for class 11th

1. FORMS OF BUSINESS
ORGANIZATION

2. VARIOUS FORMS OF BUSINESS ORGANIZATION
1. Sole proprietorship
2. Partnership
3. Joint Hindu Family business
4. Cooperative societies
5. Joint Stock Companies

3. SOLE PROPRIETORSHIP
• A business which is owned, managed and controlled by a single individual, who is
the recipient of all profits and bearer of all risk
• SOLE means ONLY and PROPRETOR refer to OWNER
• It is popular form of business organization

4. SOLE PROPRIETORSHIP

5. DEFINITION
“the individual proprietorship is the form of business organization at the head of
which stands an individual as one who is responsible, who directs its operations and
who alone runs the risk of failure”
_ LH Haney

6. FEATURES
1. Formation and closure
2. Unlimited liability
3. Sole risk bearer and profit recipient
4. Control
5. No separate entity
6. Lack of business continuity

7. MERITS OF SOLE PROPRIETORSHIP
1. Quick decision making
2. Secrecy or confidentiality of information
3. Direct incentive
4. Sense of accomplishment
5. Easy to form and close

8. DEMERITS OF SOLE PROPRIETORSHIP
• Limited resources
• Limited life of business
• Unlimited liability
• Limited managerial ability

11. 1. Joint Hindu Family business or Hindu Undivided Family (HUF) business is that form
of business organization which is owned and managed by the member of HUF
2. this type of business is governed by Hindu Law.
3. The business is controlled by the head of the family, who is the eldest member of
family and is called KARTA
4. All other members are called as CO-PARCENERS
5. Three generations of a family can be members of HUF

12. FEATURES OF HUF BUSINESS
1. Formation - at least two members and an ancestral property is the basic
2. Liability - the liability of Karta is unlimited
3. Control – controlled by Karta
4. Continuity – after the death of Karta , the next eldest member takes his position
5. Minor member – a minor can also be a member of HUF business.

13. MERITS OF HUF BUSINESS
1. Effective control
2. Continued business existence
3. Limited liability
4. Increased loyalty and cooperation

14. DEMERITS OF HUF BUSINESS
1. Limited resources
2. Unlimited liability of Karta
3. Dominance of Karta
4. Limited managerial skills

17. DEFINITION
“ Partnership is the relation between persons who have agreed to share the profits of
a business carried on by all or any of them acting for all “
-the Indian Partnership Act, 1932

18. FEATURES OF PARTNERSHIP
• Formation
• Liability
• Risk bearing
• Decision – making and control
• Continuity
• Membership
• Mutual agency

19. MERITS OF PARTNERSHIP
• Ease of formation and closure
• Balanced decision- making
• Sharing of risks
• Secrecy
• More funds

20. DEMERITS OF PARTNERSHIP
• Unlimited liability
• Limited resources
• Possibility of conflicts
• Lack of continuity
• Lack of Public Confidence

21. TYPES OF PARTNERS
• Active or working partner – such type of partner contribute capital and takes
active part in the management of the firm
• Sleeping or Dormant partner – such type of partner contributes capital but does
not take active part in business, but his association with the firm is hidden from the
general public
• Nominal partner – a nominal partner is one who allows the use of is name and
goodwill for the benefit of the firm and can be represented as a partner
• Partner by Estoppel – a partner by estoppel is one who by his words or conduct
gives an impression to others that he is a partner of the firm
• Partner by Holding out – a partner by ‘holding out’ is one who is actually not a
partner but allows himself to be represented as one by the other partners.

22. TYPES OF PARTNERSHIP
• On the basis of duration
1. Partnership at will
2. Particular partnership
• On the basis of liability
1. General partnership
2. Limited partnership
3. Limited liability partnership

23. PARTNERSHIP DEED
I. Name of firm
II. Nature and location of business
III. Duration of business
IV. Investment made by each partner
V. Distribution of profit and loss
VI. Duties and obligations of the partners
VII. Salaries and withdrawals of the partners
VIII. Terms governing admission, retirement and expulsion of partner
IX. Interest on capital and interest on drawings
X. Procedure for dissolution of the firm
XI. Preparation of accounts and their auditing
XII. Method of solving disputes

24. REGISTRATION OF PARTNERSHIP FIRM
• Registration means getting the name of partnership firm register with the Registrar
of Firm of the area in which the place of business of the firm is situated or proposed
to be situated
• It is optional for a partnership firm to get registered
• It should be registered as it provides a conclusive proof of the existence of the firms
• If it non-registered
1. A partner of an unregistered firm cannot file a suit against the firm or other
partners
2. The firm cannot file a suit against third parties
3. The firm cannot file a case against the partners.

27. DEFINITON
“Cooperative organization is a society which ha its objectives for the promotion of
economic interests of its members in accordance with cooperative principles”
- Indian Cooperative Societies Act , 1992

28. FEATURES OF COOPERATIVE SOCIETY
1. Voluntary membership
2. Legal status
3. Limited liability
4. Control
5. Service motive

29. MERITS OF COOPERATIVE SOCIETY
1. Equality in voting status
2. Limited liability
3. Stable existence or continuity
4. Economy in operations
5. Support from government
6. Ease of formation

30. DEMERITS OF COOPERATIVE SOCIETIES
• Limited resources
• Inefficient management
• Lack of secrecy
• Government control
• Differences of opinion

31. TYPES OF COOPERATIVE SOCIETY
1. Consumer’s cooperative society
2. Producer's cooperative society
3. Marketing cooperative society
4. Farmer’s cooperative society
5. Credit cooperative society
6. Cooperative housing society

34. DEFINITION
“Joint Stock Company is voluntary association of individuals for profit, having a capital
divided into transferable shares, the ownership of which is the condition of
membership “
- prof. Haney

35. FEATURES OF JOINT STOCK COMPANY
1. Artificial person
2. Separate legal entity
3. Formation
4. Perpetual succession
5. Control
6. Liability
7. Common Seal
8. Risk bearing

36. Common seal

37. MERITS OF JOINT STOCK COMPANY
1. Limited liability
2. Transfer of interest
3. Perpetual existence
4. Scope for expansion
5. Professional management

38. DEMERITS OF JOINT STOCK COMPANY
1. Complexity in formation
2. Lack of secrecy
3. Impersonal work environment
4. Numerous regulation
5. Delay in decision –making
6. Oligarchic management
7. Conflict in interest

39. TYPES OF COMPANIES
1. Private company
2. Public company
3. One person company

40. PRIVATE COMPANY
1. Restricts the right of its members to transfer shares
2. Has minimum 2 members and maximum 200 members, excluding present and
past employees
3. does not invite public to subscribe t tis share capital
4. Must have minimum paid up capital of rs. One lakh or such higher amount as may
be prescribed from time to time

41. PUBLIC COMPANY
1. Has a minimum of 7 members and there is no limit on the maximum number of
members
2. Does not restrict the rights of its members to transfer its shares
3. Is not prohibited fro inviting the general public to subscribe to its shares,
debentures or public deposit
4. Has a minimum paid up capital of Rs.5 lakh or such higher capital , as may be
prescribed

42. ONE PERSON COMPANY
1. Has only one person as its member
2. Is the special form of private company
3. Must have at least one director
4. Only Indian citizen can incorporate an one person company
5. Has to appoint another person as nominee
6. Must have a minimum paid-up capital of Rs.1 lakh. If the paid up share capital of
OPC exceeds Rs.50 lakh or its annual turnover exceeds Rs 2 crore, then it will seize
to be an OPC.

43. FORMATION OF COMPANY

44. FORMATION OF A COMPANY
INVOLVE THE FOLLOWING STAGES
1. Promotion
2. Incorporation
3. Capital Subscription
4. Commencement of business

45. PROMOTION
• It is process of planning and organizing necessary resources so that a profitable
concern can come into existence
• The person or a group of persons who performs the work of promotion and form a
company is/are known as Promoters

46. FUNCTION OF PROMOTER
• Identification of business opportunity
• Feasibility studies
1. Technical feasibility
2. Financial feasibility
3. Economic feasibility
• Name approval
• Fixing up signatories to the Memorandum
• Appointment of professionals
• Preparation of necessary document
• Payment of fees

47. NECESSARY DOCUMENT
• Memorandum of Association
• Articles of Association
• Consent of proposed director
• Agreement
• Statutory declaration

48. POSITION OF PROMOTERS
There are legal position is as under
I. They are neither the agents nor the trustees of the company
II. Promoters are personally liable for preliminary contracts
III. Promoters enjoy a fiduciary position with the company . This position does not
allow a promoters to earn secret profit from the company. If the promoters earn
profit, the company cancels the contract and recovers the same from the
promoters

49. PRINCIPLE DOCUMENTS REQUIRED TO
BE PREPARED BY THE PROMOTER
1. Memorandum of Association
A memoransom of Association is a legal document which defnes the relationship of a
company with shareholders. It describe the company’s name, physical address of
registered office, names of shareholders and the distribution of shares
It is the most important document of the company and no company can undertake
the activities that are not contained in the MoA.

50. CLAUSES OF MOA
• Name clause
• Registered office clause
• Objective clause
• Liability
• Capital clause
• Association clause

51. ARTICLE OF ASSOCIATION
• The Articles of Association is a document that contains the pupose of the company
as well as clearly defines duties and responsibility of its members
• These are the by laws of company that defines the mode and manner in which the
company’s business is to be carried on.
• Companies Act 2013 prescribes certain tables which can be considered as model
table for drafting the articles

52. INCORPORATION
• It implies the registration of a company as a body corporate under the Company
Act, 2013
• The following steps are taken by the promoters to get the company incorporated
1. Application for incorporation
2. Filling of necessary documents
3. Payment of fees
4. Registration
5. Certificate of incorporation

53. CAPITAL SUBSCRIPTION
• A public company can raise the required funds form the public by means of issue of
shares and debentures
• For doing the same, it has to issue a prospectus which is an invitation to the public
to subscribe to the capital of the company

54. STEPS FOR RAISING FUNDS FROM PUBLIC
1. SEBI approval
2. Filling of prospectus
3. Appointment of bankers, brokers and underwriters
4. Minimum subscription
5. Application to stock exchange
6. Allotment of shares

55. COMMENCEMENT OF BUSINESS
• To commence business a public company has to obtain a Certificate of
Commencement of business
• The following documents have to be filed with the Registrar of Company
1. A declaration that 90 per cent of the issued amount has been subscribed
2. A declaration that all directors have paid in cash in respect of allotment of shares
made to them
3. A declaration that no money is payable to the applicants, due to company’s failure
to obtain permission to deal in securities on a stock exchange
4. A statutory declaration that the above requirements have been completed and
must be signed by the Directors or Secretary of the company