Chapter 2

Forms of Business Organisations

Very Short Answer Questions :

1. Identify the form of business of business which is particularly common in personalized services and small scale activities.
2. Define sole proprietorship form of business organisation.
3. If the business fails, the creditors can recover their dues not merely from the business assets, but also from the personal
assets of the proprietor. Name the related limitation/
4. Which law governs the Hindu Undivided Family Business? 5. Can minors be members of Hindu Undivided Family
Business?
6. Who is Karta?
7. Who are known as coparceners?
8 . What are the two conditions for formation of Joint Hindu Family Business?
9. How is membership acquired in Joint Hindu Family Business?
10. Define the term partnership.
11. Name the act that governs the partnership form of business organisation.
12. Comment upon the liability of partners in a partnership firm.
13. 'Every partner is both an agent and a principal. Identify the related feature of partnership form of business
organisation.
14. Name any two types of partners who do not contribute capital in the business
15. Name any one type of partner who does not share the profit and losses of business.
16. Name any two types of partners who do not participate in the management of the business.
17. Name any two types of partners whose liability is unlimited.
18. Name any two types of partners who contribute capital in the business.
19. Name any two types of partners who participate in the management of the business.
20. Name any two types of partners who share profits and losses of business
21. Give the classification of partnership on the basis of duration.
22. Give the classification of partnership on the basis of liability.
23. What is a partnership deed?
24. List any two contents of a partnership deed.
25. Name the authority to whom an application has to be submitted for getting a partnership firm registered.
26. What is the minimum number of members to start a cooperative society?
27. Name the type of business organisation which is set up with the motive of welfare of members.
28. Name the Act under which a cooperative society is compulsorily required to be registered. 29. The cooperative society
can enter into contract and hold property in its name. Identify the related feature.
30. What is the maximum liability that a member of a cooperative society can be asked to bear?
31. Who has the power to take decisions in a cooperative society?
32. Why is it said that there is equality in voting status in a cooperative society form of business organisation?
33. Name any two types of cooperative societies.
34. Why is a Joint Stock Company known as an artificial person?
35. Members may come and members may go but the company continues to exist. Identify the related feature of a Joint
Stock Company.
36. Who undertakes the management and control of the affairs of the company?
37. How is transfer of interest possible in case of a Joint Stock Company?
38. Explain the term 'oligarchic management'.
39. State the minimum and the maximum number of members with reference to a private company.
40. What is the minimum and the maximum number of members in a public company?
41. Name the stages in formation of a private company.
42. Name the stages in formation of a public company.
43. Who is the promoter?
44. What do you understand by the term 'promotion' in context of company?
45. Name any two parties who are authorized to sign a statutory declaration.
46. What is the minimum number of members required to sign Memorandum of Association in case of private company
and public company?
47. Who is authorised to buy qualification shares in a company form of business organisation?
48. Name the document which is also known as the birth certificate of a company.
49. Give the full form of SEBI.
50. What is the amount of minimum subscription as per the guidelines of SEBI?
51. Name the document to be filed by a public company in case it decides to raise capital privately.

Case Studies:
1 Mehul sent an email to his friend Rahul who resides in US asking for financial help Mehul shared with him that due to a
prolonged illness, his business suffered a lot as a result, he was not able to repay the bank loan which he had taken for the
expansion of his business. He also informed him that his warehouse has been confesticated by the bank authorities to settle
his claims. Mehul also reminded Rahul of his good times in business when he had helped Rahul financially being the sole
recipient of all the business profits.In context of the above case:
(a) Identify the related feature and liability of the form of business been described in the above paragraph.
(b) Explain in brief, any two merits of this form of business which have not been mentioned in the paragraph.
2 Aniket runs a coaching centre in a market near to the north campus in Delhi University Over the years, his business has
gained popularity among the students. He now plane buy another property to set up a parallel Institute, keeping in view
the growing The property owner is giving him an option to induct him as a partner and com sole proprietorship form of
business into partnership. This way Aniket, will be to pay him only half of the price of the property. In your opinion, should
anike the offer of the property dealer and change his form of business or not. Judy answer by giving any three suitable
points.
3 Kajal, Kiran and Kavita have been involved in a partnership business for over a period of 5 years. Unfortunately, Kavita
died in a road accident. Kajal and Kiran were very upset on the sudden lose of a resourceful partner. Knowing that Kavita's
seventeen years sister, Namita is equally efficient in her work, they decided to have her as a partner in their business. Kajal
shared her plans with her father Mr. Gulati, who is a lawyer. Mr. Gulati told Kajal that Namita cannot become a partner in
their firm. However, Namita can be admitted to the benefits of the partnership firm.In context of the above case:
(a) Why does law does not permit a minor to be admitted as a partner in a firm?
(b) What are the terms and conditions under which Namita as a minor, may be admitted to the benefits of a partnership
firm?
4 Rudra Communication Limited and Sutra Communication Limited entered into a partnership contract to produce a movie
based on the social issue of female foeticide, to showcase the future of the country, if we keep killing the girl child. In
context of the above case:(a) Identify and explain the type of partnership being described in the above lines.
(b) Also, state the category of types of partnership to which it belongs.
(c) Describe in brief, any other type of partnership belonging to the same category.
5 Shri Mahila Griha Udyog Lijjat Papad, popularly known as Lijjat, is an organisation which was started in the year 1959, in
an old residential building in Girgaum (South Bombay) by a few Gujarati women with a capital 80 who aimed to earn their
living through their cooking skills. They started with the production of 4 packets of Papads. In 2018 it had an annual
turnover of more than 800 crore provides employment to 43,000 women across the country. A part of the structure of the
organisation is depicted below.
Managing Committee or 21 members

Six Office Bears President Vice-President Two Secretaries Two Treasures

(a) Identify the form of business organisation being described above.
(b) Describe briefly its any four features.
6 Sudeep is pursuing a graphic designing course at a Technical Institute at Pune. In one of the class room discussion on
'career options' at the institute, he shares with his classmates that he is a member of a business by birth. Although, he does
not have the right to take any decisions regarding the business. His uncle takes all decisions related to the business. In
context of the given case:(a) Identify the form of business organisation being described in the above lines.
(b) Mention the status enjoyed by Sudeep in this form of business organisation,
(c) State any three other features of this form business organisation which are not mentioned in the above lines.
7 Shivam is an expert graphic designer working with an Advertising company. During his free time he also takes up
freelancing logo designing assignments for various organisations within the country and abroad. Over the years, the
credibility for his work has built up. therefore, he feels it is the right time now to promote his own business. Keeping in
view, certain constraints of a sole proprietorship form of business, he is reluctant to opt for this form of business
organisation. At the same time he does not want to start the business in partnership. Is there any other form of business
organisation in which Shivam can promote his business as an individual? Name and briefly explain this form of business
organisation.
8. Toffee Private Limited is a well-known company dealing in pet food and accessories. Keeping in view the growing
demand for its products the company has decided to increase its production turnover. The expansion plan will necessiate
setting up of a new factory. In order to meet, its increased financial needs the management of the company has decided to
'go public' that is to change the form of business from a private limited company to a public limited company.
(a) Why do you think the management of the company has decided to convert the company into a public limited
company?
(b) State any four privileges that it now enjoys as a private limited company over public limited company.
9 Raj has identified a large opportunity for residents in India to generate their own power and save money by setting up
solar equipment on their roofs or balconies, etc. Besides, conceiving a business ideas promotion involves taking an initiative
to form a company so that practical shape can be given to it. Briefly outline the other functions which need to be
performed by Raj as a promoter.
10 Piyush and Prateek have decided to convert their partnership form of business organisation into a Private Limited
Company on the advice of their friend Prerak. Prerak advises them on certain documents which need to be attached with
the application for registration of the company. He asks them to get a document prepared, which will define the
relationship of the company with outsiders. In addition to this, a document containing the rules of internal management of
the company should also be prepared, which will indicate how the objectives of the company are to be achieved.
Furthermore, the directors of the proposed company have to give an undertaking to purchase the qualification shares. He
asks them to first get these three documents prepared and then contact him for further information on the remaining
documents.
(a) Identify the various documents been described in the above lines.
(b) Also, mention the remaining documents which needs to be filed with the Registrar of the companies for the
registration.
11 Rohan is pursuing a course on financial market management from a premier institute in Delhi. He has been asked to
give a presentation in the class on the topic 'Capital subscription stage in the formation of a company'. As he was travelling
to attend his best friend's wedding at Mumbai, he asked his sister Reena to prepare the presentation for him. Reena
prepared the presentation covering the various steps involved in rasing funds from the public by a public company. But she
forgot to number these steps in a proper serial order. Listed below are the extracts about various steps in an incorrect
order. You are required to you arrange these steps in an appropriate sequence.
(a) An application is to be made to at least one stock exchange for permission to deal in its shares or debentures.
(b) The company needs to appoint bankers, brokers and underwriters.
(c) Prior approval from SEBI is required before going ahead with the raising funds from public.
(d) Return on allotment signed by a director or secretary is filed with the registrar of companies within 30 days of
allotment.
(e) If the applications received for shares are for an amount less than 90% of the issue size the allotment cannot be made
and the application money received must be returned to the applicants.
(f) A copy of prospectus or a statement in lieu of prospectus is filed with the registrar of Companies.