- The document discusses joint stock companies, which are a form of business organization that can be established on a large scale with significant capital from many shareholders.
- Joint stock companies have a separate legal identity, limited liability for shareholders, and are managed democratically by elected directors on behalf of shareholders.
- They allow large capital investment and are suitable for businesses requiring significant funds, operating at large scale, and those seeking public confidence. However, they also involve more complex formation processes and greater government regulation than other business forms.
Dr. Job Thomas
Reader in Civil Engineering, School of Engineering
Cochin University of Science and Technology
Cochin -22, email: job_thomas@cusat.ac.in
Dr. Job Thomas
Reader in Civil Engineering, School of Engineering
Cochin University of Science and Technology
Cochin -22, email: job_thomas@cusat.ac.in
These lecture notes clearly explain the concept of shares in regards to Company Law. Excellent for revision and study for CPAs, Bcom or any students taking business related courses where business law is a course unit.
The Indian economy has a variety of companies existing in its market such as public companies, private companies, investment companies, limited liability companies etc.
These numerous entities in the market may look different from each other on the surface but based upon certain identifiable common characteristics they can be grouped into below-mentioned classifications. This article aims to draw your attention towards the conventional classification of the companies that are made based upon factors such as liability, control, incorporation, transferability of shares etc.
This PPT covers meaning and definition of company, features of company, association of company, memorandum of Association, Articles of Association, Prospectus, Promoters
Background of Company Law in England,
Background of Company Law in India,
Definition of Company,
Nature & Characteristics,
Features of Company,
Lifting the corporate veil,
Types of Companies,
Formation of a Company,
Memorandum & Article of Association,
Prospectus,
Share & Share Capita,
Company Management & Director,
Meetings,
Borrowing Powers,
Debentures & Charges,
Accounts & Auditors,
Prevention of oppression & Mismanagement,
Winding up,
Corporate law in pakistan
Pakistan came into being, the Companies Act, 1913 was adopted.
In the year 1984, the President of Pakistan passed the Companies ordinance, 1984.
At then the Companies act 1913 was repealed.
Currently, companies ordinance, 1984 is the main law regarding companies and it regulates all matters relating to the companies.
514 sections and eight Schedules.
Later, time to time, different amendments have been made in it.
Growth of the Corporate Enterprises
Protection of Investors and Creditors
Promotion of investment and development of economy and matters arising out of above factors or connected therewith.
Main source of Company Law is the companies ordinance, 1984.
The Companies Rules, 1985. It provides guidance to follow the law.
Notifications and circulars, etc., issued by the Securities and Exchange Commissions of Pakistan (SECP) or the Federal Government.
The Case Laws of High Court and Supreme Court.
A company becomes an Artificial legal person and recognized by law as person.
It is not a natural person.
Does not have heart, mind, hands or feet but still recognized by law as a person that is why it is considered to be Artificial Legal Person.
Can purchase assets in its name,
Have liabilities in its name.
Sue or can be sued.
The company is said to be a separate and distinct entity.
But separate from whom?
It means that company is separate from its.
The liability Company and the liability of members are different.
If company is sued it does not mean member is sued.
Bank account of owner VS company
The members are the owners of the company.
But they don’t directly manage the company.
The members elect the directors who manage the company.
Directors acts independently from the members.
The members are not the agents & cannot bind the company in any contract.
Directors are the agents of the company and manage the company.
Directors are elected normally out of members but members other than directors are not part of management.
Types of Companies under Companies Act, 2013 in India.pptxtaxguruedu
The term “company” does not have a purely technical or legal definition. It could be said to signify a grouping of people who share a common object or objects. People may associate themselves for a wide range of goals, including both materialistic and immaterial ones. However, the term “company” is typically only used to refer to groups that have come together for profit-making goals.
These lecture notes clearly explain the concept of shares in regards to Company Law. Excellent for revision and study for CPAs, Bcom or any students taking business related courses where business law is a course unit.
The Indian economy has a variety of companies existing in its market such as public companies, private companies, investment companies, limited liability companies etc.
These numerous entities in the market may look different from each other on the surface but based upon certain identifiable common characteristics they can be grouped into below-mentioned classifications. This article aims to draw your attention towards the conventional classification of the companies that are made based upon factors such as liability, control, incorporation, transferability of shares etc.
This PPT covers meaning and definition of company, features of company, association of company, memorandum of Association, Articles of Association, Prospectus, Promoters
Background of Company Law in England,
Background of Company Law in India,
Definition of Company,
Nature & Characteristics,
Features of Company,
Lifting the corporate veil,
Types of Companies,
Formation of a Company,
Memorandum & Article of Association,
Prospectus,
Share & Share Capita,
Company Management & Director,
Meetings,
Borrowing Powers,
Debentures & Charges,
Accounts & Auditors,
Prevention of oppression & Mismanagement,
Winding up,
Corporate law in pakistan
Pakistan came into being, the Companies Act, 1913 was adopted.
In the year 1984, the President of Pakistan passed the Companies ordinance, 1984.
At then the Companies act 1913 was repealed.
Currently, companies ordinance, 1984 is the main law regarding companies and it regulates all matters relating to the companies.
514 sections and eight Schedules.
Later, time to time, different amendments have been made in it.
Growth of the Corporate Enterprises
Protection of Investors and Creditors
Promotion of investment and development of economy and matters arising out of above factors or connected therewith.
Main source of Company Law is the companies ordinance, 1984.
The Companies Rules, 1985. It provides guidance to follow the law.
Notifications and circulars, etc., issued by the Securities and Exchange Commissions of Pakistan (SECP) or the Federal Government.
The Case Laws of High Court and Supreme Court.
A company becomes an Artificial legal person and recognized by law as person.
It is not a natural person.
Does not have heart, mind, hands or feet but still recognized by law as a person that is why it is considered to be Artificial Legal Person.
Can purchase assets in its name,
Have liabilities in its name.
Sue or can be sued.
The company is said to be a separate and distinct entity.
But separate from whom?
It means that company is separate from its.
The liability Company and the liability of members are different.
If company is sued it does not mean member is sued.
Bank account of owner VS company
The members are the owners of the company.
But they don’t directly manage the company.
The members elect the directors who manage the company.
Directors acts independently from the members.
The members are not the agents & cannot bind the company in any contract.
Directors are the agents of the company and manage the company.
Directors are elected normally out of members but members other than directors are not part of management.
Types of Companies under Companies Act, 2013 in India.pptxtaxguruedu
The term “company” does not have a purely technical or legal definition. It could be said to signify a grouping of people who share a common object or objects. People may associate themselves for a wide range of goals, including both materialistic and immaterial ones. However, the term “company” is typically only used to refer to groups that have come together for profit-making goals.
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Title: Sense of Smell
Presenter: Dr. Faiza, Assistant Professor of Physiology
Qualifications:
MBBS (Best Graduate, AIMC Lahore)
FCPS Physiology
ICMT, CHPE, DHPE (STMU)
MPH (GC University, Faisalabad)
MBA (Virtual University of Pakistan)
Learning Objectives:
Describe the primary categories of smells and the concept of odor blindness.
Explain the structure and location of the olfactory membrane and mucosa, including the types and roles of cells involved in olfaction.
Describe the pathway and mechanisms of olfactory signal transmission from the olfactory receptors to the brain.
Illustrate the biochemical cascade triggered by odorant binding to olfactory receptors, including the role of G-proteins and second messengers in generating an action potential.
Identify different types of olfactory disorders such as anosmia, hyposmia, hyperosmia, and dysosmia, including their potential causes.
Key Topics:
Olfactory Genes:
3% of the human genome accounts for olfactory genes.
400 genes for odorant receptors.
Olfactory Membrane:
Located in the superior part of the nasal cavity.
Medially: Folds downward along the superior septum.
Laterally: Folds over the superior turbinate and upper surface of the middle turbinate.
Total surface area: 5-10 square centimeters.
Olfactory Mucosa:
Olfactory Cells: Bipolar nerve cells derived from the CNS (100 million), with 4-25 olfactory cilia per cell.
Sustentacular Cells: Produce mucus and maintain ionic and molecular environment.
Basal Cells: Replace worn-out olfactory cells with an average lifespan of 1-2 months.
Bowman’s Gland: Secretes mucus.
Stimulation of Olfactory Cells:
Odorant dissolves in mucus and attaches to receptors on olfactory cilia.
Involves a cascade effect through G-proteins and second messengers, leading to depolarization and action potential generation in the olfactory nerve.
Quality of a Good Odorant:
Small (3-20 Carbon atoms), volatile, water-soluble, and lipid-soluble.
Facilitated by odorant-binding proteins in mucus.
Membrane Potential and Action Potential:
Resting membrane potential: -55mV.
Action potential frequency in the olfactory nerve increases with odorant strength.
Adaptation Towards the Sense of Smell:
Rapid adaptation within the first second, with further slow adaptation.
Psychological adaptation greater than receptor adaptation, involving feedback inhibition from the central nervous system.
Primary Sensations of Smell:
Camphoraceous, Musky, Floral, Pepperminty, Ethereal, Pungent, Putrid.
Odor Detection Threshold:
Examples: Hydrogen sulfide (0.0005 ppm), Methyl-mercaptan (0.002 ppm).
Some toxic substances are odorless at lethal concentrations.
Characteristics of Smell:
Odor blindness for single substances due to lack of appropriate receptor protein.
Behavioral and emotional influences of smell.
Transmission of Olfactory Signals:
From olfactory cells to glomeruli in the olfactory bulb, involving lateral inhibition.
Primitive, less old, and new olfactory systems with different path
Anti ulcer drugs and their Advance pharmacology ||
Anti-ulcer drugs are medications used to prevent and treat ulcers in the stomach and upper part of the small intestine (duodenal ulcers). These ulcers are often caused by an imbalance between stomach acid and the mucosal lining, which protects the stomach lining.
||Scope: Overview of various classes of anti-ulcer drugs, their mechanisms of action, indications, side effects, and clinical considerations.
Title: Sense of Taste
Presenter: Dr. Faiza, Assistant Professor of Physiology
Qualifications:
MBBS (Best Graduate, AIMC Lahore)
FCPS Physiology
ICMT, CHPE, DHPE (STMU)
MPH (GC University, Faisalabad)
MBA (Virtual University of Pakistan)
Learning Objectives:
Describe the structure and function of taste buds.
Describe the relationship between the taste threshold and taste index of common substances.
Explain the chemical basis and signal transduction of taste perception for each type of primary taste sensation.
Recognize different abnormalities of taste perception and their causes.
Key Topics:
Significance of Taste Sensation:
Differentiation between pleasant and harmful food
Influence on behavior
Selection of food based on metabolic needs
Receptors of Taste:
Taste buds on the tongue
Influence of sense of smell, texture of food, and pain stimulation (e.g., by pepper)
Primary and Secondary Taste Sensations:
Primary taste sensations: Sweet, Sour, Salty, Bitter, Umami
Chemical basis and signal transduction mechanisms for each taste
Taste Threshold and Index:
Taste threshold values for Sweet (sucrose), Salty (NaCl), Sour (HCl), and Bitter (Quinine)
Taste index relationship: Inversely proportional to taste threshold
Taste Blindness:
Inability to taste certain substances, particularly thiourea compounds
Example: Phenylthiocarbamide
Structure and Function of Taste Buds:
Composition: Epithelial cells, Sustentacular/Supporting cells, Taste cells, Basal cells
Features: Taste pores, Taste hairs/microvilli, and Taste nerve fibers
Location of Taste Buds:
Found in papillae of the tongue (Fungiform, Circumvallate, Foliate)
Also present on the palate, tonsillar pillars, epiglottis, and proximal esophagus
Mechanism of Taste Stimulation:
Interaction of taste substances with receptors on microvilli
Signal transduction pathways for Umami, Sweet, Bitter, Sour, and Salty tastes
Taste Sensitivity and Adaptation:
Decrease in sensitivity with age
Rapid adaptation of taste sensation
Role of Saliva in Taste:
Dissolution of tastants to reach receptors
Washing away the stimulus
Taste Preferences and Aversions:
Mechanisms behind taste preference and aversion
Influence of receptors and neural pathways
Impact of Sensory Nerve Damage:
Degeneration of taste buds if the sensory nerve fiber is cut
Abnormalities of Taste Detection:
Conditions: Ageusia, Hypogeusia, Dysgeusia (parageusia)
Causes: Nerve damage, neurological disorders, infections, poor oral hygiene, adverse drug effects, deficiencies, aging, tobacco use, altered neurotransmitter levels
Neurotransmitters and Taste Threshold:
Effects of serotonin (5-HT) and norepinephrine (NE) on taste sensitivity
Supertasters:
25% of the population with heightened sensitivity to taste, especially bitterness
Increased number of fungiform papillae
The prostate is an exocrine gland of the male mammalian reproductive system
It is a walnut-sized gland that forms part of the male reproductive system and is located in front of the rectum and just below the urinary bladder
Function is to store and secrete a clear, slightly alkaline fluid that constitutes 10-30% of the volume of the seminal fluid that along with the spermatozoa, constitutes semen
A healthy human prostate measures (4cm-vertical, by 3cm-horizontal, 2cm ant-post ).
It surrounds the urethra just below the urinary bladder. It has anterior, median, posterior and two lateral lobes
It’s work is regulated by androgens which are responsible for male sex characteristics
Generalised disease of the prostate due to hormonal derangement which leads to non malignant enlargement of the gland (increase in the number of epithelial cells and stromal tissue)to cause compression of the urethra leading to symptoms (LUTS
New Directions in Targeted Therapeutic Approaches for Older Adults With Mantl...i3 Health
i3 Health is pleased to make the speaker slides from this activity available for use as a non-accredited self-study or teaching resource.
This slide deck presented by Dr. Kami Maddocks, Professor-Clinical in the Division of Hematology and
Associate Division Director for Ambulatory Operations
The Ohio State University Comprehensive Cancer Center, will provide insight into new directions in targeted therapeutic approaches for older adults with mantle cell lymphoma.
STATEMENT OF NEED
Mantle cell lymphoma (MCL) is a rare, aggressive B-cell non-Hodgkin lymphoma (NHL) accounting for 5% to 7% of all lymphomas. Its prognosis ranges from indolent disease that does not require treatment for years to very aggressive disease, which is associated with poor survival (Silkenstedt et al, 2021). Typically, MCL is diagnosed at advanced stage and in older patients who cannot tolerate intensive therapy (NCCN, 2022). Although recent advances have slightly increased remission rates, recurrence and relapse remain very common, leading to a median overall survival between 3 and 6 years (LLS, 2021). Though there are several effective options, progress is still needed towards establishing an accepted frontline approach for MCL (Castellino et al, 2022). Treatment selection and management of MCL are complicated by the heterogeneity of prognosis, advanced age and comorbidities of patients, and lack of an established standard approach for treatment, making it vital that clinicians be familiar with the latest research and advances in this area. In this activity chaired by Michael Wang, MD, Professor in the Department of Lymphoma & Myeloma at MD Anderson Cancer Center, expert faculty will discuss prognostic factors informing treatment, the promising results of recent trials in new therapeutic approaches, and the implications of treatment resistance in therapeutic selection for MCL.
Target Audience
Hematology/oncology fellows, attending faculty, and other health care professionals involved in the treatment of patients with mantle cell lymphoma (MCL).
Learning Objectives
1.) Identify clinical and biological prognostic factors that can guide treatment decision making for older adults with MCL
2.) Evaluate emerging data on targeted therapeutic approaches for treatment-naive and relapsed/refractory MCL and their applicability to older adults
3.) Assess mechanisms of resistance to targeted therapies for MCL and their implications for treatment selection
1. Lesson 8
Joint Stock Company
You must have heard about Reliance Industries Limited (RIL), Tata Iron and Steel
Company Limited (TISCO), Steel Authority of India Limited (SAIL), Maruti Udyog
Limited (MUL), etc. Have you ever thought who owns them? What is the volume of
financial transactions of these companies? If you think about it, you will find that these
organisations are quite large in size and their activities are spread all over the country. Thus,
it is not possible for these organisations to be formed as sole proprietorship or partnership
form of business. Then, how are they formed and managed? Actually, they are a different
form of business organisation and require much more capital and manpower than sole
proprietorship and partnership form of business organisation. Let us now learn about this
form of business organisation in detail.
8.1 Objectives
After studying this lesson, you will be able to:
! define Joint Stock Company ;
! state the characteristics of Joint Stock Company;
! identify the different types of Joint Stock Company;
! discuss the advantages and limitations of Joint Stock Company;
! suggest the suitability of Joint Stock Company as a form of Business organisation;
! explain the meaning and features of a Multinational Company; and
! enumerate the advantages and limitations of Multinational Company.
8.2 Meaning of Joint Stock Company
In a partnership firm we know that the number of partners cannot exceed 20. So there is a
limit to the contribution of capital. Secondly, even if the partners could contribute a large
2. Business Studies
amount of capital, they would hesitate to do so considering the risk involved in business and
their unlimited liability. Mainly to take care of these two problems, a company form of
business organisation came into existence.
A company form of business orgnisation is known as a Joint Stock Company. It is a
voluntary association of persons who generally contribute capital to carry on a particular
type of business, which is established by law and can be dissolved only by law. Persons
who contribute capital become members of the company. This form of business has a legal
existence separate from its members, which means even if its members die, the company
remains in existence. This form of business organisations generally requires huge capital
investment, which is contributed by its members. The total capital of a joint stock company
is called share capital and it is divided into a number of units called shares. Thus, every
member has some shares in the business depending upon the amount of capital contributed
by him. Hence, members are also called shareholders.
The companies in India are governed by the Indian Companies Act, 1956. The Act defines
a company as an artificial person created by law, having a separate legal entity, with per-
petual succession and a common seal.
8.3 Characteristics of Joint Stock Company
You are now familiar with the concept of company as a form of business organisation. Let us
now study its characteristics.
i. Legal formation
No single individual or a group of individuals can start a business and call it a joint stock
company. A joint stock company comes into existence only when it has been registered
82 after completion of all formalities required by the Indian Companies Act, 1956.
3. Joint Stock Company
ii. Artificial person
Just like an individual, who takes birth, grows, enters into relationships and dies, a joint
stock company takes birth, grows, enters into relationships and dies. However, it is called
an artificial person as its birth, existence and death are regulated by law and it does not
possess physical attributes like that of a normal person.
iii. Separate legal entity
Being an artificial person, a joint stock company has its own separate existence independent
of its members. It means that a joint stock company can own property, enter into contracts
and conduct any lawful business in its own name. It can sue and can be sued by others in the
court of law. The shareholders are not the owners of the property owned by the company.
Also, the shareholders cannot be held responsible for the acts of the company
iv. Common seal
A joint stock company has a seal, which is used while dealing with others or entering into
contracts with outsiders. It is called a common seal as it can be used by any officer at any
level of the organisation working on behalf of the company. Any document, on which the
company's seal is put and is duly signed by any official of the company, become binding on
the company. For example, a purchase manager may enter into a contract for buying raw
materials from a supplier. Once the contract paper is sealed and signed by the purchase
manager, it becomes valid. The purchase manager may leave the company thereafter or
may be removed from the job or may have taken a wrong decision, yet for all purposes the
contract is valid till a new contract is made or the existing contract expires.
v. Perpetual existence
A joint stock company continues to exist as long as it fulfils the requirements of law. It is not
affected by the death, lunacy, insolvency or retirement of any of its members. For example,
in case of a private limited company having four members, if all of them die in an accident the
company will not be closed. It will continue to exist. The shares of the company will be
transferred to the legal heirs of the deceased members.
vi. Limited liability
In a joint stock company, the liability of a member is limited to the extent of the value of
shares held by him. While repaying debts, for example, if a person owns 1000 shares of Rs.
10 each, then he is liable only upto Rs 10,000 towards payment of debts. That is, even if
there is liquidation of the company, the personal property of the shareholder can not be
attached and he will lose only his shares worth Rs. 10,000.
vii. Democratic management
Joint stock companies have democratic management and control. That is, even though the
shareholders are owners of the company, all of them cannot participate in the management
of the company. Normally, the shareholders elect representatives from among themselves
known as ‘Directors’ to manage the affairs of the company.
83
4. Business Studies
Intext Questions 8.1
Given below are some statements about characteristics of joint stock company. Some are
right and some are wrong. Identify the wrong statements and strike them out:
(i) No legal formality is required to form a joint stock company.
(ii) A joint stock company dies with the death of its shareholders.
(iii) The shareholders of a joint stock company have limited liablity
(iv) A joint stock company can own property on its own name.
(v) A joint stock company is managed by the elected representatives of shareholders.
8.4 Types of Companies
We find a variety of companies in our county. The formations, liability, management and
ownership of all companies differ from each other. Let us classify the different types of
companies on the basis of their ownership and nationality. Accordingly, we have three type
of companies - Private Limited, Public Limited and Government companies on the basis of
ownership and two types of companies - Indian and Foreign, on the basis of nationality.
On the basis of Ownership On the basis of Nationality
i. Private Limited i. Indian
ii. Public Limited ii. Foreign
iii. Government
Now let us learn more about them:
Private Limited Company
These companies can be formed by at least two individuals having minimum paid–up capital
of not less than Rupees one lakh. As per the Companies Act, 1956 the total membership of
these companies cannot exceed 50. The shares allotted to its members are also not freely
transferable between them. These companies are not allowed to raise money from the pub-
lic through open invitation. They are required to use “Private Limited” after their names. The
examples of such companies are Combined Marketing Services Private Limited, Indian
Publishers and Distributors Private Limited, Oricom Systems Private Limited, etc.
Public Limited Company
A minimum of seven members are required to form a public limited company. It must have
minimum paid–up capital of Rs 5 lakhs. There is no restriction on maximum number of
members. The shares allotted to the members are freely transferable. These companies can
raise funds from general public through open invitations by selling its shares or accepting
fixed deposits. These companies are required to write either ‘public limited’ or ‘limited’
after their names. Examples of such companies are Hyundai Motors India Limited, Steel
Authority of India Limited, Jhandu Pharmaceuticals Limited etc.
84
5. Joint Stock Company
Difference between Private Limited and Public Limited Companies:
Basis Private Limited Company Public Limited Company
Membership Minimum - 02 Minimum - 07
Maximum - 50 Maximum - no restriction
Identification Use a suffix “Private Limited” Use a suffix “Limited” after its
after its name name
Transferability of Restricted Free
shares
Capital required Not less than Rs. 1 lakh Not less than Rs. 5 lakh
Raising of funds Can not give open invitation to the Can raise as much money as
public to subscribe the shares required from public
Government Company
In these companies the Government (either state or central government or both) holds a
majority share capital i.e., not less than 51%. However, companies having less than 51%
share holding by the government can also be called Government companies provided con-
trol and management lies with the government. Examples of government companies are:
Mahanagar Telephone Nigam Limited, Bharat Heavy Electricals Limited.
Indian Company
A company having business operations in India and registered under the Indian Companies
Act, 1956 is called Indian Company. An Indian company may be formed as a public lim-
ited, private limited or government company.
Foreign Company
A foreign company is a company formed and registered outside India having business op-
erations in India.
Intext Questions 8.2
Fill in the blanks with suitable words:
(i) There should be atleast ___________ members in a Public limited company.
(ii) Transfer of share freely from one member to another is not possible in case of
_________company.
(iii) Minimum amount of capital required to start a public limited company is Rs
____________.
(iv) Mahanagar Telephone Nigam Limited is ____________ company.
(v) A foreign company is formed ____________ India.
85
6. Business Studies
You have just read about the different types of companies. Now we shall discuss about the
advantages and limitation of company form of business organisation.
8.5 Advantages of Joint Stock Company
You must be keen to know why we should form a company for carrying out business?
Obviously, this is because there are many advantages which the company form of business
organisation enjoys over other forms of business organisation. Let us read about those
advantages.
The main advantages of Joint Stock Company are -
(i) Large financial resources: A joint stock company is able to collect a large amount
of capital through small contributions from a large number of people. In public limited
company shares can be offered to the general public to raise capital. They can also
accept deposits from the public and issue debentures to raise funds.
(ii) Limited Liability: In case of a company, the liability of its members is limited to the
extent of the value of shares held by them. Private property of members cannot be
attached for debts of the company. This advantage attracts many people to invest
their savings in the company and it encourages the owners to take more risk.
(iii) Professional management: Management of a company is vested in the hands of
directors, who are elected democratically by the members or shareholders. These
directors as a group known as Board of Directors ( or simply Board) manage the
affairs of the company and are accountable to all the members. So members elect
capable persons having sound financial, legal and business knowledge to the board
so that they can manage the company efficiently.
(iv) Large-scale production: Due to the availability of large financial resources and
technical expertise it is possible for the companies to have large-scale production. It
enables the company to produce more efficiently and at lower cost.
(v) Contribution to society: A joint stock company offers employment to a large num-
ber of people. It facilitates promotion of various ancillary industries, trade and aux-
iliaries to trade. Sometimes it also donates money towards education, health and
community services.
(vi) Research and Development: Only in company form of business it is possible to
invest a lot of money on research and development for improved processes of pro-
duction, new design, better quality products, etc. It also takes care of training and
development of its employees.
8.6 Limitations of Joint Stock Company
In spite of many advantages of the company form of business organisation, it also suffers
from some limitations. Let us note the limitations of Joint Stock Companies.
(i) Difficult to form: The formation or registration of joint stock company involves a
complicated procedure. A number of legal documents and formalities have to be
completed before a company can start its business. It requires the services of
specialists such as Chartered Accountants, Company Secretaries, etc. Therefore,
cost of formation of a company is very high.
86
7. Joint Stock Company
(ii) Excessive government control: Joint stock companies are regulated by
government through Companies Act and other economic legislations. Particularly,
public limited companies are required to adhere to various legal formalities as
provided in the Companies Act and other legislations. Non-compliance with these
invites heavy penalty. This affects the smooth functioning of the companies.
(iii) Delay in policy decisions: Generally policy decisions are taken at the Board
meetings of the company. Further the company has to fulfill certain procedural
formalities. These procedures are time consuming and therefore, may delay action
on the decisions.
(iv) Concentration of economic power and wealth in few hands: A joint stock
company is a large-scale business organisation having huge resources. This gives a
lot of economic and other power to the persons who manage the company. Any
misuse of such power creates unhealthy conditions in the society, e.g., having
monopoly over a particular business or industry or product; exploitation of workers,
consumers and investors.
8.7 Suitability of Joint Stock Company
A joint stock company form of business organisation is found to be suitable where the
volume of business is large and huge financial resources are needed. Since members of a
joint stock company have limited liability it is possible to raise capital from the public without
much difficulty. This form of organisation is also suitable for businesses which involve heavy
risks. Again, for business activities which require public support and confidence, joint stock
form is preferred as it has a separate legal status. Certain types of businesses, like
production of pharmaceuticals, machine manufacturing, information technology, iron and
steel, aluminum, fertilisers, cement, etc., are generally organised in the form of joint stock
company.
Intext Questions 8.3
(i) The liability of members of a joint stock company is limited to the extent of the
____________.
(ii) A Joint Stock Company form of business organisation takes more _________ to
take policy decisions.
(iii) A joint stock company form of business organisation is managed by ________.
(iv) The cost of formation of a company is very ____________.
(v) Companies Act and other economic legislations are passed to regulate the
____________.
8.8 Multinational Companies
You have learnt that we have two types of companies, on the basis of nationality, one is
Indian company and the other is Foreign company. But have you ever thought, why are
foreign companies coming to India or what are they doing in our country? Actually they are
coming to India to produce goods and services and/or to sell their products. Similarly Indian
87
8. Business Studies
companies are also extending their business operations across the boundaries of our coun-
try. This is called globalisation, which means extension of economic activities across the
boundaries of a country in search of worldwide markets. In your day-to-day life you might
be using different goods and services of Indian as well as foreign origin. The foreign goods
are either imported in our country or sometimes these goods are also produced in our
country. Due to globalisation the entire world has become one big market. Big companies
are coming out of their home countries in search of better markets for their products. In the
next section you will find details about these big companies.
Meaning of Multinational Companies
Simply speaking, a multi-national company is one which is registered as a company in one
country but carries on business in a number of other countries by setting up factories, branches
or subsidiary units. Such a company may produce goods or arrange services in one or more
countries and sell these in the same or other countries. You might have heard about many
Multinational Companies (MNCs) running business in India, like Philips, Siemens, Hyundai,
Coca Cola, Nestle, Sony, McDonald’s, Citi Bank, Good Year, etc.
Let us read the general features of multinational companies.
Features of Multinational Companies
Multinational Companies generally have the following features:
(i) International Operations: Multinational Companies generally have production, mar-
keting and other facilities in several countries.
(ii) Large size: The volume of sales, the profits earned, and also the value of assets held
by a multinational companies are generally very large.
(iii) Centralised Control: The branches and subsidiary units of an MNC operating in dif-
ferent countries are controlled from the headquarters of the company in the home
country, which lay down broad policies to be pursued.
Advantages of Multinational Companies
The Multinational Companies enjoy several advantages by way of huge earnings due to
large-scale production and distribution activities across national borders. Besides, the host
countries in which the Multinational Companies operate also derive a number of advan-
tages. These are-
(i) Investment of Foreign capital: Direct investment of capital by multinational compa-
nies helps under-developed countries to speed up their economic development.
(ii) Generation of employment: Expansion of industrial and trading activities by multina-
tional companies leads to creation of employment opportunities and raising the stan-
dard of living in host countries.
(iii) Use of advanced technology: With substantial resources multinational companies un-
dertake Research and Development activities which contribute to improved methods
and processes of production and thus, increase the quality of products. Gradually,
other countries also acquire these technologies.
(iv) Growth of ancillary units: Suppliers of materials and services and ancillary industries
often grow in host countries as a result of the operation of multinational companies.
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9. Joint Stock Company
(v) Increase in exports and inflow of foreign exchange: Goods produced in the host
countries are sometimes exported by multinational companies. Foreign exchange thus
earned contributes to the foreign exchange reserves of host countries.
(vi) Healthy competition: Efficient production of quality goods by multinational compa-
nies prompt the domestic producers to improve their performance in order to survive
in the market.
Limitations of Multinational Companies
The advantages discussed above are no doubt beneficial to host countries. But there are
several limitations of multinational companies, which we should take note of:
i. Least concern for priorities of host countries: Multinational Companies generally in-
vest capital in the most profitable industries and do not take into account the priorities
of developing basic industries and services in backward regions of the host country.
ii. Adverse effect on domestic enterprises: Due to large-scale operation and techno-
logical skills, multinational companies are often able to dominate the markets in host
countries and tend to acquire monopoly power. Thus, many local enterprises are
compelled to close down.
iii. Change in tradition: Consumer goods, which are introduced by multinational compa-
nies in the host countries, do not generally conform to the local cultural norms. Thus,
consumption habits of people as regards food and dress tend to change away from
their own cultural heritage.
Intext Questions 8.4
Given below are some statements about Multinational Company. State which of them are
advantages of Multinational Company?
(i) Multinational companies speed up the economic development of the under-devel-
oped countries.
(ii) Multinational Companies help to earn foreign exchange for the host countries.
(iii) Domestic producers improve their performance because of Multinational Compa-
nies.
(iv) Generally Multinational Companies invest money in profitable industries.
(v) Multinational Companies sometimes dominate the markets of the host countries.
8.9 What You Have Learnt
! A Joint stock company is an artificial person created by law, having separate legal
entity, with perpetual succession and a common seal. The companies are governed
by the Indian Companies Act, 1956.
! Characteristics of Joint Stock Company
(i) Legal formation
(ii) Artificial person
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10. Business Studies
(iii) Separate legal entity
(iv) Common seal
(v) Perpetual existence
(vi) Limited liability of members
(vii) Democratic Management
! Types of companies-
On the basis of ownship – Private limited Companies
– Public limited Companies
– Government Companies
! On the basis of nationality – Indian Companies
– Foreign Companies
! Advantages of Joint Stock Company
(i) Availability of large financial resources
(ii) Limited liability of members
(iii) Benefits of professional management
(iv) Large-scale production of goods and services
(v) Beneficial for the society
(vi) Emphasis on Research and Development
! Limitations of Joint Stock Company-
(i) Difficult to form
(ii) Excessive government control
(iii) Delay in policy decisions
(iv) Concentration of economic power and wealth in few hands.
! A company which is registered in one country but carries on business operations in a
number of other countries by setting up factories, branches or subsidiary units is
called Multinational Company.
! Features of Multinational companies-
(i) International operation
(ii) Large size, and
(iii) Centralised control
! Advantages of Multinational Company-
(i) Investment of foreign capital
(ii) Generation of employment
(iii) Use of advanced technology.
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11. Joint Stock Company
(iv) Growth of ancillary units
(v) Increase in exports and inflow of foreign exchange
(vi) Healthy competition in the market.
! Limitations of Multinational Company-
(i) Least concern for priorities of host countries
(ii) Adverse effect on domestic enterprises
(iii) Change in tradition and culture
8.10 Terminal Exercise
1) What is meant by Joint Stock Company?
2) State the minimum and maximum number of members of private limited company.
3) Why are the members of the company called shareholders?
4) State the meaning of Multinational Company.
5) Describe any four characteristics of Joint Stock Company.
6) Explain the different types of companies on the basis of ownership.
7) State the different types of Joint Stock Company.
8) Classify Joint Stock Companies on the basis of nationality.
9) Distinguish between Indian Company and Foreign Company.
10) What are the features of Private Limited Company? How does if differ from Public
Limited Company.
11) Distinguish between Private Limited Company and Public Limited Company.
12) What benefits do we derive from joint stock company form of business organisation.
13) Enumerate the advantages of Joint stock company.
14) State the limitations of Joint Stock Company.
15) What are the advantages of Multinational company? Explain any four.
16) Explain the features of Multinational Company.
17) Describe the limitations of Multinational Company.
8.11 Key to Intext Questions
8.1 Wrong i, ii
8.2 (i) Seven; (ii) Private limited; (iii) 5 lakh; (iv) Government; (v) Outside
8.3 (i) value of shares held by them; (ii) time; (iii) Board of Directors; (iv) high; (v)
companies.
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12. Business Studies
8.4 Advantage i, ii, iii
Activity For You
Collect any 10 items of daily use (Packed items) and list the names of the companies manu-
facturing those items. Classify those companies as public and private limited companies.
Which of them are Multinational Companies?
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