Class 11 – Page 6 – Balbharati Solutions

Maharashtra Board OCM 11th Commerce Solutions Chapter 4 Forms of Business Organisation – I

July 17, 2023

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 4 Forms of Business Organisation – I Textbook Exercise Questions and Answers.

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 4 Forms of Business Organisation – I

1. (A) Select the Correct option and rewrite the sentence

Question 1.
A sole trading concern ensures ……………….. business secrecy.
(a) maximum
(b) minimum
(c) limited
Answer:
(a) maximum

Question 2.
The members of Hindu undivided family business are called ………………..
(a) carpenter
(b) co-parcener
(c) parceners
Answer:
(b) co-parcener

Question 3.
The head of Joint Hindu Family Business is called as ………………..
(a) KARTA
(b) owner
(c) manager
Answer:
(a) KARTA

Question 4.
Registration of partnership firm is ………………. in Maharashtra.
(a) voluntary
(b) compulsory
(c) easy
Answer:
(b) compulsory

Question 5.
The liability of the shareholders in Joint Stock Company is ………………
(a) limited
(b) unlimited
(c) restricted
Answer:
(a) limited

Question 6.
A Joint Stock Company is an artificial person created by ………………….
(a) Law
(b) Articles
(c) Memorandum
Answer:
(a) Law

Question 7.
Registration of a Joint Stock Company is ………………..
(a) compulsory
(b) free
(c) not required
Answer:
(a) compulsory

Question 8.
Liability of member of a Co-operative Society is ………………
(a) limited
(b) restricted
(c) maximum
Answer:
(a) limited

Question 9.
Indian Co-operative Society’s Act was passed in ………………
(a) 1912
(b) 1913
(c) 1911
Answer:
(a) 1912

Question 10.
…………………. acts as a signature of the company.
(a) Common seal
(b) Common sign
(c) Common image
Answer:
(a) Common seal

1. (B) Match the pairs

Group A	Group B
(a) Private Company	(1) Karta
(b) Public Company	(2) Local Market
(c) Common Seal	(3) 1932
(d) Partnership Act	(4) Maximum 200 members
(e) Joint Hindu Family Firms	(5) One Man Show
(F) Subject-matter of insurance	(6) Minimum Seven members
	(7) Minimum 10 members
	(8) Signature of Company
	(9) Maximum 100 members
	(10) Manager

Answer:

Group A	Group B
(a) Private Company	(4) Maximum 200 members
(b) Public Company	(6) Minimum Seven members
(c) Common Seal	(8) Signature of Company
(d) Partnership Act	(3) 1932
(e) Joint Hindu Family Firms	(1) Karta

1. (C) Give one word/phrase/term.

Question 1.
An elected body of representatives of co-operative Society for its day to day administrations.
Answer:
Managing Committee

Question 2.
The owner is the sole manager and decision maker of his business.
Answer:
Sole Trader

Question 3.
One man show type of business organisation.
Answer:
Sole trading concern

Question 4.
The members of the Joint Hindu Family firm.
Answer:
Co-parceners

Question 5.
A partner who gives his name to partnership firm.
Answer:
Nominal partner

Question 6.
There is free transferability of shares in this company.
Answer:
Public Company

Question 7.
A partnership agreement in writing.
Answer:
Partnership Deed

Question 8.
The motto of the co-operative society.
Answer:
Service

Question 9.
An organization which is service oriented.
Answer:
Co-operatives Society

1. (D) State True or False

Question 1.
Sole trader is the decision maker of the business.
Answer:
True

Question 2.
Sole trading concern operates in local markets.
Answer:
True

Question 3.
Sole proprietorship is useful for small business.
Answer:
True

Question 4.
The liability of KARTA is unlimited.
Answer:
True

Question 5.
The maximum number of members is unlimited in Joint Hindu Family Firm.
Answer:
True

Question 6.
Joint Stock company can raise huge amount of capital.
Answer:
True

Question 7.
There is a separation of ownership and management in Joint Stock Company.
Answer:
True

Question 8.
Board of Directors manage the business of Joint Stock Company.
Answer:
True

Question 9.
Partnership agreement may be oral or written.
Answer:
True

Question 10.
In partnership firm, the liability of every partner is limited, joint and several.
Answer:
False

Question 11.
The main motto of co-operative society is to render services to its shareholders.
Answer:
False

Question 12.
The membership of a co-operative society is compulsory.
Answer:
False

1. (E) Find the odd one

Question 1.
Sole proprietorship, Joint Hindu Family, Non-Government Organization (NGO), Partnership firm.
Answer:
NGO

Question 2.
Active partner, Shareholder, Nominal partner, Secret partner.
Answer:
Shareholder

1. (F) Complete the sentences

Question 1.
Private sector enterprises are owned and managed by the …………………
Answer:
Private entities

Question 2.
There is only one owner in …………………
Answer:
Sole Trading Concern

Question 3.
Admission of new individual into existing business has given birth to …………………
Answer:
Partnership Firm

Question 4.
A partner who takes active participation in the day to day working of the business is known as …………………
Answer:
active partner

Question 5.
When there is no provision in partnership agreement regarding time period for partnership then it is known as …………………
Answer:
Partnership at will

Question 6.
The property of JHF business is jointly owned by the …………………
Answer:
KARTA

Question 7.
The management of Co-operative society is based on …………………
Answer:
democratic principles

Question 8.
The rule for voting in Co-operative society is …………………
Answer:
one member one vote

Question 9.
The rule for voting in Joint Stock company is …………………
Answer:
one share one vote

Question 10.
The face value of the shares of Co-operative society is very …………………
Answer:
less

Question 11.
Consumer’s co-operatives are formed by the …………………
Answer:
consumers

Question 12.
Registration of Joint Stock Company is compulsory according to the Companies Act …………………
Answer:
2013

1. (G) Complete the following table

Question 1.
(Public company, Private company, Co-operative Society, Partnership Firm, Sole Trading Concern)

Group A	Group B
(i) Minimum 2 and maximum 200	……………..
(ii) Minimum 10 and maximum no limit	…………….
(iii) ………………	Minimum 7 and maximum unlimited
(iv) Form of business organisation having only one member	…………………
(v) Minimum 2 and maximum 50	………………..

Answer:

Group A	Group B
(i) Minimum 2 and maximum 200	Private Limited Compmay
(ii) Minimum 10 and maximum no limit	Co-operative Society
(iii) Public company	Minimum 7 and maximum unlimited
(iv) Form of business organisation having only one member	Sole Trading Concern
(v) Minimum 2 and maximum 50	Partnership Firm

1. (H) Answer in one sentences

Question 1.
What is Sole Trading Concern?
Answer:
Sole Trading Concern is a type of business which is owned, managed and controlled by one person.

Question 2.
What do you mean by partnership firm?
Answer:
A business owned and managed by two or more persons sharing profits and losses is called a partnership firm.

Question 3.
What is the meaning of Joint Stock Company?
Answer:
Joint Stock Company is an artificial person created by law, having an independent legal status, owned by shareholders and managed by Board of Directors.

Question 4.
What is Joint Hindu Family business?
Answer:
A Joint Hindu Family is a form of business organization which runs from one generation to another according to the Hindu Law.

Question 5.
What do you mean by Co-operative Society?
Answer:
Co-operative Society is a voluntary association of individuals which is formed for providing services to members.

Question 6.
What do you mean by minor partner?
Answer:
A minor partner is a partner who is admitted into the partnership firm for the benefit of the firm with the consent of all partners.

Question 7.
What is Quasi Partner?
Answer:
Quasi partner is a partner of the partnership firm who has retired from the firm but has left his capital behind in the firm.

Question 8.
What do you mean by partner-in-profits only?
Answer:
A partner-in-profits only is a partner who gets into an agreement to share only the profits of the partnership firm and not the losses.

Question 9.
What do you mean by general partnership?
Answer:
General partnership is a form of partnership where, the liability of all the partners is unlimited, joint and several. Every partner has an equal right and it can be formed under the Partnership Act of 1932.

Question 10.
What is the meaning of Private company?
Answer:
A Private Limited company is a company which by its articles restricts the right to transfer share, limits the maximum number of members to 200.

Question 11.
What do you mean by Public company?
Answer:
A public company means a company which is not a private company.

1. (I) Correct the underlined word and rewrite the following sentences.

Question 1.
In Public company, shares are not freely transferable.
Answer:
In Private company, shares are not freely transferable.

Question 2.
In Private company, there are minimum 3 (Three) directors.
Answer:
In Private company, there are minimum 2 (Two) directors.

Question 3.
Registration of Joint Stock company is not compulsory.
Answer:
Registration of Joint Stock company is compulsory.

Question 4.
There is less secrecy in Sole Trading concern.
Answer:
There is maximum secrecy in Sole Trading concern.

Question 5.
In Partnership firm, minimum three members are required.
Answer:
In partnership firm, minimum two members are required.

Question 6.
In Joint Hindu Family business, the senior most member of family is called as Co-parcener.
Answer:
In Joint Hindu Family business, the senior most member of family is called as Karta.

Question 7.
Indian Partnership Act, 1940 is applicable in India.
Answer:
Indian Partnership Act, 1932 is applicable in India.

2. Explain the following terms/concepts

Question 1.
Sole Trading Concern.
Answer:

It is a form of business organization which is owned, managed and controlled by one person.
It need not be registered.
It does not have a legal status i.e. It does not have a stable life.
Maximum secrecy can be maintained in Sole Trading concern.

Question 2.
Partnership Firm.
Answer:

It is a voluntary association of two or more persons with a common objective.
It is formed by an agreement called Partnership deed.
It is governed by Indian Partnership Act, 1932.
Registration of partnership firm is optional as per Partnership Act, 1932.
In Maharashtra, registration of partnership firm is made compulsory.

Question 3.
Joint Hindu Family Firm.
Answer:

It is a form of business organization which is carried from one generation to another generation.
It comes into existence by operation of Hindu Law.
This form of organization is found in India only.
The seniormost member of the family is called ‘Karta’ while other members are called ‘Co-parceners’.

Question 4.
Co-operative Society.
Answer:

It is a voluntary association of individuals which is formed for providing services to members.
Its main motto is ‘service’ rather than ‘profit’.
It runs on principle of ‘One member One Vote’.
It enjoys an independent legal status, distinct from its members.

Question 5.
Joint Stock Company.
Answer:

It is an incorporated association created by law, having an independent legal status, owned by shareholders and managed by Board of Directors.
The main motive of Joint Stock company is maximisation of profit.
It works as principle of “One share One vote”.
It has to follow Indian Companies Act, 2013.

Question 6.
Karta.
Answer:

Karta is a seniormost member of the family, who runs the Joint Hindu Family Business.
The Karta has unlimited liability in such type of business.
Karta has the right to manage the business.
Karta need not consult any body about business decisions.

Question 7.
Managing Committee.
Answer:

Managing committee is a group of members of a Co-operative society, who looks after the working of Co-operative society.
They are elected by the shareholders of Co-operative society.
All important decisions are taken by the managing committee.
In short, they look after day to day administration of the Society.

Question 8.
Nominal Partner.
Answer:

A partner who only lends his name and reputation to the partnership firm is called as nominal partner.
He is simply obliging his friends by allowing the firm to use his name as a partner.
He may or may not be given any share in the profits of the firm.
He does not contribute to the capital of the business.
He is liable to the debts of the firm.

3. Study the following case/situation and express your opinion

1. Mr. Raghunath is running business from last 30 years. This business is ancestoral business of Mr. Raghunath. Kiran and Naman, two sons of Mr. Raghunath are helping him along with their wives.

Question 1.
Find out the type of business.
Answer:
Joint Hindu Family Firm.

Question 2.
Who is Raghunath?
Answer:
Raghunath is the Karta.

Question 3.
What Kiran and Naman are called?
Answer:
Kiran and Naman are called as co-parceners.

2. Mr. Sawant a Chartered Accountant by profession and Mrs. Tambe, an Architect by profession running a firm namely ‘ST Firms’ in Nagpur.

Question 1.
Identify the form of business organisation in the above examples.
Question 2.
Is it a registered organisation?
Question 3.
What is the Profession of Mr. Sawant?

4. Distinguish between the following

Question 1.
Private Limited Company and Public Limited Company
Answer:

	Private Limited Company	Public Limited Company
(1) Meaning	A Private Limited Company is a company which by its articles, restricts the right to transfer share, limits the maximum number of members to 200 and prohibits the issue of prospectus.	A Public Company means a company, which is not a Private Company.
(2) Name of the Company	Name of the company must end with the word ‘Private Limited’.	Name of the company must end with the word ‘Limited’.
(3) Number of Members	There are minimum 2 members. Maximum members are 200.	There are minimum 7 members. Maximum members are unlimited.
(4) Transfer of Shares	Shares of the company are not freely transferable.	Shares of the company are freely transferable.
(5) Issue of Prospectus	The company cannot issue prospectus. Statement in lieu of prospectus is issued.	The company has to issue prospectus compulsory.
(6) Number of Directors	Minimum 2 Directors are needed in a Private Limited Company.	Minimum 3 Directors are needed in a Public Limited Company.
(7) Statutory Meeting	A Private Limited Company need not hold a Statutory Meeting.	A Public Limited Company must hold a Statutory Meeting compulsorily.
(8) Capital	Minimum paid up capital is one lakh rupees.	Minimum paid up capital is five lakh rupees.
(9) Commencement of Business	The business can be started after getting ‘Incorporation Certificate’.	The business can be started after getting ‘Commencement Certificate’.

Question 2.
Sole Trading Concern and Partnership Firm.
Answer:

	Sole Trading Concern	Partnership Firm
(1) Meaning	Sole proprietorship is owned and controlled by one person.	Partnership firm is owned and controlled by two or more persons called as ‘Partners’.
(2) Formation	Sole trading concern can be formed easily. It is started as soon as the owner decides.	Partnership firm is formed by an agreement between two or more persons.
(3) Numbers of Members	Sole trading concern is owned by a single person.	Minimum 2 members are needed for starting business. The maximum number is 50.
(4) Registration	There is no need for registration of sole trading concern.	A partnership firm may or may not be registered. However, it is always desirable for the firm to be registered. It is compulsory in Maharashtra.
(5) Secrecy	It is possible to have maximum business secrecy.	Secrecy is shared among all the partners.
(6) Liability	Liability of a sole trader is unlimited	Liability of a partner is unlimited, joint and several.
(7) Management	The sole trader looks after management of business. He is manager of the business.	All partners take part in management of the firm according to their skills.
(8) Capital	The entire capital is contributed by the sole trader, comparatively limited.	Partners contribute capital to the firm, comparatively more.
(9) Act/Law	There is no special Act governing the Sole Trading concern.	Partnerships are governed by the Indian Partnership Act, 1932.
(10) Sharing of Profit	The sole trader alone enjoys all the profits of business.	Partners share the profits of business as per the ratio given in the agreement.
(11) Risk	In this form of business organization, the risk is assumed by sole trader alone.	In partnership firm, the risk is shared by all the partners.
(12) Disputes	There is no room for disputes among owners, as there is only a single owner.	There can be disputes among partners.

Question 3.
Partnership Firm and Joint Hindu Family.
Answer:

	Partnership Firm	Joint Hindu Family
(1) Meaning	Partnership firm is controlled by two or more persons called as ‘Partners’.	In Joint Hindu Family Firm, the Joint Hindu Family conducts business according to Hindu Laws.
(2) Number of Members	Minimum two members are needed for starting business. The maximum number is fifty.	Membership of the firm depends upon the birth and death in the family. There is no limit on membership. A person adopted into the family also becomes a member.
(3) Registration	Registration is not compulsory in India, but it is compulsory in Maharashtra.	Registration is not compulsory.
(4) Liability	The liability of partners is unlimited, joint and several.	Karta has unlimited liability and Co-parceners have limited liability.
(5) Capital	Comparatively more, as it is contributed by all partners.	The whole capital comes from ancestral property.
(6) Secrecy	Secrets share by all partners.	Secrecy can be maintained within family.
(7) Management	All partners takes part in management of the firm according to their skills.	Karta looks after the management of the business. All Co-parceners follow his decision.
(8) Stability	Stability of business is affected by death, lunacy or insolvency of a partner.	Comparatively, more stable as business is not affected by death of Karta or Co-parceners.
(9) Act	Partnerships are governed by the Indian Partnership Act, 1932.	Joint Hindu Family firm follows the Hindu Succession Act, 1956.
(10) Formation	Partnership firm is formed by an agreement between two or more persons.	Joint Hindu Family Firm comes into existence by operation of Hindu Laws.
(11) Sharing of Profits/ Losses	The profits and losses are shared by partners as per the ratio given in the agreement.	The profits and losses are shared between Karta and Co-parceners.
(12) Inspection of books of Accounts	A partner has a right to inspect books of accounts of the firm.	A co-parcener has no right to inspect books of accounts of the firm.
(13) Implied	Authority Every partner has implied authority to act on behalf of the other partners.	Karta has implied authority to act on behalf of the firm.

Question 4.
Co-operative Society and Joint Stock Company.
Answer:

	Co-operative Society	Joint Stock Company
(1) Meaning	Co-operative Society is a voluntary association of individuals which is formed for providing services to members.	Joint Stock Company is an incorporated association created by law, having an independent legal status, owned by shareholders and managed by board of directors.
(2) Number of Members	Minimum ten members and maximum number of members is unlimited.	Private company- Minimum – 2 Maximum – 200 Public company- Minimum – 7 Maximum – No limit
(3) Capital	A Co-operative society has less capital as compared to Joint Stock company.	Joint Stock company has large capital.
(4) Management	Managing Committee manages Co-operative society.	Board of Directors manages Joint Stock company.
(5) Act	Co-operative Societies have to follow Co-operative Societies Act, 1912. In Maharashtra, the societies have to follow Maharashtra State Co-operative Societies Act, 1960.	Companies have to follow Indian Companies Act, 2013.
(6) Formation	Formation of a Co-operative society is comparatively cheaper and easier.	Formation of a Joint Stock Company is costly, difficult and time – consuming.
(7) Voting Right	The principle of “One member One vote” is followed.	The principle of “One share One vote” is followed.
(8) Motto	The main motto of a Co-operative society is to give services to the people.	The main motto of Joint Stock company is to make maximum profit.
(9) Transferability of Shares	Shares are not transferable. They can be surrendered to the society.	Shares of a Public Company are freely transferable.
(10) Remuneration	Members of Managing Committee work on honorary basis.	Board of Directors are paid salary and given fees for attending board meetings.
(11) Area of Business	Normally, the co-operatives have a limited area of business.	Companies have a larger area of business operation.
(12) Proxies	In a Co-operative society, proxies are not allowed in the meetings.	In a Joint Stock company, proxies are allowed to vote in the meetings.

Question 5.
Joint Hindu Family Firm and Joint Stock Company.
Answer:

	Joint Hindu Family Firm	Joint Stock Company
(1) Meaning	In Joint Hindu Family Firm, the Joint Hindu Family conducts business according to Hindu Laws.	Joint Stock Company is an incorporated association created by law, having an independent legal status, owned by shareholders and managed by Board of Directors.
(2) Number of Members	Membership of the firm depends upon the birth and death in the family. There is no limit on membership.	Private company- Minimum – 2 Maximum – 200 Public company- Minimum – 7 Maximum – No limit
(3) Registration	Registration is not required	Registration is compulsory.
(4) Liability	Karta has unlimited liability and Co-parceners have limited liability.	The liability of shareholders is limited upto the extent of unpaid amount on shares by them.
(5) Capital	The whole of ancestral property used as capital.	The company has huge capital.
(6) Secrecy	Secrecy can be maintained within the family.	Books of accounts have to be published. Business secrecy cannot be maintained.
(7) Management	Karta manages the business and he is assisted by co-parceners.	Board of Directors manages the Joint Stock company.
(8) Government Control	There is limited government interference.	There is strict government control.
(9) Act	Joint Hindu Family Firms are governed by the Hindu Succession Act, 1956.	Joint Stock Companies are governed by Indian Companies Act, 2013.
(10) Formation	It is comparatively easy to form.	Formation of a Joint Stock Company is difficult, costly and time-consuming.
(11) Legal Existence	A Joint Hindu Family firm does not have a separate legal existence independent of its members.	A Joint Stock Company has a separate legal existence. It is distinct from its members.
(12) Minor Member	Minors can become a member of the firm.	Minors cannot become a member of the company.

Question 6.
Co-operative Society and Partnership Firm.
Answer:

	Co-operative Society	Partnership Firm
(1) Meaning	Co-operative Society is a voluntary association of individuals which is formed for providing services to its members.	Partnership firm is formed by two or more persons to do business and share profits.
(2) Number of Members	Minimum ten persons and maximum no limit.	Minimum two persons and maximum fifty persons.
(3) Registration	It is compulsory.	It is not compulsory in India, but compulsory is Maharashtra.
(4) Liability	Liability of members is limited upto the extent of unpaid amount on shares held by them.	Liability of partners is unlimited, joint and several.
(5) Secrecy	It is not possible to maintain secrecy in a Co-operative Society.	It is possible to maintain secrecy to some extent in the firm.
(6) Management	Managing Committee manages the society according to its bye-laws.	All partners are involved in the management of the firm.
(7) Stability	Stability is not affected by death, insolvency or lunacy of a member.	Stability of a firm is affected by death, insolvency or lunacy of a partner.
(8) Government Control	There is a lot of government supervision and control.	There is minimum government supervision for a partnership firm.
(9) Act	Co-operative Societies have to follow Partnership firms are governed by the Indian Co-operative Societies Act, 1912. In Maharashtra, the societies have to follow Maharashtra Co-operative Societies Act, 1960.	Indian Partnership Act, 1932.
(10) Motive	The motive is to give maximum services to the people	The motive is to earn profits.
(11) Legal Status	A Co-operative Society enjoys an independent legal status, distinct from its members.	Partnership firms do not have an independent legal status. Partners and the firm are one and the same.
(12) Transfer of Shares	Members can surrender shares to the society.	Partners cannot transfer the shares without the consent of other partners.

5. Answer in brief

Question 1.
State any four features of Sole Trading Concern.
Answer:
(i) Suitable for some Special Business : Sole trading concern is suitable for business where personal attention and individual skill is needed e.g., Beauty parlour, groceries, fashion designing, sweet shops, tailoring, restaurants etc.

(ii) Unlimited Liability : Liability of the sole trader is unlimited. In case business assets are not sufficient to meet business expenses, private property of the sole trader will be used. There is no difference made between private property and business property of sole trader.

(iii) No Sharing of Profits and Risks : A sole trader enjoys all the profits of business. As he is the single owner of business he assumes full responsibility in business. He alone bears all the losses or risks involved in business.

(iv) Business Secrecy : Maximum business secrecy can be maintained in a sole trading concern. A sole trader is responsible only to himself. He need not discuss any matter of business with outsiders. Moreover, there is no legal compulsion for sole trader to publish books of accounts of business.

Question 2.
State any four types of partners.
Answer:
The different types of partners are:
(i) Active or Working Partners : In practice one or two partners take active part in the management. Such partners are called active or working partners. They contribute capital, shares profits or losses, and has unlimited, joint and several liability. They take an active interest in the day to day working of the firm. These partners are also known as ordinary / general / actual partners.

(ii) Dormant or Sleeping Partners : A dormant or sleeping partner is one who contributes capital to the firm. He does not take any active part in the management of the firm. He shares the profits and losses of the firm like any other partner. He voluntarily surrenders the right of management. However, he is liable for the debts of the firm.

(iii) Nominal Partners : A nominal partner is one who does not contribute any capital to the firm. He lends his name to the firm. He is simply obliging his friends by allowing the firm to use his name as a partner. He may or may not be given any share in the profits of the firm. His goodwill is used to attract business. However, he is liable for the debts of the firm.

(iv) Minor as Partner : According to the Indian Contract Act 1872, a person below 18 years is called a minor. But according to the Indian Partnership Act 1932, a minor can be admitted for the benefit of the firm with the consent of all other partners. He has a right to inspect the books of accounts. Minor partner has limited liability and is not liable for losses. He has the option to continue as a full-fledged partner or discontinue as a partner on attaining the age of majority. If he wishes to discontinue, he must give a public notice within 6 months from the age of majority.

Question 3.
Describe any four types of Co-operative Society.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(ii) Credit Co-operative Societies : Members pool their savings together with the aim of obtaining loans from their pooled resources for productive purposes and non-productive purposes. They may be established in rural areas by agriculturist or artisans called as a Rural Credit Society. They may be established by salary earners or industrial areas called as Urban Banks, Salary Earners Society or Workers Society.

(iii) Marketing Co-operatives Societies : These co-operatives find better markets for members produce. They also provide credit and other inputs to increase members production levels. They perform marketing functions such as standardising, grading, branding, packing, advertising etc. The proceeds are then distributed among members depending on the quantities sold.

(iv) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

Question 4.
State any four merits of Joint Hindu Family Firm.
Answer:
Merits of Joint Hindu Family are as follows:
1. Easy Formation : Joint Hindu Family Firm can be easily formed. The formation is simple. Registration is also not compulsory. There is no limit on minimum or maximum members in the business. Family members become co-parceners by birth in the family.

2. Quick Decision : Only the Karta is involved in the decision making process. This helps to take quick decisions in business. If decisions are taken quickly there can be prompt actions.

3. Business Secrecy : Complete business secrecy can be maintained. All decisions are taken by Karta only. Co-parceners cannot even inspect books of accounts. There is no compulsion to publish books of accounts.

4. Co-parceners Liability : The liability of co-parceners is limited. It is to the extent of their share in Joint Family Business. Private property of co-parceners cannot be attached to business property.

Question 5.
State any four demerits of Joint Stock Company.
Answer:
The demerits of Joint Stock Company are as follows:
1. Rigid Formation : The formation of a joint stock company is lengthy, difficult and time consuming. There are many legal formalities for starting business. Promoters have to prepare documents like Articles of Association, Memorandum of Association, etc. A private company has to go through two stages in formation. A public company has to go through four stages in formation.

2. Delay in Decision Making Process : In company form of organization no single individual can make a policy decision. All important decisions are taken by Board of Directors. Decision taking process is time consuming. Business may lose opportunities because of delay in decision making.

3. Lack of Secrecy : The management of companies remain in the hands of many persons. Everything is discussed in the meetings of Board of Directors. All important documents are available at registered office for inspection. Thus, there is no secrecy in business matters.

4. Excessive Government Control: A large number of rules are framed for the working of companies. The companies will have to follow rules for internal working. The government tries to regulate the working of the companies because large public money is involved. In case regulations are not complied with, large penalties are involved.

6. Justify the following statements

Question 1.
The Liability of a ‘Sole trader’ is Unlimited.
Answer:

One of the main features of a sole traders is unlimited liability.
If the sole trader becomes insolvent and if his business assets are insufficient to pay off his business debts, he will have to use his private property in order to pay off his creditors.
There is no distinction between business property and private property in case of a sole trading concern.
Thus, liability of a sole trader is unlimited.

Question 2.
Karta is the sole manager of‘Joint Hindu Family Business’.
Answer:

The Karta is the eldest or senior most person in the family business.
Karta has unlimited liability.
He has the entire decision making power and he is not binding on the views of the co-parceners.
Thus, the Karta is the sole manager of Joint Hindu Family business.

Question 3.
The main objective of Co-operative society is to provide services to its members.
Answer:

The Co-operative Society is a voluntary association of persons formed for the purpose of promoting the interest of its members. It is different from all other organizations.
The main objective of a co-operative organization is not to make profit but to give service to its members.
The co-operative society is formed for the welfare of the people.
Co-operative societies are rightly called as service oriented organization. Maximisation of profit is not the aim.
Thus, the main objective of Co-Operative society is to provide services to its members.

Question 4.
A Joint Stock Company can raise huge capital.
Answer:

A Joint Stock Company is an incorporated association.
It has a legal status independent of its members.
A Joint Stock Company has large membership. There is no maximum limit.
Shares are available in the open market.
Large number of investors are interested in buying shares.
Shares are freely transferable and members have limited liability.
Thus, a Joint Stock Company can raise huge capital.
Capital can also be raised by company from financial institutions.

Question 5.
The liability of Co-parceners is limited in ‘Joint Hindu Family Business’.
Answer:

In a Joint Hindu Family Business, there are two types of members – Karta and Co-parceners.
The karta has unlimited liability and he is the only decision making authority. The co-parcerns have limited liability and therefore cannot take part in the management of the firm. They can only share the profit but cannot challenge decisions taken by the Karta.
The liability of co-parceners is limited upto the extent of their share in the Joint Hindu Family Business.
The personal property of co-parceners is not used for payment of the liability of the Joint Hindu Family business.
Thus, the liability of Co-parcerners is limited in ‘Joint Hindu Family Business’.

Question 6.
Sole proprietorship is useful for small business.
Answer:

Sole trading concern is owned by only one person.
He uses his own skill and intelligence for his business.
Sole trader brings capital from his own savings. He may borrow from friends and relatives. However, capital collected is limited.
He alone takes decisions of business. Therefore, managerial ability is also limited.
Because of limited capital and limited managerial ability, it is not possible to expand business beyond a certain limit.
Thus, sole proprietorship is useful for small business where limited capital and less managerial ability is needed.

Question 7.
Co-operative society follows democratic principles.
Answer:

The members of a Co-operative organisation form the general body which manages the co-operatives. This body exercises the power through annual general meetings. They elect their representatives who look after the day to day management which is collectively known as Managing Committee.
‘One member One vote’ is the principle followed by Co-operative Societies.
All these denote that it follows democratic principles.
Thus, Co-operative society follows democratic principles.

Question 8.
There is separation of ownership and management in Joint Stock Company.
Answer:

The shareholders are the owners of the company. The company is managed by the Board of Directors who are elected representatives of the shareholders.
There is separation of ownership and management because of the following reasons:
(a) Scattered membership (b) Large membership (c) Disinterested shareholder (d) Heterogenous members (e) Separate legal entity.
Thus, ownership is in the hands of shareholders and the management is with the Board of Directors who are paid employees of the company.

Question 9.
Shares of Private Limited company are not freely transferable.
Answer:

According to the Companies Act, the right to transfer shares is restricted by its articles.
Only a public limited company has right to transfer shares freely.
Thus, shares of Private Limited company are not freely transferable.

Question 10.
All partners are joint owners of Partnership firm.
Answer:

According to the Indian Partnership Act, 1932, all the partners are joint owners of the property of the partnership firm.
No partner can use the property of the firm for his personal interest.
No partner is allowed to take any decision without the consent of all the partners.
No partners can make any secret profit in the business.
Profits and losses are shared among the partners in the profit sharing ratio mentioned in the deed.
Thus all partners are joint owners of Partnership firm.

Question 11.
Active partners take active part in day to day management of partnership firm.
Answer:

Active partner is also called a working partner. He brings in capital and also takes active part in the business of the firm.
He has unlimited liability and shares the profits and losses of the firm. He is also called a managing partner.
Thus, active partners take active part in day to day management of partnership firm.

7. Attempt the following

Question 1.
Explain various types of Co-operative Society.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(iii) Producer’s Co-operatives : Producer’s Co-operatives are voluntary associations of small producers and artisans who come together to face competition and increase production. These societies are of two types:
(a) Industrial Service Co-operatives : This society supply raw materials, tools and machinery to the members. The producers work independently and sell their industrial output to the co-operative society. The output of members is marketed by the society.

(b) Manufacturing Co-operatives : In this type, producer members are treated as employees of the society and are paid wages for their work. The society provides raw material and equipment to every member. The members produce goods at a common place or in their houses. The society sells the output in the market and its profits is distributed among the members.

(iv) Marketing Co-operatives Societies : These co-operatives find better markets for members produce. They also provide credit and other inputs to increase members production levels. They perform marketing functions such as standardising, grading, branding, packing, advertising etc. The proceeds are then distributed among members depending on the quantities sold.

(v) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

(vi) Housing Co-operative Societies : Housing Co-operatives are owned by residents. The society purchases land and develops it. Houses are constructed for residential purpose on ownership basis. They aim at establishing houses at fair and reasonable rents to members. For construction purposes loans are made available from Governmental or Non-Governmental sources. The society also looks after the maintenance of its buildings.

Question 2.
Explain the features of Joint Stock Company.
Answer:
The features of Joint Stock Company are as follows:
(i) Common Seal : A company being an artificial person cannot sign on its own. The law requires every company to have a seal and have its name engraved on it. Common seal is a symbol of company’s incorporate existence. As common seal is the signature of the company, it has to be affixed on all important documents of the company. When the seal is used it has to be witnessed by two Directors of the Company. The common seal is under the custody of Company Secretary.

(ii) Registration : The registration of Joint Stock Company is compulsory. All the companies have to be registered under Indian Companies Act, 2013. A private limited company can start its business immediately after getting ‘Incorporation Certificate’ while public limited company has to obtain. “Certificate of Commencement of Business” before it starts business.

(iii) Artificial Legal Person : A company is an artificial person created by law. It has an independent legal status. It has a separate name. It can enter into contracts, buy and sell property in its name. The company is distinct from its members.

(iv) Membership : A company is an association of persons. A private limited company must have atleast two persons and a public limited company must have atleast seven persons. The maximum limit of members for private company is 200. A public company can have unlimited members.

(v) Perpetual Succession : A Joint Stock company enjoys a long and stable life. There is continuity in existence, which means perpetual existence. Life of the company is not affected by life of the shareholders. If a shareholder dies, becomes insolvent or insane, the company will not be closed down. “Members may come and members may go but a company goes on forever”.

(vi) Separation of Ownership and Management: Persons investing in the shares of the company are called as shareholders. They are the owners of the company. They receive a share in the profits of the company called “dividend”. The large number of shareholders cannot manage business. They elect representatives who are collectively called as Board of Directors. They manage business of the Company.

(vii) Registered Office : Registered office of the company is a place where all the important documents of the company are kept e.g., Register of Members, Annual Returns, Minute Books, etc. All correspondence work of the company is done through registered office. The address of the registered office has to be mentioned in the domicile clause of the company.

(viii) Transferability of Shares : Shareholders are the owners of the company. Shares of a public limited company are freely transferable. There is a high degree of liquidity involved in buying shares of the company. Members can buy or sell shares as needed. However, there are restrictions on transferability of shares of a private company.

(ix) Voluntary Association : Any person can purchase shares and become a member of the company. The company is a voluntary association. No difference is made on the basis of religion, caste, creed, etc.

(x) Limited Liability : The liability of shareholders is limited. It depends upon the unpaid amount of shares held by them. Shareholders cannot be held personally liable for the debts of the company.

(xi) Separate Legal Status : The company is created by law. It has a separate legal entity. A company acts independently. The company can take legal action against anybody in its individual capacity.

Question 3.
Describe the features of Co-operative Society.
Answer:
(i) Limited Liability : The liability of members is limited. It depends upon the value of shares purchased by members. Therefore, their personal property is not used for payment of society’s debt.

(ii) Management : Elected representatives of members form the Managing Committee. The Managing Committee works according to bye-laws. Collective decisions are taken after conducting meetings. The organisation is managed on democratic principles.

(iii) Service Motive : The main motive of co-operative organisation is to give service to the people. It is not profit oriented. Utmost importance is given to the welfare of the people. In that sense, a co-operative society differs from other forms of organisation.

(iv) Surplus Profit: Profits are made in the course of business after payment of dividend to shareholders. A percentage of profit is always used for welfare of the people. Bonus is given to employees and as bonus on purchase made by members.

(v) Separate Legal Status : A Co-operative Society is formed according to Co-operative Societies Act, 1912, which gives it independent legal status. It is distinct from its members. Therefore it can enter into contract purchase property, etc. in its name.

(vi) Equal Voting Rights : All the members in a Co-operative Societies have equal voting rights irrespective of number of shares held by them.

(vii) Number of Members : Minimum 10 members are required for the formation of Co-operative Society. There is no limit on maximum number of members.

(viii) Democratic Principle : Democracy is followed in the working of co-operatives. Equality of voting rights is the main principle of the organisation. The principle of ‘One member One vote’ is followed. All members are equal in society.

(ix) Voluntary Association and Open Membership : Co-operative organisation is a voluntary association of individuals. Membership is voluntary. Any person can become a member of the organisation. No difference is made on the basis of language, religion, caste, etc. There is open membership. A person can become a member on his own free will and terminate membership whenever he wants.

(x) Registration : Registration of a Co-operative organisation is compulsory under Co-operative Society’s Act, 1912. Registration is done according to the Act of every state. In Maharashtra, Societies are registered under Maharashtra State Co-operative Societies Act, 1960.

(xi) State Support : Co-operatives receive support from the government. They are under the control and supervision of the State. All of them are registered under the Co-operative Societies Act, 1912. They get a corporate status. They get concessions from government in purchase of land, payment of tax etc. They get legal and financial assistance also.

8. Answer the following

Question 1.
Explain the features of Sole Trading Concern.
Answer:
A sole trading concern is one of the oldest and simplest form of organisation. An individual owns the entire business. The individual is the owner, controller and manager of the firm. Such an individual is called a Sole Trader or Sole Proprietor. This type of business is a one-man show.
(1) According to Prof. J. Hanse, “Sometimes known as one man business, it is a type of business unit where one person is solely responsible for providing the capital, for bearing the risk of the enterprise and for the risk of ownership”.

(2) According to Prof. James Lundy : “The sole proprietorship is an informal type of business owned by one person.” The features of Sole Trading Concern are as follows:
(i) Suitable for some Special Business : Sole trading concern is suitable for business where personal attention and individual skill is needed e.g., Beauty parlour, groceries, fashion designing, sweet shops, tailoring, restaurants etc.

(v) Local Market Operations : A sole trader has limited capital and limited managerial skills, which forces him to operates in local are market only.

(vi) Individual Ownership : A sole trader is the single owner of business. He owns all the property and assets of the concern. He brings in the required capital for business. A sole trading concern is a ‘One man show”.

(vii) No separate legal status : Sole trader and his business are considered one and the same in the eyes of . law. Thus, it does not enjoy separate legal status.

(viii) Direct Contacts with Customers and Employees : A sole trader directly deals with customers and employees. A sole trader can pay personal attention to his customers. This helps him to maintain good relations with his customers. He can serve customers according to their likes and dislikes. As there are less number of employees, he can build good relations with them. He can listen to their grievances and try to solve them.

(ix) Self-employment : Such business form is best suitable for self-employment. Instead of being remaining unemployed one can start such business as it requires low capital and has less legal formalities.

(x) Freedom in Selection of Business : A sole trader has freedom to select any type of business. Business selected must be allowed legally. A sole trader can use any method of maintaining books of accounts.

(xi) Minimum Government Regulations : Sole trading concern need not follow any special Act. There are not much legal formalities needed for forming and closing a sole trading concern. Only the general law of the country has to be followed.

Question 2.
Explain different types of Partnership Firms.
Answer:
Maharashtra Board OCM 11th Commerce Solutions Chapter 4 Forms of Business Organisation – I 1
(i) General Partnership : These partnership can be formed under the Indian Partnership Act, 1932, where the liability of all partners are unlimited, joint and several.
General Partnership can be divided into three Kinds:
(a) Partnership at will: Such partnership are formed and continued as per the will of the partners. They are formed for an indefinite period. Any partner can terminate the partnership by giving a notice to the firm. Such firms exists so long as there is mutual trust and co-operation among the partners.

(b) Partnership for a particular period : Such partnerships are formed for a particular period of time. On the completion of the duration, the partnership firm automatically dissolves irrespective of the venture being complete.

(c) Partnership for a venture or particular partnership : Such partnerships are formed for a particular venture or job. It comes to an end on the completion of the venture. For e.g. construction of roads, dams, bridges, buildings, etc.

(ii) Limited Liability Partnership : This kind of partnership is formed under the Limited Liability Partnership Act 2008. There are 2 kinds of partners.

Designated Partner : Limited liability partnership is one where there are atleast two partners of which one must be a resident of India.
General Partner : In limited liability partnership a apart from the designated partners all other partners have limited liability. They are called general partners.

Question 3.
Explain different types of Partners.
Answer:
The different types of partners are:
(i) Active or Working Partners : In practice one or two partners take active part in the management. Such partners are called active or working partners. They contribute capital, shares profits or losses, and has unlimited, joint and several liability. They take an active interest in the day to day working of the firm. These partners are also known as ordinary / general / actual partners.

(v) Partner in Profits only : A partner may clearly state that he will have a share only in the profits of the firm and that he will not share losses. Such a partner is known as “Partner in Profits Only”. He has no rights of management. He may not take active participation in the management of the firm.

(vi) Partner with Limited Liability : A limited partner has limited liability. A partner whose liability depends upon the extent of investment is called a limited partner. He has no right to take part in the day to day work. But such a partnership must have at least one partner having unlimited liability.

(vii) Secret Partner : A person is a partner of the firm and not known to general public is a secret partner. Secret partners have all the features like other partners. He brings capital to the firm and also gets a share in profit. He has unlimited liability. He can take part in the working of the business.

(viii) Sub-Partner : A partner when agrees to share his own profit derived from the firm with third person, it is known as sub-partner. A sub-partner cannot call himself as a partner in the firm.

(ix) Quasi Partner : A retired partner leaving his capital with the firm is called as Quasi Partner. He does not participate in the working of the firm, but share profit of the firm. He is also liable for the debts of the firm.

Question 4.
Explain the five features of Joint Stock Company.
Answer:
The features of Joint Stock Company are as follows:
(i) Common Seal : A company being an artificial person cannot sign on its own. The law requires every company to have a seal and have its name engraved on it. Common seal is a symbol of company’s incorporate existence. As common seal is the signature of the company, it has to be affixed on all important documents of the company. When the seal is used it has to be witnessed by two Directors of the Company. The common seal is under the custody of Company Secretary.

(ii) Artificial Person : A company is an artificial person created by law. It has an independent legal status. It has a separate name. It can enter into contracts, buy and sell property in its name. The company is distinct from its members.

(iii) Registration: The Registration of Joint Stock Company is compulsory. All companies have to be registered under Indian Companies Act, 2013.

(v) O wnership and Management: Persons investing in the shares of the company are called as shareholders. They are the owners of the company. They receive a share in the profits of the company called “dividend”. The large number of shareholders cannot manage business. They elect representatives who are collectively called as Board of Directors. They manage business of the Company.

(vi) Limited Liability : The liability of shareholders is limited. It depends upon the unpaid amount of shares held by them. Shareholders cannot be held personally liable for the debts of the company.

Question 5.
Explain the merits of a Co-operative Society.
Answer:
The merits of a Co-operative Society are as follow:
(i) E asy Formation: It is easy to form a Co-operative organisation. Minimum ten members are needed to form the organisation. It does not involve much legal formalities. It is compulsory to register the organisation. However, the procedure for registration is simple and the fees are nominal.

(ii) Tax Concession : Co-operatives always get support of the government. As they play an important role in economic and social development, government gives them concessions in payment of tax.

(iii) Open Membership : Membership of a Co-operative organisation is open to all. A person can become a member by purchasing shares. No difference is made on the basis of language, religion, caste, etc. A person can become a member whenever he wants and terminate membership at his own will. Membership is voluntary.

(iv) Stability : A Co-operative organisation enjoys a long and stable life. The life of the organisation is distinct from the life of its members. If any member dies, becomes insolvent or insane, business is not closed.

(v) Self Financing and Charity : After providing 15% dividend to members, surplus amount is used for self-financing by the Co-operative Societies. Some amount of leftover profit is used for charity, social activities and for the growth of the co-operative society.

(vi) Less O perating Expenses: Cost of operation is low as salary is not paid to members who manage business. Members of Co-operative organisations work on honorary basis. They are not given any remuneration for their services. There are no expenses on advertising and publicity. This helps to increase profit.

(vii) Limited Liability : The liability of members is limited. It depends upon the value of shares purchased by members. Therefore, people are interested in investing in a Co-operative organisation.

(viii) Democratic Management: Democracy is followed in the management of co-operative organisation. All members are equal. The principle of “One member One vote” is followed. Members elect representatives who form the managing committee. They work according to bye-laws. The managing committee looks after day to day administration. Decisions are taken collectively in meetings.

(ix) Supply of Goods at Cheaper Rate : Goods are sold at lesser price through a Co-operative store. This is because the organisation is service – oriented. The store does not make use of services of middlemen and there are no expenses on advertising. So goods are sold at cheap rates.

Question 6.
Explain the demerits of Partnership firm.
Answer:
The demerits of Partnership firm are as follows:
(i) Non-transferability of Interest: In a partnership firm no one partner can transfer his share of interest to another outsider without the consent of all the partners.

(ii) Limited Capital: There is a limitation in raising additional capital for business. The business resources are limited to personal funds of the partners. Borrowing capacity of partners is limited. The maximum number of partners is fifty only. So financial capacity is less.

(iii) Absence of Legal Status : The Indian Partnership Act, 1932 does not give a legal status to a partnership firm. There is no independent legal status. The firm and its partners are one and the same.

(iv) Problem of Continuity : The partnership firm is not a separate legal entity. The firm is dependent oh mutual trust between partners. If a partner dies, becomes insolvent or insane, the firm has to be dissolved compulsorily whether the partners wish or not.

(v) Risk of Implied Authority : A partner works in two capacities. He has a dual role – Principal and Agent. He acts as an agent of the business. He can enter into contract with third party. However, a wrong decision can result in heavy losses, which has to be borne by all partners.

(vi) Limitations on Number of Partners : No partnership can go beyond maximum number prescribed (i.e. 50 members) by Indian Partnership Act. This restriction effects the raising of capital for further expansion.

(vii) Disputes : It is difficult to maintain harmony among partners. They may have different opinions and may not agree on certain matters. Partners may have conflicts if some partners work for self interest. This reduces team spirit and may finally lead to dissolution of the firm.

(viii) Difficulty in Admission of Partner : As consent of all partners is required to take any decision in the partnership firm, it becomes difficult to admit a new partner. This is a disadvantage to the firm as it cannot bring in new talent if the other partners are not agreeing to it.

(ix) Unlimited Liability : The liability of partners is unlimited. There is no difference between business property and personal property of partners. If business assets are not enough to meet business expenses, personal property can be used.

(x) Problem of Secrecy : Partnership firms lack complete business secrecy as some secrets may be disclosed by some partner to the competitor for personal benefit.

Question 7.
Explain the merits of Joint Stock Company.
Answer:
The merits of Joint Stock Company are as follows:
(i) Transferability of Shares : Shares of a public company can be transferred easily and freely. There is a high degree of liquidity in shares. Permission of directors or members need not be taken for buying and selling shares. This helps to attract investors to public company.

(ii) Relief in Taxation : The tax burden in the company is less. Provisions of Income Tax Act says that companies have to pay tax at flat rate. This is less than taxes paid by individuals earning very high income. If company is started in backward areas, the company gets relief in the form of tax holding.

(iii) More Scope for Expansion : The capital raising capacity of the company is high. The company has a lot of funds at its disposal. A part of the profit is also ploughed back for business. This enables growth and expansion of business.

(iv) Public Confidence : Joint Stock Company has to publish books of accounts. Which is audited by CA. Annual reports of the company have to be published. The activities of the Company are regulated by the provision of Companies Act, 2013. Therefore, the company gets public support.

(v) Limited Liability : The liability of shareholders is limited. It is to the extent of unpaid value of shares. Shareholders cannot be liable for the debts of the company. Features of limited liability attract more investors to business.

(vi) Expert Services : Joint Stock Company an appoint experts for managing their huge business operations. They appoint experts like Legal advisors, management experts, auditors, consultants, etc.

(vii) Democratic Management: Management of a company is democratic. Shareholders elect representatives called as Board of Directors. They manage business. Directors are accountable to shareholders. Policy decisions are taken by Directors but have to be approved by shareholders. The shareholders can also remove inefficient Directors.

(viii) Perpetual Succession : Joint Stock Company enjoy long and stable life. Its stability is not affected by death insolvency or retirement, of any of its members.

(ix) Professional Management : Large funds are at the disposal of the companies. Therefore, experts can be appointed in different areas of business. As good salaries can be paid, highly qualified personnel like Cost Accountants, Sales Experts, Market Experts, etc. can be appointed. Even Board of Directors have competent persons who manage business efficiently.

(x) Large Amount of Capital: A company can collect large amount of capital. There is no limit on maximum number of members. Due to features of limited liability, transferability of shares and liquidity, many investors are attracted to become shareholders of the company. Loans are also available to Joint Stock Companies.

Question 8.
Explain the features of partnership firm.
Answer:
The features of partnership firm are as follows:
(i) Lawful Business : Business undertaken by partnership should be lawful. It cannot undertake business forbidden by state. The definition of partnership also does not permit any association like club or charitable institution. Illegal business like smuggling or gambling is not allowed.

(ii) Agreement : Partnership is a result of agreement between partners. There could be a written or oral agreement between partners. A written agreement is preferred so that it can be used as a proof in the court of law if needed.

(iii) Number of Partners : Minimum two members are needed to start a partnership firm. The maximum number of members is 50.

(iv) Dissolution : A Partnership Firm can be dissolved through agreement between partners. If a partner wants, he can dissolve the firm by giving 14 days notice to the firm. The firm can be dissolved if a partner dies, becomes insolvent or insane.

(v) Sharing of Profits and Losses : The purpose of partnership is to earn profit. Its object cannot be a charitable one. Partners have to share profits and losses according to the ratio given in the agreement. If the agreement is silent about the proportion then profit and loss sharing will be equal.

(vi) Termination of Partner : A partner may resign by giving proper notice in writing to the other partners. A partner can also be removed if he has been found doing any fraudulent activities.

(vii) Joint Ownership : Each partner is the joint owner of the property of the firm. All partners are equal owners of business property. No partner can use property for personal use.

(viii) Registration : It is not compulsory as per Indian Partnership Act, 1932. However, in the State of Maharashtra, it has been made compulsory to get register with ‘Registrar of Firms’ of the state.

(ix) Joint Management: All partners have equal rights in managing the firm. Some partners take interest in management of the firm and others voluntarily surrender their management rights. However, all partners are jointly responsible for the management of the firm.

(x) Unlimited Liability : The liability of partners is unlimited joint and several. If assets of business is not sufficient to pay liabilities, personal property of partners can be used. If any one of the partners is declared insolvent, his liability will be borne by the solvent partners.

(xi) Principal and Agent : Each partner works in two capacities – Principal and Agent. A partner acts as principal when within the firm and acts as an agent while dealing with outsider. The partners play a dual role.

(xii) Restriction on Transfer of Interest : A partner cannot transfer or sell his interests in the firm to outsider without the prior consent of all other partners in the firm.

Question 9.
Explain the types of co-operative societies.
Answer:
Types of Co-operative Society are as follows:
(i) Consumer Co-operative Societies : A consumer co-operative is a business owned by its customers. They purchase in large quantities from wholesalers and supply in small quantities to customers. Goods are provided to buyers at reasonable prices and also provide services to them. Members get a share in the profit. The consumer society is formed to eliminate middlemen from distribution process e.g.-Apana Bazar, Sahakari Bhandar.

(v) Co-operative Farming Societies: Farmers voluntarily come together and pool their land. The agricultural operations are carried out jointly. They make use of scientific method of cultivation.

Question 10.
Explain the demerits of Joint Stock Company.
Answer:
The demerits of Joint Stock Company are as follows:
1. Rigid Formation : The formation of a joint stock company is lengthy, difficult and time consuming. There are many legal formalities for starting business. Promoters have to prepare documents like Articles of Association, Memorandum of Association, etc. A private company has to go through two stages in formation. A public company has to go through four stages in formation.

5. High Cost of Management : The management of joint stock company form of organization is costly. Services of experts like share brokers, underwriters, solicitors, bankers is needed which is costly. Highly qualified staff is needed. They are paid good salaries. Dissolution of the firm is also costly.

6. Reckless Speculation: Directors look after management of the company. They have full information about the progress of the company. They use these details for speculation in shares. This results in fluctuations in share prices. This affects public confidence.

7. No Personal Contact : There are large number of employees in the organization. There is no personal contact of owners and managers with employees. Lack of appreciation demotivates employees. Similarly, managers and directors are not able to maintain personal contacts with their customers. Thus, customers likes and dislikes are ignored.

8. No Direct Effort Reward Relationship : Joint Stock Company is owned by shareholders and managed – by Board of Directors. Board of Directors are paid for managing and profit is shared by shareholders. There is no direct relation between efforts and rewards. Directors may not take a lot of interest in the working of the company.

Maharashtra Board OCM 11th Commerce Solutions Chapter 3 Small Scale Industry and Business

July 17, 2023

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 3 Small Scale Industry and Business Textbook Exercise Questions and Answers.

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 3 Small Scale Industry and Business

1. (A) Select the Correct option and rewrite the sentence

Question 1.
The problem of ……………….. is becoming more serious in India.
(a) employment
(b) unemployment
(c) pollution
Answer:
(b) unemployment

Question 2.
India is ………………… abundant country.
(a) labour
(b) money
(c) material
Answer:
(a) labour

Question 3.
…………….. cost of power acquisition, frequent power cuts, irregular supply of power affect the productivity of SSI.
(a) Higher
(b) Lower
(c) Average
Answer:
(a) Higher

Question 4.
Before setting up business, it is essential to study prevailing ………………. environment.
(a) business
(b) natural
(c) political
Answer:
(a) business

Question 5.
Small Scale Business are ………………… intensive.
(a) money
(b) power
(c) labour
Answer:
(c) labour

Question 6.
Occurring obscured idea in mind of entrepreneur is ……………….. stage of establishing business.
(a) first
(b) second
(c) third
Answer:
(a) first

Question 7.
Small scale industries contribute nearly ……………….. to the industrial exports of the country.
(a) 40%
(b) 60%
(c) 20%
Answer:
(a) 40%

1. (B) Match the pairs

Group A	Group B
(a) Micro Manufacturing Sector	(1) Handloom
(b) Traditional Small Scale business	(2) Unskilled
(c) Registration	(3) Does not exceed Rs. 25 lakhs
(d) Labour	(4) 40% of exports of India
(e) Bicycle Parts	(5) Does not exceed Rs. 1 lakhs
	(6) DIC
	(7) Marketing Problem
	(8) Modern Small Scale business
	(9) Project Appraisal
	(10) Cost-efficiency

Answer:

Group A	Group B
(a) Micro Manufacturing Sector	(3) Does not exceed Rs. 25 lakhs
(b) Traditional Small Scale business	(1) Handloom
(c) Registration	(6) DIC
(d) Labour	(2) Unskilled
(e) Bicycle Parts	(8) Modern Small Scale business

1. (C) Give one word/phrase/term

Question 1.
A sector which is back bone of rural India.
Answer:
Small Scale Sector

Question 2.
An industry using power with less than 50 employees.
Answer:
Small Scale Industry

1. (D) State True or False

Question 1.
Small Scale industries should be developed in order to maintain, economic balance in a country.
Answer:
True

Question 2.
Majority Small Scale Industry uses advanced technology.
Answer:
False

Question 3.
Small business easily get access to low interest rates.
Answer:
False

Question 4.
Small business cannot survive in the competition.
Answer:
True

1. (E) Find the odd one

Question 1.
Coir, Handicraft, Spare Parts, Hand-loom
Answer:
Spare Parts

Question 2.
Bicycle Parts, Sericulture, Electronic Appliances, Sewing Machine
Answer:
Sericulture

1. (F) Complete the sentences

Question 1.
…………….. industries plays an important role in developing countries.
Answer:
Small Scale

Question 2.
SSI is …………….. largest industry which creates huge employment opportunities.
Answer:
second

Question 3.
SSI enjoys the advantage of ……………… cost of the produce.
Answer:
low

Question 4.
SSI are ……………… intensive.
Answer:
labour

Question 5.
SSI requires ………………….. capital as compared to large scale industries.
Answer:
less

Question 6.
SSI produces consumer goods as well as …………………. components.
Answer:
industrial

1. (G) Select the correct option

(Small Manufacturing Sector, Micro Manufacturing Sector, Micro Services Sector, Medium Manufacturing Sector, Small Services Sector)

Group A	Group B
(1) More than Rs 25 lakhs but does not exceed Rs 5 Crores	—————-
(2) —————-	Does not exceed Rs 25 lakhs
(3) More than Rs 5 crores but does not exceed Rs 10 crores	—————
(4) —————-	Does not exceed Rs 10 lakhs
(5) More than Rs 10 lakhs but does not exceed Rs 2 crores	—————-

Answer:

Group A	Group B
(1) More than Rs 25 lakhs but does not exceed Rs 5 Crores	Small Manufacturing sector
(2) Micro Manufacturing sector	Does not exceed Rs 25 lakhs
(3) More than Rs 5 crores but does not exceed Rs 10 crores	Medium Manufacturing sector
(4) Micro Services Sector	Does not exceed Rs 10 lakhs
(5) More than Rs 10 lakhs but does not exceed Rs 2 crores	Small Services Sector

1. (H) Answer in one sentences

Question 1.
What is SSI?
Answer:
Traditionally the industries in India which are organised on a Small Scale and produces goods with the help of machines, labour and power are considered as Small Scale Industries.

Question 2.
State the example of Traditional Small Scale Industry.
Answer:
Hand-loom, Handicraft, Coir, Sericulture, Khadi and Village Industries are the examples of Traditional Small Scale Industries.

Question 3.
Give examples of Modern Small Scale Industry.
Answer:
Bicycle Parts, Sewing Machines, Blades, Razors, Electric Appliances, Spare Parts are examples of Modern Small Scale Industries.

1. (I) Correct the underlined word and rewrite the following sentences.

Question 1.
The problem of employment has been becoming more serious in India.
Answer:
The problem of unemployment has been becoming more serious in India.

Question 2.
India is material abundant country.
Answer:
India is labour abundant country.

Question 3.
Small scale Industry uses advanced technology.
Answer:
Small scale Industry uses outdated technology.

Question 4.
SSI begin with large amount of capital.
Answer:
SSI begin with small amount of capital.

Question 5.
Business proposal is the first step in setting up of a small scale business.
Answer:
Decision of Business area is the first step in setting up of a small scale business.

1. (J) Arrange in proper order.

(a) Selection of a place
(b) Selection of a product
(c) Business proposal
(d) Selection of technology
Answer:
(a) Selection of a product
(b) Selection of a place
(c) Selection of technology
(d) Business proposal

2. Explain the following terms/concepts.

Question 1.
Small Scale Industry.
Answer:
Any Industrial Unit is regarded as Small Scale Industry, if the following condition is satisfied.
“Investment in fixed assets like plant and equipment either held on ownership terms or on lease or hire purchase should not be more than Rupees one crore. However, the unit in no way can be owned or controlled or auxiliary for any other industrial unit.”

Question 2.
Service Sector.
Answer:
According to MSMED on the basis of investment Micro Service Sector ‘does not exceed Rs 10 lakhs’, Small Service Sector, ‘more than 10 lakhs but does not exceed 2 crores’ and Medium Service Sector ‘more than Rs 2 crores but does not exceed Rs 5 crores’.

Question 3.
Micro Small Scale Business.
Answer:
Micro small scale business is classified as Manufacturing sector and Services Sector. According to MSMED, Micro Manufacturing sector does not exceed Rs 25 lakhs and Micro Services sector does not exceed Rs 10 lakhs.

Question 4.
Traditional Industrial Sector.
Answer:
Small Scale Industries are further classified as Traditional Small Scale Industries and Modern Small Scale Industries. Handloom, Handicraft, Coir, Sericulture, Khadi and Village Industries are the examples of traditional SSI Industries.

Question 5.
Modern Industrial Sector.
Answer:
Small Scale Industries are further classified as Traditional Small Scale Industries and Modern Small Scale Industries. Bicycle Parts, Sewing Machines, Blades, Razors, Electric Appliances, Spare Parts are the examples of Modern Small Scale Industries.

3. Study the following case/situation and express your opinion.

1. Mr. Ram wants to start Small Scale business of manufacturing parts of bicycle or machinery.

Question 1.
Identify the first step or stage of setting up his Small Scale business.
Answer:
Ram has to first decide whether the setup will be corporation, proprietorship or partnership. He has to identify his strength and weaknesses which can help him to decide what type of business would be most suitable. He has to study the amount of capital requirement needed to start his business. Once he gets the idea of total capital requirement he can decide what type of business to start.

Question 2.
State the different ways of raising the capital for his business.
Answer:
If Ram decides to start as proprietorship than he has to raise all the capital by himself. He can get it from his own savings or borrow money form bank, financial institutions. He can also study the different government schemes and raise capital through those schemes.

If Ram decides to start partnership firm than he will have to find a person who is ready to invest in his partnership firm as well as he has knowledge about manufacturing parts of bicycle. They can raise capital by investing their savings, borrowing through financial institutions and friends. They can also take help from various government schemes and institutions set-up to help SSI.

If Ram decides to start corporation i.e. Pvt. Ltd. Company than he can raise capital by issuing equity shares privately. He has to sell the shares to his friends and relatives. He can also study of various government schemes and raise capital through those schemes. Ram can also borrow money from bank, financial institutes, etc. He can also accept deposits from public in the further stage of his business.

Question 3.
‘Marketing is a necessary step of running a business.’ Comment on it.
Answer:
Goods are ultimately manufactured for consumers. There is competition among many manufacturers and traders to sale goods in the market.
Without selling the goods, manufacturer cannot earn profit. Profit is main motto of business.

To sale goods in market, advertising and publicity is required. To make your brand image in market, advertising with quality of goods is required. Branded goods are easily sold in the market. Marketing can be done through many ways like TV, Radio, Bill Boards, Internet, Websites, Salesman, etc.
Thus, marketing is a necessary step of running a business.

4. Answer in brief.

Question 1.
State any four points of importance of Small Scale Industry/Business.
Answer:
Importance of Small Scale Industry:
Job Opportunities
Regional Balance
Maximum use of Natural Resources
Reduces Migration

1. Job Opportunities : SSI is second largest industry which creates huge employment opportunities, because it can be operated with minimum amount of capital. SSI can be run with basic and potential skills. This is a boost for a labour surplus country like India.

2. Regional Balance : In India, all regions are not developed due to lack of industrialization. SSI can be setup with minimum amount of capital. Small industries manufactures product using simple technologies, local available resources, material and labour. Thus, they contribute significantly to the balanced development of the country.

3. Maximum use of Natural Resources : Small scale industries are labour intensive. They utilize available natural resources and raw materials from local areas. Such use of local natural resources minimizes the cost of production which result into reasonable price of goods.

4. Reduces Migration : Small Scale industries can create a large number of employment in rural area. SSI is also a best example of self-employment. Therefore, migration of people from rural to urban can be reduced or minimized.

Question 2.
Write any four advantages of Small Scale Industry.
Answer:
Advantages of Small Scale Industries:
1. Large Employment
2. Less Capital Requirement
3. Contribution to Export
4. Opportunities for Entrepreneurship

1. Large Employment: Small Scale Industries has huge potential to create employment opportunities. They are labour intensive and use more labour than other factors of production. Their gestation period is also low and can provide employment opportunities to large number of people.

2. Less Capital Requirement : SSI requires less capital as compared to large scale industries. SSI can be started by small entrepreneurs with limited capital resources.

3. Contribution to Export : Nearly 40% of the industrial exports are contributed by SSI. Product such as hosiery, knitwear, gems and jewellery, handicraft, coir products, woolen garments, processed food, chemical and allied products and a large number of engineering goods contribute substantially to India’s exports. Products produced by SSI are used in the manufacturing of products by large scale industries which are exported. It contributes directly and indirectly to exports and helps to earn valuable foreign exchange.

4. Opportunities for Entrepreneurship : Small Scale Industries provide opportunities for entrepreneurs with limited capital as it requires less capital and lower investment in technology and machines as compared to large scale enterprises. Therefore, small entrepreneurs can start small scale industries easily.

Question 3.
State any four challenges before Small Scale Industries.
Answer:
Challenges before Small scale industries:

Inadequate Finance
Problem of Raw Material
Labour Problem
Marketing Problem

1. Inadequate Finance : SSI generally begins with a small amount of capital. Many of the units in the small sector raise funds from capital market. These units frequently suffer from lack of adequate working capital.

2. Problem of Raw Material : Another major problem of Small Scale Industries is inadequate supply of raw materials. Due to that SSI have to compromise on the quantity and quality of raw material, or pay more, price for good quality of raw material.

3. Labour Problem : Small industries generally appoint unskilled and semi skilled worker on daily wages, This creates the problem of low labour productivity, higher absenteeism and poor job commitment. The wages are low due to financial limitations. This leads to labour dissatisfaction and increase the problem of labour turnover. Improper shifts and lack of job security makes employment in small industries unattractive and the talented work force does not opt for such job.

4. Marketing Problem : Marketing is a weaker part of small industries. SSI have to depend excessively on middlemen who at times exploit them by paying low prices and delayed payments. Further, direct marketing may not be feasible for small business firms as they lack the necessary infrastructure.

5. Justify the following statements.

Question 1.
Generally Small Scale Industries are sick.
Answer:

There are many problems faced by Small Scale Industries. These problems may be internal problems or external problems.
Internal Problems are like unskilled labour or untrained labour, lack of managerial skills and marketing skills, lack of modernisation, etc.
External problems like shortage of working capital, inadequate loans, delayed payments, shortage of raw material, etc.
According to RBI a sick unit is that which has incurred a cash loss for one year, is likely to continue it for current year as well as following year.
Thus, mainly due to financial problem, industrial units are unable to sustain themselves and are called as sick units.

Question 2.
Small Scale Industry require less amount of capital.
Answer:

The production of Small Scale Industries is less.
General unskilled labours are employed.
As production is less raw material requirement is also less.
In a place like India, where capital formation is low, small business is suitable.
Due to small in size, such form of business can easily adapt to changing atmosphere. This promotes flexibility. It can easily change their working style without much loss as compared to large businesses.
Thus, SSI requires less amount of capital.

Question 3.
Small Scale Industries have problems.
Answer:
Small scale industries have to face many problems:

Lack of Adequate Finance : Due to small scale of production and sale, Banks and Financial Institutions are afraid to give loans.
Problem of Raw material : Due to inadequate finance they cannot purchase raw material at a time. Thus, the cost of raw material increases.
Labour Problem : Due to inadequate finance, they cannot employ skilled labour which affects the production.
Marketing Problem: The goods manufactured if not marketed properly can be risky as it will affect the sales,
Problem of Transport: Transportation cost increases the cost of the product which hampers the sale as large scale industries cost may be less.
Sickness : Due to financial problem industrial units are unable to sustain themselves and finally turn to sick units.
Thus, Small Scale Industries have problems

6. Attempt the following.

Question 1.
Explain the meaning of Small Scale Industries.
Answer:
Small Scale Industries are those industries where fixed assets i.e. plant and machinery which is owned or hired or taken on lease basis, does not exceed more than one crore.

MSMED has classified Small Scale Industries into Manufacturing sector and Services sector, and further into three categories of business i.e. Micro business, Small business and Medium business.
Subsequently over a period of time, a new definition was introduced by MSMED Act, 2006 (Micro Small and Medium Enterprises Development) is as follows
(A) Manufacturing Enterprises:

A micro enterprise, where the investment in plant and machinery is less than Rs 25 lakh.
A small enterprise, where the investment is more than Rs 25 lakh but less than Rs 5 crore.
A medium enterprise, where the investment in plant and machinery is more than Rs 5 crore but less than Rs 10 crore.

(B) Service Enterprises:

A micro enterprise, where the investment in equipment is less than Rs 10 lakh.
A small enterprise, where the investment in equipment is more than Rs 10 lakh but less than Rs 2 crores.
A mediuiri enterprise where the investment in equipment is more than Rs 2 crore but less than Rs 5 crores.
An industrial unit can be categorised as small business if it fulfills the above capital investment criteria.

Question 2.
State importance of small business.
Answer:
Following are the importance of Small Business:
(i) Supply of Raw Materials to Large Industries : Finished goods of Small Scale Industries is raw material – for large scale industries. E.g., head lights supplied to automobile industries. Small Scale Industries supply raw materials to large scale industries and they get easy market available to their product.

(ii) Balanced Development between Rural and Urban Areas : With the help of locally available raw materials and labour, more and more Small Scale Business can be started in rural areas. This helps to reduced regional imbalance between urban and rural areas.

(iii) Opportunities to Young Generation : Young generations by using their creative skills make product unique in the market. Small scale business gives an opportunity to youngster to show their creativity and abilities to prove themselves and achieve success in development.

(iv) Large Employment : India is second largest populated country after China, which faced problem of unskilled and semi skilled labour. Small Scale Industries operate with more labour and less capital, which can accommodate more man power to solve employment problem.

(v) Utilisation of Domestic Resources : Small farmers can start their own unit of small industry by using locally available raw materials. He can get self employment and involve his family members too.

Question 3.
Explain in brief the impact of capital, on Small Scale industries.
Answer:
Major problem faced by small scale industries is insufficient capital, which creates following difficulties with them.
(i) Borrowings of Capital from Landlords and Money Lenders : Nationalised and Co-operative banks are not ready to finance Small Scale Industries without security. Thus, they are forced to borrow from money lenders, where they have to pay very high rate of interest.

(ii) Storage of Raw material: Small Scale Industries are agro based. Raw material is available seasonally. To stock goods they required huge finance. Due to lack of finance, they run industry only in seasons.

(iii) Lack of Skilled Labour : Only unskilled and semi skilled labourer are available. Small Scale Industries cannot afford labour cost of skilled labourer which affect quality and quantity of production and profitability.

(iv) Outdated technology : Due to insufficient capital, production methods used by SSI are old, which results in poor quality and quantity of output.

(v) Weaker Marketing Skill : In todays world marketing plays an important role. Rural area is facing marketing problem due to lack of facilities and knowledge and they are exploited by middlemen too.

Question 4.
State the problem faced by Small Scale industries.
OR
Explain in detail the challenges faced by Small Scale Industries.
Answer:
Problems faced by Small Scale Industries:
(i) Outdated Technology : Traditional methods of productions are used due to lack of finance and knowledge about latest technology. This results in poor quality of production with low output.

(ii) Problems of Infrastructure: Problems of infrastructure faced by small business are power cuts, improper transport facility, problem like congestions, bottlenecks, strikes, rise in freight charges, inadequate space, bad repair of premises, unsuitable location, high rent, etc. These problems definitely affects smooth working of small business.

(iii) Underutilization of Capacity : Small Scale Industries cannot utilize optimum resources and capacity due to lack of marketing skills, lack of demand, etc. This lead to increase the cost of product and wastage of resources.

(iv) Lack of Capital: Nationalised and Co-operative banks are not ready to provide finance without securities. Owners of Small Scale Industries don’t have any option other than borrowings funds from landlords and money lenders where they have to pay very high rate of interest.

(v) Problem of Skilled Labourers : Mostly unskilled and semi skilled labourers are available to Small Scale Industries as they cannot afford the wages to highly skilled labourer. This affect quality and quantity of output which result in less price for sales.

Question 5.
Explain the role of Small Scale Industries in employment generation.
Answer:
Small Scale Industries play very important role in generation of employment as follows:

Small Scale Industries are Labour Intensive : There is shortage of capital with small scale industries. They are labour intensive. They use more man power than machines, they creates more opportunities for rural employment.
Employment to Unskilled and Semiskilled Labourer : Small Scale Industries are using old and traditional method of production where they need unskilled and semi-skilled labourer.
Employment of Rural Land Less Labourer : Small Scale Industries are set-up in rural areas. They provide employment to local labourers. They have potential to create opportunities to large scale employment to mass population in villages.
Decrease in Migration of Labourers : Migration means movement of labourers from village to city in search of job. Due to increase in small scale industries in village areas migration of labour is reduced. Labourers are getting good employment at their own villages.

7. Answer the following

Question 1.
Explain the challenges before Small business.
Answer:
Small scale business are playing very important role in development of developing countries. They faced following challenges / difficulties:
(i) Problems of Marketing : Small business organizations depend excessively on middlemen who many times exploit them by paying low price and delayed payment. Further direct marketing may not be possible for them as they lack necessary infrastructure. Major marketing problem are lack of advertising, non-branding of products, poor quality, transportation problem, local difficulties, competition, etc.

(ii) Infrastructural Problem : Problems of infrastructure faced by small business are power cuts, improper transport facility, problem like traffic congestions, bottlenecks, strikes, rise in freight charges, inadequate space, bad repair of premises, unsuitable location, high rent, etc. These problems definitely affects smooth working of small business.

(iii) Credit and Finance : Lack of finance is the major problem faced by small business. Artisans or Craftsmen running cottage industry take credits from mahajans or traders who charge large amount of interest from them. For small scale industries, institutional source of finance (e.g. banks) is also available, but the funds allocated to this sector are inadequate.

(iv) Delayed Payment: They face problem of delayed payment by large firms and Government departments.

(v) Sickness Problem: According to RBI a sick unit is that which has incurred a cash loss for one year, is likely to continue it for current year as well as following years and unit has an imbalance in financial structure. Sickness is generally seen in small business industries like cotton, jute, sugar, textile, etc. Internal causes of sickness are lack of skill labour, faulty planning, problem of recovery, etc. External causes of sickness are shortage of capital, inadequate loans, shortage of raw material, etc. However, rehabilitation of sick unit is a costly affair.

(vi) Personal Problems : Personal problems like spending long hours to work and less time with family and the rewards have not been favourable.

(vii) Shortage of Raw Material : Shortage of raw material often take place due to reasons like natural calamities, transport problem, industrial strikes, poor quality of raw material, exploitation done by traders, etc. Traders or agents who supply raw material often exploit the owner by charging higher prices. They also insist on buying finished products at lower rate. Thus, small business owners are subject to double exploitation.

(viii) Outdated Technology : Use of low-grade technical know-how and skills have resulted in low productivity in small business industries. Many units in small business make use of primitive methods of production, this leads to increase in cost of production, whereas productivity is low. Small units often do not care about the changing tastes and fashions of customers.

(ix) Underutilization of Capacity : Small business units cannot utilize optimum resources and capacity due to lack of marketing skills, lack of demand, they work below full capacity, etc. This lead to increase the cost and wastage of resources.

(x) Labour Problem : It includes highly demanding employees, absenteeism, lack of skilled workers and transportation of workers, strikes, high wage rates, inefficiency, etc.

Question 2.
Write down the benefits or advantages of small business.
Answer:
Small scale business plays very important role in the economic development of the country.
The following are the benefits or advantages of small business:
(i) Cost Savings : Small scale business used micro production method which results into quality product at low cost of production. Production cost of small business is much more less compared to large scale industries due to low cost of operation.

(ii) Adaptability : Small scale business can change themselves as per the market requirement. They can change product, line of product as per market changes, like fashions, new product, demand, etc.

(iii) Limited Capital : As small business is labour intensive they requires very small amount of capital for plant and equipments.

(iv) Low Gestation Period : To start a new business requires very short period as compared to large scale industries. Small scale business can start production of good in very short period of time and can increase the scale of production.

Labour Intensive : Small business units use less machines and more labours. Absorption of local labour helps to solve problem of absolute poverty and control inequality of income.

(vi) Opportunities to Rural Youth : New generation youth has smart creativity. With available technology and raw materials, rural youth can start their own business unit. Small business unit plays very important role in developing countries.

(vii) Upliftment of Economy : Majority of small scale business used traditional method of productions. Rural craftsman and artisans do have their own talents and skills which they have learnt from their forefathers. Such products are very much demanded in market which results in high income.

(viii) Decentralised Economy : Small scale business prevents concentration of economic power in the few hands. Income is divided equally among large number of people.

(ix) Export Earning : Small business contributes remarkable to country’s export. 40% of India’s exports are contributed by small business like textiles, handicraft, handloom, embroidery, etc.

(x) Regional Balance : There is wide gap between urban and rural India. Small scale business helps to reduce gap between developed and underdeveloped or developing areas.

Question 3.
Explain the process of establishment of Small Scale Industries.
Answer:
In todays world, youth are more attracted towards business opportunities rather than employment.
To start a small scale industries following stages to be followed:
(i) Idea to Setup a Business : This is a first step to start a small scale industry. The prospective entrepreneur with his own capacity decide the sized and type of business like sole proprietorship, partnership or corporation.

(ii) Analysis of Business Surrounding : It is necessary to understand different business surrounding and policies before starting any business. They are competitors, legal, economical, industrial, technological, etc.

(iii) Choice of Product : Entrepreneurs has to decide his sector of production i.e. Manufacturing or Service sector. After doing market survey and understanding advantages and disadvantages one should decide line of product or services.

(iv) Location for Business : Entrepreneur has to select location to start business. It plays very important role in success of business while selecting location many factors are to be taken into consideration like availability of labour, raw materials, power supply, transportation, etc.

(v) Technology Selection : An entrepreneur has to select available and suitable technology for his business. He should select technology he is familiar to use.

(vi) Project Appraisal : It means the study and assessment of a project. One should study the project very carefully from the point of view regards to economy, finance, marketing and profitability.

(vii) Capital Requirement : The entrepreneur has to plan for capital requirement and sources available for capital. It can be self finance, loan from relatives or banks.

(viii) Incorporation / Registration : It is compulsory for every small scale industry to registered with the respective Government Authorities. A printed application form is available with District Industries Centre (DIC). Entrepreneur has to duly filled the information with his signature in the form and submit to DIC.

(ix) Implementation of Resources : After registration of business entrepreneur has to start with production process:

Financial Resources : The entrepreneur has to collect finance and make necessary arrangement for capital.
Factor Set up : The entrepreneurs has to allocate space for various operations, purchase of machinery and tools and installation of it.
Electric power and water supply : The entrepreneur has to calculate total electric power requirement in KW (Kilowatt) and get connection from the authority and supply for water connection.
Appointment of staff : Small scale industries are labour, intensive. One has to appoint unskilled and semi-skilled staff as per requirement to start production.

(x) Manufacturing and Selling of Product : After assembling all financial and physical resources goods are manufactured and send to market for sale. Advertising and publicity plays very important role in marketing and selling of product.

(xi) Customer’s Feedback : Customer satisfaction is very important in business. Regular feedback from customers is helping to make qualitative changes in product.

Question 4.
Explain the importance of small business.
Answer:
Following are the importance of Small Business:
(i) Supply of Raw Materials to Large Industries : Finished goods of Small Scale Industries is raw material – for large scale industries. E.g., head lights supplied to automobile industries. Small Scale Industries supply raw materials to large scale industries and they get easy market available to their product.

Question 5.
It is clear that the absence of capital and raw material is the main reason for the short term sickness. Explain it.
Answer:
Industrial sickness means the industry which has financial losses over period of time. Short term sickness is a temporary phenomenon.
Followings are the main capital and raw material reasons for short term sickness:
Financial / Capital:
(i) Non availability of Finance from Banks : Nationalised and Co-operative banks are not ready to finance SSI as there is less possibility of recovery of loans. Banks demand securities against loans, which is difficult to arrange for the small businessman.

(ii) Loans from Money lenders : As bank finance is difficult to raise, small businessman borrow capital from money lenders who charged very high rate of interest.

(iii) Shortage of Working Capital : Majority of small scale industries are depend on local source of raw material which is seasonal. They have to buy large quantity of raw materials to be used through out the years which needs large finance.

(iv) Unawareness of various Government Schemes : Due to lack of awareness among the owners of SSI about various Government Scheme for capital marketing, subsidies, etc. suffer capital problems.

Raw Material:
(i) Local source of raw material : Majority of small scale industries are depends on local supply of raw materials. Local suppliers of raw materials make artificial scarcity for supply of raw materials which make increase in product cost for the businessman.

(ii) Seasonal supply of raw materials : Small scale industries are using local supply of raw materials. The supply of raw material is seasonal. They don’t have huge capital to stock large quantity of raw materials due to this they have to stop production of goods after season ends and face problem of short term sickness.

(iii) Shortage of raw material : There may be short supply of raw materials due to natural calamities, transport strike, etc. affect the running of small scale industries.

(iv) Poor quality of raw material : There is no grading or standardizing of raw materials supply to small scale industry. This affect product quality and quantity.

Maharashtra Board OCM 11th Commerce Solutions Chapter 2 Trade

July 17, 2023

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 2 Trade Textbook Exercise Questions and Answers.

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 2 Trade

1. (A) Select the correct option and rewrite the sentence

Question 1.
……………. is the link between producer and retailer.
(a) Consumer
(b) Wholesaler
(c) Manufacturer
Answer:
(b) Wholesaler

Question 2.
Price charged by retailers is generally ………………..
(a) higher
(b) lower
(c) fixed
Answer:
(a) higher

Question 3.
A wholesaler invest ……………… capital in the business.
(a) small
(b) large
(c) less
Answer:
(b) large

Question 4.
Retailer is the …………….. link in the chain of distribution.
(a) first
(b) last
(c) second
Answer:
(b) last

Question 5.
Retailers supply information to the …………………. through wholesalers.
(a) manufacturer
(b) government
(c) consumers
Answer:
(a) manufacturer

Question 6.
Major items ……………… are chemicals, crude oil and petroleum products, edible oils, electronic goods, gold and silver, pearl and precious stone.
(a) exported by India
(b) not exported by India
(c) imported by India
Answer:
(c) imported by India

Question 7.
For customs clearance the ……………… is prepared by the exporter.
(a) carting order
(b) letter of credit
(c) shipping bill
Answer:
(c) shipping bill

Question 8.
……………… carry goods on their head in basket or containers.
(a) Hawkers
(b) Peddlers
(c) Cheap Jacks
Answer:
(b) Peddlers

Question 9.
………………… open their shops on market days i.e. on fixed days.
(a) Street Traders
(b) Market Traders
(c) Peddlers
Answer:
(b) Market Traders

Question 10.
……………… retailers deal in particular goods.
(a) General Stores
(b) Specialty Shop
(c) Second Hand Good Shops
Answer:
(b) Specialty Shop

Question 11.
………………… is known as self – service store.
(a) Departmental Store
(b) Super Market
(c) Multiple Store
Answer:
(b) Super Market

1. (B) Match the pairs

Question 1.

Group A	Group B
(a) Departmental store	(1) Carry goods on heads
(b) Market traders	(2) Uniform price
(c) General shops	(3) Business on market day
(d) One price shop	(4) Most common shop
(e) Peddlers	(5) Huge capital
	(6) Distribution through branches
	(7) Carry goods on carts
	(8) Sale used articles
	(9) Specialized goods
	(10) Authorized dealers

Answer:

Group A	Group B
(a) Departmental store	(5) Huge capital
(b) Market traders	(3) Business on market day
(c) General shops	(4) Most common shop
(d) One price shop	(2) Uniform price
(e) Peddlers	(1) Carry goods on heads

Question 2.

Group A	Group B
(a) Import trade	(1) First step in import
(b) Registration	(2) Goods not for own country
(c) Entrepot trade	(3) Buying goods from other country
(d) Letter of Credit	(4) No restrictions
(e) Large Turnover	(5) Selling goods to other country
	(6) Credit worthiness of importer
	(7) Recovery of dues
	(8) Wholesaler
	(9) Retailer
	(10) Credit worthiness of exporter

Answer:

Group A	Group B
(a) Import trade	(3) Buying goods from other country
(b) Registration	(1) First step in import
(c) Entrepot trade	(2) Goods not for own country
(d) Letter of Credit	(7) Recovery of dues
(e) Large Turnover	(8) Wholesaler

1. (C) Give one word/phrase/term

Question 1.
A person who move daily from place to place to sell goods.
Answer:
Itinerant retailer

Question 2.
The middleman between wholesaler and customer.
Answer:
Retailer

Question 3.
A retail shop which operates through branches.
Answer:
Chain stores

Question 4.
A shop where all goods are available at same price.
Answer:
One price shop

Question 5.
A retailer who display his goods on the load.
Answer:
Street traders

Question 6.
An order placed by an importer for the supply of certain goods.
Answer:
Indent

1. (D) State True or False

Question 1.
Wholesaler keeps large stock of goods.
Answer:
True

Question 2.
Wholesaler deals in small quantity.
Answer:
False

Question 3.
A retailer has no direct contact with consumers.
Answer:
False

Question 4.
Super market shops offer home delivery facilities to customer.
Answer:
False

Question 5.
Departmental store located out of the city.
Answer:
False

Question 6.
Customers cannot bargain in one price shop.
Answer:
True.

Question 7.
Letter of Credit is required for obtaining export license.
Answer:
True

Question 8.
Buying goods from other country is known as export trade.
Answer:
False

Question 9.
Maintaining high quality is necessary to sustain in export business.
Answer:
True

1. (E) Find the odd one.

Question 1.
Itinerant Retailers
General Stores, Hawkers, Cheap Jacks, Peddlers.
Answer:
General Stores

Question 2.
Large Scale Retailers
Departmental Stores, Chain Stores, Market Trader, One Price Shop.
Answer:
Market Trader

Question 3.
Small Scale Retailers
Specialty Shops, Second hand Goods Shops, Malls, Authorised Dealers.
Answer:
Malls

1. (F) Complete the sentences.

Question 1.
The original form of trade was ……………
Answer:
barter

Question 2.
Trade establishes a link between producers and …………….
Answer:
consumers

Question 3.
The wholesaler provides valuable services to manufacturers and ……………….
Answer:
retailers

Question 4.
The wholesaler purchases a large quantity of goods from the ………………..
Answer:
manufacturers

Question 5.
The wholesaler bears the risk of ……………… and market fluctuations.
Answer:
price

Question 6.
The wholesaler provides financial support to retailers by way of ………………. facility.
Answer:
credit

Question 7.
The retailer is the connecting link between the wholesaler and …………………..
Answer:
consumers

Question 8.
……………… is a large retail organization which mainly sells wide range of food and grocery items on the basis of ‘Self-service’.
Answer:
Super market

Question 9.
……………….. are retail stores owned by a single organization
Answer:
Chain store

Question 10.
The shop where the price of all products or goods are same is known as ……………..
Answer:
One price shop

Question 11.
A modern shopping mall is an ………………. term.
Answer:
American

Question 12.
The Letter of Credit is the safest method of payment in ………………. trade.
Answer:
foreign

1. (G) Select the correct option

Question 1.
Wholesaler deals in (small / large) quantity.
Answer:
Large

Question 2.
Departmental stores are located (in / out of) the city.
Answer:
in

Question 3.
Customer cannot bargain in (General stores / One Price shop).
Answer:
One price shop

Question 4.
Retailer operates in (global / local) market.
Answer:
local

Question 5.
Departmental store is a (large / small) scale retail shop.
Answer:
large

Question 6.
Supermarket shop requires (limited / large) capital.
Answer:
large

Question 7.
Chain stores are retail store owned by (many / single) organization.
Answer:
single

Question 8.
The shop where the price of all the product or goods are (different / same) is known as one price shop.
Answer:
same

1. (H) Answer in one sentence

Question 1.
What do you mean by internal trade?
Answer:
Trade carried on within the geographical boundaries of a country is called internal trade or domestic trade.

Question 2.
Who is known as hawkers?
Answer:
A trader who carries the goods on the back of animals or wheel cart for the purpose of selling is called an hawker.

Question 3.
What is the meaning of Peddlers?
Answer:
Mobile retailer who carry goods on their head or back and move from one place to another for selling are called Peddlers.

Question 4.
What do you mean by fixed shop retailers?
Answer:
Fixed shop retailers are those retailers who have a fixed place for their business.

Question 5.
What do you mean by small scale fixed retailers?
Answer:
Small scale fixed retailers are those who conduct their business operations on a small scale with variety of goods at a fixed place.

Question 6.
What do you mean by large scale fixed retailer?
Answer:
Large scale fixed retailers operate on large scale business at a fixed place.

Question 7.
What is departmental store?
Answer:
A departmental store is a large scale retail organisation situated in a central place in the city. It is divided into a number of small retail shops known as departments, selling different goods under one roof. .

Question 8.
What is meant by supermarket shop?
Answer:
It is a large scale retail organization which sells a wide variety of goods to customers on the basis of self service.

Question 9.
What do you mean by chain store?
Answer:
Chain store is a retail shop owned and controlled by a single organization located in different parts of the city, with a particular kind of goods.

Question 10.
What is one price shop?
Answer:
One price shops are shops where all articles are sold at one standard and fixed price.

Question 11.
What is a mall?
Answer:
A mall is a large enclosed shopping complex comprising of various stores business cinema theaters and restaurants.

1. (I) Correct the underlined word and rewrite the following sentences

Question 1.
When the trade activities are conduct between two or more countries, it is called as internal trade.
Answer:
When the trade activities are conduct between two or more countries, it is called as external trade.

Question 2.
Export trade refers to the purchase of goods and services from foreign country.
Answer:
Import trade refers to the purchase of goods and services from foreign country.

Question 3.
The price charged in departmental stores is comparatively less.
Answer:
The price charged in departmental stores is comparatively high.

Question 4.
Wholesaler requires less capital.
Answer:
Retailer requires less capital.

Question 5.
Tariff rates of various countries affect the internal trade.
Answer:
Tariff rates of various countries affect the external trade.

1. (J) Arrange in proper order

Question 1.
Retailer, Consumer, Producer, Wholesaler.
Answer:
Producer, Wholesaler, Retailer, Consumer.

Question 2.
International Market, Local Market, National Market, State Market.
Answer:
Local Market, State Market, National Market, International Market.

Question 3.
Import Stage, Pre-import Stage, Post-import Stage, Preliminary Stage.
Answer:
Preliminary Stage, Pre-import Stage, Import Stage, Post-import Stage.

2. Explain the following terms /concepts.

Question 1.
Wholesale Trade.
Answer:

When goods are purchased in large quantity from the manufacturers or producers for the purpose of resale to retailers, then it is called as wholesale trade.
The person doing wholesale business is called wholesaler.
Wholesaler acts as a link between manufacturer and retailer.

Question 2.
Retail Trade.
Answer:

When goods are sold in smaller quantities to the final consumers, then it is called as retail trade.
The person doing retail trade is called as retailer.

Question 3.
Foreign Trade.
Answer:

Trade carried on between two or more foreign countries is called foreign trade.
Foreign trade depends as political relations between two countries.
Procedure of foreign trade is complex, difficult and lengthy.
It consists of import trade and export trade.

Question 4.
Letter of Credit.
Answer:

A letter of credit is a guarantee issued by the importers bank that it will honour the payment upto certain amount of export bills to the bank of the exporter.
It is generally demanded by the exporter country.
It gives assurance to exporter country about its payment of goods exported.

Question 5.
One price shop.
Answer:

One price shop are shops where all the articles are sold at one standard and fixed price.
Such shops sells variety of goods of daily use.
Goods at such shops are sold at lower prices.
E.g. of goods sold at such shops are – watches, shampoos, household articles, crockery, etc.

Question 6.
Departmental Store.
Answer:

Departmental store is a large scale retail shop having different departments and sections for different type of goods in the same building.
It sells large variety of goods under one roof.
E.g. Shopper stop.

Question 7.
General store.
Answer:

General store is a retail shop which deals in a wide variety of goods located in a residential locality.
Such store sells goods of daily needs like food grains, soaps, stationery, medicines, oils, biscuits, etc.
They provide home delivery to their customers.
They buy goods from the wholesalers or directly from the manufacturers.

Question 8.
Mall.
Answer:

A mall is a large enclosed shopping complex having various stores, restaurant, cinema hail and other business.
E.g. Phoenix Mall, Inorbit Mall, etc.
It is an American term in which one or move building from a complex.

3. Study the following case/situation and express your opinion.

1. Sonupant purchases his grocery material every month from nearest Nandulal grocery shop and he purchase wheat, rice and pulses in bulk for whole year from Gorhe and Son’s Market yard.

Question 1.
Who is wholesaler?
Answer:
Gorhe and Son’s Market yard.

Question 2.
Who is retailer?
Answer:
Nandulal grocery shop is the retailer.

Question 3.
Any one difference between wholesaler and retailer?
Answer:
Goods are sold to retailer for the purpose of sale by wholesaler.
Goods are sold to customer for consumption by the retailer.

2. Anurag is selling goods to Japan. Kavita is buying goods from USA where as Ganesh is buying raw material from South Africa and after processing it sells finished goods to Malaysia.

Question 1.
Who is exporter?
Answer:
Anurag is the exporter.

Question 2.
Who is importer?
Answer:
Kavita is an importer.

Question 3.
What is Entrepot Trade?
Answer:
Enterpot trade is re-exporting of the goods to another country, with or without processing or re-packaging, e.g. Ganesh buying raw materials from South Africa and processing it and selling it to Malaysia.

4. Distinguish between the following

Question 1.
Wholesaler and Retailer.
Answer:

	Wholesaler	Retailer
(1) Meaning	A person who conducts the wholesale trade is called as wholesaler.	A person who conducts retail trade is called as retailer.
(2) Capital/Finance	Wholesaler needs large amount of capital	Retailer needs small amount of capital.
(3) Link	It is a link between manufacturer and retailer.	It is a link between wholesaler and customers.
(4) Location	It is located in central market of the city.	It is located in various local markets in the city.
(5) Profit margin	Wholesaler works on less profit margin.	Retailer works on more profit margin.
(6) Sales of goods	Goods are sold to retailer for the purpose of resale.	Goods are sold to final customers for their consumption.
(7) Credit Facility	Wholesaler offers credit facility to retailers.	Retailer offers credit facility only to his regular customers.
(8) Prices	It sales goods at lower prices to retailers.	It sales goods at higher prices to customers.
(9) Specialisation	They are specialised in one or few line of goods.	They are specialised in variety of goods.
(10) Warehousing	Requires warehousing facilities as the stock of goods are on large scale.	He does not require separate warehousing due to small scale purchasing.
(11) Home Delivery	Wholesaler offers delivery of goods to retailers at their shops.	Retailer offers home delivery of goods to regular customers.

Question 2.
Itinerant Retailers and Non-Itinerant Retailers (Fixed shop retailers).
Answer:

	Itinerant Retailers	Non-Itinerant Retailers/ Fixed Shop Retailers
(1) Meaning	Itinerant retailers are those retailers who do not have a fixed places for their business.	Fixed shop retailers are those retailers who have a fixed place for their business.
(2) Capital	It requires limited capital.	It requires higher capital investment.
(3) Stock of Goods	They keep limited stock of goods.	They keep large stock of goods.
(4) Quality of Goods	They sell low quality goods.	They sell quality goods.
(5) Variety of Goods	They do not offer variety of goods to customers.	They offer variety of goods to customers.
(6) Prices	Prices of goods is lower due to absence of fixed cost.	Prices of goods is higher than itinerant retailers.
(7) Credit Facility	Credit facility is not given to customers.	Credit facility is given only to regular customers.
(8) Choice of Goods	Customers have no scope for choice of goods.	Customers have more scope for choice of goods.
(9) Door to Door Service	They offer door to door service to their customers.	They do not offer door to door services to their customers.
(10) After Sales Service	They do not provide after sales service to customers.	They provide after sales service to customers.
(11) Types of Goods	It deals in goods of daily need and more perishable nature.	It deals in all types of goods as per the needs of the customers.

Question 3.
General Stores and Specialty Stores.
Answer:

	General Stores	Speciality Stores
(1) Meaning	It is a shop which deals in wide variety of goods.	It is a shop which deals in specialised products of goods.
(2) Location	It is located in the residential areas of the city.	It is located in busy shopping centers of the city.
(3) Prices	Prices of goods are generally low.	Prices of goods are generally high.
(4) Sales	Goods are sold on cash basis as well as on credit basis.	Goods are sold on cash basis only.
(5) Variety of Products	Customers have limited choice of goods.	Customers have maximum choice in one line of goods.
(6) Types of Goods	Goods sold as per customers day to day need.	Specialised goods are sold to customers.
(7) Advertisement	Do not spend much expenses on advertisement.	Spend more expenses on advertisement due to specialisation.

Question 4.
Departmental Stores and Chain Stores.
Answer:

	Departmental Stores	Chain Stores
(1) Meaning	It is a large scale retail store having different departments and sections for different type of goods under a same roof.	It is a retail shop owned and controlled by a single organization located in different parts of the city.
(2) Variety of Goods	It deals with large variety of goods.	It deals with goods of a particular manufacturer only.
(3) Location	It is located at central place of city.	It is located in the residential area of the city.
(4) Capital	it requires large amount of capital.	It requires less amount of capital than Departmental store.
(5) Choice of Goods	It deals in the variety of goods and offers wide choice to customers.	It deals in particular product of goods and offer the wide choice to customers.
(6) Home Delivery	It provides home delivery to customers.	It do not provide home delivery to customers.
(7) Operation	Operations of departmental store are rigid in nature.	Operation of Chain Stores are flexible in nature.
(8) Motto	Motto of departmental store is to attract customers.	Motto of Chain Store is to approach the customers.
(9) Price	It generally charges high price.	It charges comparatively less price.
(10) Cost of operating	Cost of operating departmental store is high.	Cost of operating chain store is low.

Question 5.
Import Trade and Export Trade
Answer:

	Import Trade	Export Trade
(1) Meaning	It refers to buying of goods and services from foreign country.	It refers to sale of goods and services to foreign country.
(2) Person Involved	The person doing import trade is called importer.	The person doing export trade is called exporter.
(3) Example	India buying bananas from Sri Lanka.	India selling mangoes to Sri Lanka.
(4) Effect as Currency	It reduces foreign currency.	It increase foreign currency.
(5) Stages	It includes following stages: (a) Preliminary stage (b) Pre-shipment stage (c) Shipment stage (d) Post-shipment stage	It includes following stage: (a) Preliminary stage (b) Pre-import stage (c) Import stage (d) Post-import stage.

5. Answer in brief.

Question 1.
State any four feature of one price shop.
Answer:
Features of One Price Shop:

Location: One price shops are located in busy centers of the city such as busy trade centers, near railway stations, bus stops and other crowded places.
Variety of Goods: In one price shop, the customers are given wide scope to make selection of goods of their choice. However, the price is uniform but quality of the goods may be different.
Cash Sales : In this shop goods are sold on cash basis only. No credit facility is given to the customers. So there is no risk of bad debts.
Low Priced Articles: In one price shop, the goods are sold to customers for domestic use at lower prices e.g. stationery, cutlery, toys, plastic goods, etc.
Uniform Prices : All the articles of goods are sold in one price shop at the same price. The customers have no scope for bargain in this shop.
Business Policy: In one price shop, the policy of buying and selling of goods of all the shops are the same one.

Question 2.
State any four features of wholesalers to manufacturers.
Answer:
Services of Wholesalers to Manufacturers:

Provide Finance : Wholesaler provides advance to the manufacturers so they can do bulk production. Manufacturer can maintain continuous flow of production.
Collecting Order and Distribution of Goods : Wholesaler collects small orders of goods from the retailers then he collects the goods from manufacturer and distributes it to retailers.
Goods Sale on Large Scale : Wholesaler sells goods to the retailers on large scale on behalf of manufacturers.
Economy in Production : Large scale of production is made possible because production of goods is done continuously by the manufacturer.
Market Information : Wholesaler provides latest information of market condition to manufacturer. On the basis of this information manufacturer changes his production policies and regulates production activities.
Storage : The wholesaler provides storage facilities for the manufacturers product of goods. This helps them to fill up the time gap between production and consumption of goods.

Question 3.
Write any four services of retailers to consumers.
Answer:
1. Variety of Goods : Retailer keep different brands of goods which helps the customer to choose.

2. After Sales Services : After sales services are given for a particular period, which is known as guarantee period for costly and durable goods such as refrigerators, TV. etc. Such services create confidence in minds of consumers for further purchases.

3. Regular Supply of Goods : Retailer stocks the goods sufficiently which are required by the customers and customers purchases the goods whenever needed.

4. Credit Facilities : Retailers provides credit facility to customer which helps him to grow up sales and also it is convenient for the customers to purchase goods.

5. Home Delivery : Retailer provides home delivery service to the customers which helps him to maintains permanent relationship with the customers.

Question 4.
State any two types of small scale fixed shop retailer.
Answer:
Types of Small Scale Shop Retailers:
(i) General Store Retailer : These shops are found in residential areas and offers shopping convenience to the customers. They deal in wide variety of goods so there is scope for choice. They deal in almost all household articles and goods of daily use. They provide credit facilities and have personal relation with their customers. They have fixed place of business so the customers have faith and confidence in dealing with them.

(ii) Second Hand Goods Dealers : As the name indicates these shops deal in used or old goods and articles. They buy goods from individual and not from manufacturers or wholesalers. They repair or overhaul the items. They display them in their shops. Generally people from poor communities prefer to buy from these shops.

Question 5.
Explain preliminary stage of import procedure.
Answer:
Ist Stage : Preliminary Stage:
(1) Registration : In order to carry out import, the importer has to get himself registered with the authorities given below:

Director General Foreign Trade (DGFT) in order to get an Import-Export Certificate Number.
The Income Tax department to obtain Permanent Account Number.
To carry out GST formalities.

(2) Negotiation or Trade enquiry : The importer must collect information from overseas suppliers regarding the goods he wants to import of a product. It contains details like-

Price
Delivery schedule,
Credit period and
Terms and conditions of sale, payment and delivery.

Question 6.
Explain post-shipment stage of export procedure.
Answer:
Post-shipment Stage:

Shipment Advice : On the dispatch of the goods, the exporter sends shipment advice to the importer. Along with it, he also sends the packaging list, commercial invoice and non-negotiable copy of loading.
Presentation of Documents : The necessary documents are presented to the bank for negotiation and realisation of export proceeds.
Realisation of Export incentive : Various incentive like duty drawbacks, refunds of GST if paid, etc. is given to the exporter by the concerned authorities.
Follow up : Exporter has to follow up and find out the buyers reaction on the goods he receives. This concludes the export procedure.

6. Justify the following statements

Question 1.
Wholesaler sells goods in large quantities.
Answer:

Wholesaler buys goods in large quantities from the manufacturer and sells it to the retailers according to their orders.
Thus, wholesaler sells goods in large quantities.

Question 2.
Wholesaler maintains price stability.
Answer:

A wholesaler is both a buyer and a seller.
He is in a position to maintain price stability by balancing supply and demand factors.
By suppling regular goods to the retailer, he solves the risk of shortage and price fluctuation is reduced. Thus, wholesaler maintains price stability.

Question 3.
Retailer provide home delivery of goods to customers.
Answer:

Retailer is a person who buys goods on smaller quantities.
Retailer provides home delivery of goods to customer at nominal cost or free of cost.
This helps them to improve relations with the customers and maintain permanent relations with the customers.
Thus, retailer provide home delivery of goods to customers.

Question 4.
Wholesaler performs various marketing functions.
Answer:

The wholesaler carries various marketing functions like warehousing, advertisings, sales promotion, etc. on behalf of the manufacturers.
They also perform various marketing functions like assembling, warehousing, transporting, grading, packing, advertising and financing.
These functions help the retailers and a manufacturers as they can concentrate on the production and selling activities.
Thus, wholesaler performs various marketing functions.

Question 5.
Authorized dealer do not have other product of other manufacturers.
Answer:

An authorized dealer only deals with one line of products from one manufacturers.
They do not have products of other manufacturers.
They promote the goods by providing window display, advertising and also having attractive schemes for selling the goods.
Thus, authorized dealer do not have other product of other manufacturers.

Question 6.
General stores are generally situated near residential areas.
Answer:

General stores are found in residential areas and offer shopping convenience to the customers.
They deal in wide variety of goods.
They deal with day to day useful goods.
Thus, general stores are generally situated near residential areas.

Question 7.
Departmental store has centralized management system.
Answer:

Departmental stores are generally established by joint stock companies.
Various departments which look like specialized shops are controlled and managed by single management.
The management of departmental store is centralized.
All departmental store is centralized.
All departments are independent but they are centrally owned managed are controlled.
Thus, departmental store has centralized management system.

Question 8.
Packing plays an important role in selling product in the supermarket.
Answer:

Packing plays an important role in selling products in the supermarket.
Goods are duly packed by giving details of quantity, quality, weight, price, contents, date of manufacturing and date of expiry.
This is helpful in handling the goods and also makes the goods more attractive and durable.
Thus, packing plays an important role in selling product in the supermarket.

Question 9.
Chain store sell a limited range of goods.
Answer:

Each branch of a chain store deals in the same commodity or in the same line of products.
This enables the store to give better guidelines to the customers.
Thus, chain store sell a limited range of goods.

Question 10.
There is no scope for bargaining in one price shop.
Answer:

The goods are priced at one price which is fixed.
There is a fixed and uniform price. ,
The price are fixed in advance, so there is no scope for bargaining.
Thus, there is no scope for bargaining in one price shop.

7. Answer the following

Question 1.
What are the main features of Wholesaler?
Answer:
(A) Meaning:

Wholesalers are those who engage themselves in wholesale trade.
It is concerned with the buying of goods in large quantities from producers and reselling the same in small quantities to the retailers.
Wholesaler is a connecting link between producers on one hand and retailers on the other.

(B) Definitions:
Philip Kotler “wholese,lling includes all activities involved in selling goods or services to those who buy for resale or for business use.

The wholesaler generally deals in one or few items of goods.
Wholesaler requires a large amount of capital to be invested in the business.
Wholesaler buys goods from the manufacturer in large scale.
Wholesaler sells the goods to retailers as per their requirement.
Wholesaler has direct contact with manufacturer.
Wholesaler is located in the same area for convenience of the retailer.
Wholesaler acts as a real risk bearer in the process of distribution,
Wholesaler performs various marketing functions.

Question 2.
Explain the services of retailers to wholesalers.
Answer:
Services of Retailers to Wholesalers:

Create demand: Retailers attracts consumers attention towards new products and arrivals in the market through personal salesmanship.
Helps to Distribute : Retailer helps distributing perishable goods which are having short life. He also performs assembling, grading and packing function.
Marketing: Retailers sometimes carry marketing function for the wholesalers i.e. handling transportation, solving shortage problems, advertise goods, etc.
Financing: Wholesaler collects order from customers and take advances from them. Then places order to manufacturer. Retailer collects sales proceeds from customers and passes it to the wholesaler and finally it reaches the manufacturer.
Attracts Consumers : Retailer makes an advertising of goods by displaying in the showroom and thus promote sales. This activity directly helps the wholesaler to sell the product.
Provides Information: Retailer provides information to the wholesaler regarding market and demand of goods by the customers, likes and dislikes of customers, etc.
Connecting Link : Retailer purchases goods from wholesaler and sells it to the customer and thus act as a middleman.
Increase Sales : Retailers help the wholesaler to increase his sales by buying goods from him regularly and at short intervals.

Question 3.
Explain small scale fixed shop retailers.
Answer:
Small Scale Fixed Shop Retailers:
Small scale fixed retailers usually run their business operations on a small scale and deal in limited fine of goods. Such shops are run by their owners with the help of assistants. These shops are situated in residential areas.

Types of Small Scale Shop Retailers:
(i) General Stores : These shops are found in residential areas and offers shopping convenience to the customers. They deal in wide variety of goods so there is scope for choice. They deal in almost all household articles and goods of daily use. They provide credit facilities and have personal relation with their customers. They have fixed place of business so the customers have faith and confidence in dealing with them.

(ii) Second Hand Goods Shops : As the name indicates these shops deal in used or old goods and articles. They buy goods from individual and not from manufacturers or wholesalers. They repair or overhaul the items. They display them in their shops. Generally people from poor communities prefer to buy from these shops.

(iii) Authorised Dealers : These retailers have an authorized dealership of a particular manufacturer’s goods. They sell of consumers requirement goods like T.V. sets, mobile phones, washing machine, etc.

(iv) Speciality Shops : These retailers deal in particular line of goods. They keep a wide variety of items within the same line of products. They offer goods at reasonable prices. They are popular in cities and towns. They provide wide choice to customers. Normally they carry on business on cash basis.

Question 4.
Explain the services of wholesalers.
Answer:
Wholesaler provides services to:
(A) Manufacturers and (B) Retailers
(A) Services of Wholesalers to Manufacturers:

Finance Assistance : Wholesaler provides advance to the manufacturers, so they can do bulk production. Thus, manufacturer can maintain continuous flow of production.
Collecting Order and Distribution of Goods : Wholesaler collects small orders of goods from the retailers then he collects the goods from manufacturer and distributes it to retailers.
Large Purchase : Wholesaler purchases goods on large scale from the manufacturers and sells it to the retailers on behalf of the manufacturers.
Transportation: Wholesaler sometimes carry the transportation function of manufacturer by himself. So cost and time of manufacturer is saved.
Risk Bearing: He takes a risk of buying goods in big quantity and storing them. This may sometimes lead him to loss.
Provide Market Information : Wholesaler provides latest information of market condition to manufacturer. On the basis of this information manufacturer changes his production policies and regulates production activities.
Marketing Function: Wholesaler carries many marketing functions like warehousing, advertising, sales promotion, etc. on behalf of manufacturer.
Storage : The wholesaler provides storage facilities for the products manufacture by the producers. This helps them to fill up the time gap between production and consumption of goods.

(B) Services of Wholesaler to Retailers:

Financial Support: Wholesaler provides credit facility, discount facility and financial assistance to their retailers.
Market Information : Wholesaler provides market information to retailers as he has link with various manufacturers. This information is very useful to retailers for purchase of goods.
Risk Bearing : Retailer holds limited stock of goods and avoids the risk of spoilage of goods. Retailer get protected from increase or decrease of prices of goods and fluctuation of demand.
Stock of Goods : Wholesaler stores the stock of goods for retailers, then retailer supply these goods to customers as per their demands.
Warehousing and Transport: Wholesaler provides the facility of storing of goods as well as transport facility to retailers. They also do home delivery of goods to retailers.
Regular Supply : Wholesaler assures regular supply of goods to the retailers. Risk of shortage of goods and price fluctuation is reduced.
Sales Promotion : Wholesaler provides promotional facility to the retailer. He advertises on behalf of retailers and this helps the retailers to increase the sales.

Question 5.
Explain the different services of retailers.
Answer:
Retailers provides services to:
(A) Customers and
(B) Wholesaler

(A) Services of Retailers to Customers:
1. Variety of Goods : Retailer keep different brands of goods which helps the customer to choose.

3. Regular Supply of Goods : Retailer stocks the goods sufficiently which are required by the customers and customers purchases the goods whenever needed.

4. Credit Facilities : Retailers provides credit facility to customer which helps him to grow up sales and also it is convenient for the customers to purchase goods.

5. Home Delivery : Retailer provides home delivery service to the customers which helps him to maintains permanent relationship with the customers.

6. Information : Retailer is a link between manufacturer and consumer. He provides valuable information from the customers to the manufacturer so that he can modify the product as per the likes and dislikes of the customers. Corpplaints regarding defects in goods, improper functioning of the product, constant break down, etc. are passed on to the manufacturers.

7. Local Convenience : Retailers are generally located near residential areas. Hence, customers can buy the goods whenever they require.

8. Improves Standard of Living : Retailers help customers to increase their standard of living by making available all the latest types of goods produced.

9. Sale of Perishable Goods : Perishable goods like milk, meat, fish, vegetables, etc. require quick distribution. Hence, retailer provides this facility as per customers requirement.

(B) Services of Retailers to Wholesaler:

Create demand: Retailers attracts consumers attention towards new products and arrivals in the market through personal salesmanship.
Helps to Distribute : Retailer helps distributing perishable goods which are having short life. He also performs assembling, grading and packing function.
Marketing: Retailers sometimes carry marketing function for the wholesalers i.e. handling transportation, solving shortage problems, advertise goods, etc.
Financing: Wholesaler collects order from customers and take advances from them. Then places order to manufacturer. Retailer collects sales proceeds from customers and passes it to the wholesaler and finally it reaches the manufacturer.
Attracts Consumers : Retailer makes an advertising of goods by displaying in the showroom and thus promote sales. This activity directly helps the wholesaler to sell the product.

Question 6.
Define import trade. Explain its procedure in detail.
Answer:
Import trade refers to buying of goods and services from another country or countries i.e. a foreign country. The procedure of import trade varies from one country to another country depending upon the policy implemented in that country. Import of goods and services is controlled by the government in most of the countries. India follows the following import procedure, which is divided into four stages.

[A] Ist Stage : Preliminary Stage :
(1) Registration : In order to carry out import, the importer has to get himself registered with the authorities given below:

Director General Foreign Trade (DGFT) in order to get an Import-Export Certificate Number.
The Income Tax department to obtain Permanent Account Number.
To carry out GST formalities.

(2) Negotiation or Trade enquiry : The importer must collect information from overseas suppliers regarding the goods he wants to import of a product. It contains details like-

Price
Delivery schedule,
Credit period and
Terms and conditions of sale, payment and delivery.

[B] IInd Stage : Pre-import Stage :
(i) Import License / Quota Certificate : The Export Import (EXIM) Policy of our country indicates which goods need license for import and which can be imported freely. For goods that require a license, the importer should get a quota certificate and acquire the license. At the time of importing goods, the IEC number is to be mentioned.

(ii) Foreign Exchange Clearance : The exporter has to be paid in foreign exchange by the importer as he resides in a foreign country. For this the Indian currency has to be exchanged for foreign currency. This is done by Exchange Control Department of the Reserve Bank of India (RBI). The importer has to get the foreign exchange sanctioned. For this he applies in a prescribed form to a bank authorised by RBI. After scrutiny of the documents, the necessary foreign exchange is sanctioned.

(iii) Placing an Order : Once the foreign exchange clearance is obtained from RBI the importer places an import order with the exporter for supply of goods. This order contains information on all aspects relating to the goods to be imported. These include quality, quantity, size, grade, price, packing and shipping, ports of shipment, insurance, delivery schedule and modes of payment. This order is called as indent.

(iv) Letter of Credit : If the exporter agrees to a letter of credit, then the importer obtains it from his bank and forwards it to the exporter. It minimises the risk of non-payment for the exporter. At the same time, the importer should arrange for sufficient funds to be paid on delivery of the goods.

(v) Clearing and Forwarding Agent : The importer then appoints C & F agent to look after the various customs formalities and documentation work with respect to import of goods.

(vi) Shipment Advice: Once the goods are loaded on the vessel, the exporter sends a shipment advice to the importer. This document contains details about the goods, invoice number, bill of lading and name of the vessel, the port of export and date of sailing of the vessel. This will help the importer for custom clearance and unloading of goods.

[C] IIIrd Stage : Import Stage:
(1) Receipt of Document : The importer receives the documents sent by the exporter through his bank. They are as follows Bill of Lading, Certificate of Origin, Certificate of Inspection, Packing List, Commercial Invoice, etc.

(ii) Bill of Entry : The clearing and forwarding agents, then prepare a bill of entry. This bill is presented to the dock superintendent for release of goods. The bill of entry has details like number of packages, quality of good and price of goods.

(iii) Delivery Order : For taking delivery of the goods a delivery order is needed. This is obtained from the shipping company by the C & F agent. Once this is received the freight charges are paid and goods are allowed to be unloaded from the ship.

(iv) Customer Clearance : The importer has to present the Bill of Lading, Bill of Entry and Packing List to the customer authority who will certify it and give customs clearance.

[D] IVth stage : Posts Import Stage:
Various duties have to paid in order to take the goods out of port are:

Port Trust Dues : The clearing and forwarding agent has to make the payment of port trust dues.
Customer Duty : Also paid by the clearing and forwarding agent to the custom authorities.
Insurance Premium : Under the FOB (Free of Board) impact, the importer has to make the payment of Insurance Premium.
Payment of Freight: The shipping contract will lay down the amount of freight to be paid and it has to be paid by the importer for getting clearance of goods.
Exporters Payment: The exporter draws a Bill of Exchange on the importer according to the terms and conditions of the contract.
Follow Up : It is the duty of the importer to take a follow up of the goods. If there are any discrepancies in the order or goods it has to be intimated to the exporter. Thus, the procedure of importing goods comes to an end.

Question 7.
What is export trade? Explain its procedure in detail.
Answer:
Trade between two countries is called International Trade. It can be import or export trade. Export trade refers to selling of goods and services to other country or foreign countries.

Export procedure is as follows:
There are four stages which help in simplify the export procedure.
[A] Preliminary Stage : This is the first stage which includes the following steps.
(1) Registration : The exporter gets himself registered with various authorities in order to conduct export trade like-

Director General of Foreign Trade in order to obtain Import Export Certificate Number.
Income Tax Authority to obtain Permanent Account Number.
Export Promotion Council (EPC) and GST authority.

(2) Appointment of Agent: The exporters are supposed to appoint an agent in the foreign country who will look after the order or book order for the exporter.

[B] Pre-shipment Stage:

Receipt of Order : When the exporter receives an order he has to check the details of the order. He also check the restriction of import in the importer’s country.
Letter of Credit: The exporter has to obtain a letter of credit from the importer, which is used to clear the foreign exchanges and other restrictions.
Pre-shipment Finance : The exporter has to meet his working capital needs and for that he has to obtain the pre-shipment finance from his bankers.
Production of goods : If the exporter is a manufacturer, then he has to produce the goods according to the order placed by the importer, otherwise he has get the necessary goods arranged from his suppliers.
Packaging : Packaging plays a very important role in export business. Goods have to be packed as per the requirement of the importer and it should protect the goods in transit, preserve the quality of goods and carry out promotion of goods.
ECGC Cover (Export Credit and Guarantee Corporation) : In order to protect the goods and cover the credit risks, the exporter must obtain an cover of ECGC. The ECGC covers the risk upto 90%, if the importer fails to make the payment.
GST formalities (Goods and Service Tax): All formalities regarding GST must be complied with by the exporter.
Marine Insurance : For exporting the goods, it is mandatory for the exporter to take a marine insurance policy for the goods exported. This insurance is under CIF (Cost,Insurance and freight) contract.
Clearing and Forwarding Agents (C & F agents): The exporter has to appoint a clearing and forwarding agent to carry out the necessary formalities of customs. They are also called custom house agents.

[C] Shipment Stage:
(i) Processing of Document: The exporter prepares the shipping bill and gets all the documents processed at the customs house as required for the export of good.

(ii) Examination of Goods : The clearing and forwarding agents obtain1 a document called ‘carting order’ from the Port Trust Authorities, which allows the exporter to take the goods inside the dock area.

(iii) Loading of Goods : On examination of the goods, the ‘Customs Examiner’ issues order called ‘Let Export’ order. This is given to the clearing and forwarding agent by the ‘Customers Preventative Officer’ (CPO). The goods are then loaded on the ship and the captain of the ship issue a receipt called the ‘Mates Receipt’. Then the C & F agent obtain the Bill of Lading.

[D] Post-shipment Stage:

Shipment Advice : On the dispatch of the goods, the exporter sends shipment advice to the importer. Along with it, he also sends the packaging list, commercial invoice and non-negotiable copy of loading.
Presentation of Documents : The necessary documents are presented to the bank for negotiation and realisation of export proceeds.
Realisation of Export incentive : Various incentive like duty drawbacks, refunds of GST if paid, etc. is given to the exporter by the concerned authorities.
Follow up : Exporter has to follow up and find out the buyers reaction on the goods he receives. This concludes the export procedure.

Maharashtra Board OCM 11th Commerce Solutions Chapter 1 Introduction of Commerce and Business

July 17, 2023

Balbharti Maharashtra State Board Organisation of Commerce and Management 11th Textbook Solutions Chapter 1 Introduction of Commerce and Business Textbook Exercise Questions and Answers.

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 1 Introduction of Commerce and Business

1. (A) Select the correct option and rewrite the sentence

Question 1.
A Lawyer is ……………..
(a) a professional person
(b) a businessman
(c) an employee
Answer:
(a) a professional person

Question 2.
Raw material is converted into finished product by…………….. industry.
(a) genetic
(b) extractive
(c) manufacturing
Answer:
(c) manufacturing

Question 3.
Actual buying and selling of goods is known as ………………..
(a) profession
(b) trade
(c) industry
Answer:
(b) trade

Question 4.
National level code of conduct is prepared for ……………….
(a) professionals
(b) businessmen
(c) employees
Answer:
(a) professionals

Question 5.
Construction of dams is an activity done under ……………….. industry.
(a) primary
(b) secondary
(c) tertiary
Answer:
(b) secondary

Question 6.
The problem of distance is solved by ………………..
(a)bank
(b) transport
(c) warehousing
Answer:
(b) transport

Question 7.
Commerce is a branch of ………………
(a) business
(b) industry
(c) trade
Answer:
(a) business

Question 8.
Return in business is called ………………
(a) fees
(b) salary
(c) profit
Answer:
(c) profit

Question 9.
A business unit depends upon ………………… for selling its output.
(a) industry
(b) society
(c) employees
Answer:
(b) society

Question 10.
Warehousing creates ……………… utility of goods.
(a) place
(b) time
(c) form
Answer:
(b) time

1. (B) Match the pairs

Question 1.

Group A	Group B
(a) Helping disabled person	(1) Social objective
(b) Genetic industry	(2) Foreign trade
(c) Local Currency	(3) Sericulture
(d) Solve social problems	(4) Non-economic activity
(e) Employment	(5) Internal trade
	(6) Mining
	(7) Profit
	(8) Economic activity
	(9) Business
	(10) Home trade

Answer:

Group A	Group B
(a) Helping disabled person	(4) Non-economic activity
(b) Genetic industry	(3) Sericulture
(c) Local Currency	(5) Internal trade
(d) Solve social problems	(1) Social objective
(e) Employment	(8) Economic activity

1. (C) Give one word, phrase or term

Question 1.
A regular activity concerned with production and distribution of goods and services for profits.
Answer:
Business activity

Question 2.
Human activities that are conducted for earning money.
Answer:
Economic activities

Question 3.
Buying and selling of goods against money or money’s worth.
Answer:
Trade

Question 4.
Activities that remove all the difficulties in trade.
Answer:
Auxiliaries to trade

Question 5.
The type of industries that creates immovable wealth.
Answer:
Construction industry

Question 6.
Name the business activity which is concerned with production of goods and services.
Answer:
Industry

Question 7.
Name the business activity which is concerned with distribution of goods and services.
Answer:
Commerce

Question 8.
The activity which provides mobility to men and material.
Answer:
Transport

Question 9.
An aid to trade which creates time utility.
Answer:
Warehousing

Question 10.
An occupation by which a person agrees to provide expert services for fees.
Answer:
Profession

1. (D) State True or False

Question 1.
Business is an economic activity.
Answer:
True

Question 2.
Every profession is practiced for earning money.
Answer:
True

Question 3.
Primary industries are concerned with nature.
Answer:
True

Question 4.
Trade includes commerce.
Answer:
False

Question 5.
Warehousing removes difficulty of time.
Answer:
True

Question 6.
Trade includes buying and selling of goods and services.
Answer:
True

Question 7.
Profit leads to increase in overall efficiency of the organisation.
Answer:
True

Question 8.
Plant nursery is an example of extractive industry.
Answer:
False

Question 9.
Industry creates form utility.
Answer:
True

Question 10.
Retailer is the link between manufacturer and wholesaler.
Answer:
False

1. (E) Find the odd one

Question 1.
Agriculture industry, Extractive industry, Genetic industry, Manufacturing industry.
Answer:
Manufacturing industry

Question 2.
Import trade, Export trade, Wholesale trade, Entrepot trade.
Answer:
Wholesale trade

Question 3.
Banking, Insurance, Transport, Manufacturing.
Answer:
Manufacturing

Question 4.
Tea, Milk, Coffee, Machinery.
Answer:
Machinery

1. (F) Complete the sentences

Question 1.
Economic activities are those activities which are conducted to ………………
Answer:
earn money

Question 2.
……………… Includes marketing of goods and services.
Answer:
commerce

Question 3.
Business is an ……………….. activity.
Answer:
economic

Question 4.
The basic purpose to is to ………………… earn profit.
Answer:
business

Question 5.
Professional charges …………………… in exchange of expert services.
Answer:
fees

Question 6.
……………… is the person who offers the work.
Answer:
employer

Question 7.
………………. is considered as a reward for assuming several business risks.
Answer:
profit

Question 8.
Industry creates ………………… utility.
Answer:
form

Question 9.
In ………………. trade, goods, are purchased and sold in bulk.
Answer:
wholesale

Question 10.
……………….. is the link between wholesaler arid customer.
Answer:
Retailer

1. (G) Select the correct option

Question 1.
(Export trade, Foreign trade, Wholesaler, Import Trade, Economic objective of business)

Group A	Group B
(i) Trade between different countries	—————
(ii) Purchase of goods and services from another country	————–
(iii) ————–	Selling of goods and services to foreign customer
(iv) ————–	Link between producer and retailer
(v) Spending money on Research and Development for development of business	——————–

Answer:

Group A	Group B
(i) Trade between different countries	Foreign Trade
(ii) Purchase of goods and services from another country	Import Trade
(iii) Export Trade	Selling of goods and services to foreign customer
(iv) Wholesaler	Link between producer and retailer
(v) Spending money on Research and Development for development of business	Economic objective of business.

1. (H) Answer in one sentence

Question 1.
What is an economic activity?
Answer:
Activity done for earning money is an economic activity.

Question 2.
What is a non-economic activity?
Answer:
Activities are done to satisfy human wants other than monetary demands.

Question 3.
What do you mean by wholesale trade?
Answer:
Trade conducted on large scale is wholesale trade.

Question 4.
What is the meaning of retail trade?
Answer:
Trade conducted on small scale is retail trade.

Question 5.
What do you mean by import trade?
Answer:
When the goods or services are bought from other countries, to home country it is called import trade.

Question 6.
What do you mean by export trade?
Answer:
When the goods or services are sold to other countries, form home country it is called export trade.

Question 7.
What is an entrepot trade?
Answer:
Goods brought in the country from one country and sold to some other country, it is called entrepot trade.

Question 8.
What is meant by auxiliaries to trade?
Answer:
Auxiliaries to trade are the services which help the smooth conduct of trade.

Question 9.
What is trade?
Answer:
Buying and selling of goods and services is called trade.

Question 10.
What do you mean by commerce?
Answer:
Commerce is a part of business activity which is concerned with the distribution of goods and services.

Question 11.
What is primary industry?
Answer:
Industry which depends upon nature for production is called primary industry.

Question 12.
What is secondary industry?
Answer:
Industry which depends upon primary industry for production is called secondary industry.

Question 13.
What do you mean by genetic industry?
Answer:
Genetic industry means the industry engaged in reproduction and multiplication of plants.

1. (I) Correct the underlined word and rewrite the following sentences

Question 1.
Profession can be transferred to other person.
Answer:
Profession cannot be transferred to other person.

Question 2.
Capital is required for employment.
Answer:
Capital is required for business.

Question 3.
Industry creates place utility.
Answer:
Transport creates place utility.

Question 4.
Commerce represents supply side of market.
Answer:
Industry represents supply side of market.

Question 5.
The basic purpose of business is to provide services.
Answer:
The basic purpose of business is to make profit.

Question 6.
Business is non-economic activity.
Answer:
Business is an economic activity.

Question 7.
Barter exchange is an exchange with money.
Answer:
Barter exchange is an exchange with goods.

2. Explain the following terms/concepts

Question 1.
Business.
Answer:

Business is one of the economic activities.
Business is done to earn profit.
It is done by individuals or organisations.
Business includes all those activities done for production, processing and distribution of goods.
Business has a risk involved.

Question 2.
Profession.
Answer:

Profession is a part of economic activity.
A person who practices profession is called a professional.
A professional has to acquire particular knowledge under formal education system.
He practices and obtain skill in his profession. E.g. Doctors, Lawyers, Chartered Accountants, Architects etc.
A professional gets fees for his services.

Question 3.
Employment.
Answer:

Employment is an economic activity.
A person works for others to earn his livelihood.
A person who works is called an employee and a person who offers work is an employer.
Employee gets remuneration after certain period which is called salary or wages.

Question 4.
Home Trade.
Answer:

Trade means buying and selling of goods and services.
Trade conducted within the boundaries of the country i.e. buying and selling of goods and services within the country is called home trade or internal trade.
Home trade is divided into two parts; Wholesale trade and retail trade.

Question 5.
Foreign Trade.
Answer:

Buying and selling of goods and services is called trade.
Trade can be conducted within the country or with other countries.
Trade conducted with other countries is called foreign or external trade.
Foreign trade is divided into three parts; they are import, export and entrepot trade.

Question 6.
Economic Activity.
Answer:

Human beings are engaged in various activities throughout the day.
Some activities are done to earn money or livelihood.
These activities are called economic activities.
Economic activities are of three types; they are business, employment and profession.
Because of the economic activities a person can earn for himself and his family.
These activities are required for the survival of a human being.

Question 7.
Non-economic Activity.
Answer:
(i) Human activities are divided into two types – economic and non-economic activities.

(ii) Non-economic activities are those which are conducted by a person to satisfy his non monetary requirements. They include personal, social, cultural, religious activities, etc. E.g. singing, playing games, gardening etc.

3. Study the following case/situation and express your opinion.

1. Jaysukh oil mills produce refined oil. The entire production is purchased by Rupesh Oil Depot, who in turn sells it to various retailers. Mrs. Prachi purchased 2kg oil from Balaji Groceries.

Question 1.
Wholesaler
Answer:
Wholesaler – Rupesh Oil Depot

Question 2.
Retailer
Answer:
Retailer – Balaji Groceries

Question 3.
Consumer
Answer:
Consumer – Mrs. Prachi

2. Mr. Pranav is a tin manufacturer in India. Mr. Jack of England sells goods to M/s Frank Corporation in North America and Mr. Williams of USA buys various goods from Brazil.

Question 1.
Who is the importer?
Answer:
Importer – M/s Frank Corporation in North America, Mr. Williams in USA

Question 2.
Who is the manufacturer?
Answer:
Manufacturer – Mr. Pranav

Question 3.
Who is the exporter?
Answer:
Exporter – Mr. Jack

4. Distinguish between the following

Question 1.
Industry and Commerce.
Answer:

	Industry	Commerce
(1) Meaning	Industry is engaged in the production of goods and services.	Commerce looks after the distribution of goods and services.
(2) Location	Industries are located in the industrial belts which are usually away from residential areas.	Infact there is no particular location of commerce. It gives its services at any location.
(3) Utility	Industries create form utility.	Commerce creates place, time and possession utility.
(4) Resources	Industries require mainly machinery, materials and man power for production	Commerce mainly works with the help of man power.
(5) Capital	Industries require huge capital. It mainly depends upon the size of industry.	Activities of commerce comparatively require less capital.
(6) Interdependence	Industries depend on commerce for the supply of raw materials and carrying finished goods to markets.	Commerce cannot function unless supported by the goods provided by the industries.
(7) Conducted by	Manufacturers	Traders or mercantile agents
(8) Classification	Industries are divided into Primary, secondary and tertiary types.	Commerce is divided into Trade and auxiliaries to trade.
(9) Market Force	Industries represent supply side of the market.	Commerce represents demand side of markets.
(10) Status	It has primary importance.	It has secondary importance.

Question 2.
Business and Commerce.
Answer:

	Business	Commerce
(1) Meaning	It is an economic activity engaged in production and distribution of goods and services.	Commerce takes care of distribution of goods and services.
(2) Concept	Business is a wider term than business.	Commerce is a narrower term than business.
(3) Part of	Business is a part of economic activity.	Commerce is a part of business.
(4) Skill	Industries require more of technical, managerial and marketing skills.	Commerce mainly require managerial and marketing skills.
(5) Classification	Business is classified into two parts industry and commerce.	Commerce is divided into two parts trade and auxiliaries to trade.
(6) Capital	It requires large capital.	It requires limited capital.
(7) Investment	Heavy investment is required.	Less investment is required.

Question 3.
Business and Profession.
Answer:

	Business	Profession
(1) Meaning	It is an economic activity where goods and services are produced and distributed.	Profession is also an economic activity under which a person uses his knowledge and provide expect services.
(2) Nature	A person invests his capital and starts business. He may or may not have proper skill or knowledge.	A professional has to take formal training before starting his profession.
(3) Special education	Business does not require special formal education though it is advisable.	Professional is required to take formal education to practice a profession.
(4) Returns	A businessman gets profit.	A professional gets fees from clients.
(5) Registration	A businessman need not register with a particular body or association.	A professional has to register under the respective body or association eg. A Lawyer has to register himself with the Bar Council of India before carrying out his profession.
(6) Capital requirement	More capital is required to run a business. Capital is brought by a businessman.	Comparatively less capital is required to carry out a profession. The required capital is brought by a professional.
(7) Code of conduct	There is no specific code of conduct for the businessmen. They are the owners so they may form the code of conduct for their organisation.	There is specific code of conduct for a professional. This code is decided by the respective association.
(8) Examples	Manufacturer of textiles, retailer, courier service provider, etc.	Doctor, Lawyer, Architect, Chartered Accountant, etc.

Question 4.
Employment and Profession.
Answer:

	Employment	Profession
(1) Meaning	Business is an economic activity, conducted to earn remuneration.	Profession is also an economic activity under which a person uses his knowledge and provide services.
(2) Nature	A person works for other person or organisation to get his livelihood.	A professional has to take formal training before starting his profession.
(3) Special education	It depends on the nature of employment. Some type of employment requires a specific type of education. Whereas in some cases any education is acceptable.	Professional is required to take formal education to practice a profession.
(4) Returns	An employee gets remuneration in the form of wages or salary.	A professional gets fees from clients.
(5) Registration	An employee does not require registering himself with specific associations.	A professional has to register under the respective body or association eg. A Lawyer has to register himself with the Bar Council of India before carrying out his profession.
(6) Capital requirement	Employee need not invest money in the business. He does not require capital.	Comparatively less capital is required to carry out a profession. The required capital is brought by a professional.
(7) Code of conduct	Employee has to follow the rules and regulations of his organisation.	There is specific code of conduct for a professional. This code is decided by the respective association.
(8) Decisionmaking	Employee has no right to take decisions in the organisations unless he is asked.	Professional can take his own decisions as he is the owner.
(9) Tenure	Every employment has a specific tenure. It means the maximum period for which an employee can remain in the employment is fixed. The employee has to retire after that period.	Professional can work throughout his life also.

5. Answer in brief

Question 1.
State any four features of profession.
Answer:
Profession is a part of economic activity. A professional acquires formal knowledge to practice profession. Following are the features of profession:
(i) Qualification : A particular qualification is required to practice a profession. A professional needs to acquire knowledge through formal education. Unless he gets a formal knowledge and training, he cannot practice profession, e.g. A Doctor cannot prescribe medicines without having a degree in medicine.

(ii) R eturns: A professional charges fees for the services rendered to the clients, The fees charged by a professional depends on different factors like his knowledge, experience, skill etc. His income is not fixed.

(iii) Capital : Professional requires capital to set up or run his practice. The amount of capital depends upon the nature of practice a professional wants to do.

(iv) Work Nature : A professional who is expert in a particular field, provides services in his field of expertise, eg. an architect will provide his services in the field of building houses.

Beside the above features, there are other features like-

Aim
Registration and Membership
N on transferability

Question 2.
State any two types of industries.
Answer:
Industries is a part of business. They look after the production of goods and services. Industries creates form utility. There are various types of industries. They can be broadly divided into three categories.
(i) Primary Industry :
These are the industries which depend on nature for their production. They include agriculture, mining, fishing, wood cutting etc. Primary industries are further divided into three types; agriculture industry, extractive industry and genetic industry.

(ii) Secondary Industry :
These are the industries which depend upon primary industries for their production. They mainly categorized as manufacturing industries and construction industries. Secondary industries use the raw materials of primary industries and convert them into finished products which is then sold in the market.

Question 3.
Give two types of Foreign Trade.
Answer:
Trade with other countries is called foreign trade. Foreign trade is of three types.

Import trade : When the goods or services are purchased from other countries it is called import trade,
Export trade : When the goods are sold to other countries, it is called export trade.
Entrepot trade : It is also called re-exporting. In this case goods are first brought from one country and again resale to other country, e.g. A buyer from India imports goods from France and exports them to Australia.

Question 4.
State any four auxiliaries to trade.
Answer:
Auxiliaries to trade are all those services which help in the smooth conduct of trade. There are different types of services which help trade. They are explained below.
(i) Warehousing: Warehousing helps to store the goods safely. There is a gap between the time of production and the time of consumption. Warehousing fills up this gap by conveniently storing the goods till they are demanded in the market. Warehousing, thus, creates time utility. Care is taken that the goods do not get damaged in the warehouse.

(ii) Advertising : Advertising is an important tool in the hands of a businessman to communicate to potential buyers. In today’s world producer/seller is situated at one place and consumers are spread over wider area. Through advertisement, producer or seller can contact the consumers. There are different mediums of advertisement, e.g. T.V., Radio, Hoardings, Print etc.

(iii) Insurance : Business is exposed to many risks. A businessman has to be careful about the risks. Some risks can be avoided, some can be minimized and some can be transferred. Insurance is an auxiliary which helps the businessman to handle the risk. Businessman can transfer some of the risks to insurance company. Insurance company, by accepting premium from the businessman, assures him to pay compensation in case of loss.

(iv) Transport: Transport is an important auxiliary to trade. Transport carries raw materials and people to place of production and brings finished goods to markets. Thus transport creates place utility. Transport can be conducted by different modes e.g. rail, road, water or air.

Beside the above features, there are other features like-

Banking
Mercantile Agents
Communication

Question 5.
State any four features of employment.
Answer:
Employment is an economic activity. A person works for others to earn his livelihood.
Following are the features of employment:
(i) Aim : The main aim of person accepting employment is to earn money.

(ii) Qualification : Qualifications are required depending upon the nature of employment. Some types of work require educational qualifications, some require some specific skill, some require both. But qualifications are necessary for employment.

(iii) Monetary returns : The person who accepts employments and work for the employer gets remuneration after specific intervals. Remuneration can be wages or salary. Usually wages are paid daily or weekly and salaries are paid monthly.

(iv) Capital: Capital is not required for the person who is in employment.

Question 6.
Write any four objectives of business.
Answer:
Business is done with some objectives. These can be divided as (a) Economic objectives and (b) Social objectives. Following are the Economic Objectives:

Earning Profit: Business is done with the main objective of earning profit. Profit is always a motivating factor for a businessman.
Searching New Customers : To maximize profit a business organisation has to search new customers. It is required to expand the business. It is also important to retain the old customers.
Best possible use of Resources : Making best use of available resources is the objective of business. This ensures avoiding of wastage and saving valuable money. This ultimately leads to increase in profit.
Innovation : One of the important objectives of business is to make innovations for the development of business. Therefore research and development becomes an important part of the working of any business organisation.

Question 7.
State any four features of business.
Answer:
Business is an economic activity which is done to earn profit.
Following are the features of business:
(i) An economic activity : Business is an economic activity. Because it is done to earn profit for livelihood.

(ii) Two parties : Business is mainly concerned with the production and distribution of goods and services. It means business transactions involve exchange and in any exchange two parties are involved. Thus business involves two parties.

(iii) Profit motive: Every business is done with a motive of making profit. Therefore all the activities of business revolve around profit. A businessman is not satisfied with the profit he gets, but he tries to maximize the profit either by increasing the production or by reducing the cost. He tries to find out new customers and new markets.

(iv) Production of Goods and Services : Business includes the production of goods and services. Raw materials are used and the finished goods are produced.

Question 8.
State any two types of primary industry.
Answer:
Primary industries are those industries which depend on nature for production. Primary industries are of three types which are given below.

Agriculture industry: Agriculture includes cultivation of land. It is an important primary sector industry.
Extractive industry : Extractive industry draws out the produce from natural resources like land, river or sea etc. The products extracted are usually in raw form they are converted into finished products and sold in the market.
Genetic industry : Genetic industries are engaged in the reproduction and multiplication of plants and animals e.g. poultry, plant nursery, etc.

6. Justify the following statements.

Question 1.
Retailer is in direct contact with ultimate consumers.
Answer:

Retailer in a trader operating in the chain of distribution.
He deals with the ultimate consumer.
Retailer is the last link in the chain of distribution.
Goods flow from the producer to consumer in the following way:
Producer → Wholesaler → Retailer → Consumer
Thus, retailer comes into direct contact with the ultimate consumer.

Question 2.
Commerce is a wider term than trade.
Answer:

Commerce is a part of business. Business is divided into two parts; industry and commerce,
Commerce is concerned with the distribution of goods.
Commerce is divided into two parts. One is trade and the other is auxiliaries to trade.
Trade is concerned with buying and selling of goods and services.
Trade is’a part of commerce.
Along with trade, commerce also includes auxiliaries or services to trade.
These services help in the smooth running of trade.
Thus, it clearly indicates that commerce is a wider term than trade.

Question 3.
Risk is inevitable in business activities.
Answer:

Every business is exposed to various risks. A businessman cannot avoid risks in the business.
These risks include goods remaining unsold due to changes in fashions, risks of losses due to fire or theft, damage to goods during transportation or warehousing, risks of bad debts, etc.
A businessman has to be prepared to handle these risks.
These risks cannot be totally eliminated. But they can be minimized or transferred to insurance company.
A businessman must be ready for the risks as they are inevitable.
Thus, risk is inevitable in business activities.

Question 4.
Combination of import-export trade is entrepot trade.
Answer:

Import, export and entrepot trade are the parts of foreign trade.
When the goods are purchased from other countries it is called import trade.
When the goods are sold to other countries it is called export trade.
A combination of import and export trade is called entrepot trade.
In case of entrepot trade goods are first purchased from one country i.e. imported and then sold to or exported to other country.
E.g. Indian trader purchased some computers from Japan and sold them to Sri Lanka will be included in entrepot trade.
Thus, entrepot trade is a combination of import and export trade.

Question 5.
Transport creates place utility.
Answer:

Transport is one of the important auxiliaries to trade.
Transport brings raw materials and people to the place of production and carries finished products to markets.
There are different modes of transport through it carries goods and people from one place to another. They are rail, road, water and air.
If goods are produced at one place, it may not have demand at that place only.
Transport carries them to other place where they are demanded and create place utility.
Thus, we can say that transport creates place utility.

Question 6.
Industrial activities take place before commerce starts its role.
Answer:

Industry and commerce are the two parts of business.
Both the parts are complimentary to each other.
One cannot function without other.
Industries look after the production of goods and services and commerce takes care of the distribution of the goods produced.
Obviously production of goods comes first and it is followed by distribution or selling of goods.
Thus, industrial activities take place before commerce starts its role.

Question 7.
Available resources should be used to its maximum.
Answer:

Resources are always scarce. The demand for resources is more and the availability of resources is less.
Similarly, resources belong to the society but the businesses use them for production and provide the finished products to the society.
So it is necessary to use the resources carefully.
Wastage of resources should be avoided.
Wherever possible, recycling and reusing the resources should be considered by the businesses.
Thus, whatever resources available should be used to its maximum.

Question 8.
Wholesalers is a link between retailer and manufacturer.
Answer:

Wholesaler and retailer are the important intermediaries in trade.
They help to bring the goods from the manufacturer to ultimate consumer.
Wholesaler is a trader who deals in large quantities i.e. the wholesaler purchases the goods in bulk from the manufacturer and sells it to retailer in small quantities.
Both the wholesalers and retailers are the part of chain of distribution, which is shown below.
Producer → Wholesaler → Retailer → Consumer
Thus, it is true that wholesaler is the link between the manufacturer and retailer.

Question 9.
Business is a part of economic activities.
Answer:

Economic activities are those activities which are done with the intention of making money.
A person has to earn money for his livelihood.
However all economic activities are not same. They can be conducted mainly in three different ways.
(a) Employment (b) Profession and (c) Business.
Business is conducted to earn profit.
businessman invests his own capital, takes decisions and carries out business activities.
He also takes risk for carrying business activities.
Thus, a businessman is responsible for the business activities. The profit earned is enjoyed by the businessman. So business is a part of economic activity.

Question 10.
Changing fashions is one of the important causes of business risk.
Answer:

Business is exposed to various kinds of risk.
The risks can be due to the loss of goods by fire or theft, bad debts, changes in government policies, goods remaining unsold etc.
Goods remaining unsold due to changes in fashion, is also an important type of risk in the business.
Due to this risk businessman can suffer loss.
However this risk is there in case of some goods only e.g. clothes, footwear, jewellery, accessories, sun glasses etc.
This risk is not there in case of food grains or vegetables as they are essentials and their demand remains somewhat constant.
Thus, changes in fashion is an important risk in the business.

7. Answer the following questions

Question 1.
What do you mean by commerce ?
Answer:
Commerce involves distribution of goods and services. Commerce is a part of business. Business is divided into two parts. They are (i) industry and (ii) commerce. Industries are concerned with the distribution of goods and commerce does the distribution of those goods in the market. Commerce helps in bringing the goods from the manufacturer to consumer by making uninterrupted flow of goods. Commerce includes main two activities – (i) Trade and (ii) Auxiliaries to trade.
(i) Trade means buying and selling of goods and services. Any buying and selling is included in trade. It can be industrial goods, consumer goods or buying and selling of services, etc.

(ii) Auxiliaries of trade are all those supportive services which help in the smooth conduct of trade. They include transport, banking, insurance, advertising, etc.

Question 2.
What is the meaning of export trade?
Answer:
Trade is divided into two parts, (i) Home trade and (ii) Foreign trade. Home trade is a trade conducted within the country where as foreign trade is trade with other countries. When the goods are purchased from and sold to other countries it is included in foreign trade.

Foreign trade is divided into three parts, (i) Import trade, (ii) Export trade and (iii) Entrepot trade. In case of export trade goods are sold to other countries e.g. A garment trader from India selling his garments to England will be included in export trade. Export trade plays an important role in the economy of any country, It helps a country to get valuable foreign exchange for the country, It also helps to enhance the reputation of the country in the foreign market.

Question 3.
State the role of auxiliaries to trade in trading activities.
Answer:
Role of auxiliaries to trade:

Auxiliaries to trade are all the services which help trade.
Trade means buying and selling of goods. However buying and selling is not possible unless it is supported by different services which will make the trade easy.
There are different auxiliaries or services which support buying and selling. They are : transport, warehousing, banking, insurance, advertising, etc.
These services help the trader as well as the buyers. They remove the hindrances in the process of distribution and ensure smooth flow of goods from the manufacturer to consumer.
In modern world, the manufacturers and’ consumers stay away from each other. It becomes very difficult for the manufacturer to contact the buyers and sell goods directly to them.
In this regard auxiliaries to trade help in establishing a link between the manufacturer or seller to consumer.

Question 4.
What are the different types of secondary industries?
Answer:
Secondary industries are those which depend upon primary industry for production. Secondary industries take raw materials from primary industries and carry out their production.
Secondary industries are of two types:
(i) Manufacturing industry : These industries are engaged in the manufacturing of various types of goods. They may be consumer goods or industrial goods. These industries convert raw materials into finished products. They make use of men, material and money for production. The examples of these industries include chemical industry, electronics industry, textile industry, paper industry.

(ii) Construction industry : These types of secondary industries are engaged in the construction activities such as dams, bridges, buildings, roads, tunnels etc. In case of other industries the goods are produced at one place but sold at different places. However in case of construction industry the construction takes place at one place only. Thus this industry creates immovable property.

Question 5.
State the types of human activities.
Answer:
There are various activities conducted by a person in a day. These activities can be divided into two parts.
Human Activities:
Economic activities
Non-economic activities

1. Economic activities : These activities are conducted to earn money. A human being requires money for livelihood. Economic activities are divided into three types.

Business
Profession
Employment

Business is done to earn profit. Profession is done by acquiring special knowledge to provide services to people. A professional gets fees for the services rendered. Whereas when a person works for other person or” organisation to earn wage or salary, is called employment.

2. Non-economic activities : Non-economic activities are conducted by the person to satisfy their needs other than financial needs. These activities include cultural, social, religious, sports, health related etc.

Question 6.
Describe the scope of internal trade.
Answer:
Internal trade is a part of trade. It includes buying and selling of goods within the country. Internal trade is further divided into two parts.
(i) Wholesale Trade : Wholesale trade is a trade conducted on large scale. A wholesaler purchases goods in bulk from the manufacturer and sells them to the retailers. Wholesaler forms a large network through which he helps to distribute goods at distant places. Wholesaler is an expert trader in his field. He acts as a link between the manufacturer and the retailer.

(ii) Retail Trade : Retail trade is a trade conducted on small scale. He purchases goods from the wholesalers and sells them to the consumers in required quantities. Retailer comes into direct contact with the consumers. A retailer caters to the needs of consumers by providing them various goods in whatever quantities they want.

Question 7.
How does banking and insurance help trading?
Answer:
Commerce includes trade and auxiliaries to trade. Trade means buying and selling of goods and services. But buying and selling is not possible unless it is supported by the auxiliaries of trade. Thus auxiliaries to trade are the services which help trade. Banking and insurance are two important auxiliaries to trade.
(i) Banking : Banking services help traders in many ways. Branches of banks are spread over wider areas. Traders can open an account in bank and take the advantage of various banking services. Banks offer loans, overdrafts, transfer of money, letter of credit, foreign exchange facilities to the traders.

(ii) Insurance : There are various kinds of risks in the business. A businessman can transfer some risks on the insurance company. Goods can be destroyed by fire, theft or damaged in transportation. The businessman can transfer these risks on the insurance company. He has to pay premium to the insurance company and make a contract with the insurance company. In case of loss, insurance company pays compensation to the trader.

(iii) Thus, the risks cannot be avoided completely but can be minimized by taking insurance policy.

8. Answer the following in details.

Question 1.
Give comparative analysis of business, profession and employment.
Answer:
Business, profession and employment are the part of economic activities. These activities are conducted to earn money. However the nature of all the three activities is different. A comparative analysis of all the three activities is given below:
Maharashtra Board OCM 11th Commerce Solutions Chapter 1 Introduction of Commerce and Business 1

Question 2.
Define business. Explain its features.
Answer:
Business is a part of economic activities. Business is done to earn profit. It is done by an individual or a group of individuals. Business can be defined in many ways by thinkers. Some of them are given below:
Prof. Haney : “ Business activities are all those activities which are directed towards the production and processing of wealth”.
Prof. Pride, Huges and Kapoor: “The organised efforts of individuals to produce and sell for a profit, the goods and services that satisfy society’s needs”.

The term business also refers to the organised efforts and activities of individuals to produce and sell goods and services for profit.

Following are the features of business:
1. Continuity in Dealings : Continuity is most important in case of any business. Business requires regularity. Business activity should be carried on for a Longer time. A transaction carried on only for one time or few times cannot be called as a business activity, e.g. Sale of own old motor car cannot be considered as a business activity.

2. Uncertain Returns : The returns in any business are not fixed. They are uncertain and fluctuating. The profit of business is not fixed or guaranteed.

3. Risk Element: Business is exposed to many risks. These risks arise out of some unforeseen circumstances or wrong decisions or misjudgements of the businessman. A businessman cannot avoid the risks but he can minimize the risks by taking proper steps. Some risks can be transferred to insurance company.

4. Satisfaction : Customer is an integral part of any business activity. Without a customer there cannot be buying or selling. Businesses need customers to fulfil their monetary objective and therefore customer satisfaction is the most important part of any business activity. Modern thinking on business gives top most priority to customer satisfaction. If the customers are satisfied, there will be more sale and profit to the business.

5. Two Parties : Business includes production and distribution. Every business transaction involves exchange. For carrying out any exchange two parties are required. These two parties are the seller and the buyer. There is an oral or written agreement between the buyer and the seller to buy or sell the goods or services.

6. Economic Activity : Business is an economic activity. The intention of carrying out any business is to earn money. Business is not conducted for satisfying sentimental needs of a person. Business activity is purely monetary.

7. Profit Motive : Business is basically conducted to earn profit. Every businessman tries to get maximum profit out of the business. Profit is required for the businessman to earn the livelihood and also for the survival of the business. It is also required for the expansion of business. Thus profit plays a vital role in business.

8. Production of Goods and Services :: Business has two aspects. One is production of goods and services and distribution of them. Goods are produced by the industries. Providing of services also form an important part of business activities.

9. Exchange of Goods and Services : Goods and services are exchanged for money or money’s worth. It is a business activity as there is a seller and a buyer and they exchange goods or services for a value. In modern days almost all the transactions are carried out with money as a medium of exchange. In case of very few transactions, goods are exchanged for goods.

10. Dealings in Goods and Services : In case of business, goods or services are bought and sold. There cannot be business without the exchange of goods or services. Goods can be consumer goods or industrial goods. Services are of different types like banking, insurance etc. Services are also exchanged for a value.

Question 3.
Describe various objectives of a business.
Answer:
Business is an economic activity which includes production and distribution of goods and services. Business is done to get profit. Even though business is done with the intention of making profit, that is not the only objective of the business. There are other objectives of business.
The objectives of business are explained below:

A. Economic Objectives:
(i) Searching of New Customers : Business needs expansion. So that it can earn more profit. Therefore searching new customers or new markets becomes an important economic objective of business.

(ii) Earning Profit: Making profit always becomes the main economic objective of any business.

(iii) Best possible Use of Resources : It is the responsibility of any businessman to make proper use of available resources. It is because resources are limited and the demand for resources is more. When a businessman uses resources carefully and economically, he can save his money. It will ultimately result in the increase of profit.

(iv) Innovation : Business needs change according to current situation. New products, new processes should be found out to remain in the competition in the market. Then only a business can survive and continue making profit. Therefore making innovations is one of the economic objectives of the business.

(B) Social Objectives:
Following are the social objectives:
(i) Contributing to the Welfare of the Society : Social objectives incliude the working for the betterment of the society in general. It is the responsibility of the business to work for the welfare of the society by carrying out social welfare programmes.

(ii) Avoiding Unfair Trade Practices : Unfair trade practices are those practices which are not advisable in business. They include black marketing, hoarding, adulteration, wrong representation, false advertisements etc. Unfair trade practices make adverse effect on the business. Therefore one of the important social objective of business is to keep itself away from such practices.

(iii) Supplying Quality Products : It is the social objective of business, to provide quality products to the customers. Customer is the important part of any business. Without customers, a business cannot function. Therefore it is the responsibility of the business to provide safe, non ad ulterated, durable products to the customers.

(iv) Help to Solve Social Problems : In modern world many social problems are occurring in the society. Business is a part of the society and therefore one of the social objectives of business is to help solving the social problems.

(v) Employment Generation : A business can provide employment to many people. It becomes the social objective of the business to generate more and more employment. This will help to reduce the problem of poverty and unemployment.

(vi) Welfare of Employees : Employees is an integral part of any organisation. Business cannot function without the employees. It is therefore the responsibility of the businessman to provide better working conditions to employees. Better working conditions help to improve the productivity of the employees.

Question 4.
Explain the importance of profit in business.
Answer:
Business is such activity which involves earning profit. Any business organisation, whether small or large, production unit or service industry; works for getting maximum profit. Profit plays a very important role in business.
The role of profit is explained below:
(i) Growth and Expansion : Profit acts as an internal source of raising funds. Business can keep aside excess profit and use it for its own expansion or diversification purpose. Expansion results into more profit, which can be used for other purposes.

(ii) Research and Development : When a business gets good profits it can spend money on research and development. Research and development helps to find out the processes that help to reduce the cost of production and provide better quality products. This helps to increase the production ultimately resulting in increase in profit.

(iii) Returns to lnvestors: The owner of business needs returns on the money he has invested in the business. These returns are in the form of profit. If there are good profits, the businessman gets fair returns on his investment.

(iv) Means of Livelihood : A biusiness is mainly carried on for getting the livelihood. A result of business is profit. Thus the main role of profit is to help the businessman earn his living.

(v) Increasing Efficiency : Profit acts as a motivating factor. A businessman who is working hard for the business and gets substantial profits gets a motivation to work hard. Profit thus helps in increasing the efficiency. Similarly an employer can give good remuneration to the employees when there is good profit. This helps to increase the efficiency of the employee also.

(vi) Reward for Risks : Every business is exposed to various types of risks. A businessman has to consider these risks. As a businessman takes risks and performs business activities, buyers get the necessary commodities. The result of these business activities is profit. Profit in this case acts a reward for the risk taken by the businessman.

(vii) Survival: The most important role of profit is to help the business to carry on the activities continuously. Survival of business depends upon the continuous supply of finance. Profit enables business to continue with the uninterrupted supply of funds.

Thus profit plays a vital retie in the business. Profit is an inevitable part in every business. It helps a businessman to earn his livelihood, carry on research and development activities and most importantly survival of the business.

Maharashtra Board Class 11 Secretarial Practice Solutions Chapter 12 Correspondence with Statutory Authorities

July 16, 2023

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 12 Correspondence with Statutory Authorities Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 12 Correspondence with Statutory Authorities

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
_____________ is the main authority to regulate the administration of Companies Act, 2013 in India.
(a) MCA
(b) Company Secretary
(c) Board of Directors
Answer:
(a) MCA

Question 2.
The headquarters of MCA is at _____________
(a) Mumbai
(b) New Delhi
(c) Pune
Answer:
(b) New Delhi

Question 3.
To administer the provisions of the Companies Act, 2013 is the objective of _____________
(a) MCA
(b) ROC
(c) Directors
Answer:
(a) MCA

Question 4.
_____________ is responsible for registering companies.
(a) ROC
(b) SEBI
(c) Auditors
Answer:
(a) ROC

Question 5.
The Certificate of Incorporation is issued by _____________
(a) ROC
(b) MCA
(c) NCLT
Answer:
(a) ROC

Question 6.
_____________ can strike off or remove the name of a company from the Register of Companies.
(a) MCA
(b) ROC
(c) SEBI
Answer:
(b) ROC

Question 7.
Central Government exercises administrative control over ROCs through the _____________
(a) MCA
(b) SEBI
(c) Regional Directors
Answer:
(c) Regional Directors

Question 8.
_____________ is the quasi-judicial body set up by the Central Government to grant certain approvals and decide disputes under the provisions of the Companies Act.
(a) MCA
(b) ROC
(c) NCLT
Answer:
(c) NCLT

Question 9.
_____________ can hear appeals against the orders issued by NCLT.
(a) NCLAT
(b) SEBI
(c) MCA
Answer:
(a) NCLAT

Question 10.
An appeal against the order of NCLAT can be filed in the _____________
(a) MCA
(b) SEBI
(c) Supreme Court
Answer:
(c) Supreme Court

Question 11.
_____________ was established as a statutory body to regulate the securities market in India.
(a) NCLT
(b) MCA
(c) SEBI
Answer:
(c) SEBI

Question 12.
_____________ regulates the functioning of Stock Exchange in India.
(a) SEBI
(b) MCA
(c) ROC
Answer:
(a) SEBI

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Administration of Companies Act, 2013	(1) SEBI
(b) ROC	(2) Hears appeals against orders of NCLT
(c) NCLAT	(3) NCLT
(d) Regulator of Securities Market	(4) Incorporation of companies
(e) Quasi-judicial body	(5) MCA
	(6) Board of directors
	(7) Companies Act 2013
	(8) Regional Director
	(9) Chennai
	(10) Liquidator

Answer:

Group ‘A’	Group ‘B’
(a) Administration of Companies Act, 2013	(5) MCA
(b) ROC	(4) Incorporation of companies
(c) NCLAT	(2) Hears appeals against orders of NCLT
(d) Regulator of Securities Market	(1) SEBI
(e) Quasi-judicial body	(3) NCLT

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
The main authority is concerned with the administration of the Companies Act.
Answer:
MCA

Question 2.
The organization is responsible for administering the Companies Act and regulating professional bodies like ICAI, ICSI, etc.
Answer:
MCA

Question 3.
The authority which issues Certificate of Incorporation to company.
Answer:
ROC

Question 4.
Every company has to apply for incorporation to this authority situated in the state where its head office is to be located.
Answer:
ROC

Question 5.
The authority that handles corporate civil disputes in India.
Answer:
NCLT

Question 6.
An appeal against the orders of NCLT is heard by this authority.
Answer:
NCLAT

Question 7.
Regulator of the securities market in India.
Answer:
SEBI

Question 8.
An institution that regulates the functioning of stock exchanges and intermediaries in the securities market.
Answer:
SEBI

1D. State whether the following statements are True or False.

Question 1.
MCA regulates the functioning of the corporate sector as well as administers the Companies Act.
Answer:
True

Question 2.
MCA has no supervisory authority over professional bodies like ICSI, ICAI, etc.
Answer:
False

Question 3.
ROC is concerned with the registration of companies.
Answer:
True

Question 4.
On payment of fees, ROC allows the public to inspect certain documents filed with it.
Answer:
True

Question 5.
NCLT has jurisdiction over proceedings on matters of disputes arising under the Companies Act.
Answer:
True

Question 6.
NCLAT can hear appeals against the order of NCLT.
Answer:
True

Question 7.
NCLAT may confirm, modify or reject the orders passed by the NCLT.
Answer:
True

Question 8.
SEBI protects the interest of investors in the securities market.
Answer:
True

Question 9.
ROC is the regulator of the securities market.
Answer:
False

1E. Complete the sentences.

Question 1.
Administration of Companies Act and other laws related to corporate world is the responsibility of _____________
Answer:
MCA (Ministry of Corporate Affairs)

Question 2.
Registration of companies is done by _____________
Answer:
ROC (Registrar of Companies)

Question 3.
The authority which handles corporate civil disputes is called as _____________
Answer:
NCLT (National Company Law Tribunal)

Question 4.
The authority which hears appeals against the orders of NCLT is called as _____________
Answer:
NCLAT (National Company Law Appellate Tribunal)

1F. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Regulator of Securities Market	……………………….
(2) MCA	……………………….
(3) ……………………	Hears appeals against orders of NCLT

(NCLAT, Administers Companies Act, SEBI)
Answer:

Group ‘A’	Group ‘B’
(1) Regulator of Securities Market	SEBI
(2) MCA	Administers Companies Act
(3) NCLAT	Hears appeals against orders of NCLT

1G. Answer in one sentence.

Question 1.
Name the authority which administers the Companies Act and Partnership Act.
Answer:
MCA (Ministry of Corporate Affairs).

Question 2.
Name the authority attached to the High Court which helps in the winding up of companies.
Answer:
The authority attached to the High Court which helps in the winding up of Companies is the Official Liquidator.

1H. Correct the underlined word and rewrite the following sentences.

Question 1.
ROC supervises and controls the operations of stock exchanges in India.
Answer:
SEBI supervises and controls the operation of stock exchanges in India.

Question 2.
An appeal can be made against the order issued by NCLT to NCLAT within 90 days.
Answer:
An appeal can be made against the order issued by NCLT to NCLAT within 45 days.

2. Explain the following terms/concepts.

Question 1.
Ministry of Corporate Affairs (MCA)
Answer:

The MCA is primarily concerned with the administration of the Companies Act, 2013.
The MCA is responsible to prevent practices from having an adverse effect on competition, to promote and sustain competition in markets.
MCA supervises certain professional bodies like the Institute of Chartered Accountants of India. (ICAI), Institute of Company Secretaries of India (ICSI), Institute of Cost Accountants of India.
It works with the help of Regional Directors, ROC, and Official Liquidator.

Question 2.
Registrar of Companies (ROC)
Answer:
The Registrar of Companies (ROC) is an office under the Ministry of Corporate Affairs (MCA) which deals with the administration of Companies and Limited Liability Partnerships in India.

At present 22 Registrar of Companies is operating in all major states.
States like Tamilnadu and Maharashtra have more than one ROC.
ROC is a full-time field officer who has wide powers and responsibilities in administering the Companies Act.
ROC has to examine various documents filed with it by the companies in compliance with the Companies Act, 2013.
The ROC has to take decisions on documents filed with it and reply within 30 days from the date of filing the documents.

Question 3.
National Company Law Tribunal (NCLT)
Answer:

The Central Government has constituted National Company Law Tribunal in June 2016.
It is a quasi-judicial body, which grants approvals and handles Corporate Civil Disputes.
The Tribunal operates through 15 ‘Benches’ consisting of 2 members i.e. a judicial member and a technical member.
The Tribunal has to dispose of every application or petition within 3 months of receiving it.
An appeal against the order of NCLT can be made to National Company Law Appellate Tribunal (NCLAT).

Question 4.
National Company Law Appellate Tribunal (NCLAT)
Answer:
National Company Law Appellate Tribunal was constituted for hearing appeals against the orders of the National Company Law Tribunal.

NCLAT is also the Appellate Tribunal for hearing appeals against the order passed by the Insolvency and Bankruptcy Board of India.
It is headed by a chairperson and has a maximum of 11 members comprising of judicial and technical members.
An appeal can be made against the order issued by NCLT to NCLAT within 45 days.
An appeal can be made against the orders of NCLAT to Supreme Court within 60 days.

Question 5.
Securities and Exchange Board of India (SEBI)
Answer:

SEBI was established in 1992 as a statutory body to regulate the Securities Market in India.
Its head office is in Mumbai.
It supervises and controls the operations of Stock Exchanges, Companies issuing securities, and other intermediaries like Underwriters, Merchant Bankers, Brokers, etc.
It protects and safeguards the interest of the investors in the security market.
The main objective is to regulate the functioning of securities markets and stock exchanges.
It develops a code of conduct for fair practices by intermediaries.

3. Answer in brief.

Question 1.
State the powers of ROC.
Answer:
The Registrar of Companies (ROC) is an office under the Ministry of Corporate Affairs (MCA) which deals with the administration of Companies and Limited Liability Partnerships in India. At present 22 Registrar of Companies is operating in all the major states. States like Tamilnadu and Maharashtra have more than one ROC. ROC is a full-time field officer who has wide powers and responsibility in administering the Companies Act.

Following are the powers of ROC:

To extend the time of the Annual General Meeting other than the first AGM by a period not more than 3 months.
To inspect or call for books of account, other books, and papers.
To seek in writing any information or explanation with regard to any document furnished to ROC.
Seek the Special Court to issue an order for seizure of books and papers of the company, if the ROC feels that such records may be destroyed, altered, or falsified.
To strike off the name of a company from the Registrar of Companies.

Question 2.
State the powers of NCLT.
Answer:
Meaning of NCLT:
The Central Government has constituted National Company Law Tribunal in June 2016. The NCLT is a quasi-judicial body, which grants approvals and handles Corporate Civil disputes.

Powers of NCLT:

To hear and decide all proceedings related to compromise, arrangement, and reconstruction of a company.
To hear and decide all winding up petitions on the ground of inability to pay its debts and on other grounds.
To hear and decide petition for an extension of time for repayment of deposits.
To hear and decide cases pertaining to oppression and mismanagement of a company.
To call for holding AGM or EOGM of a company.
To direct a company not to dispose of funds of a company and to freeze the assets of a company for being used against the interest of the company.
To hear and decide grievances of rejection in transferring shares and securities.

Question 3.
What are the objectives of MCA?
Answer:
The MCA is primarily concerned with the administration of the Companies Act, 2013.
It frames the rules and regulations for regulating the functioning of the corporate sector in accordance with the law.

Objectives of MCA:

To administer the provisions of the Companies Act, 2013, and other allied laws.
To quickly identify non-compliance with the Companies Act.
To encourage companies to improve Corporate Governance and adopt responsible business practices.
To promote fair competition.
To make available to the public, corporate data.
To offer various services to the stakeholders.

4. Justify the following statements.

Question 1.
The MCA was set up by Central Government to fulfill certain objectives.
Answer:
The MCA is primarily concerned with the administration of the Companies Act, 2013.
It frames the rules and regulations for regulating the functioning of the corporate sector in accordance with the law.

Objectives of MCA:

To administer the provisions of the Companies Act, 2013, and other allied laws.
To quickly identify non-compliance with the Companies Act.
To encourage companies to improve Corporate Governance and adopt responsible business practices.
To promote fair competition.
To make available to the public, corporate data.
To offer various services to the stakeholders.

Question 2.
The Companies Act, 2013 has given certain Powers to ROC.
Answer:
The Registrar of Companies (ROC) is an office under the Ministry of Corporate Affairs (MCA) which deals with the administration of Companies and Limited Liability Partnerships in India. At present 22 Registrar of Companies is operating in all the major states. States like Tamilnadu and Maharashtra have more than one ROC. ROC is a full-time field officer who has wide powers and responsibility in administering the Companies Act.

Following are the powers of ROC:

To extend the time of the Annual General Meeting other than the first AGM by a period not more than 3 months.
To inspect or call for books of account, other books, and papers.
To seek in writing any information or explanation with regard to any document furnished to ROC.
Seek the Special Court to issue an order for seizure of books and papers of the company, if the ROC feels that such records may be destroyed, altered or falsified.
To strike off the name of a company from the Registrar of Companies.

Question 3.
The Central Government has empowered NCLT with certain powers.
Answer:
Meaning of NCLT:
The Central Government has constituted National Company Law Tribunal in June 2016. The NCLT is a quasi-judicial body, which grants approvals and handles Corporate Civil disputes.

Powers of NCLT:

To hear and decide all proceedings related to compromise, arrangement, and reconstruction of a company.
To hear and decide all winding up petitions on the ground of inability to pay its debts and on other grounds.
To hear and decide petition for an extension of time for repayment of deposits.
To hear and decide cases pertaining to oppression and mismanagement of a company.
To call for holding AGM or EOGM of a company.
To direct a company not to dispose of funds of a company and to freeze the assets of a company for being used against the interest of the company.
To hear and decide grievances of rejection in transferring shares and securities.

5. Attempt the following.

Question 1.
Write a letter to ROC seeking an extension of time to hold the AGM.
Answer:

STARTRACK LIMITED
Registered Office: Galaxy House
Rainbow Township, Mira Road, Mumbai – 400609
CIN: L13471 MH 2012 PLC 000222

Phone: 022-22135649, 91-9910190332

Website: www.startracklimited.com
Email: startrack@limited.com

Date: 30th July 2019.

Ref No: ROC/AGM – 99.
The Registrar of Companies
Churchgate,
Mumbai – 400019.

Sub: Extension of time for holding 6th Annual General Meeting.

Dear Sir,

As per the Companies Act, 2013, our Company must hold its 6th Annual General Meeting on or before 30th September 2019, for the financial year ending on 31st March 2019

We are extremely sorry to inform, that due to most of our directors are on travel abroad during that period, we will not be able to hold the Annual General Meeting before 30th September 2019.

We, therefore, request you to grant us an extension period of two months for holding the said AGM i.e. up to 30th November 2019.

We will be highly obliged if you grant us the permission to extend the said meeting.

Thanking you,

Yours faithfully,
for STAR TRACK LIMITED.
Sign
Company Secretary

Encl: Copy of Annual Report 2017-18.

Question 2.
Write a letter to MCA with regard to ‘Ticket Raising’.
Answer:

STARTRACK LIMITED
Registered Office: Galaxy House
Rainbow Township, Mira Road, Mumbai – 400609
CIN: L13471 MH 2012 PLC 000222

Phone: 022-22135649, 91-9910190332

Website: www.startracklimited.com
Email: startrack@limited.com

Date: 1st April 2019.

Ref No: MCA/ST – 19
The Manager
(Web-service Dept)
Vaibhav Apartment,
Vaibhav Nagar,
New Delhi – 110003

Sub: Difficulty in downloading e-form.

Dear Sir,

This is to inform you that company is intending to download e-form (Form SH-7) to intimate the ROC about the alteration made in the share capital of our company.

However, we are not able to download the form due to some technical error, and the message that pops up on pressing the ‘ENTER’ button is “The file is damaged and cannot be repaired”.

In spite of our repeated effort, we are not able to download the form. So we earnestly request you to look into the matter at your earliest.

Also, let us know the next step to resolve the above matter.

Thanking you,

Yours faithfully,
for STAR TRACK LIMITED.
Sign
Company Secretary

Encl: Copy of message as appearing on the website.

Question 3.
Write a reply to a complaint by the Investor.
Answer:

STARTRACK LIMITED
Registered Office: Galaxy House
Rainbow Township, Mira Road, Mumbai – 400609
CIN: L13471 MH 2012 PLC 000222

Phone: 022-22124745, 91-9920380555

Website: www.startracklimited.com
Email: startrack@limited.com

Date: 2nd June 2019.

Ref No: IC/ 219.
Ms.Vaishali Rane,
Birla House,
Bhagwati Road,
Kandivli (W).
Mumbai – 400018.

Sub: Non-Receipt of Annual Report.

Dear Sir,

We are in receipt of your letter dated 20th May 2019 regarding the non-receipt of the Annual Report.

As per the Companies Act, 2019, we have sent by post to all the members, the notice of 8th AGM along with the Annual Report well in advance, as per the address provided by you in our Register of Members.

It is however unfortunate to know that you have not received the Notice and the Annual report. We are once again sending you the same to the address mentioned in your letter.

Yours faithfully,
for STAR TRACK LIMITED
Sign
Company Secretary

Encl: Annual Report 2018-19
CC to: SEBI

Question 4.
Write a letter to NCLT seeking an extension of time to repay Public Deposits.
Answer:

STARTRACK LIMITED
Registered Office: Galaxy House
Rainbow Township, Mira Road, Mumbai – 400609
CIN: L13471 MH 2012 PLC 000222

Phone: 022-22135649, 91-9910190332

Website: www.startracklimited.com
Email: startrack@limited.com

Date: 30th July 2019.

Ref No: NCLT/99
The National Company Law Tribunal Board.
‘C’ wing, 25th Floor, Priyadarshini Bhavan,
M.G. Road,
New Delhi – 110004.

Sub: Extension of time to repay Pubic Deposit.

Sir,

The company had accepted Public Deposits worth 20 lacs on 1st April 2016 for a period of two years. The Deposits are to be repaid on or before 31st March 2018.

However, as the company is passing through financial problems, we are is unable to repay deposits on the above-mentioned date.

The board held a meeting on 29th December 2017 and passed a resolution for seeking an extension from NCLT for a period of three months, to repay deposits. Therefore, we request you to grant us an extension for three months to repay it.

Copy of the petition is attached in two sets. We assure you that the company will pay the deposits on or before 30th June 2019.

Yours faithfully,
for STAR TRACK LIMITED
Sign
Company Secretary

Encl:

Certified copy of Board Resolution.
Petition for Extension of time.
Challan for fees paid.

Maharashtra Board Class 11 Secretarial Practice Solutions Chapter 11 Correspondence with Banks

July 16, 2023

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 11 Correspondence with Banks Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 11 Correspondence with Banks

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
A company usually opens _____________ account in a bank.
(a) Current
(b) Saving
(c) Recurring
Answer:
(a) Current

Question 2.
Bank is a _____________ institution.
(a) financial
(b) social
(c) cultural
Answer:
(a) financial

Question 3.
The appointment of banker is usually made by the _____________
(a) Board of Directors
(b) Secretary
(c) Chairman
Answer:
(a) Board of Directors

Question 4.
Resolution for opening Bank Account is passed in the _____________ meeting.
(a) Board
(b) Statutory
(c) Annual General
Answer:
(a) Board

Question 5.
Bank provides overdraft facility to _____________ account holder.
(a) Current
(b) Saving
(c) Fixed Deposit
Answer:
(a) Current

Question 6.
_____________ is used for depositing cash into a bank account.
(a) Pay-in-slip
(b) Withdrawal slip
(c) Cheque
Answer:
(a) Pay-in-slip

Question 7.
Borrowing/Accepting and lending money are considered as _____________ functions of bank.
(a) Primary
(b) Secondary
(c) Agency
Answer:
(a) Primary

Question 8.
Withdrawals are not permitted from the _____________ deposit account.
(a) Fixed
(b) Current
(c) Savings
Answer:
(a) Fixed

Question 9.
_____________ account is suitable to salaried people.
(a) Savings
(b) Current
(c) Fixed
Answer:
(a) Savings

Question 10.
Generally Interest is not paid on _____________ deposit account.
(a) Current
(b) Saving
(c) Fixed
Answer:
(a) Current

Question 11.
A deposit which is kept for fixed period in bank is called _____________ deposit.
(a) Fixed
(b) Current
(c) Recurring
Answer:
(a) Fixed

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Lost cheque	(1) Board of Directors
(b) Appointment of Banker	(2) Higher rate of interest
(c) Cash credit	(3) Used for depositing cash and cheque
(d) Fixed Deposit Account	(4) Stop Payment
(e) Savings Account	(5) Restrictions on withdrawals
(f) Pay-in-slip	(6) Separate Account
(g) Overdraft facility	(7) Current Account
	(8) Recurring Account
	(9) Shareholders
	(10) No interest is paid
	(11) Used for withdrawing amount from the account
	(12) Long term credit facility
	(13) Certain restrictions on withdrawals
	(14) Dealing in foreign exchange

Answer:

Group ‘A’	Group ‘B’
(a) Lost cheque	(4) Stop Payment
(b) Appointment of Banker	(1) Board of Directors
(c) Cash credit	(6) Separate Account
(d) Fixed Deposit Account	(2) Higher rate of interest
(e) Savings Account	(5) Restrictions on withdrawals
(f) Pay-in-slip	(3) Used for depositing cash and cheque
(g) Overdraft facility	(7) Current Account

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
A slip is used for depositing cash and cheque in the Bank account.
Answer:
Pay-in-slip

Question 2.
Permission to withdraw excess amount from Current Account.
Answer:
Overdraft

Question 3.
Separate loan account under which the short-term loan facility is given by the bank to the business.
Answer:
Cash credit

Question 4.
The short-term credit facility is given by the bank to the current account holder.
Answer:
Overdraft

Question 5.
The account is generally opened by the business organization.
Answer:
Current Account

Question 6.
The request of Secretary to the bank not to make the payment of the cheque.
Answer:
Stop payment request

Question 7.
The type of account for which a higher rate of interest is paid to bank depositors.
Answer:
Fixed Deposit Account

Question 8.
The slip is used for withdrawing money from Savings Account.
Answer:
Withdrawal Slip

Question 9.
Negotiable Instrument which can be discounted with the bank.
Answer:
Bill of exchange

1D. State whether the following statements are True or False.

Question 1.
Joint Stock Company opens Current Account.
Answer:
True

Question 2.
Generally, no interest is paid by the bank on the Current Account.
Answer:
True

Question 3.
In cash credit, the customer’s account is credited by the bank with the sanctioned amount.
Answer:
True

Question 4.
Board resolution is not required to open the Current Account with the bank.
Answer:
False

Question 5.
The bank account of the company is operated by shareholders.
Answer:
False

Question 6.
Overdraft facility is granted to Savings account holders.
Answer:
False

Question 7.
Bank correspondence should be brief and to the point.
Answer:
True

Question 8.
It is necessary to instruct the bank to stop the payment of a cheque that is lost.
Answer:
True

Question 9.
A bank overdraft facility is a long-term facility.
Answer:
False

Question 10.
Banks grant long-term loans only.
Answer:
False

1E. Find the odd one.

Question 1.
Saving Deposit, Recurring Deposit, Cash Credit. Fixed Deposit
Answer:
Cash Credit

Question 2.
Overdraft, Fixed Deposit, Discounting of Bills, Cash Credit
Answer:
Fixed Deposit

1F. Complete the sentences.

Question 1.
A financial institution which receives deposits and lends money is called as _____________
Answer:
Bank

Question 2.
Accepting deposits and lending money are the primary functions of _____________
Answer:
Commercial Bank/Bank

Question 3.
A facility under which a customer can overdraw money from his account is called as _____________
Answer:
Overdraft facility

Question 4.
Overdraft facility is given to _____________
Answer:
Current Account Holder

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Overdraft	…………………………
(2) Primary Function	………………………..
(3) International Trade Transactions	………………………..
(4) ………………………	Current Account

(Accepting Deposits, Current Account, Letter of Credit, Businessman)
Answer:

Group ‘A’	Group ‘B’
(1) Overdraft	Current Account
(2) Primary Function	Accepting Deposits
(3) International Trade Transactions	Letter of Credit
(4) Businessman	Current Account

1H. Answer in one sentence.

Question 1.
What is a Letter of Credit?
Answer:
A letter of credit is a payment method generally used for international trade transactions. Letter of credit is issued by a bank on behalf of its client, promising to pay a certain amount of money to the seller, in case the buyer fails to pay it.

Question 2.
Which facility is given to the Current Account holder?
Answer:
Overdraft facility is given to Current Account Holder by the Bank.

Question 3.
What do you mean by stop payment of cheque?
Answer:
When a cheque is issued by the company, there is a possibility of misplacement of the cheque or loss in transit. Then it is necessary to inform the bank to stop payment of such cheque.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
Accepting deposits is the secondary function of Banks.
Answer:
Accepting deposits is the primary function of Banks.

Question 2.
Businessman opens Fixed Deposit Account.
Answer:
Businessman opens Current Account.

Question 3.
Under cash credit facility businessman/account holder can overdraw from his account.
Answer:
Under an overdraft facility, a businessman/account holder can overdraw from his account.

2. Explain the following terms/concepts.

Question 1.
Bank
Answer:
A bank is a financial institution, in which people deposit their idle or surplus cash, and those who need funds borrow from banks.

Question 2.
Demand Deposits
Answer:
The deposits which are repayable on demand are called Demand Deposits.

Question 3.
Time Deposits
Answer:
The deposits which are not repayable on demand are called Time Deposits.

Question 4.
Savings Deposits
Answer:
To encourage saving habit among the people, the bank allows depositors to open a savings account. There are restrictions on the frequency and amount of withdrawals.

Question 5.
Current Deposits
Answer:
This account is normally opened by businessmen, firms, or companies. There is no limit on the amount or number of withdrawals.

Question 6.
Recurring Deposits
Answer:
The account which encourages the customers to make regular savings and to deposit a fixed sum of money for a specific period of time is called Recurring Deposits.

Question 7.
Fixed Deposits
Answer:
Fixed Deposits are the deposits received for a fixed period. The rate of interest is high for fixed deposits. The longer the period of deposit, the higher is the rate of interest.

Question 8.
Loans
Answer:
A loan granted for a specific time period against personal security, gold or silver, and other moveable or immovable assets is called a term loan.

Question 9.
Advances
Answer:
Advances is a credit facility provided by the bank to its customers. It differs from loans in the sense that loans may be granted for a longer period, while advances are for a shorter period.

Question 10.
Cash Credit
Answer:
Under a cash credit facility, a bank allows the borrower to withdraw amounts up to the specified limit. Such credits are allowed against the security of stock of raw material, finished goods, etc.

Question 11.
Overdraft
Answer:
It is a facility where the bank allows its customers to overdraw an amount up to a particular limit. Such facility is allowed against collateral securities like shares, FDR, LIC Policy, etc.

Question 12.
Discounting of Bill
Answer:
It is a short-term finance facility provided by the bank to its customers by allowing discounting of bills and making payment of bills before their due date.

Question 13.
Letter of Credit
Answer:
A letter of credit is a payment method generally used for international trade transactions. A letter of credit is issued by a bank on behalf of its client, promising to pay a certain amount of money to the seller in case the buyer fails to pay it.

Question 14.
Stop payments of cheque
Answer:
When a cheque is sent by the Company, there is a possibility of misplacement of cheque or loss in transit. In that case, it is necessary to inform the bank to stop the payment of such cheques.

3. Distinguish between the following.

Question 1.
Current Account and Savings Account.
Answer:

Basis	Current Account	Savings Account
1. Meaning	It is a type of bank account that is generally opened by the businessman to carry out their business activities.	It is a type of bank account which is opened by salaried and household people with an aim of saving their part of the income and earn interest.
2. Withdrawals	There are no restrictions on the number of withdrawals. They can withdraw money by cheque.	There are restrictions over the number of withdrawals. They can withdraw money either by cheque or by withdrawal slip.
3. Facilities	Such account holder gets the facilities of Passbook, Cheque Book, Statement of Account and Pay-in-Slip Book.	Such account holders get the facilities of Passbook, Cheque Book, and Pay-in-Slip Book.
4. Rate of Interest	Generally, no interest is allowed on the Current Account. If it is allowed it is a very nominal rate.	The rate of interest on the Saving Account is higher than the Current Account but less than fixed deposits.
5. Overdraft facility	Overdraft facility is allowed to Current Account holders.	Overdraft facility is not allowed to Saving Account holder.
6. Suitability	It is suitable for traders, business firms, and institutions.	It is suitable for salary earners, households, and fixed income groups.

Question 2.
Loan and Overdraft
Answer:

Basis	Loan	Overdraft
1. Meaning	Amount granted for a specific period of time, against personal security, gold or silver, and other movable or immovable assets is called a loan.	Overdraft is a credit facility granted by the bank to Current account holders. Under an overdraft facility, the bank allows its customers to overdraw an amount up to a particular limit.
2. Eligibility	Savings account, Fixed, Recurring, and Current account holders are eligible for the loan facilities.	Only Current account holders are eligible for an overdraft facility.
3. Duration	The loan is a long period facility.	Overdraft is a short period facility.
4. Purpose	The purpose is to meet long-term requirements.	The purpose is to meet short-term working capital requirements.
5. Repayment	The amount of the loan may be repaid in installments or in a lump sum on its due date.	The amount of overdraft is adjusted against the balance of Deposits in the Current account.
6. Security	It is provided against personal security, gold or silver, and other movable or immovable assets.	It is provided against collateral securities like shares, FDR, LIC Policy, etc.

Question 3.
Fixed Deposit Account and Recurring Deposit Account.
Answer:

Basis	Fixed Deposit Account	Recurring Deposit Account
1. Meaning	Fixed Deposits are the deposits received for a fixed period of time.	A Recurring Deposit account is that account where depositors regularly deposit a fixed amount for a specific period of time.
2. Facilities	The bank gives a Fixed Deposit Receipt to the Fixed Deposit holders.	The bank gives a Pass Book and Pay-in-Slip book to Recurring Deposit holders.
3. Rate of Interest	The rate of interest allowed is higher. The longer the period of deposit, the higher will be the rate of interest.	The rate of interest is less than Fixed Deposit Account.
4. Suitability	It is suitable for those people having surplus income in hand.	It is suitable for fixed-income groups and lower-income groups.

4. Answer in brief.

Question 1.
What are the points to be kept in mind by a Secretary while corresponding with Banks?
Answer:
The following precautions must be taken by the secretary while corresponding with banks:

Prompt reply: For any correspondence with the bank, the reply must be sent without delay is the responsibility of a secretary.
Brevity/Conciseness: Secretary should provide maximum information in minimum words. A letter should not be lengthy. Unnecessary details, irrelevant information or explanation, lengthy paragraphs should be avoided.
Courtesy: The letter to the bank should show empathy, respect, and mutual understanding. It is helpful for getting favourable responses and built up goodwill for the organization.
Accuracy: While corresponding with Bank ‘Accuracy’ and ‘Perfectness’ are very important. Whatever information or data provided must be accurate. No haphazard remarks or statements are to be made.
Clarity: The secretary must provide true, factual updates and clear information about his organization to the banker. Clarity is required to avoid misunderstandings with bankers.

Question 2.
Under what circumstances will a secretary correspond with the Banks?
Answer:
The following are the circumstances under which a secretary has to correspond with the banks:
(i) Letter for opening a Current Account with the Bank:
The decision of opening a Current account is taken in the Board meeting by passing a resolution. The Board instructs the secretary for opening a Current account. The Secretary has to write a letter to the Bank accordingly and enclose the necessary documents.

(ii) Letter requesting a bank to stop payment of cheque:
When cheques are sent by Companies, there are possibilities of misplacement of cheques or loss in transit. Thus, it is necessary to inform the bank to stop the payment of such cheques.

(iii) Letter requesting a Bank for granting an overdraft facility:
Certain credit facilities are provided by the Bank to their customers. The Bank allows a Current Account holder to withdraw excess amount than the available balance. Secretary has to correspond with the bank to prevail this facility.

(iv) Letter requesting bank to issue a letter of credit:
A letter of credit is a payment method generally used for international trade transactions. Letter of credit is issued by Bank on behalf of its client promising to pay a certain amount of money to the seller in case the buyer fails to pay it. Secretary has to correspond with the bank to obtain this letter of credit.

Question 3.
State the agency functions of Banks.
Answer:
Agency functions of banks are part of secondary functions.
Following are the agency functions of the Bank:

Bank collects the cheques and Bill of Exchange on behalf of the customers or account holders.
Bank collects dividends, interest, and salary and credits the account holder’s account.
Bank makes payment of rent, insurance premium, electricity bill, etc.
Bank act as a Depository Participant for purchase and sale of securities.
Transfer of money.
Fulfill standing instructions of depositors.
The bank acts as a trustee, an executor of the will, and an attorney for the account holder.
The bank acts as a Banker to the issue, Lead Manager, etc. for the companies.

Question 4.
State the utility functions of Banks.
Answer:
Commercial Bank provides general utility services to their customers or account holders to attract customers.
Utility functions of Banks are as follows:

Provide locker facility to customer utility function of banks are as follows.
Provide a letter of credit facility to account holders for international business transactions.
Helps to deal in Foreign Exchange.
Provide Credit cards, Debit cards, and A.T.M. facilities.
To assist in the purchase and sale of securities.
Provide traveler’s cheque to customers.

Question 5.
Explain the different types of Deposits.
Answer:
The Bank accepts two types of deposits from the people.
(i) Demand Deposits:
Demand Deposits are deposits, where money is repaid by the bank on the demand made by the depositors or customers of the bank.

Such deposit accounts are:
(a) Savings Deposits:
As the name indicate this account is opened and operated by that person who have regular and fixed income e.g. salary. In order to ‘save’ something out of current income, this account is opened.
Features of this account are:

It is mainly for saving purposes.
Money can be withdrawn on demand.
Minimum balance must be maintained.

(b) Current Deposits:
This account is opened by the businessman, firm, company, etc. for business purposes. There is no limit on the number of withdrawals. Generally, interest is not payable on this account. Overdraft facilities are also allowed to these depositors.

(ii) Time Deposits:
The deposits which are not repayable on demand are called ‘Time Deposits’. These deposits are payable after a specific period of time.

Fixed Deposits: In this deposit account, a certain sum is kept deposited for a fixed period. A higher rate of interest is paid on Fixed Deposit.
Recurring Deposits: In this deposit account, the customer deposit’s fixed amount on regular basis for a specific period. The money is deposited periodically. The rate of interest is more than Saving Deposits.

5. Justify the following statements.

Question 1.
The secretary has to correspond with the Banks under certain circumstances.
Answer:
Following are the circumstance under which a secretary has to enter into correspondence with banks:

Letter for opening a Current account with Bank.
Letter requesting a bank to stop payment of the cheque.
Letter requesting a bank for granting overdraft facility.
Letter requesting a bank to issue a letter of credit.
Letter to a bank enquiring about new banking facilities.
Letter to the bank for a long-term loan.
Thus, the secretary has to correspond with the Banks under certain circumstances.

Question 2.
The secretary should observe certain precautions while corresponding with the Banks.
Answer:
The following precautions must be taken by the secretary while corresponding with the banks:

Secretary should give a prompt reply.
Secretary should take care that the letter should not be lengthy.
Unnecessary details should be avoided.
Not to use any harsh or rude words while corresponding with the banker.
Provide true factual updates and clear information about his organization to the bankers.
Thus, the secretary should observe certain precautions while corresponding with the Banks.

Question 3.
The primary functions of Commercial Banks include-Accepting deposits and Lending funds.
Answer:
The main object of a commercial bank is to accept deposits and lending money to customers or account holders:

To encourage the people who have surplus funds.
To encourage the saving habit among the people.
To give support to businessmen for opening a current account.
To encourage people to make regular savings.
To lend loans and advances through various modes i.e. short-term loan, medium-term loan, long term loan, overdraft facility, cash credit facility, and discounting of the bill of exchange, etc.
Thus, the primary functions of Commercial Banks include-Accepting deposits and Lending funds.

Question 4.
The Bank accepts two types of deposits from the public i.e. Demand and Time Deposits.
Answer:

The basic aim of the bank is to pool the excess money to the bank and develop the habit of saving amount people.
Bank accepts deposits in two forms i.e. Demand Deposits and Time deposits.
Demand Deposits include – Current Deposits and Savings Deposits.
Time Deposits includes – Fixed Deposits and Recurring Deposits
Thus, the Bank accepts two types of deposits from the public i.e. Demand and Time Deposits.

Question 5.
There is a difference between Loans and Advances given by the Bank.
Answer:

Bank lends money in two ways – i.e. Loans and Advance.
The loan is granted for a specific period of time against personnel security, gold or silver, and other movable or immovable properties.
Advances is a credit facility provided by the bank to its customers against collateral securities like – shares, Government shares, F.D.R., L.I.C. Policy, Stock of raw materials, or finished goods.
Loans are granted for a longer period while Advances are granted for a shorter period.
Loans may be short-term, medium-term, or long-term while advances are in form of overdraft, cash credit, and discounting of bills.
Thus, there is a difference between Loans and Advances given by the Bank.

Question 6.
Overdraft facility is given only to current depositors.
Answer:
Overdraft is a credit facility allowed to current account holders:

Under an overdraft facility, the bank allows, customers, to withdraw an amount, up to a particular limit.
The collateral securities are usually accepted for an overdraft facility.
The rate of interest charged by commercial banks for overdraft is low.
Overdraft facility is given only to existing current depositors because they have good relations with the Bank.
Thus, an overdraft facility is given only to current depositors.

6. Attempt the following.

Question 1.
Write a letter to the bank for opening a Current Account.
Answer:

PRAGAT KRUSHI SEVA COMPANY LTD.
Registered office: Milind Sally Manjul,
Nashik Pune Highway, Sangamner
CIN: H353558 MH 2019 PLO 227244

Phone: 02425 – 223019
Fax: 02425 – 227230

Website: www.pragatksltd.com
Email: milinadkulkarni@gmail.com

Date: 10th March 2019.

Ref No. BlbRbl212019
The Bank Manager, IDBI Bank,
New Nagar Road,
Jantar Raja Maidan,
Sangamner.

Sub: Opening of Current Account.

Dear Sir,

The Board of Directors of a company have passed a resolution on 3rd March 2019 to open a Current Account in your bank in the name of the company i.e. “PRAGAT KRUSHI SEVA COMPANY LTD.” and to appoint you as the company’s banker.

Please find enclosed herewith the following documents for the purpose of opening the Current Account of our company.

Account opening form duly filled, signed and dated.
Certified copy of Memorandum of Association.
Certified copy of Articles of Associations.
Certified copy of Incorporation Certificate.
Certified copy of Board resolution regarding opening a Current Account.
Specimen signature of two directors Mr. Maithily Kulkarni and Mr. Ajit Godse and the company secretary
Certified copy of the list of present Directors of the company.
Duly filled up Pay-in-slip along with ₹ 5,000 (Rupees Five thousand only) in cash as initial deposit.
Certified copies of PAN and TAN.

Thanking you,

Yours Faithfully,
for PRAGAT KRUSHI SEVA CO. LTD.
(Sign)
Company Secretary.

Encl: As above

Question 2.
Write a letter to the bank to stop the payment of the cheque.
Answer:

AVANI GLASS LIMITED COMPANY
Registered Office: Janata Raja Maidan,
Vidya Nagar, Sangamner.
CIN: B45453 MH 1992 PCL 123272

Phone: 02425 – 227244
Website: www.avaniglass.com

Fax: 02425 – 222340
Email: renukrushna@gmail.com

Date: 15th March 2019

Ref. No. B/PC/1/19-20
The Bank Manager,
New Nagar Road,
Sangamner.

Sub: Stop Payment of Cheque No 303592
Ref: Our Account No 30357090414

Dear Sir,

It is to bring to your notice, to stop payment of the Cheque no. 303592 dated 10th March 2019 of ₹ 75,000 (Rupee Seventy Five Thousand) issued by the company from Current Account no. 30357090414 in favour of Mr. Krushna Chaudhari, Nashik.

The said cheque is reported to be lost by the party. So we kindly request you to stop the payment of the said cheque.

We highly regret the inconvenience caused to you and wishing your kind co-operation in the above matter.

Thanking you,

Yours Faithfully,
for AVANI GLASS LIMITED COMPANY
(Sign)
Company Secretary.

Question 3.
Letter requesting a bank to issue a Letter of Credit.
Answer:

B.K. INDUSTRIES LTD.
Registered Office: 240, Apeksh.
F.C. Road, Pune 4
CIN: B40418 MH 2010PIL 373078

Phone: 020 – 3070901
Fax: 020 – 3145402

Website: www.BKundu.com
Email: unvitkrusha@gmail.com

Date: 25th May 2019

Ref. No. BP/23/19-20
The Bank Manager,
Bank of Maharastra,
F.C. Road,
Pune – 4.

Sub: Issue of Letter of Credit.
Ref: Our Current Account No 020304147911

Dear Sir,

We are pleased to inform you that, we want to import printing machine from America.

As per the quotation received from Mark Industries, America we have to place an order along with a letter of credit.

We, therefore, request you to issue a letter of credit in favor of the said company USD 4,50,0000. This letter may be issued on the basis of the credit balance in our current account and as per the prevailing exchange rate.

Kindly issue the letter of credit and oblige. This will enable us to place an order at an early date.

Thanking you,

Yours Faithfully
for B.K. INDUSTRIES LTD.
(Sign)
Company Secretary.

Question 4.
Write a letter requesting the bank to grant an overdraft facility.
Answer:

JAI MATA GLASS AGENCIES LTD.
Registered Office: 285, M.G. Road,
Dwarka. Nashik.

Phone: 0253 – 27304580
Fax: 0253 – 283048800

Website: jaymata.com
Email: jaymata@gmail.com

Date: 10th January, 2019

Ref. No. BK/7/20-19
The Manager,
RDBI Bank
Dwarka, Nashik.

Sub: Request for overdraft facility
Ref: Account No. 00303540451

Dear Sir,

The Board of Directors in their meeting held on 2nd January 2019 has decided to request you to grant our company an overdraft facility up to ₹ 10 lakhs for a period of 5 months from March 2019 to July 2019.

We are the manufacturer of Tuffen glass and we have a large export order for which we need to have working capital to fulfill our daily needs.

We request you to accept our security of Fixed Deposit worth ₹ 10 lakhs with your bank.
We would also like to bring to your notice that we are being your customer for the last 10 years.
Expecting your early reply in favor of our overdraft facility.

Thanking you,

Yours Faithfully,
for JAI MATA GLASS AGENCIES LTD.
(Sign)
Company Secretary

Activity (Textbook Page No. 168)

Visit a Bank and collect the form of opening a bank account and find out. The detail to be filled in and Documents needed to open an account.
Answer:
Yesterday, I visited the IDBI Bank of India, Sangamer Branch.
I collected the account opening form from Mr. Abhay Kulkarni Bank Officer.
The following are the details to be filled in in the Account opening form.

Branch Name
Date of opening account
Branch Address
Scheme Codes
Account Number
Type of Account
Full name in Capital Letter
Date of Birth
Occupation
PAN
Name of Guardian
Relationship with minor
Operating instruction
Facilities required
Statement of Account through
Other information
Declaration, if any
Specimen signature
Signature

Document required for opening a Bank Account.

Certified copy of Articles of Association and Memorandum of Association.
Certified copy of Board Resolution regarding the opening of a Current Account.
Specimen signature of Directors and Secretary.
List of Directors
Certificate of Incorporation.

Maharashtra Board Class 11 Secretarial Practice Solutions Chapter 10 Correspondence with Directors

July 16, 2023

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 10 Correspondence with Directors Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 10 Correspondence with Directors

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
Representatives of shareholders are ____________
(a) directors
(b) employees
(c) servants
Answer:
(a) directors

Question 2.
The notice of the meeting of the Board of Directors must be accompanied by ____________
(a) agenda
(b) minutes
(c) resolution
Answer:
(a) agenda

Question 3.
____________ looks after the management of a company.
(a) Board of Directors
(b) Auditor
(c) Company Secretary
Answer:
(a) Board of Directors

Question 4.
The Directors take decisions at ____________ meeting.
(a) Annual General
(b) Board
(c) Statutory
Answer:
(b) Board

Question 5.
According to Section 167(1)(b) of the Companies Act 2013, if a director absents himself from all the meetings of the Board, for a period of ____________ months or more, with or without the leave of the Board, he shall be deemed to have vacated his office.
(a) 12
(b) 10
(c) 9
Answer:
(a) 12

Question 6.
Every company except OPC and the small company shall hold minimum ____________ Board Meetings in each year.
(a) 4
(b) 3
(c) 5
Answer:
(a) 4

Question 7.
The gap between two consecutive Board Meetings should not be more than ____________ days.
(a) 120
(b) 110
(c) 130
Answer:
(a) 120

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Directors	(1) At least 2 Directors
(b) Absenteeism of Director in Board Meetings	(2) At least 3 Directors
(c) Public Company	(3) Disqualification of director
(d) Private Company	(4) Representatives of shareholders
(e) Notice of a Routine Board Meeting	(5) 21 clear days
	(6) 7 days
	(7) 70 days
	(8) Representative of the public
	(9) At least 20 directors
	(10) At least 30 directors

Answer:

Group ‘A’	Group ‘B’
(a) Directors	(4) Representatives of shareholders
(b) Absenteeism of Director in Board Meetings	(3) Disqualification of director
(c) Public Company	(2) At least 3 Directors
(d) Private Company	(1) At least 2 Directors
(e) Notice of a Routine Board Meeting	(6) 7 days

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
Elected body of representatives of shareholders.
Answer:
Board of Directors

Question 2.
An employee of a company who provides guidance and advice to the Board of Directors about business matters.
Answer:
Company Secretary

Question 3.
A meeting of all the directors of a company.
Answer:
Board Meeting

Question 4.
A written invitation was given to the Director to attend the meeting.
Answer:
Notice of Board Meeting

1D. State whether the following statements are True or False.

Question 1.
A director can be removed before the expiry of his term.
Answer:
True

Question 2.
Directors act as trustees of the company.
Answer:
True

Question 3.
A director can remain absent for any number of Board Meetings.
Answer:
False

Question 4.
Directors act as agents and trustees of the company.
Answer:
True

Question 5.
Company Secretary need not attend the board meetings.
Answer:
False

Question 6.
Director can take decisions individually.
Answer:
False

1E. Complete the sentences.

Question 1.
The elected representatives of the shareholders are called as ____________
Answer:
Board of Directors

Question 2.
The meeting of all Directors is called as ____________
Answer:
Board Meeting

Question 3.
The notice period for Board Meeting shall not be less than ____________
Answer:
7 days

1F. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Notice of Board Meeting	………………………..
(2) …………………..	Meeting of all directors
(3) Duty of Directors	………………………….

(Board Meeting, Not less than 7 days, Disclosure of personal interest)
Answer:

Group ‘A’	Group ‘B’
(1) Notice of Board Meeting	Not less than 7 days
(2) Board Meeting	Meeting of all directors
(3) Duty of Directors	Disclosure of personal interest

1G. Answer in one sentence.

Question 1.
When does a Director vacate his office due to absenteeism at Board Meeting?
Answer:
When the director is absent for all meetings of the Board held during a period of twelve months, with or without the leave of absence from the board, he shall be deemed to have vacated his office.

Question 2.
Can a Director who was absent at the Board Meeting get a copy of the minutes of that Board Meeting?
Answer:
If the director is absent for a board meeting he has the right to get a copy of the minutes of that Board Meeting.

1H. Correct the underlined word and rewrite the following sentences.

Question 1.
Secretary is an elected representative of the shareholders.
Answer:
Director is an elected representative of the shareholders.

Question 2.
Secretary is responsible for the decision-making and framing policies of a company.
Answer:
Director is responsible for the decision-making and framing policies of a company.

2. Explain the following terms/concepts.

Question 1.
Director
Answer:
Director is any person occupying a position by whatever name called, Directors are authorized by shareholders to conduct the activities of the company. Director prepares policies to achieve the aims of the company.

Question 2.
Board of Directors
Answer:
Directors are elected representatives of shareholders. Directors are responsible for decision making, policy framing, and determination of plans for achieving the target set. They have to exercise proper control, direction, and supervision. Directors exercise their powers and authorities collectively as a “Board”.

Question 3.
Conciseness
Answer:
Business letters to directors must be brief and to the point. Unnecessary details, irrelevant matters must not be written, conciseness refers to ‘briefness’. It is said that ‘brevity is the soul of correspondence’.

Question 4.
Politeness
Answer:
While corresponding with Directors, simple words and language must be used. A letter must show empathy, respect, and mutual understanding. It helps to create goodwill. Unnecessary big terms, long sentences should be avoided. Secretary should not use any harsh words while corresponding with directors.

Question 5.
Initiative
Answer:
The secretary must take utmost care while corresponding with directors. He should take the lead to make arrangements for the board meetings. Secretary also helps the directors in conducting meetings.

Question 6.
Notice and Agenda of board meeting
Answer:
The notice of the Board meeting is a document that is sent to all directors of the company. All types of companies are required to give notice of at least 7 days along with agenda before the actual day of the meeting. Notice of Board meetings is generally sent by hand delivery or by post or by electronic means.

3. Answer in brief.

Question 1.
What are the points to be considered by a secretary while corresponding with the directors?
Answer:
Following are the points or precautions to be taken by the secretary while corresponding with Directors.

Initiative: The secretary must take utmost care while corresponding with directors. He should take the lead to make arrangements for the board meetings. Secretary also helps the directors in conducting meetings.
Accuracy: In correspondence with directors “accuracy” or perfectness is very much important. Whatever information, action, data, or reply is to be given, must be given accurately. Secretary should provide correct, accurate, and perfect information.
Promptness: Every letter must be dealt with promptly, whatever might be the subject matter. Prompt replies always create a good impression about your organization, delays in correspondence may prove to be costly in a later stage.
Brevity: The letter acts as a representative of the organization. Hence, the secretary should always provide all information in a compact manner. A letter should not be lengthy. Secretary should provide maximum information in minimum words.
Politeness: In correspondence with directors simple and words and language must be used. Unnecessary use of big terms, long sentences should be avoided. Secretary should not use any harsh words.

Question 2.
Under what circumstances will a secretary correspond with a director?
Answer:
Following are the circumstances when a company secretary corresponds with a Director:

Sending Notice and Agenda of routine Board Meeting.
Requesting a director to disclose his interest in a particular contract.
Forwarding the minutes of the meeting to the directors who were absent from the meeting.
Intimation to the director about the provisions regarding absenteeism at board meetings.

4. Justify the following statements.

Question 1.
Directors exercise their powers and authorities collectively as a Board.
Answer:

The Directors occupy a very important position in the company’s management.
They are elected representatives of the shareholders.
Directors are responsible for decision making, policy framing, and determination of plans for achieving the target set.
They have to exercise proper control, direction, and supervision.
Directors exercise their powers and authorities collectively as a “Board”.

Question 2.
The Secretary should take certain precautions while corresponding with Directors.
Answer:

The company secretary is an executive officer of a Joint Stock Company.
The decisions taken by the board of directors are implemented by the secretary.
The secretary acts as a link between the directors and other management personnel.
The secretary provides assistance to the directors and guidance to the directors.
Directors occupy key positions and are superiors, so the communication with them should be cautious and tactful.

Question 3.
The Board of Directors is the elected representative of the shareholders.
Answer:

A Joint Stock Company is a business organization with a wide scope of business activity.
Though shareholders of the company are the part of owners as well as the members of the Joint Stock Company, they cannot participate in the management and day-to-day functioning of the company since they are scattered over a large geographical area.
So, as such the shareholders during the Annual General Meeting elect the directors to act as their representatives and carry on the business activities of the company.

Question 4.
The Secretary has to correspond with Directors on important occasions.
Answer:

The company secretary is an executive officer of a joint-stock company.
The decisions taken by the board of directors are implemented by the secretary.
The secretary acts as a link between the directors.
The secretary is said to be the ears, eyes, hands, and mouthpiece of the Board.
So under the following circumstances, the secretary writes letters to Directors:
- Sending Notice and Agenda of the routine Board meeting.
- Requesting directors to disclose their interest in a particular contract.
- Forwarding the minutes of the meeting to the directors, who were absent for the meeting.
- Intimating the director, the provisions regarding absenteeism at consecutive board meetings.

5. Answer the following questions.

Question 1.
Draft the notice and agenda of routine board meetings.
Answer:

INFORT TECHNOLOGY LIMITED
Registered Office: 12, Swaraj Excellency,
British Library Lane, F.C. Road, Pune-411004
CIN: BOO160MH20375JLB400180

Phone:020-21173428
Fax: 020-32194237

Website: www.inforttechnology.com.
E-mail: infort@technology.com.

Date: 25th March 2019

Ref. No.: D/MR/13/19-20
The Director,
Mr. Anvit Gaurav Gaikwad,
Vastushodh, Building 42, Flat No. 107,
Urbangram, Kirkutwadi, Pune.

Sub: Notice of the Board Meeting dated 28th April 2019.

Dear Sir,

I wish to inform you that the monthly Board meeting will be held on 28th April 2019 at 10.00 a.m. at the registered office of the company to transact the following business.

AGENDA

To confirm the minutes of the last meeting.
To confirm the applications of shares.
To consider the financial position of the company.
To decide the date of the next board meeting.
To discuss any other matter with the permission of the Chairman.

You are requested to be present at the meeting.
Thanking you,

Yours faithfully,
for Infort Technology Ltd.
Sign
Company Secretary

Question 2.
Write a letter to the director requesting him to disclose his personal interest in a contract.
Answer:

CHAUDHARI KANCHWALA LIMITED
Registered Office: S.N.1960, Kolhar Ghoti Highway,
Sangamner Akole Road,
Mangalapur.
CIN: B40408MH2019ABC1205

Phone: 02425-227244
Fax: 02425-221974

Website: www.chaudharikanchwala.com.
E-mail: chaudhari60@gmail.com

Date: 1st January 2019

Ref. No.: D/CK/23/19-20
The Director,
Mrs. Rajshri Atul Chaudhari,
Janata Raja Madian,
Vidyanagar, Sangamner.

Sub: Disclosure of personal interest.

Dear Madam,

I wish to inform you that the meeting of the Board of Directors of the company will be held on 21st January 2019. The Board decided to appoint Public Relations Officer for developing relations with customers and wholesalers.

As per information received from a reliable source, Mr. Vinayak Nehulkar your relative has applied for the post of PRO.

I wish to know whether the said information is true or false. In this case, if you have a personal interest in his appointment, kindly disclose your nature of interest as per Section 184 of the Companies Act, 2013.

Kindly revert as early as possible.

Thanking you,

Yours faithfully,
for Shri Chaudhari Kanchwala Ltd.
Sign
Company Secretary

Question 3.
Write a letter to the director who was absent for a Board Meeting to inform him about the proceeding of the meeting.
Answer:

PRABHAT OPTICAL COMPANY LTD.
Registered Office: Yuga Tower, Nashik-Pune Road,
Ganesh Nagar, Sangamner.

Phone: 02425-222697
Fax: 02425-232697

Website: www.prabhatoptical.com.
E-mail: ritivinayak@gmail.com.

Date: 20th May 2019.

Ref. No.: D/LB/16/19-20
The Director,
Mr. Vijay Kodur,
Tajane Mala, Navine Nagar Road,
Sangamner – 422605.

Sub: Information about the proceedings of the meeting.

Dear Sir,

Please find enclosed herewith a copy of the minutes of the Board Meeting held on 1st May 2019 for your information and record.

I invite your attention to paragraph No.25 of the minutes. A proposal to establish a branch office in Mumbai was moved by Mr. Laxman Gadekar. It was seconded by Mr. Atul Chaudhari. After a detailed discussion, the chairman finally concluded the meeting by accepting the proposal. The motion was passed with an 80% majority.

The other items on the agenda being of routine nature require no explanation.

Thanking you,

Yours faithfully,
for Prabhat Opticals Company Ltd.
Sign
Company Secretary

Encl.:- Copy of Minutes

Question 4.
Write a letter to the director reminding him about the provision relating to absenteeism at the Board Meeting.
Answer:

SURESH CABLES NETWORK COMPANY LIMITED
Registered Office: Shubham Heights,
Old Mumbai Agra Road, Ghoti.
CIN: H25301MH1999ABC14708

Phone: 042530
Fax: 312240

Website: www.sureshcnc.com
E-mail: sureshcable@gmail.com.

Date: 13th December 2019.

Ref. No.: D/CB/17/19-20
The Director,
Mrs. Archana Sumit Pawar,
Juna Adgaon Naka, Chavan Nagar,
Tapovan Road, Nashik.

Sub: Information about absenteeism in the board meeting.

Dear Madam,

This is to bring to your attention the fact that you have remained absent for two consecutive board meetings held on 15th October 2018 and 17th November 2018. The chairman has not received any intimation from you regarding your absence from these board meetings.

You are requested to note that Section 167(1)(b) of the Companies Act, 2013 provides that a director has to vacate his office if such absence is with or without the chairman’s permission.

The next board meeting of the company is to be conducted on 13th January 2019. Please make it convenient to attend this meeting or intimate the cause of absence to avoid disqualification under Section 167(l)(b). The notice and agenda of the Board Meeting have been already forwarded to you.

Thanking you,

Yours faithfully,
for Suresh Cable Network Company Ltd.
Sign
Company Secretary

Maharashtra Board Class 11 Secretarial Practice Solutions Chapter 8 Company Meetings – II

July 16, 2023

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 8 Company Meetings – II Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 8 Company Meetings – II

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
The secretary has to prepare ____________ before the meeting.
(a) resolution
(b) notice
(c) minutes
Answer:
(b) notice

Question 2.
General Meeting must have a notice of at least ____________ clear days.
(a) 7
(b) 21
(c) 14
Answer:
(b) 21

Question 3.
The gap between two annual general meetings should not be more than months.
(a) 15
(b) 18
(c) 24
Answer:
(a) 15

Question 4.
Auditor is appointed in ____________
(a) Annual General Meeting
(b) Creditors Meeting
(c) Extra ordinary General Meeting
Answer:
(a) Annual General Meeting

Question 5.
The business transacted in extra ordinary general meeting is ____________ business.
(a) Ordinary
(b) Routine
(c) Special
Answer:
(c) Special

Question 6.
An extraordinary general meeting is held ____________
(a) once in a year
(b) once in the life time
(c) under special circumstances
Answer:
(c) under special circumstances

Question 7.
Writing the minutes of meeting is the duty of the ____________
(a) Chairman
(b) Director
(c) Secretary
Answer:
(c) Secretary

Question 8.
New Directors in place of retiring Directors are appointed in the ____________
(a) Class Meeting
(b) Annual General Meeting
(c) Creditors Meeting
Answer:
(b) Annual General Meeting

Question 9.
Before the Annual General Meeting is held the Secretary has to compile ____________
(a) Auditor’s Report
(b) Committee Report
(c) Annual Report
Answer:
(c) Annual Report

Question 10.
The Secretary has to draft the minutes of the meeting within ____________ days of the meeting.
(a) Fifteen
(b) Sixty
(c) Forty
Answer:
(a) Fifteen

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Board Meeting	(1) Once in the year
(b) Auditor	(2) Minimum 4 meetings in a year
(c) Annual General Meeting	(3) Prepare at any time
(d) Extraordinary General Meeting	(4) Auditor’s Report
(e) Minutes of Meeting	(5) Prepared before the meeting
	(6) Prepared after the meeting
	(7) Under special circumstance
	(8) Prepared during the meeting
	(9) Once in Six months
	(10) Meeting of creditors

Answer:

Group ‘A’	Group ‘B’
(a) Board Meeting	(2) Minimum 4 meetings in a year
(b) Auditor	(4) Auditor’s Report
(c) Annual General Meeting	(1) Once in the year
(d) Extraordinary General Meeting	(7) Under special circumstance
(e) Minutes of Meeting	(6) Prepared after the meeting

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
A meeting of shareholders which is held once a year.
Answer:
Annual General Meeting

Question 2.
A meeting of shareholders is held between two annual general meetings.
Answer:
Extra Ordinary General Meeting

Question 3.
A Report which is prepared before Annual General Meeting.
Answer:
Annual Report

Question 4.
A meeting of the shareholders is held under special circumstances.
Answer:
Extra Ordinary General Meeting

Question 5.
A meeting of the preference shareholders of a company.
Answer:
Class Meeting

1D. State whether the following statements are True or False.

Question 1.
Only special business is transacted at Annual General Meeting.
Answer:
False

Question 2.
Annual Report is prepared by members.
Answer:
False

Question 3.
Extraordinary General Meeting is called for a special and urgent purpose.
Answer:
True

Question 4.
A member has a right to attend a Board meeting.
Answer:
False

Question 5.
A class meeting is the meeting of a particular class of shareholders.
Answer:
True

Question 6.
Director cannot appoint a proxy to attend and vote at the board meetings.
Answer:
True

Question 7.
21 clear days notice should be given in case of Board Meeting.
Answer:
False

Question 8.
Secretary has to arrange to take down the notes of the proceedings of the meeting.
Answer:
True

1E. Find the odd one.

Question 1.
Annual General Meeting, Extra Ordinary General Meeting, Board Meeting.
Answer:
Board Meeting

Question 2.
Annual General Meeting, Committee Meeting, Class Meeting.
Answer:
Committee Meeting

1F. Complete the sentences.

Question 1.
The meeting which is held once in every financial year is called as ____________
Answer:
Annual General Meeting

Question 2.
The meeting held to discuss and decide any special or urgent matters is called as ____________
Answer:
Extra-ordinary General Meeting

Question 3.
Meeting of all Directors is called as ____________
Answer:
Board Meeting

Question 4.
The Authority to convene the Annual General Meeting is with the ____________
Answer:
Board of Directors

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Interval between two Annual General Meetings	…………………….
(2) First Board Meeting	…………………….
(3) ……………………….	21 clear days
(4) ……………………….	Alteration in Memorandum of Association

(Notice of General Meeting, Extraordinary General Meeting, Not more than 15 months, within 30 days of company’s Incorporation)
Answer:

Group ‘A’	Group ‘B’
(1) Interval between two Annual General Meeting	Not more than 15 months
(2) First Board Meeting	within 30 days of companies Incorporations
(3) Notice of General Meeting	21 clear days
(4) Extraordinary General meeting	Alteration in Memorandum of Association

1H. Answer in one sentence.

Question 1.
Who can attend Board Meetings?
Answer:
Board of Directors attends Board Meetings.

Question 2.
When can an Adjourned Annual General meeting be held?
Answer:
Adjourned Annual General Meeting will be held on the same day, same place and same time in the next week.

Question 3.
Why is Extra-Ordinary General Meeting held?
Answer:
Extra Ordinary General Meeting is held under special circumstances to discuss urgent and important matters.

Question 4.
When should the first Annual General Meeting be held?
Answer:
The first Annual General Meeting must be held within nine (9) months of the closing of the first financial year of the company.

Question 5.
What should be the interval between two Annual General Meetings?
Answer:
The time interval between two Annual General Meetings should not be more than 15 months.

Question 6.
What should be the gap between two Board Meetings?
Answer:
The gap between the two Board Meetings should not be more than 120 days.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
Minimum four Committee Meetings must be held in a year.
Answer:
Minimum four Directors Meetings must be held in a year.

Question 2.
Creditors Meeting must be held once a year.
Answer:
Annual General Meeting must be held once a year.

Question 3.
Extra Ordinary Meeting must be held every year.
Answer:
Annual General Meeting must be held every year.

Question 4.
The Meeting of all Directors is called Annual General Meeting.
Answer:
The Meeting of all Directors is Called Director’s Meeting.

2. Explain the following terms/concepts.

Question 1.
Committee Meeting
Answer:
The Board of Directors may from the committee and delegate some of its powers to them. This committee should consist of only directors. The delegation of such powers to committees is to be authorized by Articles of Association and should be subject to the provisions of the Companies Act. A meeting of Allotment Committee, Transfer Committee, etc are examples of Committee Meeting.

Question 2.
Virtual Meeting
Answer:
If there is any urgency to call Board Meeting and practically not possible for Directors to attend the meeting in a short notice, so with the help of technology, a virtual meeting can be held. The meetings are recorded and active participation of Directors is also possible through video conferencing. Certain special and confidential matters cannot be dealt with through video conferencing as per the directions of the Central Government.

Question 3.
Creditor’s Meeting
Answer:
Creditors of the company include Debenture holders, Depositors, Banks, and others. The meeting of creditors is called when the company proposes to make a scheme for an arrangement with its creditors.
E.g. In the case of winding up of the company, a meeting of creditors and of contributors is held to ascertain the total amount due by the company and also to appoint a liquidator to wind up the affairs of the company.

3. Study the following case/situation and express your opinion.

1. Platinum Limited Company was incorporated on 1st January 2018. Advice the Board of Directors on the following matters.

Question (a).
Within what period should the company hold its 1st Annual General Meeting?
Answer:
First Annual General Meeting must be held within Nine (9) months of the closing of its financial year.

Question (b).
At which place should the Annual General Meeting be held?
Answer:
Annual General Meeting should be held at the registered office or at some other place within the city or village which the registered office of the company is situated.

Question (c).
How many days in advance should the notice and agenda be sent to members?
Answer:
Notice and Agenda should be sent 21 clear days before the Annual General Meeting.

2. XYZ Ltd held its Annual General Meeting on 11th May 2018. On 1st June Mr. X, a Director of the company was arrested for a financial scam. Hence the shareholders of the company want to remove him.

Question (a).
Can the company call for the next Annual General Meeting to be held immediately to remove the Director?
Answer:
No, the company cannot call the next Annual General Meeting immediately to remove the director.

Question (b).
Which meeting of members should the company hold to discuss the removal of the Director?
Answer:
Extra Ordinary General Meeting should be called to discuss removal of the director.

Question (c).
What type of resolution will be passed in this meeting for the removal of the Director?
Answer:
A resolution requiring special notice (section 115) will be passed in the meeting for the removal of the director.

4. Distinguish between the following.

Question 1.
Shareholders’ Meeting and Board Meeting.
Answer:

Basis

Shareholder’s Meeting (Annual General Meeting)

Board Meeting (Director’s Meeting)

1. Meaning

It is the meeting of all the members or shareholders of the company.

It is the meeting of all the Directors of the company.

2. Number of times

Annual General Meeting is held once every year. Extra Ordinary General Meeting is held to discuss urgent and important matters. It is called in between two Annual General Meetings.

Minimum 4 meetings to be held in a year and the gap between two meetings should not be more than 120 days.

3. Quorum

Quorum in case of Public Company is as follows:

No. of Shareholders	Quorum
Up to 1000	5 members
1000-5000	15 members
More than 5000	30 members

In the case of the private company, 2 members present in person shall be the quorum.

The quorum for the Board Meeting is a minimum of 2 Directors or 1/3rd of its total Directors whichever is higher.

4. Proxy

Members can appoint a proxy to attend and vote at the meeting on their behalf.

Directors cannot appoint a proxy to attend and vote at the meeting.

5. Notice

Notice of shareholder’s meeting must be sent to all the members at least 21 clear days before the meeting.

Notice of Board Meeting must be sent to every Director at least 7 days before the meeting.

6. Purpose

The purpose of this meeting is to take approvals from shareholders on the Annual Report, Appointment of Auditor, etc.

The purpose of this meeting is to discuss policy matters, future planning, etc.

Question 2.
Annual General Meeting and Extra-ordinary General Meeting
Answer:

Points	Annual General Meeting	Extraordinary General Meeting
1. Meaning	It is a meeting of shareholders held once in a year as per the provisions of Section 96 of the Companies Act, 2013.	It is a meeting of shareholders held under special conditions to discuss urgent and important matters as per the provisions of Section 100 of the Companies Act, 2013.
2. Purpose	The purpose is to give information about the progress made by the company during the year.	The purpose is to discuss urgent and important matters that cannot be postponed till next Annual General Meeting.
3. Number of times	The first Annual General Meeting is held within 9 months of the completion of the financial year and the subsequent Annual General Meeting is held within 6 months of the completion of the financial year.	Extraordinary General Meeting is held anytime between two Annual General Meetings.
4. Authority	Annual General Meeting is normally called by the Board of Directors and can be called by the Central Government under special circumstances.	Extra-ordinary General Meeting can be called by: Board of Directors Board of Directors on the requisition of members The National Company Law Tribunal
5. Business transacted	To approve annual accounts To approve Auditors and Director’s Report To appoint Auditors, Directors, etc. To declare a dividend.	To alter Articles of Association. To alter Memorandum of Association. Removal of Director. Voluntary winding up of a company.
6. Penalty	In case of default in holding Annual General Meeting, every officer concerned is punishable with a fine upto ₹ 1,00,000 and fine of ₹ 5,000 per day till default continues.	If the directors fail to hold this meeting on requisition, the requisionist themselves can hold it and recover the expenses from defaulting directors.

5. Answer in brief.

Question 1.
List the duties of a Secretary after the Annual General Meeting.
Answer:
Duties of a Secretary after Annual General Meeting:

Drafting Minutes: The secretary drafts the minutes of the meeting on the basis of the notes taken down during the proceedings of the meeting.
Implementation of decisions: The secretary instructs the concerned department for implementing the decisions taken at the meeting.
Dispatch Dividend Warrants: The secretary has to make an arrangement to dispatch dividend warrants to the shareholders.
Filing Resolutions: The secretary has to file an Annual Report with the Registrar. In case of a special resolution, the secretary has to file the special resolution with the Registrar within 30 days of passing that resolution.
Information to Absent Members: The secretary sends the information of the proceedings of the meeting to the absent members.

Question 2.
State the objectives of the Annual General Meeting.
Answer:
Purpose or objectives of Annual General Meeting: The main objective of holding an Annual General Meeting is to provide an opportunity to members to discuss the functioning of the company.

To review the progress and performance of the company.
To approve annual accounts, director’s report, and auditor’s report.
To appoint auditors and fix their remuneration.
To declare a dividend.
To elect new directors in place of retiring Directors To transact special business, if any like-
- business of the company taken over by the Government.
- the company did not function well through the year, etc.

Question 3.
State any four legal provisions regarding Board Meeting.
Answer:
Legal Provisions relating to Board Meeting:
(i) Authority to Convene:
The chairman of the Board is the proper authority to call the Board Meeting.

(ii) Number of Board Meetings:

First Board Meeting shall be held within 30 days of the date of its incorporation.
Subsequently, there should be four meetings in a year.
The gap between the two meetings should not be more than 120 days.
At least one Board meeting should be held in 6 months in case of one person company, small company and dormant company.
The gap between two meetings should not be more than 90 days in the case of one person company, a small company, and a dormant company.

(iii) Notice [Section 173(3)]:

The notice of every Board Meeting must be given to every director at least 7 days before the meeting at his registered address along with an agenda of the meeting.
It can also be sent by post or by hand delivery or by E-mail.
If a company fails to send notice within a given time, then every officer in default shall be liable to a penalty of Rs. 25,000.

(iv) Quorum (Section – 174):

The quorum for the Board Meeting is 1/3rd of the total number of directors or two directors whichever is higher.
Any fraction should be rounded to one.
Interested directors (personal interest in any matter) are not included in the quorum.

Question 4.
What are Class Meetings?
Answer:
Class Meetings (Section 48):

When the meeting of a particular class of shareholders takes place such as a preference shareholders meeting, it is known as a class meeting.
Such a meeting may be called for an alteration in the right and privileges of that particular class of shareholders.
It can also be called for the purpose of conversion of one class of shares into another.
The class meeting is not held regularly.

Question 5.
What is the purpose of conducting an Extra-ordinary General Meeting?
Answer:
Purpose or Objectives of Extra-Ordinary General Meeting:
The main purpose behind calling this meeting is to make shareholders aware of the happenings in the company or to seek their approval on some urgent and important matters of the company.

Alteration in the Memorandum of Association.
Alteration in Articles of Association.
Reduction of Share Capital.
Removal of a Director before the expiry of his term.
Removal of an Auditor before the expiry of his term.
Voluntary winding up of the company.

6. Justify the following statements.

Question 1.
Annual General Meeting is adjourned in absence of a quorum.
Answer:

Quorum is a minimum number of members to be present for a valid Meeting.
As per the Companies Act, 2013, the quorum for the Annual General Meeting of a public company is as follows:

No. of Shareholders	Quorum
Up to 1000	5 Members
1000 – 5000	15 Members
More than 5000	30 Members

For a private company minimum of 2 members should be present
If the meeting is conducted without a quorum, it is considered invalid.
In the absence of a quorum, Annual General Meeting is adjourned.
Adjourned Meeting will be convened on the same day, same time, and the same place in the next week.

Question 2.
A notice of the meeting must be sent to all members in case of the General Meeting.
Answer:

The Board of Directors is the authority to convene general meetings.
The notice must be given 21 clear days before the meeting to all those who are entitled to receive it.
The notice must be sent to all the members at their registered address in India.
Notice can be sent by registered post, if requested by the member, charges for the same is to be paid in advance.
Notice is also given in all leading newspapers.
Notice is accompanied by agenda and also Annual report, Auditor report, Annual accounts, etc. in case of Annual General Meeting.

Question 3.
Extra Ordinary General Meeting is called under special circumstances.
Answer:

Extraordinary General Meeting is held in between two Annual General Meetings.
It is held when the matter is of utmost importance and it cannot be postponed till the next Annual General Meeting.
It can be called to make shareholders aware of the happenings in the company.
It can also be called to seek their approval on important and urgent matters.
Important and urgent matters can be:
- Alteration in Memorandum of Association
- Alteration in Articles of Association
- Reduction in share capital
- Removal of a director or auditor
- Voluntary winding up of a company, etc.

Question 4.
Board of Directors can exercise their powers collectively through the Board Meeting.
Answer:

Directors collectively are called as Board of Directors.
The Board of Directors has to meet frequently with reference to the day-to-day working of the company.
All important decisions can be taken by the Board of Directors in the Board Meeting collectively.
Powers which can be exercised at Board Meeting are:
- The power to fill casual vacancies in the Board.
- To recommend the rate of dividend.
- The power to appoint managing Director, Manager, etc.
- To sanction a contract.
- To give loans or invest in shares of other companies.

Question 5.
The Quorum for the Annual General Meeting of a public company depends upon the number of shareholders.
Answer:

Quorum is a minimum number of members to be present for a valid meeting.
As per the Companies Act, 2013, the quorum for the Annual General Meeting of a public company are as follows:

No. of Shareholders	Quorum
Up to 1000	5 Members
1000 – 5000	15 Members
More than 5000	30 Members

- If the number of shareholders is up to 1000, then the required quorum is 5 members.
- If the number of shareholders is more than 1000 and up to 5000, then the required quorum is 15 members.
- If the number of shareholders exceeds 5000 then the quorum is 30 members for a public company.
In the absence of a quorum, if the meeting is conducted or a resolution is passed, it is considered illegal and invalid.
In the absence of a quorum, the meeting is adjourned to the same day, same place, and same time in the next week.

Question 6.
When a company is in financial difficulty it may call a meeting of creditors.
Answer:

Creditors of the company include Debenture holders, Depositors, Banks, financial institutions, etc.
When a company is in a financial crisis, it seeks the help of creditors.
The company can request creditors to alter the rate of interest, to alter the terms of security, etc.
Meeting of creditors can be called to compromise in a dispute with them.
Creditors and contributors can provide financial help to the company to safeguard them and also to protect them to avoid winding up of a company.

Question 7.
As per the Companies Act, every company has to hold the Annual General Meeting.
Answer:

Every company other than one person company must hold an Annual General Meeting once a year.
Annual General Meeting is held to review the working of the company during the previous financial year and take an effective decision for the next year.
It is mainly called to approve Annual Report, Auditor Report, Annual Accounts, to declare a dividend, to elect Directors, Auditors and to transact special business, if any.
First AGM shall be held within 9 months of the closing of the first financial year of the company.
The time interval between two Annual General Meetings should not be more than 15 months.
If the default is made in holding AGM then the company and every officer of the company in default are punishable with a fine which may extend up to ₹ 1,00,000 and up to ₹ 5,000 per day till default continues.

7. Answer the following questions.

Question 1.
Explain the functions of a secretary related to the Annual General Meeting.
Answer:
Functions (duties) of secretary related with Annual General Meeting:
Secretary has to perform many functions related to all types of meetings like Board Meeting, Annual General Meeting, etc. He has to perform all duties in compliance with the provisions of the Act. Secretary has to perform functions before, during, and after the meeting.

Functions of a secretary related to Annual General Meeting are as follows:
Functions Before the Annual General Meeting:
(i) Preparation of Accounts and Reports:
The secretary has to ensure that the Annual Accounts, Annual Report, and Auditor Report are prepared for consideration and approval.

(ii) Board Meeting:
Board Meeting is called to transact the following business:

To adopt Annual Accounts duly audited.
To adopt Director’s Report
To consider the rate of dividend
To fix the day, date, time, and place of the Annual General Meeting.

(iii) Notice:
The secretary has to send 21 clear days’ notice of a meeting to members and auditors before the meeting along with the auditor report, annual report, annual accounts, agenda, etc. The secretary has to arrange for publishing the notice of the meeting in leading newspapers.

(iv) Chairman Speech:
The secretary has to assist the chairman in drafting his speech to be delivered at the meeting.

(v) Preliminary Arrangement:
The secretary has to make arrangements such as booking of hall, refreshments, Register of Members, Members Attendance Book, etc.

Functions During the Annual General Meeting:
(i) Attendance:
The secretary has to get signatures of members present at the meeting in ‘Members Attendance Book.’

(ii) Quorum:
The secretary should see that the required quorum is present at the meeting and informs the chairman of the meeting.

(iii) Reading of Reports:
The secretary has to read the notice, Director’s Report, and Auditor’s Report as directed by the Chairman.

(iv) Notice of Proceedings:
The secretary should take down the notes of the proceedings of the meeting. He has to draft the minutes on the basis of these notes.

(v) Assist Chairman:
The secretary has to assist the chairman during the meeting. He should provide information, documents, etc as and when needed.

(vi) Conduct of Poll:
Secretary makes arrangements for conducting the poll if it is demanded by the members.

Functions After the Annual General Meeting:
(i) Drafting Minutes:
The secretary drafts the minutes of the meeting on the basis of the notes taken down during the proceedings of the meeting.

(ii) Implementation of decisions:
The secretary instructs the concerned department for implementing the decisions taken at the meeting.

(iii) Dispatch Dividend Warrants:
The secretary has to make an arrangement to dispatch dividend warrants to the shareholders.

(iv) Filing Resolutions:
The secretary has to file the Annual Report with the Registrar. In case of a special resolution, the secretary has to file the special resolution with the Registrar within 30 days of passing that resolution.

(v) Information to Absent Members :
The secretary sends the information of the proceedings of the meeting to the absent members.

Question 2.
Explain the different types of General Meetings of a company.
Answer:
General Meetings are meetings of Equity shareholders of the company. There are two types of General Meetings:

Annual General Meeting
Extraordinary General Meeting.

1. Annual General Meeting (Section 96):
Every Company other than One Person Company must hold Annual General Meeting once in a year.
Purpose or Objective of Annual General Meeting:

To review the progress and performance of the company.
To approve annual accounts, director’s report, and auditor’s report.
To appoint auditors and fix their remuneration.
To declare a dividend.
To elect new directors in place of retiring directors.
To transact special business, if any.

Legal Provisions relating to Annual General Meeting:
(i) Time Limit:

The time interval between two Annual General Meetings should not be more than 15 months.
Extension of time for holding the Annual General Meeting may be given by the Registrar to the company for a period not more than three months, except for the first Annual General Meeting.
One person company is exempted from the provision of Annual General Meeting.

(ii) Authority to Convene Annual General Meeting:
The Board of Directors is the proper authority to convene the Annual General Meeting.

(iii) Notice:
The notice must be given to all those who are entitled to receive it, at least 21 clear days in advance of the meeting. It is sent to the members at their registered address by post or through electronic mode like Email, etc.

(iv) Time, Day, and Place of Annual General Meeting:
Annual General Meeting shall be called during business hours between 9 am to 6 pm on any day other than National holidays. It can be held at the registered office or at some other place within the city or village in which the registered office of the company is situated.

(v) Quorum:
According to the Companies Act, 2013, the quorum for the Annual General Meeting of a public company is as follows:

No. of Shareholders	Quorum
Upto 1000	5 Members
1000 – 5000	15 Members
More than 5000	30 Members

For a private company minimum of two members should be present in person.

(vi) Adjournment:
In the absence of a quorum, Annual General Meeting stands adjourned. It will be convened on the same day, same time and the same place in the next week.

(vii) Default:
If the default is made in holding the Annual General Meeting as per the provisions of the Act or as per the instructions of the Central Government, the company and every officer of the company who is in default are punishable with a fine which may extend up to ₹ 1,00,000/-. If the default continues fine may extend up to ₹ 5,000 per day till the default continues.

2. Extra-Ordinary General Meeting (Section – 100):
Meaning:
It is a meeting which is called in between two Annual General Meetings under special circumstances, which cannot be postponed till the next Annual General Meeting. The matters discussed under this meeting is of utmost importance and urgent by nature.

Purpose or Objectives of Extra-Ordinary General Meeting:
The main purpose behind calling this meeting is to make shareholders aware of the happenings in the company or to seek their approval on some urgent and important matters of the company.

Alteration in the Memorandum of Association.
Alteration in Articles of Association.
Reduction of Share Capital of the company.
Removal of a Director before the expiry of his term.
Removal of an Auditor before the expiry of his term.
Voluntary winding up of the company.

Legal Provisions relating to Extra Ordinary General Meeting:
(i) Time for holding a meeting:
Extra Ordinary General Meeting is held between two Annual General Meetings under special circumstances. It can be held at any time as per the requirements of the company.

(ii) Authority to Convene:

The Board of Directors has the right to call an Extra-Ordinary General Meeting by sending a proper notice to the shareholders.
Extra-Ordinary General Meeting can be called by the members holding at least 1/10th of the paid-up capital or 1/10th of voting power in the company. Board must call Extra-Ordinary General Meeting within 45 days of receiving the requisition from the members.
If the Board fails to call such a meeting then the requisitionists themselves call this meeting within 3 months from the date of deposit of the requisition. The company shall pay all the expenses incurred for holding such meetings by the requisitionist.
National Company Law Tribunal (NCLT) can order such meetings on its own or at the request of a director or any members having voting rights.

(iv) Quorum:
According to the Companies Act, 2013, the quorum for the Annual General Meeting of a public company is as follows:

No. of Shareholders	Quorum
Up to 1000	5 Members
1000 – 5000	15 Members
More than 5000	30 Members

For a private company minimum of two members should be present in person.

Question 3.
Explain the different types of Director’s Meetings.
Answer:
Director’s meeting:
Directors collectively are called as Board of Directors. They meet regularly to discuss and decide upon company matters, implementation of plans and review the progress made by the company.

(i) Board Meeting (Section 173):
It is a meeting of the Board of Directors. The Board of Directors has to meet frequently with reference to day to day working of the company. The Board of Directors can exercise their powers collectively through the Board Meeting.

Legal Provisions relating to Board Meeting:
(a) Authority to Convene:
The chairman of the Board is the proper authority to call the Board Meeting.

(b) Number of Board Meetings:

First Board Meeting shall be held within 30 days of the date of its incorporation.
Subsequently, there should be four meetings in a year.
The gap between the two meetings should not be more than 120 days.
At least one Board meeting should be held in 6 months in case of one person company, small company, and dormant company.
The gap between two meetings should not be more than 90 days in the case of one person company.

(c) Virtual Meeting/Video Conferencing:
If there is any urgency to call Board Meeting and practically not possible for Directors to attend the meeting in a short notice, so with the help of technology, a virtual meeting can be held. The meetings are recorded and active participation of Directors is also possible through video conferencing. Certain special and confidential matters cannot be dealt with through video conferencing as per the directions of the Central Government.

(d) Notice [Section 173(3)]:
The notice of every Board Meeting must be given to every director at least 7 days before the meeting at his registered address along with an agenda of the meeting.
It can also be sent by post or by hand delivery or by E-mail.
If a company fails to send notice within a given time, then every officer in default shall be liable to a penalty of Rs. 25,000.

(e) Quorum (Section – 174)

The quorum for the Board Meeting is 1/3rd of the total number of directors or two directors whichever is higher.
Any fraction should be rounded to one.
Interested directors (personal interest in any matter) are not included in the quorum.

(f) Adjournment:
The meeting of the Board of directors can be adjourned in the absence of a quorum.
The adjourned meeting can be held on the same day, same time and the same place in the next week.

(ii) Committee Meeting:

The Board of Directors may from the committee and delegate some of its powers to them.
This committee should consist of only directors. The delegation of such powers to committees is to be authorized by Articles of Association and should be subject to the provisions of the Companies Act.
A meeting of Allotment Committee, Transfer Committee, etc are examples of Committee Meeting.

Activity 1 (Textbook Page No. 123)

Visit the website of any public company and study its Annual Report/Director’s Report.
Answer:
[Note: Students should do this activity by themselves with the help of the internet.]

Activity 2 (Textbook Page No. 127)

Enlist the functions of a Secretary related to an Extra-Ordinary Meeting.
Answer:
Functions of Secretary Relating to Extra Ordinary General Meeting:
(i) Before the Meeting:

Time of Holding: To decide the date, time, place, and agenda for holding the meeting in consultation with the chairman of the company and to convene the Board Meeting for finalization of these things by passing a resolution to that effect.
Drafting of Resolution: To draft the proposed resolution and explanatory statements and to get them approved by the board.
Notice: To draft the notice of the meeting and arrange to get the same printed together with the explanatory statements, proxy forms, and admission cards. To send the notice with agenda to all the members, at least 21 days before the meeting.
Public Notice: The notice is also published in the leading newspapers for the information of the general public.
Notice to Stock Authorities: If the shares are listed on the stock exchange, a notice of the meeting is sent to stock exchange authorities too.
Proxy: To verify proxy forms received and enter them in the proxy register.
Preparing Documents: The important documents, records, Books, etc. are kept ready for reference during the meeting.

(ii) During the Meeting:

Checking: To check the admission card of the members.
Attendance: To take attendance of members.
Ascertaining Quorum: To ascertain the quorum.
Reading Notice: To read the notice convening meeting.
Assist Chairman: To assist the chairman, by providing necessary information, records documents.
Notes of Proceedings: To make notes of the proceedings of the meeting.

(iii) After the Meeting:

Drafting Minutes: To draft the minutes of the meeting and enter the same in the Minute Book.
Signed by the Chairman: To get Minutes signed by the chairman of the meeting.
Filing of Resolution: To file the certified copy of the resolution passed at the meeting, to the Registrar of Companies.
Sending Intimation: To send intimation to the concerned persons.
Implementations: To carry out decisions taken at the meeting.

Maharashtra Board Class 11 Secretarial Practice Solutions Chapter 7 Company Meetings – I

July 16, 2023

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 7 Company Meetings – I Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 7 Company Meetings – I

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
The intimation to members stating the day, date, time, and place of meeting is known as ______________
(a) quorum
(b) agenda
(c) notice
Answer:
(c) notice

Question 2.
The notice of the general meeting must be sent to all members ______________ clear days before the meeting.
(a) 24
(b) 21
(c) 14
Answer:
(b) 21

Question 3.
The person who presides over the meeting is known as ______________
(a) Secretary
(b) Chairman
(c) Director
Answer:
(b) Chairman

Question 4.
A proxy can vote only in the case of voting by ______________
(a) division
(b) show of hand
(c) poll
Answer:
(c) poll

Question 5.
The appointment of an auditor requires ______________
(a) resolution requiring special notice
(b) an ordinary resolution
(c) a special resolution.
Answer:
(b) an ordinary resolution

Question 6.
A ______________ is the proposal put before the meeting for discussion and decision.
(a) Motion
(b) Resolution
(c) Minutes
Answer:
(a) Motion

Question 7.
The right of casting vote is given to the ______________
(a) Director
(b) Chairman
(c) Secretary
Answer:
(b) Chairman

Question 8.
Minutes must be recorded within ______________ days of the conclusion of the meeting.
(a) 60
(b) 21
(c) 15
Answer:
(c) 15

Question 9.
______________ resolutions are not passed in general meeting.
(a) Ordinary
(b) Special resolution
(c) Resolution by circulation
Answer:
(c) Resolution by circulation

Question 10.
For passing special resolution ______________ majority is required.
(a) 51%
(b) 66%
(c) 75%
Answer:
(c) 75%

Question 11.
For alterations in the Articles of Associations ______________ is required.
(a) a special resolution
(b) an ordinary resolution
(c) a resolution requiring a special notice
Answer:
(a) a special resolution

Question 12.
Provisions about resolutions are contained in ______________ of a company.
(a) Articles of Association
(b) Memorandum of Association
(c) Prospectus
Answer:
(a) Articles of Association

Question 13.
When a poll is demanded it must be taken within ______________ hours.
(a) 48
(b) 36
(c) 12
Answer:
(a) 48

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Chairman	(1) Proposal put before the meeting
(b) Quorum	(2) Casting vote
(c) Motion	(3) Amendment
(d) Minutes	(4) Minimum number of members required for a valid meeting
(e) Notice	(5) Voting
(f) Proxy	(6) Maximum number of members required for a valid meeting
	(7) Record of a meeting
	(8) Accepted motion
	(9) Intimation stating agenda, day, date, time and place of meeting
	(10) Representative of a member
	(11) Representative of a director
	(12) Formal motion

Answer:

Group ‘A’	Group ‘B’
(a) Chairman	(2) Casting vote
(b) Quorum	(4) Minimum number of members required for a valid meeting
(c) Motion	(1) Proposal put before the meeting
(d) Minutes	(7) Record of a meeting
(e) Notice	(9) Intimation stating agenda, day, date, time and place of meeting
(f) Proxy	(10) Representative of a member

1C. Write a word or a term or a phrase which can substitute each of the following statements.

Question 1.
The person who signs the minutes of the meeting.
Answer:
Chairman

Question 2.
A method of voting where members can vote in proportion to the number of shares held.
Answer:
Voting by-poll

Question 3.
A resolution passed by simple majority.
Answer:
Ordinary Resolution

Question 4.
A resolution passed by a 3/4 majority.
Answer:
Special Resolution

Question 5.
A company officer who is required to draft the minutes of the meeting.
Answer:
Secretary

Question 6.
A person who conducts the proceedings of the meeting.
Answer:
Chairman

1D. State whether the following statements are True or False.

Question 1.
Minutes are prepared before the meeting.
Answer:
False

Question 2.
A maximum number of members required to attend the meeting is called a Quorum.
Answer:
False

Question 3.
Meetings are held only to review the progress of the company.
Answer:
False

Question 4.
Chairman has the right to conduct the meeting.
Answer:
True

1E. Find the odd one.

Question 1.
Next Business Motion, Previous Question Motion, Special Resolution.
Answer:
Special Resolution

Question 2.
Ordinary Resolution, Resolution requiring special notice, Substantive motion.
Answer:
Substantive Motion

1F. Complete the sentences.

Question 1.
The authority who can convene the general meeting of shareholders is ______________
Answer:
Board of Director

Question 2.
The advance intimation about the day, date, time, etc. of a meeting sent to the members is called as ______________
Answer:
Notice

Question 3.
The minimum number of members required to be present at a meeting is called as ______________
Answer:
Quorum

Question 4.
A person who attends a general meeting and votes on behalf of a member is called as ______________
Answer:
Proxy

Question 5.
A proposal put before a meeting for consideration and adoption is called as ______________
Answer:
Motion

Question 6.
A formal and final decision taken in a meeting is called as ______________
Answer:
Resolution

Question 7.
The written records of proceedings of a meeting is called as ______________
Answer:
Minutes

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Voting by-poll	…………………
(2) ………………………	Special resolution
(3) Substantive Motion	…………………..
(4) ………………………	Chairman

(Presides over the meeting, Proxy, an amended Motion, 3/4 or 75% majority)
Answer:

Group ‘A’	Group ‘B’
(1) Voting by-poll	Proxy
(2) 3/4 or 75% majority	Special Resolution
(3) Substantive Motion	an amended Motion
(4) Presides over a Meeting	Chairman

1H. Answer in one sentence.

Question 1.
What are Minutes?
Answer:
Minutes are the written records of the proceedings of the meeting.

Question 2.
What is Notice?
Answer:
Notice is an advance intimation given by the company informing the day, date, time, and place of the meeting.

Question 3.
What is Ordinary Resolution?
Answer:
A resolution that is passed by a simple majority i.e., 50% or more is called Ordinary Resolution.

Question 4.
What is the agenda?
Answer:
Agenda is a list of items to be discussed or things to be done at the meeting.

Question 5.
Who is Chairman?
Answer:
A chairman is a person who presides over a meeting.

Question 6.
What is the point of order?
Answer:
A point of order is an objection or question raised by any member regarding irregularity in the proceedings of the meeting.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
Minutes are prepared before the meeting.
Answer:
Minutes are prepared after the meeting.

Question 2.
Resolution is a proposal put before a meeting for discussion.
Answer:
Motion is a proposal put before a meeting for discussion.

Question 3.
Polling papers are used for voting by show of hands.
Answer:
Polling papers are used for voting by-poll.

Question 4.
A Motion is a final decision taken in the meeting.
Answer:
A Resolution is a final decision taken in the meeting.

Question 5.
The agenda is prepared after the meeting.
Answer:
The agenda is prepared before the meeting.

1J. Arrange in proper order.

Question 1.
(a) Drafting Minutes
(b) Sending notice
(c) Confirming quorum
Answer:
(a) Sending Notice
(b) Confirming Quorum
(c) Drafting Minutes

Question 2.
(a) Motion
(b) Resolution
(c) Voting
Answer:
(a) Motion
(b) Voting
(c) Resolution

2. Explain the following terms/concepts:

Question 1.
Ordinary Resolution
Answer:
Ordinary Resolution (Section 114) A resolution that is passed by a simple majority i.e. 50% or more is called ordinary resolution. More than 50% of the votes should be in favour of the motion. An ordinary resolution need not be submitted to the Registrar of Companies. The notice of the meeting need not require to explain the particulars of an ordinary resolution.
Example:

Approval of Director’s report and Auditor report
Alteration of share capital
Declaration of dividend
Approval of final accounts
Election of director
Appointment of Secretary, Auditor, etc.

Question 2.
Agenda
Answer:
Agenda is a list of items to be discussed or things to be done or the business to be transacted at the meeting. It is sent along with the notice. A secretary prepares the agenda in consultation with the Chairman. The business at the meeting is transacted according to the order in which it appears in the agenda, routine matter first followed by special matters. The agenda is prepared as per the nature and the scope of the meeting.

Question 3.
Quorum
Answer:
Quorum (Section 103) is the minimum number of members required to be present for transacting a valid business. Without quorum proceeding of the meeting becomes invalid. The quorum should be present throughout the meeting i.e. from beginning till the end of the meeting. Secretary must check the quorum before the commencement of the meeting.

Question 4.
Proxy
Answer:
A proxy is a person, who can attend and vote at the meeting on behalf of an absent member. Every member of a company has a statutory right to appoint a proxy. When a member is not in a position to attend the meeting, he can appoint his representative. The representative of an absent member is called a Proxy. He has no right to speak at the meeting.

Question 5.
Amendment
Answer:
An amendment is any alteration proposed by a member to the original motion when a motion is under discussion. Amendments are generally moved to alter original motion by

Adding some new words or
Deleting some words or
Replacing some words or
Changing the position or place of words.

The amendment should be relevant to the main motion and it must not alter the original motion.

Question 6.
Motion
Answer:
A motion is a proposal put before the meeting for discussion and decision. A person who proposes a motion is called a proposer or a mover of a motion. A motion is subject to alteration before it is adopted by the meeting.

Question 7.
Special Resolution
Answer:
The resolution which is passed by a special majority is called a Special resolution. It is passed by 3/4th or 75% majority. The purpose of passing this resolution should be mentioned in the notice of the meeting. A special resolution is passed in general meetings only. Notice of special resolution has to be given to the members 21 clear days before the meeting. A copy of the special resolution must be filed with the Registrar of companies through e-filing on the MCA portal within 30 days of passing the resolution.
Examples:

Change in the name of the company (Section 13).
Change in the registered office of the company from one state to another (Section 12).
Alteration in the object clause of the company.
Reduction in the authorized share capital of the company.
Alteration in the Articles of Association of the company (Section 14)

Question 8.
Notice
Answer:
Proper notice must be given to a proper person for a valid meeting. Notice is an advance intimation given by the company informing the day, date, time, and place of meeting and business to be transacted at the meeting. It is given in writing to all those who are entitled to receive it. In case of general meeting, 21 days clear notice before meeting and 7 days in case of the Board meeting.

Question 9.
Minutes
Answer:
Minutes are the written records of proceedings of a meeting. It is a summary of all discussions and decisions taken at the meeting. It is a concise and accurate record of business transacted at the meeting. Minutes are prepared by the secretary within 15 days after the meeting. Minutes are recorded in minutes book and written in the past tense. After preparing minutes, it should be passed in consecutive meetings. Minutes book for General meetings and Board meetings are maintained separately.

Question 10.
Point of order
Answer:
A point of order is a question or objection raised by any member when he wants to point out an irregularity in the proceedings of the meeting. It is raised to draw the attention of the chairman.
The point of order can be raised on the following points:

Absence of quorum
Breach of any rule related to meeting
Misbehavior of any member
Unparliamentary or Improper language used by any member.

3. Study the following case/situation and express your opinion.

1. XYZ Ltd Co. sent notice of its Annual General meeting to its members. In the meeting, a resolution is to be passed on altering the Articles of Association.

Question (a).
Should agenda also be sent with Notice?
Answer:
Yes, the agenda should be sent along with the notice.

Question (b).
What type of resolution is needed to alter the Articles?
Answer:
A special resolution is needed to alter the Articles of Association.

Question (c).
Should the resolution for altering articles be filed with the Registrar of Companies?
Answer:
A copy of the special resolution passed for altering Articles of Association must be filed with the Registrar of Companies within 30 days of its passing.

2. A General meeting of a public limited company is to be held. State the provision of quorum for-

Question (a).
meeting of the company which has less than 1000 members?
Answer:
The quorum for less than 1000 members is 5 members.

Question (b).
meeting of the company which has more than 5000 members?
Answer:
The quorum for more than 5000 members is 30 members.

Question (c).
meeting of the company which has 2500 members?
Answer:
The quorum for 2500 members is 15 members.

3. Mr. P is elected as chairman of the General Meeting. Please advise him on the following matters:

Question (a).
What should be done if the votes cast in favour and against the motion are equal?
Answer:
A chairman of the general meeting (Mr. P) can exercise casting votes in case of a tie in votes.

Question (b).
How many votes can a member cast under the poll method?
Answer:
Under the poll method, a member can cast his votes as per the number of shares held by him. ‘One shares One vote’ is a rule.
Eg. If Mr. A has 100 shares, he can cast 100 votes.

Question (c).
What should Mr. P do if any point of order is raised by a member?
Answer:
If the point of order is raised, Mr. P has to stop discussion on an original motion under discussion and give his ruling/decision immediately on point of order.

4. Distinguish between the following.

Question 1.
Agenda and Minutes
Answer:

Basis	Agenda	Minutes
1. Meaning	Agenda is a list of ‘the things to be done or ‘business to be transacted at the meeting.	Minutes are the record of the business transacted, resolutions passed and decisions arrived at by the meeting.
2. Contents	Agenda, generally contains ‘what is to be done, motions, etc.	Minutes generally contain ‘what has been done, resolution, etc.
3. When Prepared	The agenda is prepared before the meeting.	Minutes are prepared after the conclusion of the meeting.
4. Tense	It is written in the future tense.	It is always in the past tense.
5. Importance	Agenda enables the members to know, what business the meeting is going to transact. The Chairman also can conduct the meeting as per the agenda.	Minutes are evidence of the decisions taken at a meeting. Even an absent member can know about the proceedings of the meeting.
6. Legal Status	Agenda has no legal importance. The Companies Act has not provided any rules regarding the drafting of an agenda.	Minutes are the legal evidence of resolutions passed at the meeting. It provides abstract proof of the proceedings at the meeting. It can even be produced in the court of law as a legal document.
7. Approval	The agenda is prepared by the secretary and approved by the Chairman, but no approval of the members is required.	Minutes are prepared by the secretary and approved by the members, finally, it is confirmed by the Chairman.
8. Alterations	Alterations in the order of items in an agenda can be made if the members attending the meeting agree to it.	Minutes once recorded in the minute book, signed by the Chairman, and confirmed by the members cannot be altered.

Question 2.
Motion and Resolution
Answer:

Basis	Motion	Resolution
1. Meaning	Motion is a written proposal placed before the meeting for discussion and decision.	Resolution is a duly approved and accepted motion in the meeting.
2. Amendment	Motion can be amended before it is put to vote.	Resolution once passed, cannot be amended.
3. Recording	A motion is not recorded in the minute’s book of a meeting.	All resolutions must be recorded in the minute book of a meeting.
4. Filing	The motion need not be filed with the Registrar of Companies.	Special resolutions are required to be filed with the Registrar of the Companies within 30 days of the date of its passing.
5. Withdrawal	It may be withdrawn by mover before it is put to vote.	Once it is approved, it cannot be withdrawn.
6. Evidence	It can not be used as evidence.	It can be used as legal evidence.
7. Types	Motion can be (a) Formal motion (b) Substantive motion	Resolution can be (a) Ordinary resolution (b) Special resolution

Question 3.
Voting by show of hands and Voting by-poll.
Answer:

Basis	Voting by show of hands	Voting by-poll
1. Meaning	Voting by show of hands is a method of voting in which members cast their votes by raising their hands.	Voting by-poll is a method in which every member is given a paper to record their votes according to the number of shares held by them.
2. Secrecy	Votes are given openly, hence secrecy is not maintained.	Votes are recorded on voting papers, hence secrecy is maintained.
3. Voting by Proxy	Proxies are not allowed to vote under this method.	Proxies can vote only in this method.
4. No. of Votes	‘One man One vote’ is the principle of voting.	‘One share One vote’ is the principle of voting.
5. Effect	The decision by show of hands is canceled, if the poll is demanded.	The decision taken by-poll is final and it cannot be canceled.
6. Nature	It is a democratic method of voting.	It is a capitalistic method of voting.

5. Answer in brief.

Question 1.
State the importance of company meetings.
Answer:
The term meeting is derived from the Latin word ‘Maeta’ means ‘face to face.
A meeting may be defined as ‘Any gathering or assembly or coming together of two or more persons for transacting some lawful business of a common concern.’ – P.K.Ghosh.

Importance of Company Meetings:

Members get the opportunity to come together and discuss the work and progress of the company.
Minutes of the last meeting is read, which enables the absent and present member to get a clear idea about the matters discussed in the previous meeting.
It enables the management to discuss and decide about their policies, plan, programs, etc, and its implementation.
Problems faced by the company can be discussed at the meeting and a decision can be arrived.
Legal formalities related to convening and conducting meetings of the company are fulfilled by conducting meetings.
Appointment of directors and auditors, declaration of dividend, approvals of the annual report, financial statements, auditors report, etc. can be done in the meetings.
Strict action can be taken against defaulters in the meeting.

Question 2.
State the legal provisions regarding Proxy.
Answer:
Legal Provisions regarding Proxy are as follows:

Appointment: Any member of a company entitled to attend and vote at the meeting shall be entitled to appoint a proxy to attend and vote at the meeting on his behalf. A minor cannot be appointed as a proxy. The proxy cannot be appointed for the Board Meeting. The appointment of a proxy is valid for an adjourned meeting.
Right: A proxy is not allowed to speak at the meeting. The proxy can vote only on resolutions passed by voting by-poll.
Membership: A person appointed as a proxy need not be a member of the company.
Proxy form: A member appointing a proxy must submit a duly completed proxy form in the registered office of the company at least 48 hours before the meeting.
Inspection: A member can inspect any proxy form by giving not less than three days’ notice to the company.

Question 3.
When can the point of order be raised?
Answer:
A point of order is a question or objection raised by any member when he wants to point out an irregularity in the proceedings of the meeting. It is raised to draw the attention of the chairman.
The point of order can be raised on the following points:

Absence of quorum
Breach of any rule related to meeting
Misbehaviour of any member
Unparliamentary or improper language used by any member.

When the point of order is raised, discussion on the original motion is stopped for some time. The chairman gives his decision on point of order. The decision given by the chairman is final and binding on the meeting.

Question 4.
Explain any four methods of Voting?
Answer:
Methods of Voting:
(i) Voting by Voice:
In this method, the members are requested to say ‘Yes’ if they favour the motion or say ‘No’ if they are against the motion. The decision is taken on the basis of the volume of voice. This method is rarely used. The volume of voice may not give a clear and correct idea about the majority of votes.

(ii) Voting by Division:
In this method, present members are divided into two groups. Members in favour and those against the motion are asked to go to different rooms. Then the sense of the meeting is ascertained by counting and the chairman declares the result.

(iii) Voting by show of Hands:
This method is used in the general meetings of a company. After the discussion on the motion, the Chairman requests the members to raise their hands in favour or against the motion. The chairman declares the result by counting a number of hands in favour or against the proposal. ‘One man One vote’ is the principle.

(iv) Voting by Poll:
The poll can be demanded after the declaration of result by show of hands. Under this method, each member can vote in proportion to the number of shares held by him. ‘One share One vote’ is the principle. Polling papers are given to members and proxies for recording their votes. The result of the poll is final and not to be challenged.

Question 4.
State the importance of Minutes.
Answer:
The importance of Minutes are as follows:

Official record: Minutes provide a ready reference to all the activities related to the meeting. It is the most important, official, and authentic record on which people can trust.
Evidence: Minutes can be used as prima facie evidence in a court of law.
Future reference: Minutes is a permanent record. It can be used for taking future managerial decisions.
Legal provisions: Minutes are prepared in order to comply with the provisions of the Companies Act and Secretarial Standard.
Information to absent members: Minutes help the absent members to know the proceedings of the meeting, as it is not always possible for everyone to attend the meeting.
Reminder: The matters discussed at the meeting are noted down in minutes. It acts as a reminder to the concerned people.
Information about resolution: The motion and discussion on the motion are reflected in the resolution. Interested parties can always refer to the text of a resolution when there is contradiction or confusion.
Inspection of Minutes: As per the Companies Act, Minutes Book should be kept at the registered office of the company and every member has right to inspect the Minutes book at the general meetings.

6. Justify the following statements.

Question 1.
The meeting must be duly convened and properly constituted.
Answer:

A meeting is defined as Any gathering assembly or coming together of two or more persons for the transaction of some lawful business of the common concern.
A meeting becomes valid when it is duly convened and properly constituted.
A meeting should be convened by proper authority.
It must be convened as per the provisions of the Companies Act, 2013.
Notice and Agenda of the meeting must be given 21 clear days before the meeting to all those who are entitled to receive it.
Thus, meetings must be duly convened and properly constituted.

Question 2.
Chairman is responsible for the proper conduct of meetings.
Answer:

A Chairman is a person who presides over a meeting.
There should be a proper person in the chair i.e. chairman to conduct the proceedings of the meeting smoothly, fairly, and properly.
A chairman should maintain overall discipline in the meeting.
A chairman has to maintain order at the debate and decide the priority of speakers so that members can get a chance to express their views.
A chairman should give his ruling on point of order at the earliest.
A chairman can initiate an order for voting and declare the result of voting.
A chairman must prevent improper behaviour, if any, by the member and prevent the use of unparliamentary language.
Thus, Chairman is responsible for the proper conduct of meetings.

Question 3.
Motion can be amended.
Answer:

A motion is a proposal put before the meeting for discussion and decision.
The amendment is an alteration proposed by a member to the original motion under discussion.
Amendment can be done by adding some new words or deleting some words in the original motion.
Amendment can be done by replacing some words or by changing the position of words to the original motion.
The amendment should be relevant to the original motion.
The amendment is done to make the original motion more effective and meaningful.
Amendment can be accepted or rejected. If accepted, it is considered for discussion. If approved by the meeting, it is incorporated in the original motion.
Thus, the motion can be amended.

Question 4.
The proxy can not speak in the meeting.
Answer:

A proxy is a representative of a member.
A proxy can attend and vote on behalf of an absent member.
If a member is not in a position to attend the meeting, he can appoint a proxy on his behalf.
A proxy need not be a member of the company.
A minor cannot be appointed as a proxy.
A proxy has no right to speak at the meeting.
A proxy can vote only under the poll method.
A member appointing a proxy must submit the proxy form in the registered office of the company at least 48 hours before the meeting.
Thus, Proxy can not speak in the meeting.

Question 5.
Notice is issued to members for a meeting along with the agenda.
Answer:

Notice is an advance intimation given by the company informing the day, date, time, and place of the meeting.
Agenda is given along with notice so that members can come well prepared for the meeting.
Members come to know about the matters to be discussed at the meeting.
If a member is not in a position to attend the meeting, he can appoint a proxy.
Member can advise his proxy to vote on certain matters.
Thus, a Notice is issued to members for a meeting along with the agenda.

7. Answer the following questions.

Question 1.
Explain the powers and duties of the chairman.
Answer:
A chairman is a person who presides over a meeting. There should be a proper person in the chair i.e. chairman to conduct the proceedings of the meeting smoothly, fairly, and properly.

Powers of Chairman:

To maintain order and conduct the meeting properly.
To maintain order at the debate.
To decide the priority of speakers.
To prevent improper behaviour and unparliamentary language.
To adjourn the meeting.
To exercise a casting vote.
To declare the result of the voting.
To give a ruling on point of order.

Duties of Chairman:

To see that the meeting is duly convened and properly constituted.
To see that the meeting is held according to the rules.
To see that the items are discussed as per the order of the agenda.
To maintain overall discipline in the meeting.
To give a fair chance to members to express their views.
To declare the result of voting.
To check and sign minutes book.
To act in the best interest of the company.

Question 2.
Explain the different methods of voting.
Answer:
Different methods of voting are as follows:
(i) Voting by voice:
In this method, the members are requested to say “Yes’ if they favour the motion or say ‘No’ if they are against the motion. The decision is taken on the basis of the volume of voice. This method is rarely used. The volume of voice may not give a clear and correct idea about the majority of votes.

(ii) Voting by division:
In this method, present members are divided into two groups. Members in favour and those against the motion are asked to go to different rooms. Then the sense of the meeting is ascertained by counting and the chairman declares the result.

(iii) Voting by ballot:
Under this method, every member entitled to vote is asked to record the vote on a ballot paper and deposit it in the ballot box. The votes are counted and the result is declared. This method ensures secrecy in voting.

(iv) Voting by show of hands:
This method is used in the general meetings of a company. After the discussion on the motion, the Chairman requests the members to raise their hands in favour or against the motion. The chairman declares the result by counting a number of hands in favour or against the proposal. ‘One man One vote’ is the principle.

(v) Voting electronically:
The Central Government may prescribe certain companies for having compulsory electronic voting in general meeting. Members may exercise his right to vote by electronic means.

(vi) Voting by postal ballot:
The Central Government may prescribe certain companies for having voting by postal ballot. Ballot papers are sent by post to members.

(vii) Voting by Poll:
Poll can be demanded after the declaration of result by show of hands. Under this method each member can vote in proportion to the number of shares held by him. ‘One share One vote’ is the principle. Polling papers are given to members and proxies for recording their votes. The result of poll is final and not to be challenged.

Question 3.
Explain the types of resolution.
Answer:
Types of Resolution:
(i) Ordinary Resolution:
A resolution which is passed by simple majority is called ordinary resolution. More than 50% of the votes should be in favour of motion. An ordinary resolution need not be submitted to the Registrar of Companies. The notice of the meeting need not require to explain the particulars of an ordinary resolution.

Examples:

Approval of Directors report and Auditor report.
Alteration of share capital
Declaration of dividend, etc.

(ii) Special Resolution:
The resolution which is passed by special majority is called as Special resolution. It is passed by 3/4th or 75% majority. The purpose of passing this resolution should be mentioned in the notice of the meeting. A special resolution is passed in general meeting only. Notice of special resolution has to be given to the members 21 clear days before the meeting. A copy of special resolution must be filed with the Registrar of Companies through e-filing on MCA portal within 30 days of passing resolution.

Examples:

Change in the name of the company.
Change in the registered office of the company from one state to another.
Alteration in the object clause of company, etc.

(iii) Resolution requiring special notice:
Some resolutions require special notice as per the companies Act or Articles of Association of the company, hence such resolutions are called resolution requiring special notice. Special Notice resolution may be ordinary or special resolution. A proposer of a motion has to give a special notice of 14 days to the company. The company should then give a notice of that resolution to all members atleast 7 days before the meeting.

Examples:

Resolution to appoint a person as an auditor other than a retiring auditors.
A resolution providing that a retiring auditor shall not be reappointed.
Resolution to appoint director other than retiring director, etc.

(iv) Resolution requiring registration:
Resolution which are required to be registered with the Registrar of Companies are called as resolution requiring registration. Resolution should be filed with Registrar within 30 days of its passing.

Examples:

All special resolutions.
Resolution made by Board of Directors regarding appointment or re-appointment of Managing director.
Resolution by members regarding dissolution of the company, etc.

(v) Resolution by Circulation:
When directors have to take important and urgent decisions and do not have a sufficient time to call a meeting, then a draft resolution is prepared and forwarded to all directors to pass resolution. It is called as resolution by circulation.

Activity: (Textbook Page No. 113)

Prepare an agenda for a meeting to discuss holding of Annual Day.
Answer:

AGENDA
Agenda for “Utsav – 2019”.
Annual day of Reliable Junior College, Mahim.

To discuss the date, venue and time for Utsav – 2019.
To decide and invite Chief guest for innaguration.
To set up the various committees – Cultural Committee, Welcoming Committee, Refreshment Committee, Security Committee, Stage Committee.
To assign the responsibilities to the various committees.
To issue special passes for the VIP’s and guest.
To fix the budget for the annual day.
To decide the vendor for Momentos and Medals.

Maharashtra Board Class 11 Secretarial Practice Solutions Chapter 6 Directors and Key Managerial Personnel of a Company

July 16, 2023

Balbharti Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 6 Directors and Key Managerial Personnel of a Company Textbook Exercise Questions and Answers.

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 6 Directors and Key Managerial Personnel of a Company

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
_____________ comprises of a team of Directors.
(a) Board of Directors
(b) Board of Trustees
(c) Board of Managers
Answer:
(a) Board of Directors

Question 2.
_____________ can be a director.
(a) An Individual
(b) A Firm
(c) A Body corporate
Answer:
(a) An individual

Question 3.
Upto _____________ as maximum directors are allowed to a company.
(a) five
(b) fifteen
(c) fifty
Answer:
(b) fifteen

Question 4.
A maximum of _____________ Directorships is allowed to a person.
(a) two
(b) ten
(c) twenty
Answer:
(c) twenty

Question 5.
A maximum of _____________ Directorships of a public company is allowed to a person.
(a) one
(b) ten
(c) twenty
Answer:
(b) ten

Question 6.
_____________ is a unique identification number required to be a Director.
(a) PIN
(b) DIN
(c) TIN
Answer:
(b) DIN

Question 7.
_____________ powers are the powers given to Board under the Act.
(a) Statutory
(b) Managerial
(c) Administrative
Answer:
(a) Statutory

Question 8.
Director represents company in his role as _____________
(a) Agent
(b) Managing Partner
(c) employee
Answer:
(a) Agent

Question 9.
Managing Director is appointed for a period of _____________ years
(a) 5
(b) 10
(c) 15
Answer:
(a) 5

Question 10.
_____________ is required to work under superintendence, control, guidance of the Board.
(a) Government
(b) ROC
(c) Managing Director
Answer:
(c) Managing Director

Question 11.
_____________ is an employee of the company.
(a) Alternate director
(b) Non-executive Director
(c) Whole-time director
Answer:
(c) Whole time Director

Question 12.
_____________ need not be a director of the company.
(a) Manager
(b) Managing Director
(c) Whole-time director
Answer:
(a) Manager

Question 13.
_____________ needs a whole time director.
(a) Listed company
(b) Partnership
(c) OPC
Answer:
(a) Listed company

Question 14.
To provide guidance to Board is _____________ duty of Company Secretary.
(a) Personal
(b) General
(c) Statutory
Answer:
(c) Statutory

Question 15.
Only a member of _____________ can be a practicing Company Secretary.
(a) ICAI
(b) ACCA
(c) ICSI
Answer:
(c) ICSI

Question 16.
_____________ is to be prepared in prescribed form MR-3.
(a) Annual Report
(b) Auditors Report
(c) Secretarial Audit Report
Answer:
(c) Secretarial Audit Report

1B. Match the pairs.

Question 1.

Group ‘A’	Group ‘B’
(a) Board of Directors	(1) Nominated by the Board
(b) Managing Director	(2) Assists and advises the Board
(c) Company Secretary	(3) Automatic Appointment
(d) First Directors	(4) Appointed by ROC
(e) Alternate Director	(5) Extensive Powers of management
	(6) Substantial Powers of management
	(7) Appointed by Promoter
	(8) Assist and Advises the Government
	(9) Negligible Powers of management
	(10) Nominated by Council

Answer:

Group ‘A’	Group ‘B’
(a) Board of Directors	(5) Extensive Powers of management
(b) Managing Director	(6) Substantial Powers of management
(c) Company Secretary	(2) Assists and advises the Board
(d) First Directors	(7) Appointed by Promoter
(e) Alternate Director	(1) Nominated by the Board

Question 2.

Group ‘A’	Group ‘B’
(a) Public company	(1) Arises due to death of Director
(b) Private company	(2) Collective Powers
(c) Secretarial Auditor	(3) Individual Powers to Directors
(d) Casual Vacancy of a Director	(4) Arises due to additional work
(e) Powers of the Board	(5) Appointed by Managing Director
	(6) At least 2 (two) Directors
	(7) At least 3 (three) Directors
	(8) At least 15 (fifteen) Directors
	(9) At least 1 (one) Director
	(10) Appointed by the Board

Answer:

Group ‘A’	Group ‘B’
(a) Public company	(7) At least 3 (three) Directors
(b) Private company	(6) At least 2 (two) Directors
(c) Secretarial Auditor	(10) Appointed by the Board
(d) Casual Vacancy of a Director	(1) Arises due to death of Director
(e) Powers of the Board	(2) Collective Powers

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
The organization with distinct features of separate ownership and management.
Answer:
Joint-stock company

Question 2.
The officer is responsible for the company’s finances.
Answer:
Chief Financial Officer

Question 3.
The body of elected representatives of the company.
Answer:
The Board of Directors

Question 4.
The officer is a statutory and administrative officer and also acts as co-ordinator of the company.
Answer:
Company Secretary

Question 5.
Qualification required to be a Company Secretary.
Answer:
Member of ICSI

Question 6.
Agents, Trustees, and Managing Partners of the company.
Answer:
The Board of Directors

Question 7.
The audit which checks compliances of different legislations.
Answer:
Secretarial audit

Question 8.
This KMP signs documents of the company requiring authentication by the company.
Answer:
Company Secretary

Question 9.
The nature of the relationship of Directors with the company.
Answer:
Fiduciary

Question 10.
Name the Secretarial Standard – 1.
Answer:
Secretarial Standards on meetings of the BOD

Question 11.
Name the Secretarial Standard – 2.
Answer:
Secretarial Standards on General Meeting

Question 12.
Name the Secretarial Standard – 3.
Answer:
Secretarial Standards on Dividend

1D. State whether the following statements are True or False.

Question 1.
A large number of shareholders necessitates the company to have a separate managerial body.
Answer:
True

Question 2.
The maximum number of Directors allowed to a company is 15 (fifteen).
Answer:
True

Question 3.
A public company should have a minimum of 10 (ten) directors.
Answer:
False

Question 4.
DIN is required for Secretaryship.
Answer:
False

Question 5.
Executive Director is called an outside Director.
Answer:
False

Question 6.
The promoter of a company cannot be the Independent Director.
Answer:
True

Question 7.
Only individuals can be directors.
Answer:
True

Question 8.
The casual vacancy of the Board is filled by the members.
Answer:
False

Question 9.
To function as per Articles of Association of the company is the statutory duty of the Board.
Answer:
True

Question 10.
A Director is an employee of the company.
Answer:
False

Question 11.
The Managing Director is appointed by a resolution.
Answer:
True

Question 12.
The minimum and maximum age to be a Managing Director is 21 and 70 respectively.
Answer:
True

Question 13.
A company may appoint more than one M.D.
Answer:
True

Question 14.
Indian companies prefer a Managing Director over a Manager.
Answer:
True

1E. Find the odd one.

Question 1.
Woman Director, Promoter, Executive Director.
Answer:
Promoter

Question 2.
Absent at Board Meeting, failure to disclose an interest, DIN.
Answer:
DIN

1F. Complete the sentences.

Question 1.
Separate ownership and management is a unique feature of _____________
Answer:
Company

Question 2.
Minimum number of Directors for a private company should be _____________
Answer:
Two

Question 3.
Minimum number of Directors for a public company should be _____________
Answer:
Three

Question 4.
Minimum number of Directors for an OPC should be _____________
Answer:
One

Question 5.
First Directors of a company are appointed by _____________
Answer:
Promoter

Question 6.
At least one Woman Director is required by _____________ company.
Answer:
Listed Company

Question 7.
Casual vacancy on Board is filled by _____________
Answer:
Board

Question 8.
Director is the guardian of interest of company as _____________
Answer:
Trustees

Question 9.
First Secretary is appointed by _____________
Answer:
Promoters

Question 10.
The audit which checks the compliance of Companies Act is called as _____________
Answer:
Secretarial Audit

1G. Select the correct option from the bracket.

Question 1.

Group ‘A’	Group ‘B’
(1) Rotational Director	…………………..
(2) ……………………….	Alternate Director
(3) Woman Director	…………………..
(4) ……………………….	First Director

(Every Listed Company, Appointee by Promoters, Appointed in Place of a director who is absent, Retire by Rotation)
rotation)
Answer:

Group ‘A’	Group ‘B’
(1) Rotational Director	Retire by Rotation
(2) Appointed in Place of a director who is absent	Alternate Director
(3) Woman Director	Every Listed Company
(4) Appointee by Promoters	First Director

1H. Answer in one sentence.

Question 1.
Who is the officer responsible for the company’s financial plan?
Answer:
Chief Financial Officer is responsible for the company’s financial plan.

Question 2.
What is the importance of Secretarial Standards?
Answer:
The main aim of Secretarial Standards is to standardize all diverse secretarial practices prevailing in the corporate world.

Question 3.
Who provides guidance to the Board of Directors?
Answer:
Company Secretary provides guidance to the Board of Directors.

Question 4.
What is the tenure of ‘Managing Director?
Answer:
The tenure of the Managing director is Five Years.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
A public company must have a minimum of 15 directors.
Answer:
A public company must have a minimum of 03 directors.

Question 2.
First Directors are appointed by ROC.
Answer:
First Directors are appointed by Promoters.

Question 3.
Secretarial Standards are given by the Companies Act, 2013.
Answer:
Secretarial Standards are given by the Institute of Company Secretaries of India.

2. Explain the following terms/concepts.

Question 1.
Director
Answer:
Director is a person appointed to manage, direct and supervise the company. According to Sec-2(34) of the act, “Director means a director appointed to the Board of the company”.

Question 2.
Managing Director
Answer:
Managing Director is a director appointed by virtue of an agreement with the company; or by passing a resolution in the general meeting or by its Board of Directors or by virtue of Memorandum of Associations or Articles of Association. He is entrusted with substantial powers of management of the affairs of the company. He is appointed for a period of 5 years.

Question 3.
Independent Director
Answer:
As per section 149 of the Companies Act, 2013, any director other than a managing director, whole-time director, or a nominee director is termed as an independent director.

Question 4.
Executive Director
Answer:
Executive Director is also called as ‘Whole Time Director’, He is in full-time employment with the company. He plays an important role in the day-to-day management of the company.

Question 5.
Non-Executive Director
Answer:
Non-Executive Director is known as ‘Outside Director’. Non-Executive Director is not involved in the day-to-day management of the company. He is appointed to get second opinions from the board.

Question 6.
Alternate Director
Answer:
Alternate Director is a director who is nominated by the board in the place of absence director. He is appointed for a minimum of 3 months.

Question 7.
Casual vacancy of Director
Answer:
The casual vacancy is created due to the death of a director, which is filled by the board at the board meeting. It is valid till the vacating director’s incomplete term.

Question 8.
Chief Financial officer
Answer:
An officer responsible for the company’s finances is called Chief Financial Officer. He need not be a director of the company. He has to compulsory sign the audited financial statements of the company.

Question 9.
Company Secretary
Answer:
The company secretary is appointed to perform functions of the company and he is appointed by a resolution of the Board. He has to follow the terms and conditions decided by the board. He should be a member of ICSI.

Question 10.
Secretarial Standard
Answer:
It is formulated by ICSI and approved by Central Government through the Ministry of Corporate Affairs (MCA). The main purpose of setting Secretarial Standards is to standardized fine corporate government practices prevailing in companies.

Question 11.
Secretarial Audit
Answer:
It is an audit that monitors the compliance requirements of the company. The main aim of such an audit is to detect errors and mistakes in compliance with the rules and regulations of the Companies Act. It builds confidence among regulators, management, and shareholders of the company.

Question 12.
The Board of Directors
Answer:
Representatives elected by the Equity Shareholder in their Annual General Meeting are called as Board of Directors. They are allotted certain powers to control and manage the business of the firms.

3. Study the following case/situation and express your opinion.

1. Mr. A is a commerce graduate. He has vast experience in the field of finance and the financial market. He wishes to become a director of PQR Co. Ltd.

Question (a).
Is he required to obtain DIN?
Answer:
He was required to obtain DIN. It is compulsory to acquire DIN for every Director.

Question (b).
Can PQR Co. Ltd. object to his directorship on lack of specialized qualification?
Answer:
The company act has not prescribed any academic or professional qualification for directors, so he can obtain directorship.

Question (c).
If he is appointed as director of PQR Co. Ltd, is he entitled to remuneration?
Answer:
The managerial position entitles him to get managerial remuneration so if Mr. A is appointed as director of PQR Co. Ltd then he is entitled to remuneration.

2. Mr. Z is a member of the Institute of Company Secretaries of India.

Question (a).
Can Mr. Z be appointed as pro-tem Secretary of LMN Ltd. which is under formation?
Answer:
Yes, Mr. Z can be appointed as pro-tem secretary of LMN Ltd. which is under formation. The First Secretary is appointed by the promoters of the company.

Question (b).
Can Mr. Z work as Secretarial Auditor?
Answer:
Yes, Mr. Z can work as Secretarial Auditor because he is a member of ICSI.

Question (c).
Mr. Z wishes to be employed as whole time Secretary in companies ABC Ltd. and OPC Ltd. Is he allowed?
Answer:
Mr. Z, as a whole-time secretary, cannot hold office in more than one company. So, Mr. Z can be employed either in ABC Ltd or One Person Company and not in both.

3. Mr. M wishes to be the Managing director of QRS Ltd.

Question (a).
The age of Mr. M is 30 years. Can he be appointed as MD of a company?
Answer:
Yes, Mr. M is 30 years old and the age required to be completed for MD’s post is 21 years. So he can be appointed as MD of a Company.

Question (b).
Is it necessary that Mr. M should be one of the directors on the Board of QRS Ltd?
Answer:
Yes, It is necessary that Mr. M should be one of the directors on the board of QRS Ltd. He should be appointed by the board.

Question (c).
For how long a period QRS Ltd. can appoint Mr. M. as a Managing Director?
Answer:
QRS Ltd can appoint Mr. M. as a managing director for a period of 5 years.

4. Distinguish between the following.

Question 1.
Director and Managing Director
Answer:

Basis	Director	Managing Director
1. Meaning	Director is the elected representative of the shareholders of the company.	The managing director represents the board in the day-to-day activities of the business.
2. Appointment	He is elected at the Annual General Meeting by the members of the company.	He is appointed by the board of directors.
3. Tenure	Directors of public companies retire by rotation. Maximum tenure is of 3 years, 1/3 of Independent Director is not liable to retire by rotation.	The tenure of managing director is for a term of five years.
4. Remuneration	Remuneration for services is given as per specific provisions. The director is given sitting fees to attend the board meeting which may extend up to ₹ 1 lakh plus remuneration.	M.D is entitled to either a monthly salary or 5 % of the net profit. If more than one M.D. is appointed then maximum remuneration cannot be more than 10% of the net profit.
5. Status	Directors are elected representatives of the shareholders managing company in absence of shareholders. They can be agents of the company but not employees of the company.	Managing Director has dual status i.e. a director and a manager (employee).
6. Positions held	Director is the only member or person on the board.	The managing director is the director on the Board. M.D. is the whole time manager in the company.
7. Number of companies	Director can work in 20 companies at a time wherein a maximum of 10 public companies at a time.	A person can be an M.D. of a maximum of 2 companies at a time.

Question 2.
Managing Director and Manager
Answer:

Basis	Managing Director	Manager
1. Meaning	The Managing Director is appointed by the Board to look after the day-to-day administration of the company.	The manager is in charge of the whole management affairs of the company.
2. Appointment	The managing director is appointed by an agreement with the company or by resolution passed by the company in a Board meeting or by virtue of its Articles of Associations of the company.	The manager is appointed under a contract of service.
3. Remuneration	MD is entitled to either a monthly salary or 5% of net profit. If there is more than one managing director, the maximum remuneration payable is 10% of the net profit.	Maximum remuneration to a manager cannot be more than 5% of the net profit.
4. Number of posts	A company may have more than one Managing Director. He can be M.D. in maximum of 2 companies.	The company can have only one post of manager.
5. Power	He is given substantial powers of management.	He is entrusted with whole powers of management.
6. Position held	The managing director must be the director of the company.	The manager need not be a director of the company.

Question 3.
Managing Director and Whole Time Director
Answer:

Basis	Managing Director	Whole Time Director
1. Meaning	The managing director represents the board in the day-to-day management of the company.	The whole time director devotes whole time to the working of the company.
2. Powers	The Managing Director is given substantial powers of management.	A whole-time director does not have the power to take decisions on policy matters.
3. Number of posts	A person can be an M.D. of a maximum of 2 companies at a time.	More than one whole-time directorship is not possible at a time.
4. Performance	He manages the affairs and business of the company.	He performs important administrative functions of the company.

5. Answer in brief.

Question 1.
What is DIN?
Answer:

It means Director Identification Number.
DIN is a Unique Identification Number for an existing director or person intending to be the director of a company.
It is compulsory to acquire DIN by Director.
It helps in the detection and handling of offenses committed by a director.
It is obtained through an online process by filing an application.

Question 2.
State any four powers of the Board of Directors.
Answer:

Director is a person appointed to manage, direct and supervise the affairs of the company.
The power of the Board of Directors are as follows:
To appoint or remove key managerial personnel: The Board of Directors has the power to appoint and remove key managerial personnel.
To recommend dividend: The board of directors recommends the dividend to the shareholders.
To fill a casual vacancy in the Board: Casual vacancy in the board arises due to different reasons such as the death of a director who is filled by the Board at the Board meeting.
To issue securities whether in India or abroad: Board of Director’s issue securities means shares, debentures, bonds) in India and abroad also.

Question 3.
Mention any four ways in which the office of a director becomes vacant.
Answer:
The office of a Director shall automatically become vacant in the following ways:

Any disqualification: A person cannot be appointed as a director if he is of unsound mind or insolvent or convicted by the court.
Absentee at Board meeting: Director who has been absent in the meeting of the board of directors held during the period of 12 months with or without taking leave of absence of the Board.
Disqualification by Court or Tribunal: Director has to vacate office if he has been disqualified by an order of a court or the Tribunal.
Provision of the Act: Director has to vacate office if he is removed under the provisions of the Companies Act.

Question 4.
State the powers of a Managing Director.
Answer:
As it is stated in the definition itself the Managing Director is entrusted with the substantial powers of management, which clearly indicates that he has been given certain important powers of routine business matters of a company.
The powers exercised by him are fellows:

To act as a link between the Board of Directors and the managerial staff.
To look after the management and administration of a company.
To appoint the company employees.
To participate in policymaking as well as policy execution.
To sign contracts on behalf of a company.
To decide about the investment of funds of a company.
To receive remuneration from a company.

Question 5.
State the statutory duties of a company secretary.
Answer:
Secretary is an employee of the company. He enjoys the power and advises the management.
Statutory duties of a company secretary are as follows:

To organize meetings and be present at all the meetings of the company.
To maintain the minutes of all meetings.
To issue notices and circulars to the members of the company.
To maintain and update the Register of members and debenture holders and other books of the company.
To file all necessary returns with the Registrar of Companies.
To communicate with the shareholders on various matters.

6. Justify the following statements.

Question 1.
Directors are managing partners.
Answer:

Directors have to work as a team as Board of Directors, not as an individual.
The powers by Board are subject to provisions of the Companies Act and Memorandum and Articles of Associations.
Director is required to perform his functions.
He represents shareholders to conduct and manage the business of the company on their behalf.
They are entrusted with vast powers of management and perform several functions which are proprietary in nature like allotment of shares, raising of loans, investing funds of the company.
This is because they themselves are significant shareholders of the company.
In fact, they are the most active shareholders of the company.
Thus, Directors are the managing partners of the company.

Question 2.
A Director is an agent of the company.
Answer:

Since the company is an artificial person, it needs to be represented by the Director.
They deal on behalf of the company.
Directors should deal skillfully, carefully, and diligently.
Directors are held liable as an, while company is held liable as the principal.
A Director is an agent as he acts between the company and shareholders.
Thus, a director is an agent of the company.

Question 3.
The company has a distinct feature of separate ownership and management.
Answer:

The company has a unique feature of separate ownership and management.
Shareholders are its owner and Directors are its managers.
Being an artificial person, it needs a human agent to manage and control the working of the company.
Shareholders are scattered all over therefore management of the company by them is not possible.
Also, the shareholders are not interested in the management of such a big organization.
The company as an artificial person having no physical existence needs humans to control its affair.
Thus, the company has a distinct feature of separate ownership and management.

Question 4.
DIN helps investors of the company.
Answer:

DIN is a unique identification number for an existing director or person intending to be the director of the company.
It is compulsory to acquire DIN by every Director.
Din is Pre-require for e-filling of company’s documents.
It helps the investors of the company to make a more accurate and informed decisions because they get to known the composition of the top management of the company.
It also helps to handle the problems created due to a company after collecting or raising money from the public.
Thus, I agree with the given statement.

Question 5.
Directors have to work as a team.
Answer:

Directors have to work as a team of “Board of Directors” and not individually.
He exercises the power as a Board which is subject to provision of the Act.
Director is a representative of shareholders so he has to work collectively in the best interest of the company and its shareholders.
He cannot take decisions alone on behalf of the company.
Thus, directors have to work as a team.

Question 6.
Directors play a triple role.
Answer:

Directors play a triple role i.e. in the form of an agent, as a managing partner, and as a trustee.
As an agent, the director deals skillfully, carefully, and elegantly while representing the company with outsiders.
As a managing partner, the director acts as a representative of the shareholder and manages the company on their behalf.
As a trustee, the director acts as a guardian of the interest of shareholders and a company.
They use the company’s funds in the most appropriate manner and cautiously.
They are also the trustee of all the assets of the company.
Thus, directors play a triple role.

Question 7.
Company Secretary plays a triple role.
Answer:

Company Secretary plays a three-fold role in the form of – as a statutory officer, as a coordinator, and as an administration officer.
As a statutory officer, the secretary signs the document for authentication, files annual returns to ROC, maintains various statutory registers and ensures compliance with the law.
As a coordinator, the secretary acts as a network between the Board of Directors and other executive officers at different levels. He acts as an internal as well as external coordinator for the company.
As an administrative officer, the secretary ensures the implementation of various policies of the company and also supervises and controls the functioning of various departments of the company.
Thus, Company Secretary plays a triple role.

Question 8.
A director cannot be called an employee of the company.
Answer:

Directors are elected representatives of the company’s shareholders.
The status of an employee is within the limits of his contract and service.
His employer holds the ultimate control to guide his activities and functions.
These limits of an employee cannot be applied to a director.
So a director cannot be called an employee of the company.
Thus, a director cannot be called an employee of the company.

Question 9.
The managing Director has substantial powers of management.
Answer:
As it is stated in the definition itself the Managing Director is entrusted with the substantial powers of management, which clearly indicates that he has been given certain important powers of routine business matters of a company.
The powers exercised by him are as follows:

To act as a link between the Board of Directors and the managerial staff.
To look after the management and administration of a company.
To appoint the company employees.
To participate in policymaking as well as policy execution.
To sign contracts on behalf of a company.
To decide about the investment of funds of a company.
To receive remuneration from a company.

Question 10.
Indian companies prefer to appoint a Managing Director than a Manager.
Answer:

Indian company prefers to appoint managing director rather than manager because Managing Directors holds dual authorities and he is able to influence the board of director in a better way.
Manager need not be a director of a company while the managing director has to be director of a company,
The company cannot have more than one manager, while it can have more than one managing director.
Thus, Indian companies prefer to appoint a managing director than a manager.

Question 11.
Pro-tem secretary is helpful to the company.
Answer:

The first secretary of the company is appointed by the promoters of the company.
The first secretary is called as ‘pro-tem’ secretary.
Pro-tem secretary appointed by promoters may or may not be appointed as full-time or regular Secretary.
Pro-tem secretary helps in fulfilling different formalities during the formation of the company.
Thus, the Pro-tem secretary is helpful to the company.

Question 12.
Secretarial Standards should be in conformity with the Act.
Answer:

The Secretarial Standards are formulated by the Institute of Company Secretaries of India and approved by the Central Government through the Ministry of Corporate Affairs.
The Companies Act, 2013, makes compliance with the Secretarial Standard mandatory.
It leads to provide better monitoring of compliances of law, strengthening the process of the Board, and create confidence in investors.
The Secretarial Standards aim at achieving integrating, harmonizing, and standardizing fine corporate governance practices across all companies.
Thus, Secretarial Standards should be in conformity with the Act.

Question 13.
Secretarial Standards lead to better legal compliance.
Answer:

Companies follow diverse practices based on differing business cultures and varied usages over a period of time.
The Secretarial Standards aim at achieving integrating, harmonizing, and standardizing fine, corporate governance across all companies
It leads to provide better monitoring of compliance of the law, strengthening the process of the Board, and create confidence in investors.
Secretarial Standards are reviewed by Secretarial Standard Board (SSB) once a year or whenever changes are made in the law.
Thus, Secretarial Standards lead to better legal compliance

Question 14.
A secretarial Audit is required under the laws.
Answer:

It is an audit that checks the compliance of various legislation including the Companies Act, other Corporate Acts, and economic laws.
It aims at detecting errors and mistakes in the compliance mechanisms.
It gives confidence to regulators, management authorities, and shareholders that the company is following a disciplined approach of evaluation and improve effectiveness and risk management.
Thus, Secretarial Audit is required under the laws.

7. Answer the following questions.

Question 1.
Explain the Role of Directors.
Answer:
Director is a person appointed to manage, direct and supervise the affairs of the company.
The elected representatives of the shareholders are called Directors.

Role of the Directors:

He helps the investors to take accurate decision.
He has to fill casual vacancies on the board.
He has to recommend dividends.
He has to issue securities in India or abroad.
He manages a company on behalf of the shareholder.
He appoints the first auditor of the company.
He can appoint or remove Key Managerial Personnel.
He can borrow the money on behalf of the company.
His role is full of trust, loyalty, care, and good faith.
Directors act as a trustee, agent and managing partner for the company.

Question 2.
Explain the duties of a Director.
Answer:
A director’s relationship with a company is regarded as fiduciary in nature. It means his duty is full of trust, care, and good faith.
The duties of directors can be categorized into two heads:

Statutory Duties:
- To file a return of Allotment.
- To act in accordance with the Articles of the company.
- To disclose an interest in a transaction.
- To attend Board meetings.
- To appoint first Auditors of the company.
General Duties:
- Duty of good faith i.e. he must act in the best interest of the company.
- Duty of care i.e. he must take utmost care in the performance of work assigned.
- Duty not to delegate i.e. he is required to perform his function personally. He may delegate in case of emergency.

Question 3.
Explain the Managing Director.
Answer:
Definition: The Companies Act, has defined a Managing Director as “A Director who by virtue of an agreement with the company or of a resolution passed by a company in the general meeting or by its Board of Directors or by virtue of its Memorandum or Articles of Association, is entrusted with substantial powers of management of the company”.

Disqualification:

Any person less than 21 years of age and more than 70 years of age.
A person who is an undischarged insolvent person or has at any time been adjudged as an insolvent.
A person who has suspended payment to his creditors or made a composition with them.
A person who is, or has been convicted by a court of an offense with a sentence of more than 6 months period.

Appointment:
A Managing Director may be appointed by any one of the following ways:

by an agreement with a company.
by the resolution passed at the general meeting.
by the Board of Directors.

Term of office:
The term of office of the Managing Director cannot exceed 5 years at a time, but he can be reappointed as such for a further period of five years.

The number of Managing Directorship:
A Managing Director can not act as such for more than two companies at the same time.

Remuneration:
The remuneration paid to the Managing Director is subject to the maximum limit of 5% of the net profit of a company or a monthly salary. If a company has more than one Managing Director then total remuneration paid to them (all) shall not exceed 10% of the net profit.

Powers of a Managing Director:

To act as a link between the Board of Directors and the managerial staff.
To look after the management and administration of a company.
To appoint the company employees.
To participate in policymaking as well as policy execution.
To sign contracts on behalf of a company.
To decide about the investment of funds of a company.
To receive remuneration from a company.

Duties of a Managing Director:

To act on behalf (agent) of the Board of Directors.
To implement the decision of the Board.
To supervise, direct, control, and guide the day-to-day affairs of the business.
To guide the senior executives in their administrative work.
To report to the Board about programmes made or any problem faced by a company.
To chair the Board meetings and general meetings, if necessary.
To manage routine work of a company.
To sign all the contracts and documents on behalf of the company.

Question 4.
Explain the Company Secretary.
Answer:
Meaning:

Secretary is an employee of the company and he is appointed to perform functions of a company secretary,
He should be a member of the Institute of Company Secretaries of India (ICSI).
The first secretary is appointed by the promoter of the company and he is called a ‘pro-tem’ secretary.
He holds liable for non-compliance with the provisions of the Act.

Duties of a Company Secretary:
It is categorized as (A) Statutory Duties and (B) General Duties.

(A) Statutory Duties:

To organize and attend meetings of the company.
To prepare minutes of meetings.
To communicate with shareholders on various matters.
To issue notices and circulars to the members of the company.
To maintain various Registers and books of the company
To file returns with the ROC.

(B) General Duties:

To provide guidance to the Board of Directors as needed.
To discharge duties towards regulators and authorities of the company.
To assist the Board of Directors in conducting the business of the company.
To perform duties allotted by the Board.

Rights of a Secretary:

To control and supervise the working of departments of the company.
To get indemnified by the company, if any loss is suffered by the secretary.
To sign documents requiring authentication.
To get remuneration from the company.

Question 5.
Explain the role of the Company Secretary.
Answer:
The company secretary plays a crucial and important role in the administration of the company.
The emphasis on good governance has increased the role of the secretary in protecting the interest of investors.

Role of Company Secretary:

Secretary as a Statutory officer:
To sign documents for authentication.
To sign and deliver Annual Returns and other documents and to the Registrar of Companies.
To maintain different statutory registers like
- Minutes of General and Board meetings of the company.
- Registers of Members and Debenture holders Register of Directors and KMP and their shareholdings.
To ensure compliance with the law

(ii) Secretary as a Co- ordinator:

To implement policies framed by the Board.
To act as a link between the Board and other executives at different levels.
To act as a mouthpiece or spokesperson of the Board.
To act as an internal and external coordinator.

(iii) Secretary as an Administration officer:

To ensure implementation of the policies of the company.
To supervise and control the functioning of different departments of the company.
To take an overall view of different aspects of the company’s administration and develop a strong and efficient organizational setup.
To contribute to the administration of the company.

Category: Class 11

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 4 Forms of Business Organisation – I

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 3 Small Scale Industry and Business

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 2 Trade

Maharashtra State Board 11th Organisation of Commerce and Management Solutions Chapter 1 Introduction of Commerce and Business

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 12 Correspondence with Statutory Authorities

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 11 Correspondence with Banks

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 10 Correspondence with Directors

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 8 Company Meetings – II

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 7 Company Meetings – I

Maharashtra State Board Class 11 Secretarial Practice Solutions Chapter 6 Directors and Key Managerial Personnel of a Company