
b) Filing of Prospectus.
c) Appointment of Bankers, Brokers, Underwriters.
d) Minimum Subscription.
e) Application to Stock Exchange.
f) Allotment of Shares.
4) Commencement of Business- If the amount of minimum subscription is raised through new issue of shares, a public company applies to the Registrar of Companies for issue of certificate of commencement of business. The following documents are required:
i) A declaration about meeting minimum subscription requirements.
ii) A declaration regarding the application and allotment money paid by the directors as same as others.
iii) A declaration that no money is payable to the applicants because of the failure of the company.
iv) A statutory declaration that the above particulars are followed.
v) The registrar shall examine the documents if these are found satisfactory a certificate of commencement of business will be issued.
Q. Distinguish between Private Company and Public limited Company. State three basic advantages of company form of organization. (5+3=8) (2018)
-> Difference between Public Sector and Private Sector:
| Public Company | Private Company |
| It is owned, controlled and managed by the central or state government. | It is owned, controlled and managed by private individuals or groups. |
| It is managed by persons appointed by the government. | It is managed by owners or managers appointed by them. |
| Its main objective is to provide service to society. | Its main objective is to earn profits. |
| Managers are accountable for its financial results to the government. | Managers are accountable for its financial result to its owner. |
Three basic advantages of company form of organisation:-
1. Limited Liability- Liability of members of a company is limited up to the amount unpaid on the face value of the shares.
2. Transferability of shares- Shares of a company are freely transferable.
3. Perpetual Succession- A company has a continuous existence which is not affected by the death of its members.
