Company chapter no 4
Define Joint Stock Company
A joint stock company may be defined as an artificial person recognized by lay with a distinctive name a common seal, a common capital comprising transferable share carrying limited liability and have a perpetual succession
What is separate legal entity of company?
Promoters
Revaluation Account
Gaining ration
Sacrifice ratio
directors
Separate legal entity means that a company is distinct from the person forming it. It enjoy s may of the rights artificial persons.
Like
- It sue or be sued in its name
- If can own and transfer the property on its own name
What is common seal?
Common seal is used as substitute of signature because company is an artificial person and cannot sing itself.
Define perpetual existence of a company
It means a joint stock company has a continuous life. The share holder can come or go but the existence of a company cannot effect. It can be winded up through compliance with the provision of company’s ordinance 1984
Define limited liability
The liability of the member is generally limited ot the extent to the nominal value of share or the amount held by them
What is company limited by shares
These are companies in which the shareholders have a limited to the extent to the nominal value of shares. These companies must have share capital.
What is company limited by guarantee?
A company in which the liability of its members is limited to such amount a s member may be respectively undertake tot contribute to the assets of the company in the event of tits being wound u. generally such companies do not have share capital.
Define unlimited company
A company in which the liability of its members n unlimited every member of the companies personally liable to the full extent of his personal assets for the full debts f the companies it may or may or may not have share capital.
Private limited company
According to the company ordinance 1984 it can be formed
- At least tow member and maximum 50 members
- It has no right to issue the shares
- It restrict the transference of shares
What is public limited company
According to the company ordinance 1984 it can be formed
- At least seven member and there is no limit on maximum numbers
- It can invite the public for application for issuance of shares
- it can easily transfer the shares form one person to another person
Define memorandum of association
The document which define the scope and object of the company
What is article of association?
The document which defines the rules and regulation of the company
What is prospectus?
This is a statement in the form of a small booklet, notice, circular, advertisement or other an invitation issued by the company to the public for subscription of shares
Define term shares?
The total amount of capital of a company Is divided into smaller units these units are called shares.
What is share capital?
The sum or total of the par value of shares of a company is called share capital.
Define Authorized capital
The amount of capital with which is registered. It is also called nominal or registered capital.
Define issued capital?
Shares offered to the general public for contribution are know as shares issued the totoal value of these shares called issued capital.
Define Subscribed capital?
Out of the total number of shares issued by the company that is number of share which is taken up by the public are know as subscribed shares. The total valued of such shares called subscribed s capital.
Subscription may
· under subscription (A company may not received application for all the shares offer by it to the public. a company receives application less that its offer is called.)
· over s subscription
· (A company may receive a large number of application for all the shares offer by it to the public. a company receives application more then that its offer is called.)
What is called up capital?
The portion of a subscribed capital which is called up by the company form public is called up capital
Define Paid up capital
The total amount received by the company out of the total called up amounts called paid up capital.
What is primary or preliminary expense?
These are the expense which is incurred in the initial sates of incorporation like legal fee, remuneration of promoters and cost of printing of various documents.
Define underwriting commission
The commission which is paid to underwriter to take the risk of share offiered to the pubic is know as underwriting commission.
What is par value of share?
The value of which is assigned to a unit of shares is called par value of share its is also called as nominal value or face value of shares.
Define book value of shares?
The value of shares according to the books of a company is called book value of share.
What is market value of share?
The price at which the buyer is willing to purchase the shares and seller is willing to sell it is called market value of shares.
Issued of shares at premium?
When a share having face value of Rs.10 is issued by the company for an amount more than Rs.10 the share is called issued at a premium.
Issued of share at discount?
When a share having face value of Rs.10 is issued by the company for an amount Less than Rs.10 the share is called issued at a Discount
Define Debentures?
A certificate issued by a company under its seal acknowlging a debts due by it to its holder. It includes debentures stock, Bonds and participation term certificate and other securities.
Kinds of debentures
Redemption point of view
1. Redeemable debentures
Those debentures which are repayable at the end of a specified period
2. Irredeemable debentures
Those debentures which never repayable during the existence of the company
Convertibility point of view
1. Convertible debentures
These are debentures which are converted into shares as per terms of their issues
2. Non convertible debentures
Debentures are not convertible into shares of a company are term as non convertible debentures.
Security point of view
1. Simple or naked debentures
Those debentures which are without any security as to payment of interest or repayment of principle
2. Mortgage debentures
Those debentures which are secured by a fixed or floating charge on the assets of the company
Registration point of view
1. Registered debentures
These are debentures which are registered in the name of the holders in the books of the company. And transfer of these must be registered in the books of company
2. Bearer Debentures
These are payable to bearer of debentures. These debentures can be transferred by mere delivery
What is debentures stock?
Debentures stock is converted debentures which is fully paid and transfer in fraction of rupees.
Difference between Debentueres and debentures stcok
Debentures stock Debentures
- Debentures stock is fully paid it may be paid partially
- Debentures stock is transferable in fraction of rupees it is transferred entirely
What is difference between Debentures holder and share holder?
Debentures holder Share holder
- Debentures holder is creditor of company Shareholder is Owner of business
- Debentures holder receives interest Shareholder receives profit
- Debentures holder have no right to participate Shareholder participate in
in decision making decision making.
What is difference between joint stock company and partnership?
JSC partnership- It is a legal person it is not legal person
- Liability of member is limited Liability is not limited
- No of members are at least 7 to unlimited at least 2 and maximum 20 members but in case banking sector not more then ten.
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