Top Qualities of A Successful Businessman: 

1. Physical appearance

The physical appearance and the personality of the businessman have great

contribution in his success in the business. If he has good appearance and

commanding personality, it impresses the employees and makes him a

successful businessman. 

2. Education 

Today business is a complex activity and demands the services of educated

and skilled persons who especially know the tacts of business. So the

education is compulsory for a good businessman to understand the

complication and has communication with others.

3. Technical Skills

Today every business demands some sort of technical skill. So a good

businessman must know all those technical skills required fir that particular

business which he has stated. For example if you wants to manufacture Air

crafts, then you must be a engineer and if you want to open an audit firm

then you must be a charted accounted.

4. Honest 

It is true that honesty is a best policy, so, for the success of the business, it is

necessary   that the business must be an honest person. He should not

deceive any one. He should not mix up inferior quality in his own. He should

work honestly. People will trust him and his business will develop.

5. Hard working 

A businessman must be a hardworking man. He should be habitual to work

for a longer time to develop and look after his business. If he is not hard

working and is a lazy person he cannot complete the other and he will have

to suffer losses.

6.  Courteous

A businessman must be a cool minded person and should talk with his

subordinates, colleagues and customer politely. He should not leave courtesy

in any case, in this way can win the hearts if his customers and can develop

the business relations. 

7. Steadfast

A goof businessman is always steadfast in his business (dealing) affairs; he is

not disturbed by the usual business hindrances and small losses. He works

hard honestly and steadily to develop his business.  

 

8. Endurance Power

The endurance power is an asset for a businessman. He has to meat and talk

with so many other people. Some time during discussion, something’s are

disliked by him but in spite of this, he does not get angry and deal with

others patiently.

9. Discipline 

It is the quality of a good businessman that he must have a disciplined

personality. He must be regular, punctual and dutiful. He must not leave

today’s work on tomorrow. He should present himself as a role model for

other employees. 10. Decision power

Many business decisions are made by a businessman. It is necessary for a

good businessman that he must have quick decision power. He should not

make delay in important decision and it is only possible when he has quick

decision power to settle the matters.

11. Cooperative

It is necessary for a good businessman that he should have passion of co-

operation for his colleagues and employees. He should trust on teamwork.

When he cooperates with others in the best interest if business then he can

also expect their cooperation, which is necessary for the success of the

business.

12. Trustable

A businessman should be honest and fair in dealing with others, people will

trust on him and they will come again and again with deal him and he will

earn more profit.

13. Ability To Plan

Planning is an essential element of business activity. A successful

businessman always first determines the targets for future and then

prepares plans and budgets to achieve these targets. At the end of each

year, he compares the actual results with predetermined targets and points

of efficiency and deficiency are nominated in order to get help from them in

future planning. So a good businessman must be an expert of business

planning and organization.14. Managerial Skills

 A businessman has to manage all the business activates. So he should be an

expert of managerial skills. It is often said that a good manager is good

businessman, so management skill is necessary for successful businessman,15. Innovative

 New changes and development are taking place in business like very other

field of life. It is all due to new inventions and scientific and technological

developments. So a businessman should always be ready to develop and

apply new rules for the advancement of the business.16. Sightedness 

A good businessman always has an eye on his past performance and thinks

about his future. He should be able to forecast his future demand. He should

properly plan and produce goods and services to meet his future demand in

order to earn maximum profit.

17. Financial Soundness

The success of the business mostly depends upon the financial soundness of

the businessman. Without sufficient funds no business can be run properly.

As the business extends, it earns more and more profit and the extension of

the business demands excessive finance, so the good businessman should

not only be financially sound party but should also know the skills of financial

management.

18. Experience

It is rightly said that an old is gold. So it is necessary for the smooth running

of the business that a businessman should have vast experience of business.

An experienced person can earn more profit as compared to a new one and

can become a successful businessman.19. Communication Power

A number of times a businessman has to address his employees attend

important meeting and has to contact with customers and with other people.

If he has effective communication power then he can impress and convince

the others and it is very important for the business. 20. Leadership Qualities 

A businessman is the leader of this concern and leader should lead from the

front. When the leader is competent, every business activity is performed

smoothly. So a good businessman is that who has all the qualities of

leadership in order to extend the business and to earn more profit. 

Important Provisions of partnership DeedFriday, August 28, 2009

 

The usual provisions which should be contained in such documents are as follows:

1.      Name of the firm

Name of the firm under which the business is to be conducted.

2.     Nature of Business

Nature of the business to be conducted by the partners.

3.     Location

Location of the business where it is to be operated.

4.     List of Partners

List of partners their names addresses and other particulars.

 

5.     Duration of Partnership

Duration of partnership; whether it is definite period of time or indefinite period of time.

6.     Date Of Commencement

Date of the Commencement of the business.

7.     Total Capital

The total capital of the firm and the share of each partner in the capital.

 

8.     Ratio of Profit

 The ratio of sharing profits and losses of each partners.

9.     Amount of Drawing

The amount that each partner shall be allowed to withdraw in anticipation of profit.

10.   Interest on Capital and Drawings

Whether interest to be allowed on capital and charged on drawings and at what rates.

11.       Amount of Salary

The amounts of any salary payable to partners.

12.   Division of Work

The division of work amount the partners for the management of the firm.

13.       Amount of Profit

The fixation of the amount of profit payable to any employee other than salary.

14.   Head Office and Branches

Allotment of the place for head office an branches.

15.    Dealing Bank

The name of the dealing bank.

 

16.   Additional Capital

How further capital, if necessary is to be introduced.

17.   Audit of Accounts

Provisions regarding the preparation audit and signing by the partners of annual accounts.

18.   Rules of Admission and With Drawal

Rules regarding to retirement, debt and admission of partner, including minor.

19.    Determination Of Good Will

How the value of good will is determined and accounts will be cleared of retired or deceased partner.

20.   Period of Accounts

Period after which final accounts are to be prepared.

21.   Rights and Duties of Partners

Classes as to the rights and duties of each partner.

22.   Loan and Interest

Provisions in regard to amount to be brought in by and the partners by way of loans and interest there on.

23.   Settlement of Accounts

Settlement of accounts at the dissolution of firm.

24.   Arbitration

Provision for arbitration in case of disputes among the partners.

25.   Deficiency in Capital

How the deficiency in capital will be covered at the insolvency of arty partner.

26.   Witness

The date and witnesses of agreement.

 

27.   Ways of Dissolution

The manner under which the firm may be dissolved.Any other clause or clauses which may be found necessary at any time may be contained here by the mutual consent of all the partners

Types of Cooperative SocietiesMonday, August 31, 2009

The following are the main types of cooperative enterprises:

i.        Producer Cooperative Societies

These are formed to eliminate the middlemen and capitalist groups from the industrial production. Its main purpose is to produce goods for the requirements of its members. Surplus productions are also supplied to out riders in the open market at profit. All the necessary activities .as production, management and marketing are performed by the members themselves. Its members get dividend on the basis of the capital invested by them.

Objects

(a)        To purchase the raw materials and other factors at most economical prices.

(b)        To produce the goods at the most economical level.

(c)        To supervise the production most efficiently and effectively.

(d)       To dispose of the surplus production to non members at maximum prices.

(e)        To eliminate the middlemen and capitalists.

(f)        To remove the worker's grievances in respect of working conditions, wages etc.

(g)        To arrange for the democratic control of the industrial unit.

ii.       Consumer Cooperative Societies

The society is the voluntary association of ordinary people formed with the object of obtaining daily requirements of the members. It directly purchases the goods at large scale from the producer or wholesalers at whole sale price. It thus eliminates capitalists, retailers and other middlemen from the channel of distribution and members are in a position to make their purchase at cheater rate. Anyone can become member by purchasing one share of the society. Sometimes goods are also supplied to non-members but they do not share in the profit of the society. Profit earned by the store are distributed among the members according to the value of the purchases conducted by the manager who is elected by the members. Generally its two types are popular in the world.

(a)        Retail cooperative store.

(b)        Wholesale cooperative store.

Objects

1.         To eliminate the retailers, capitalists and wholesalers.

2.         To promote the welfare of the members.

3.         To supply the daily necessities of life to its members at market price.

4.         To increase the purchasing power an standard of living of the members of the   society.

iii.      Marketing Cooperative Society

It is the voluntary association of producers formed for the object of arranging the disposal of their output. It pools together the output of the individual members and  arranges to supply the product at highest possible price. The profit of the sale of the ~ products is distributed among the contributing producers according to their individual contribution to the pool. This kind of society is particularly useful for the small producers and agriculturists. It can be formed in two organization according to the local condition of the country i.e.

(a)        Single purpose society

(b)        Multi purposes society

Objectives

1.         To eliminate the middlemen who are liable of the high cost of marketing.

2.         To pool together the output of the individual members.

3.         To grade and process of the pooling products of the members.

4.         To dispose of the product at the maximum price.

5.         To adjust supply to demand.

6.         To provide storage facilities to its members.

7.         To procure the information relating to market for the member's product.

8.         To provide the financial facilities to its members.

iv. Insurance Cooperative Society

This type of cooperative society is formed for the objects of providing group insurance facilities to its members. It makes the contract with sound insurance company on collective terms and conditions and thus pay lower premium rate to insurance company as compared with ordinary policy holders. These are other two forms of cooperative Insurance i.e.

1.         Mutual office

2.         Self concern.

In the Mutual office, the policy holders are the owners and the profit of the insurance company is utilized in the following ways:

(a)        To strengthen the financial position of the company.

(b)        To decrease true amount of premium.

(c)        To distribute bonus to its members.

Self concern

Cooperative society is organized to provide insurance facilities like the private insurance company and issued policy to its members for reasonable amount.

Object

1.         To provide insurance facilities to its members.

2.         To charge the low rate of premium.

3.         To promote the welfare of the members.

4.         To encourage the habit of thrift and investment.

v.       Housing Cooperative society

It is an association of middle and low income groups of people. Generally it is formed in urban areas. The main purpose of this form of society is to protect its members against exploitation by landlords. It not only grants financial assistance to its members but also achieve the economics of purchase of building material in bulk. In order to become a member of the society one must buy at least one share of the society. The liability of the member is limited to his capital contributed. It is also called "Building Society" and may be divided into three types i.e.

(1)        Housing Building Society

(2)        Land Society

(3)        Finance Society

Objectives

1.         To receive deposits from its members.

2.         To make loans to its members for the construction of house at low rate of interest.

3.         To render technical services for its members.

4.         To purchase building materials at economical rate.

5.         To perform the welfare activities as water supply, roads, sewerage, electricity etc.

vi. Cooperative Farming Society

This form of Society is formed with the object of obtaining the benefits of large scale farming and maximizing agricultural products. It is basically agricultural. cooperative which is confined to agricultural countries. Its members generally relate to the formers including those owing land. The cooperative forming are of the following types:

1.         Cooperative collective farming Society.

2.         Cooperative joint farming society.

3.         Cooperative better farming society.

4.         Cooperative tenant farming society.

Objective

(a)        To consolidate holding.

(b)        To introduce new technique of cultivation.

(c)        To improve the irrigating system.

(d)       To increase the area under agricultural operations.

(e)        To make necessary steps for the improvements of the standard of living of the   farmers.

(f)        To increase the production per acre.

(g)        To provide seeds manures and implements to its members.

(h)       To dispose of agricultural output.

vii. Credit Cooperative Society

Credit cooperative society is the voluntary association of .the financially weak persons organized with the object of providing short term financial requirements to them. This society performs important role in the rural areas where the dishonest money lenders have been exploiting simple villagers by charging high rate of interest. The Funds of the society consist of (a) Membership fees, (b) Dispose of shares (c) Deposits from members and non-members (d) Loan from govt. and semi govt.

The liability of members is unlimited. This assists the society in raising funds and ensures that every member will take keen interest in the activities of the society. The society prefers the poorer members in granting loan and charges low rate of interest from them. Generally the society advances the amount for productive purposes but some loans are also given to members for unproductive purposes. Credit cooperative society may be divided into two types:

(1)        Agricultural Credit Society

(2)        Non-agricultural credit Society

Objects

(a)        To get rid of the pressure of money lenders.

(b)        To provide the financial facilities for short term to its members.

(c)        To keep the minimum rate of interest on loan.

(d)       To develop the habit of thrift and saving among the members.

(f)        To encourage the habit of mutual aid

Advantages of the cooperative societySaturday, August 29, 2009

The advantageous factors of the cooperative type of organization are given below:

 

i. Elimintation of Middlemen

The management of the consumer cooperative society directly purchases the finished goods from the manufacturer and producer. Producer Cooperative society procures the raw material from the producer. Thus they try to free themselves from the grip of the middlemen and make the goods available to consumers at lower prices.

ii. Saving in Management Expenses

Cooperative society enjoys some economics in the field of management due to voluntary services performed by the members themselves. Thus, it is possible to minimize the expenses of management and supervision.

iii. Minimum Stock

Society Purchases the same goods which are actually demanded by its members. Thus there is need to have minimum stock at hand due to constant and regular demands.

iv. Economy in Distribution and Production Expenditure

Society is saved from any distribution and production expenses. It has got its regular customers, therefore society has not to face any trouble for marketing its goods. Thus it has not to incur any expenditure for publicity and advertisement, I which is a big item in the budget of the capitalist producer.

 v. Integration

Under this type of organization, complete integration between producers, wholesalers and retailers is always possible. This is thus a clear advantage over capitalist economy.

vi. Employment Opportunities

Thousands of people are engaged in different types of

cooperative small scale and cottage industries. Thus it removes the problem of jobless persons in developing countries.

vii. Equal Distribution of Wealth

With the growth of the cooperative society wealth has not been concentrated into a few hands. Thus this factor tends to equalize the distribution of wealth in the society.

viii. Educative and Social Value

Spirit of sacrifice, sense of mutual help and self help are developed among the members. They are able to adopt the principles of honesty and unity. It thus creates the economic and social aspects of human life among the members.

ix. Financial services

It renders financial services for its members for the purchase of seeds, manures, implements and house etc. It thus removes the financial problems of the member of the society.

x. Taxes Facilities

Government provides certain concessions to this form of organization i.e. exemption from stamp duty, super tax, income tax and registration fees.

xi. Improvement of Standard of Living

Its main aim is to bring about greater benefit for its members. It supplied daily necessities of life to its members at the lowest prices. Thus it is helpful for the improvement and progress of standard of living.

xii. Equal Status

It is a democratic organization where at members enjoy equal voice in the management of the cooperative business.

xiii. Extensive Market

As the goods are supplied to its members at cheaper rates, the general public is attracted to become the shareholders of the

society.

xiv. Rural Development

Cooperative organization renders public utility services such as village communications, sanitation, water supply, drainage, education and undertakes the supply of various implements to the farmers.

xv. Encouragement of habit of Saving

Cooperative society supply the goods to its members at cheaper prices. It thus creates the attraction in the general public for becoming shareholders of the society. This tendency encourages the habit of saving and investment.

xvi. Miscellaneous Advantages

(a) It helps to eliminate the evils of capitalism from the society.

(b) It increase the business and economic activities in the country.

(c) It promotes the welfare of the community.

Nature of BusinessFriday, August 28, 2009

The term “Business” is wide in meaning. It includes all those human activities made for the sake of earning profit through the process of production of goods or buying or selling of goods. Man starts business for the sake of earning of money, and money is earned by satisfying human needs and desires with certain things.

Business activities can be of various kinds. These may be fishing, mining, agriculture, cultivation, banking or industry, whether these may be conducted by a Limited Company or by a Partnership firm or by one man, whether the business is done on wholesale or retail level. In short every human activity made to earn income or profit is known as Business. If the goods are produced to fulfil personal needs only, this activity cannot be called business. Earning of profit is the special mark of business. As compared with commerce and industry the word Business is used in the wide sense. It also includes all those economic factors which help a man to earn profit by satisfying material, spiritual and mental needs of human beings. There is a close relationship among Business, Industry, Trade and Commerce and they are therefore; taken in the same sense. But sometimes the

difference in their meaning becomes very obvious. Briefly speaking Business means earning of profit, Industry means production, commerce denotes means of distribution and transportation of goods. Trade is considered as a part of Commerce.

Function of BusinessThe following are the major functions of the business.

1. Creation and Distribution of UtilitiesBusiness involves creation and distribution of goods with 1he object of earning profit. A business man conducts this process for his own interest. It also includes the mining, communication and transportation functions.

2. Planning and controlling FunctionIt is one of the most difficult functions in 1he business undertaking. It is largely concerned with the determination of policy for plant and following them through production. Any divergence from the target may affect the function to be performed at the next stage.

3. Technology and Engineering FunctionEngineering department in large technical industries advise the supervisors on technical matters. Research, development and designing of the product function is often performed under the engineering department.

4. Finance FunctionThis is the most important function in the private enterprise by which all the activities are conducted. The funds are in the custody of treasurer who is liable for all types of payments belonging to money. Credit control, purchase discount, wages and loans are also financial function.

5. Manufacturing FunctionManufacturing is primarily concerned with the conversion of raw material into finished or intermediate go9ds. In other words it is the creation of form utility. Manufacturing process may only involve the changing of the nature of the material, as this function is done in refining or chemical industry, But really it includes both the changing of the nature of the material and its form as it is conducted in the steel industry.

6. Personnel FunctionThe personnel function is conducted by personnel department which is also named as Industrial Relation Department. Usually the following functions are centralized by this department:(a) Organization(b) Establishing policies(c) Staff development as promotion policies, training programme(d) Remuneration (i.e. job evaluation, grading, merit rating, establishment of wages and salary structure.)(e) Relationship scheme through trade unions, counseling, etc.(f) Casting and budgeting(g) Record Keeping

7. Accounting FunctionAccounting department performs a professional service to business. Accountant or chief accountant is in-charge of this department who conducts and supervises the financing accounting, budgeting and costing activities. regarded as one of the tools of administration.

8. Purchasing FunctionIt is one of the highly important functions in manufacturing organization. There are several specialists in their respective fields in the purchase department who also increase the efficiency of work and help to maintain reasonable prices of the product. The purchasing function is closely related to sales.

9. Sales FunctionIt is productive function of business which is generally performed by sales department. It involves transfer of ownership of goods from one hand to another in exchange for money. Sales function also includes grading, where housing, transporting, sorting, collecting and packaging matters.

OrganizationOrganization is generally regarded as grouping of activities in a co-ordinated manner with a view to obtaining maximum benefits. In the words of Richard “Organization is the structural relationship between the various factors in an enterprise”. According to this concept three factors of an enterprise i.e. Men, Material and Management are combined to attain the objects of the business. So organization is the relationship between the various objectives and factors.Some writers refer the word 'organization' to the individuals functioning within an organizational unit as well as to the whole functioning. However, it is advisable that organizational changes should be made according to changed circumstances in order to meet present environment.

Principles or Organization

The relevant principles of organization are given below:(1) Division of Function(2) Division of Responsibility(3) Adoptability(4) Delegation(5) Line of Authority(6) Co-ordination(7) Specialization(8) Balance

1. Division of FunctionThe activities of enterprise must be divided into several sections and each section must be entrusted to qualified persons in order to ensure systematic and efficient performance. There should be principle or right man for the right job.

2. Division of ResponsibilityThe must be definite and suitable division of responsibility. The structure must contain the duties and

responsibilities of each person and each section or department so that one may clearly know one's respective functions.

3. AdoptabilityThere must be adaptability and flexibility in organization structure. Its changes must be made in response to changed circumstances in order to meet present situation.

4. DelegationThe principle of delegation is fundamental to organization as well as to each group. So the scope of delegation of authority and responsibility must be understood and clearly defined, preferably in writing.

5. Line of AuthorityThe must be vertical structure indicating an unbroken line of authority from the highest level to lowest.

6. Co-ordinationThe organization must be arranged so as to allow an easy co-operation at each level of work.

7. SpecializationGroup must be designed so as to attain a greater degree of specialization at each stage.8. BalanceThere must be balance in various sections of organization for the successful operation of the business.

Business OrganizationBusiness Organization is an act of grouping activities into effective co-operation to obtain the objectives of the business. In other words, it is the structural relationship between the persons who

deal with the overall organizational management in enterprise for specific purposes. In the words of Haney, “It is more or less independent complex of land, labour and capital, organized and directed for productive purposes by entrepreneurial ability”.

Forms of Business Organization

The different from of business organization can be summarized as follows:(1) Soletradership(2) Co-ownership(3) Partnership(4) Joint Stock Company(5) Co-operative Undertaking(6) Combination

1. SoletradershipSole tradership is the oldest form of business house which is owned, controlled and managed by an individual. It is also named as sole proprietorship or sole ownership. This type of organization may easily by formed and its registration is not required by law. One man invests his capital and devotes full time and energy into his business and so he enjoys hundred percent profit of business. On the other side if there is loss, he sustains all the losses of his business. Sole proprietor has unlimited liabilities and his private assets are also liable to pay the obligations of his business. Retailers, hawkers and all other persons who perform direct services for the public near to their home are of sole tradership type.

2. Co-OwnershipIt is the relationship who employ their money in order to own property. In other words, it is the joint ownership of property by two or more persons. This ownership is generally created by the operation of law as well as from status. Agreement is not essential for its formation. The property of the owners is used in business of commercial purposes or it may be rented out. But there is not concept of community sharing of profit or loss. The persons who form his type or organization are individually known as co-owners and are collectively named as co-ownership.

3. Partnership

Partnership is the relationship between two or more persons who agreed to share profit of a business carried on by all or any of them acting for all. The number of partners must not exceed twenty in ordinary business and not more than ten in banking business. It can be formed without any legal formalities. Like individual ownership it is simple to form and easy to run. Similarly, it may be dissolved without performing any legal process. Every partner has unlimited liabilities in partnership. It does not possess a legal entity apart from its members. This type of organization is very popular in our country. The small and medium size business activities are performed under such organization. Two or more persons may start this business with a moderate capital and new partners may be admitted for getting additional capital. In Pakistan, it is controlled under the partnership Act 1932.

4. Joint Stock CompanyA joint stock company is a voluntary association of different persons created by law as a separate body for specific purposes. It enjoys a common capital contributed by its members, such capital being divided into transferable shares. The liability of each such member is limited to the face value of the shares he holds. It has a legal entity apart from its members. It can sue and be sued in its own name. In our country, joint Stock Company is controlled under the company ordinance 1984.It is managed by the group of persons known as Board of Directors who are appointed by the shareholders. Public company and private company are two major forms of Joint Stock Company. These are very popular in the field of large scale production and distribution due to its greater benefits.

5. Co-operative UndertakingA co-operative undertaking is a voluntary association of individual for the common interest of its members. It is formed for conducting some business activities. It is protective device used by the economically weak persons of the society to safeguard their common interest against the exploitation of economically strong group or individual. It is thus organized to render services to its members. Its capita is generally divided into a number of shares of equal value. In this form of organization all members enjoy equal rights of ownership and have equal voice in the management.Its formation is governed by the provisions of the co-operative Society Act 1925 in our country. It can be established with limited or unlimited liability. There are several types of co-operative societies i.e. Consumer, Producer, Marketing, Housing, Agriculture and Insurance Co-operative Societies. There are all rendering valuable services for the public.

6. CombinationWhen two or more business undertaking units combine to carry on business together for achieving the economic benefits, Combination takes place. It is also formed for defensive purposes: But it is considered to be unlawful if any of its objects be against public Interest. It is set up in various sectors

i.e. trading, industrial and technical. It may be temporary or permanent. It may be found In loose or strong form, Horizontal, vertical, circular and diagonal are the types of combination, Trust, cartel, pool, holding company and ring are the major forms of combination, But the main object of combination is always to achieve common economic welfare for its constituent members.

Voluntary AssociationSaturday, August 29, 2009

It is a voluntary association of persons where there is no restriction for its membership. Any person can become a member of society and can leave it at any time after due notice to the society.

i. Equality

The capital of the society is generally divided into a number of shares of equal value. In this form of organization all members enjoy equal rights of ownership and consider equal voice in management of the cooperative enterprise.

 

ii. Honesty

Its members must not be dishonest and selfish. All the activities must be carried on honestly and fairly.

iii. Cash Terms

Generally, the goods are supplied to its members on cash basis. To deal on credit term is strictly prohibited. This tendency creates the habit of thrift among the members and saves the cooperative society from bad debts and keeps members out of unnecessary losses.

iv. Self Services

All the administrative and business activities are conducted by the members themselves. Salaried persons are also employed but they have no voice in the management.

v. Distribution of Surplus

In principle, the cooperatives do not distribute their profit according to the capital held by the shareholders.

But the surplus earned by a cooperative is contributed to the

following sectors.

(a) At first a moderate rate of interest on capital is provided to individual members.

(b) Some portion of surplus is spent on social and welfare activities of the members.

(c) Some amount is transferred to reserve fund for strengthening the institution.

(d) Another portion of surplus is utilized for the payment of bonus to the employees.

(e) In case of consumers cooperative society, the surplus may be distributed among the members on the basis, of the purchases made by them.

vi. Democracy

It is a democratic form of organization where every member is allowed to participate in the management of the business. "One member, one vote" is the basic principle of a cooperative organization and therefore managing committee cannot over look any section of members.

vii. Economy

All the activities of the society must be carried on economically and unnecessary expenditure and wastage are to be avoided.

viii. Spirit of Sacrifice

The cooperative society must be based on the principle of all for each and each for all. There must be spirit of self help and mutual help amongst the members.

ix. Service Motto

It is a form of business house not with the profit as the guiding motive but with the primary object of rendering maximum services to its members.

x. Solidarity

There must be trust and confidence among members for the successful operation of the society. The members must be united, associated while taking any decision regarding certain matters.

Dis-Advantage of PartnershipFriday, August 28, 2009

 

The partnership is not liked more than other forms of organization due to the following disadvantageous factors.

1.     Limited Capital

As the number of partners is 1imited in this form of organization so the capital remains limited. When the capital cannot exceed to a particular limit, large size business may not be started.

 

2.     Unlimited Liability

This is a great drawback of the partnership that private property of each partner is also liable to pay business debts. This factor prevents the rich man to invest large capital in such risky business.

3.     Lack of Prompt Decision

The number of partners creates the problem to reach certain decision. So the difference of opinion is the great hindrance in promptness of decision. This delay brings many problems in marketing, Production and management.

4.     Lack of Supervision

There are no effective rules and regulations to control the activities of partnership in our country. Audit and publication of accounts is not compulsory by law for partnership firm. So the lack of supervision has increased the chances of manipulation and fraud in accounts.

5.     Absence of Perpetuity

Partnership has not the capacity of continued existence. The life of the partners is connected with the running life of the partnership business. The partnership may come to an end by the death, retirement, insolvency or disagreement of any partner.

6.     Expansion Problems

The business of the partnership may not be expanded due to the following factors:

(a)        Limited number of partners.

(b)        Limited capital and financial sources.

(c)        Unlimited liability.

(d)       Lack of managerial and technical abilities.

But the business of the joint Stock company may easily be increased due to the absence of the above mentioned factors.

7.     Lack of Interest

Partners do not take keen interest in the business activities of the firm due to the following reasons:-

(a)        Limited share of Profit or loss of each partner.

(b)        Limited chances of growth of business.

(c)        Restriction in the transferring of shares.

(d)       Frozen investment.

(e)        Limited life of the business.

Thus the result in the absence of personal interest is the success or failure of the business.

8.     Chances of Disclosure

Each partner is allowed to participate in the management of business by law. So all partners know the internal affairs of the business. In case of withdrawal, dis-agreement or retirement of partners, there will be a great risk of leakage of the secrecy.

9.     Limited Abilities

As the financial resources of partnership are limited as compared with joint Stock company so it is not possible to engage the higher technical and administrator persons. Thus the result is the failure of business sooner or later.

10.   Chances of Friction

There should be mutual co-operation and trust among the partners and these factors are necessary' for successful achievement of the business. But generally there is mis-understanding, friction and dispute among the partners which hamper the progress of the firm.

11.   Lack of Confidence

As there is no compulsion by law for the publication of accounts in partnership so true picture cannot come to the notice of the public. Due to this situation people do not trust partnership firm and avoid to deal with and enter into contract.

12.   Transferability of shares

There is restriction to transfer the share without the consent of existing partners. If a partners transfers his share without obtaining consent, firm may be dissolved. Thus investment remains concentrated into few hands.

13.   Risk of Loss

As the management of the partnership generally conducted by unskilled and inefficient persons, there are great risks of losses. In case of heavy losses the business may come to an end. But in the joint stock company the amount of losses is sustained by number of shareholders and so business is not affected by such situation.

 

14.   Unfit for Large Scale Enterprise

This form of organization is quite un-suitable for large and heavy business due the following reasons:

(a)        Limited number of partners.

(b)        Limited capital.

(c)        Lack of technical and administrative abilities.

(d)       Limited life.

(e)        Unlimited liability.

(f)        In-sufficient rules and regulation.

But foregoing factors are not found in Joint Stock Company so this form is suited for large scale business.

Advantages of PartnershipFriday, August 28, 2009

 

Partnership is preferred to other forms of business due to the following advantageous points.

1.     Ease of Organization

Partnership can be organized without any legal formalities. There is no license fee, registration fee, registration fee for the formation of this type of organization. No formal documents are required to be submitted to the Registrar's Office. Two or more persons may start this type of business at any time. But the formation of the Joint Stock Company is needed long complicated process.

2.     Sufficient Capital

In the sole proprietorship the capital remains limited but this problem does not arise in the partnership firm due to number of partners i.e. 20 in ordinary business and 10

banking business. As such partner contributes his share in the business so capital volume can be sufficiently increased for business activities.

3.     Borrowing Facilities

The partnership firm is considered safe organization for providing credit facilities due to unlimited liability of partners. Thus sufficient funds in terms of credit can be: procured from financial institutions or other sources in time of need.

4.     Simplicity in Dissolution

There are no complicated legal requirements for the dissolution of the partnership firm. Partners may dissolve their business very easily at any time. On the other side, Joint Stock Company cannot be dissolved without fulfillment of the long process of the company ordinance 1984.

5.     Combined Abilities

A firm may enjoy the combined abilities of several heads. There may be different abilities of partners i.e. purchaser, administrator, accountant and Technician. So the firm is in a position to utilize their services for product1ve purposes.

6.     Skilled Workers

As the firm enjoys larger financial sources therefore, it is possible for the organization to hire the services of qualified and competent persons for indefinite period of time. Thus capital and financial sources of firm may be utilized maximum in profitable sector.

7.     Minority Protection

Minority protection in a partnership cannot be neglected by law. All the policy matters are decided with the consent of each partner. If any matter is disposed of without the willingness of one partner, the dis-agreement partner may withdraw his share and may dissolve the firm. Thus there is no risk of any conspiracy against the minority partners on behalf of the majority partners.

8.     Personal Interest

The partnership firm is in a better position in respect of personal element as compared with Joint Stock Company. As number of members in ordinary business cannot exceed 20, so all the benefit is confined among these partners. This factor creates the effective motivation to efficiency, economy, production and strong financial position.

9.     Minimum Legal Restrictions

This form of organization is fee from following restrictions:

(a)        Declaration of Profit.

(b)        Submission of the Report to the Registrar's office.

(c)        To audit the annual accounts.

(d)       To call the meeting.

(e)        To dispose of the Resolution.

(f)        To maintain the statutory books.

(g)        To publish certain statements.

On the other hand, public company has to follow strictly the above mentioned restrictions by law. But partnership may operate freely without interference from any legal authority.

10.   Public Trust

People show more confidence on partnership firm than sole tradership. If firm is registered they think .these are working under the supervision of the government. So people feel no risk in creating relation with such business. Thus goodwill is established in the market which increases the income earning capacity of the firm.

11.   Expansion of Business

There are more chances to expand the business volume due to the following factors:

(a)        Large number of partners.

(b)        Combine judgment and abilities.

(c)        Personal interest of each partner.

(d)       Fore-sight element due to unlimited liability.

(e)        Administrative and technical abilities.

(f)        Borrowing facilities.

But some important factor are not found in sole tradership. So its business cannot be expanded comparatively.

12.   Flexible Management

This organization is considered flexible as compared with Joint Stock Company. Partners can change their business policy with mutual consultation. They thus make immediate decision, since there is no necessity of disposing of resolution. The quickness of action is the most important element in the field of management as well as in marketing.

13.   Secrecy

As there is no compulsion to publish its accounts for partnership firm so the business secrecy remains confined within the partners. This sector is important for

successful operation of the business. But Public Company has to publish all types of accounts by law.

14.   Moral Promotion

Partnership is the best organization for small investors and to show themselves the proprietors of the firm. This factor promotes the moral courage of partners.

15.   Absence of Fraudulent

As every partner is allowed to participate in the affairs of the business, therefore each partner may look into the activities of firm. There is no risk of fraud or misrepresentation on behalf of the working partner. According to provision of the partnership every partner may check the accounts. So this provision minimizes the chances of manipulation in accounts.

DESTINCTION BETWEEN CO-OWNERSHIP and PartnershipFriday, August 28, 2009

 

CO-OWNERSHIP PARTNERSHIP

1.     Creation

            It is generally arisen by the             operation of law or status.            Agreement is not essential for the       formation of co-ownership.

 

It must be created by the agreement or contract. No contract no Partnership. Agreement may be expressed or implied.

2.     Sharing of Profits

            There is no concept of            community sharing of profit or             loss in co-ownership.

 

Sharing of profits is the basis object of the formation of the partnership.

3.     Object

            Under this form of organization            "business" may or may not be             conducted.

 

Various kind of partners are united to carry on any type of "business"

4.     Position

            As one co-owner is not an agent             of another co-owner, he cannot             bind another by

 

On partner is an agent of another partner and he can bind all persons by this act.

his act.

5.     Transferring Right

            A co-owner an transfer his share, right and interest to other person            without the consent of the             existing co-owner.

 

A partner cannot transfer his share or right to a stranger without the consent of other partner.

6.     Maximum Limit

            There is no restriction for the            maximum number of co-            owner in the co-ownership            business.

 

There is restriction for minor to become a regular partner according to partnership Act. 1992.

7.     Minor

            A Minor can become regular co-           owner in the co-ownership            business.

 

There is restriction for the maximum number of partnership firm (i.e. not more than 20 in ordinary business and 10 in banking business)

8.     Division of Property

            A co-owner can demand division           of property for his own interest.

 

A partner has no right to partition of property but he can demand share of profit out of the properties.

9.     Lien Position

            A co-owner not being an agent of         an other co-owner so he has no             lien on the co-ownership             property.

 

As one partner is an agent of another partner, he has lien on the business property.

10.   Right of Dissolution

            The business of the co-ownership            cannot be dissolved by the death             or retirement of any co-owner.

 

The life of the partnership is affected by the death, retirement or insolvency of any partner.

POSTED BY I2BIZ AT 5:11 AMLABELS: BUSINESS, PARTNERSHIP

PARTNERSHIP

Partnership Act 1932 defines partnership as follows:

"It is the relation between persons who have agreed to share the profit of a business carried on by all or any of them acting for all"

"When two or more persons may become joint owners with a view to carry on a business together and sharing the profits in agreed proportions, this is know as partnership." The Contract Act has defined partnership as, "The relation which subsists between persons who have agreed to combine their property, labour or skill in some business and share in the profits thereof between them". The persons who constitute this organization are individually termed as partners and collectively known as firm and the name under which their business is conducted in called the "Firm Name". The number of partners must not exceed twenty in ordinary business and not more than ten in banking business.

A partnership can be formed without any legal formalities. Like sole tradership it is easy to form and simple to run. Similarly partnership may be dissolved without performing any legal process. It does not possess a legal identity apart from its members. From the operating stand point, the partnership may conduct a business in very much the same manner as a sole proprietorship.

This form of organization is very popular in our country. The small and medium size business activities i.e. whole sale or retailing, production or distribution are performed under this form. Two or more persons may start this business with a moderate capital and new partners may be admitted for getting additional capital.

CHARACTERISTICS OF PARTNERSHIPThe main features of partnership are given below:

1.     Agreement

There must be agreement between the parties concerned. This is the most important characteristics of partnership. Without agreement partnership cannot be formed. "No agreement no partnership." But only competent persons are entitled to make a contract.

There are some provisions contained in the partnership agreement. These are determined clearly before the commencement of business. But it differs from business to business. This documents may be written or oral. But it must be written so that disputes may be settled according to the provisions of agreement.

2.     Number of Partnership

There should be more than one person to form a partnership. But there is restriction for the maximum number of partners. In case of ordinary business, the partners must not exceed 20 and in case of banking must not exceed 10 (before nationalization).

3.     Business

The object of the formation of partnership is to carryon any type of business. It may be manufacturing or merchandise type small or large scale business. But it should not be illegal business in the country concerned.

4.     Profit motive

The basic motive of the formation of partnership is to earn profit. This profit is distributed among the partners according to agreed proportion. If there is loss it will be sustained by all partners except the minor.

5.     Conduct of Business

The business of partnership is conducated by all the partners or any or them acting for all. But each partner is allowed to participate in the management by law.

6.     Entity

It has no separate entity apart from its members. It is not independent of the partners. Law has not granted it any legal entity.

7.     Unlimited liability

This is the prominent feature of partnership that the liability of each partner is not limited to the amount invested but his private property is also liable to pay the business obligations.

8.     Investment

Each partner contributes his share in the capital according to the agreement. Some persons become partners without investing any capital to the business. But they devote their time, energy and ability to their business instead of capital and receive profit.

9.     Transferability of share

There is restriction to transfer the share from one partner to another person without the consent of existing partners. So the investment in the partnership remains confined into few hands.

10.   Position

One partner is an agent as well as principal to other partner. He can bind the other person by his act. In the position of an agent he can make contract with another person or parties on behalf of his concerned firm.

11.    Mutual Confidence

The business of the partnership cannot be conducted successfully without the element of mutual confidence and cooperation of partners. So the members must have trust and confidence in each other.

12.   Free Operation

There are no strict rules and regulations to control the partnership activities in our country i.e. no restriction for the audit of accounts, submission of various reports and other copies to any government authority. So this organization may operate freely without any interference.

Factors of Stating BusinessFriday, August 28, 2009

1.     Demand

Before starting a business, the market is surveyed to know which goods are in

demand. The businessman also selects a business which is suitable to him and which he can organize well.

 

2.     Size of Business

The businessman must keep in view the volume of business. He decides whether he has to do business at small scale or large scale. He may limit his business at the local level; and by adopting the business of a wholesaler, he can extend his business to other market.

3.     Form of Organization

After deciding the size of business, the business man has to plan about the form of organization. He decides whether he has to start business as a sole-proprietor, or as a partnership or in form of Joint Stock Company.

4.     Suitable Location

Suitable location facilitates business and guarantees its success. The premises where following facilities are available are considered best for business: with sufficient supply of raw material, an easy approach to the market for the sale of goods, water, power and quick means of transportation and protection against risks and accidents.

5.     Concession from Govt.

In some enterprises Govt. allows some concession or rebate income to X or in excise duty. In some kinks of business import and export policies are lenient. All these concessions are kept in view before starting a business.

6.     Arrangement of Capital.

Capital is arranged according to the size and bulk of business. Even after the business has Started capital is required for the purchase of raw-material and for the payment of wages and taxes and for miscellaneous, purposes. Capital is arranged keeping in view all these requirements.

7.     Business Policy

Policy is framed before the actual commencement of business. Determination of method of payment and receipts, formula and technique of production are most essentials for the successful business. Future prospects are to be regarded according to the rate of growth. Anyhow policy generally depends upon the nature of business, rate of profit and situation of market.

8.     Availability of a Administrative Personnel and Skilled

        Workers

If machinery is arranged in business, skilled personnel are also employed to run the machinery and the administration. Qualified persons should be engaged if business is to be conducted on right lines.

9.     Availability of Labour

Labourers are the back-bone of a business. Before starting a business the area is surveyed to know whether sufficient labour is available or not; In order to reduce the cost of production, the local rate of wages of labour is also kept in view. It is better to start business in an area where the wages are low.

10.   Means of Transportation

Developed means of communication and transportation are essential for business. These means help to bring raw-material to the factory and also help to transport finished goods to the local and other markets. If these facilities are not available the cost of production will increase, and the business will suffer. 

 

Kinds of PartnersWednesday, September 2, 2009

The following are the major classification of the partners:

1.     Active Partner (Managing or Working Partner)

A person who takes active part, in the affairs and management of the business is called active partner. He contributes his shares in the capital and is also liable to pay the obligations of firm.

2.     Nominal Partner

He is not in reality a partner of firm but his name is used as if he is a member of the firm. He is not entitled in the profit or loss of the business but he is liable to all the acts of the firm. The person who has good prestige and status is given, the position of nominal partner.

 3.     Sub-Partner

The person who receives a share of profit from one of the regular partners is called the Sub-Partner. He is not liable to pay the debt is of the firm. He has no rights and privileges against the firm.

4.     Silent Partner (Silent form managing point of view)

He is that kind of partner who does not participate in the affairs of the business but is known to outsiders as a partner of the firm. He is liable to pay the debts of the firm like other partner.

5.     Secret Partner (Secret from public point of view)

He is active in the running life of the firm but public does not know him as partner of the firm. He pays his share in the capital and is liable to settle the creditors of the firm.

6.     Sleeping Partner or Dormant Partner (Sleeping From Both Points of View i.e. public and managing)

A person who (a) does not conduct the management of the firm personally (b) is not known to the outsiders as a partner of the firm, is called sleeping partner. But he invests his amount in the business and is liable to clear the debts of the firm. He is also called dormant partner.

7.     Minor Partner

There is no restriction to join the minor in the partnership by law. Although he may become partner but with the consent of all existing partners. In this case, he can be admitted to the profits of the firm only but not losses. He is not personally liable for the obligations of the firm. But minor has the right to inspect and copy .the accounts of the firm. Within six months of his attaining maturity, he has to give public notice whether he wants to remain partner or not. After his decision, he will deemed as full fledged partner.

8.     Quasi Partner

A person who has retired from the running management life of the firm but he does not withdraw his capital from the business is know as quasi-partner. So his capital is considered as a loan and he receives interest at the rate varying with the profit. Really he is not a partner but he is a Deferred Creditor.

 9.     Senior Partner

A person who brings large portion of capital in the business is called senior partner. He has prominent position in the firm due to his experience, skill, energy, age and other abilities.

10.   Junior Partner

He invests minor portion of capital in the business and so he has small share in the profits. He is junior to an other partner in the firm due to his age, experience and other factors.

11.   Holding Out Partner (Estoppels partner)

A person who declares by word of mouth as partner of the firm is called holding out partner. In reality he is not a regular partner so he is not entitled to receive share of profit. Such persons are liable to those parties who have given credit on the faith of such representation.

12.   Salaried Partner

An individual who does not bring anything i.e. amount or goods in the firm but has right to receive salary or share in the profit or both is named as salaried partner. He is known to the outside world as a partner and is liable for all the acts of the firm like other partners.

13.   Incoming Partner

A person who is newly admitted to the firm with the consent of all the parties is called incoming partner. He is not liable for any act of the firm done before he became a partner unless he agrees;

14.   Retired Partner (Outgoing Partner)

A person who goes out of a firm due to certain event or reason is known as retired or out going partner. In this situation the remaining partners continue to carry on the business. Retiring partner is liable for all the obligations and debts incurred before the retirement. But he will also be liable to third parties even for future transaction, if he does not give public notice of his retirement..

15.   partners in Profit Only

He is an individual who gets a share of the profits only without being liable for the losses. He does not participate in the management of the business. He will be liable to outsiders for all acts of the firm.

 16.   Limited Partner

A person who has not to pay any obligation more than the share he holds in the firm is called limited partner. He can not take part in the management of the firm. This kind of partner exists in limited partnership. But this organization is rare in our country.

COMPULSORY WINDING UP BY THE COURTMonday, September 7, 2009

There are following six reasons for the compulsory winding up of the joint stock company:

1. Special resolution

A company may be wound up by the court if a special resolution is passed for this Purpose.

2. Failure to commence business

When the company does not commence business within a year from its incorporation or suspends business for a year.

3. Statutory report or meeting

Where default is made in submitting the statutory report to the registrar's office or in holding the statutory meeting within prescribed time or any two consecutive annual general meetings under section 305 (b) in company ordinance 1984.

4. Reduction in number of members

Where the number of members of public company is reduced below seven or in case of private company below two.

5. Inability to pay its debts

Where the company is unable to pay its debts in the following situation.

a. If a creditor whose debt exceeds. Rs.50,000 or one percent of its paid up capital which ever is less under section 306 (a) Has served notice requiring payment and is not paid within 30 days.

b. If execution in favour of creditor remains unsatisfied or

c. If the court is fully satisfied that the company is quite unable to pay its debts.

6. Court's decision

When the court is of the opinion that it is just and equitable that the company should be wound up due to its mismanagement, dead-lock, fraudulent or any other reasonable grounds.

GROUNDS FOR ISSUING A SUPERVISION ORDERMonday, September 7, 2009

GROUNDS FOR ISSUING A SUPERVISION ORDER

The grounds on which an. order for supervision is made are summarized as follows:

a. If the rules of winding up are not completely followed.

b. If the liquidator acts in a partial manner.

c. If the winding up resolution is obtained by fraud.

d. If the liquidator disregards to dispose of the assets of the company.

Short Notes

a. Statement in lieu of prospectus

b. Share Certificate

c. Share Warrant

d. Common Seal

e. Dividend

f. Minimum Subscription

g. Transmission of share

h. Underwriting

POSTED BY I2BIZ AT 9

WINDING UP UNDER THE SUPERVISION OF THE COURTMonday, September 7, 2009

WINDING UP UNDER THE SUPERVISION OF THE COURT

The following is the process of the court:

a. Resolution

At first the company has to pass special or extra ordinary resolution to wind up voluntarily.

b. Petition for subject to supervision

When there are frauds or irregularities in the voluntary winding up, the petition may be presented by one or more of the competent parties for winding up under the supervision of the court.

c. Supervision order

The court may, if it thinks fit, order that the voluntary winding up shall continue but subject to the supervision of the court and on such terms and conditions as the court thinks just.

d. Power of the court

The court has power to appoint an additional liquidator of to remove any liquidator. But generally the liquidator appointed by the company for the voluntary winding up continues in office subject to his giving of security.

e. Dissolution of the company

When the supervision order made, the liquidator may exercise all his powers in a voluntary winding up. On completion of the winding up, the court will make an order that the company is dissolved.

VOLUNTARY WINDING UP IS SUB-DIVIDED INTOMonday, September 7, 2009

1. Member's voluntary winding up.

2. Creditors voluntary winding up.

1. Procedure in member's voluntary winding up

To bring about a member's voluntary winding up the following conditions must be satisfied.

a. Statutory declaration

The majority of directors make a statutory declaration of solvency for submission to registrar intimating him that having made full enquiry into the company's affairs, they of the opinion that the company will be able to pay its debts in full within three years from the commencement f the winding up,

b. Special / ordinary resolution

After the declaration of solvency has been submitted to registrar , the company in general meeting passes the ordinary or special resolution as the case may be for the winding up of the company.

c. Appointment of liquidator

The company in general meeting appoints a liquidator to wind up the company's affairs and distribute its assets. The remuneration of liquidator may be fixed in this meeting. On the appointment of liquidator, all the powers of directors and other officers end except so far as the company in its general meting or the liquidator himself sanctions their continuance. Within ten days after the appointment of liquidator, the notice regarding the appointment must be sent to registrar.

d. Final process of winding up

If the winding up continues for more than one year, the liquidator has to call general meeting of the company at the end of each year. When the company's affairs are fully wound up, he has to call final meeting of the shareholders. At this meeting the liquidator must submit a final account of the company's affairs to the members. Within one week after the final meeting, the liquidator must file with registrar a copy of the accounts and a return of the holding of the meeting. At the end of three months from the date of registration of return, the company is dissolved and its name is struck off the Register of Joint Stock Companies.

2. Creditors voluntary winding up

The procedure for a creditor's voluntary winding up is follows:

a. Solvency declaration

Statutory declaration regarding solvency of the company is not necessary in case of creditor's voluntary winding up.

b. General meeting

A general meeting of the company will be called for the purpose of passing extra-ordinary resolution. This resolution is required for the winding up of the company because it cannot continue its business because of its liabilities.

c. Creditor's meeting

The company must call a meeting of the creditors on the same day or on the following day after the general meeting of the company. A notice must be sent in writing to each creditor for this purpose.

d. Statement of company's position

The directors of the company must lay before the creditors a full statement of company's position, a list of creditors and their estimated claims. A director of the company, appointed by other directors must preside the creditor's meeting.

e. Intimation to registrar

The information regarding the notice of resolution passed must be sent to registrar within ten days from the date of creditor's meeting.

f. Appointment of liquidator

The creditors and the company at their respective meeting may nominate a person to act as liquidator. If different persons are nominated by creditors and company respectively, the opinion of the creditors shall hold good.

g. Committee of inspection

The creditors and the members at their respective meeting may appoint a committee of inspection consisting of five persons in each committee.

h. Liquidator's powers and duties

The liquidator may exercise his power for the winding up of the company with the sanction of the committee of inspection or in the absence of such committee, with the creditors.

i. Liquidator's remuneration

The liquidator's remuneration is fixed by the committee of inspection or, if there is no such committee, by the creditors.

j. After the expiry of one year

If winding up continues for more than one year, the liquidator must. call the meeting of .creditors and members at the end of each year. He must lay

before the meeting an account of his acts for the winding up during the preceding year.

k. At the end of winding up

On completion of the winding up, the liquidators have to cal final general meeting of the members and a meeting of creditors. The notice for these meetings must publish in the gazette and news papers at least ten days before the meeting. The liquidator has to lay his reports regarding the accounts and assets of the company before the meeting. Within one week after the date of the meeting, the liquidator must submit to Registrar a copy of his accounts and a return of the holding of such meeting.

l. Dissolution of the company

At the end of three months from the date of registration return the company is dissolved and it ceases its legal entity.

The circumstances of such winding up are described belowMonday, September 7, 2009

a. Expiry of fixed period

Where the period is fixed for the duration of the company by the Articles, it. may be winding up on the expiry of period. But the company has to pass ordinary resolution in general meeting to wind up.

b. Happening of event

A company may be wound up on the happening of event on which (under the Articles) the company is to be dissolved.

c. Special resolution

A company may be wound up voluntarily if the company passes special resolution for this purpose.

d. Heavy liabilities

A company may be wound up if the company passes extra-ordinary resolution that it cannot continue its business due to its heavy liabilities.

COMPULSORY WINDING UP BY THE COURTMonday, September 7, 2009

There are following six reasons for the compulsory winding up of the joint stock company:

1. Special resolution

A company may be wound up by the court if a special resolution is passed for this Purpose.

2. Failure to commence business

When the company does not commence business within a year from its incorporation or suspends business for a year.

3. Statutory report or meeting

Where default is made in submitting the statutory report to the registrar's office or in holding the statutory meeting within prescribed time or any two consecutive annual general meetings under section 305 (b) in company ordinance 1984.

4. Reduction in number of members

Where the number of members of public company is reduced below seven or in case of private company below two.

5. Inability to pay its debts

Where the company is unable to pay its debts in the following situation.

a. If a creditor whose debt exceeds. Rs.50,000 or one percent of its paid up capital which ever is less under section 306 (a) Has served notice requiring payment and is not paid within 30 days.

b. If execution in favour of creditor remains unsatisfied or

c. If the court is fully satisfied that the company is quite unable to pay its debts.

6. Court's decision

When the court is of the opinion that it is just and equitable that the company should be wound up due to its mismanagement, dead-lock, fraudulent or any other reasonable grounds.

Joint Stock CompanySunday, September 6, 2009

Joint Stock Company is a voluntary association of different persons created by law as a separate body for specific purposes. It possesses a common capital contributed by its members such capital being divided into transferable shares. The liability of each such member is limited to the face value of the shares he holds. LORD JUSTICE LINDELY defines. "A company is an artificial person created by law with a perpetual succession and a common seal". It has a legal entity, separate from the person composing it. It can sue and be sued In its own name.

It is formed and controlled under the Company Ordinance or of the State. It is

managed by the group of persons known as Board of Directors. This form of organization is very popular in the field of large scale production and distribution due to its greater benefits.

CharacteristicsThe following are the main characteristics of the joint stock company:

I.      Legal Existence

Joint Stock Company is an Artificial Person created by law. As it has separate legal existence apart from its members, it can purchase the property or transfer the title of property or sue in a court of law in its own name. In our country, it is organized and supervised under the company ordinance 1984.

2.     Limited Liability

The liability of the shareholder is limited to the unpaid value of the shares he holds. Private assets of the members are not liable to settle the business obligations. This is a prominent distinctive feature from other forms of business organization.

3.     Number of Members

There are large numbers of members in the joint stock company. In case of Public company minimum number of members is seven and there is no restriction for the maximum number of members. In case of Private Company, minimum number of members is two and maximum is fifty.

4.     Transferability of Shares

The share of the public company is transferable. This type of share may easily be purchased or sold in the stock exchange market. But members of partnership cannot freely transfer their shares to another person.

5.     Object

The basic of the formation of the joint stock company is to earn profit. Whole profit is not distributed among the shareholders but some portion of profit is transferred to Reserve Fund. So that it may be used at the time of emergency.

6.     Management

Its management is conducted by the Board of Directors. But the shareholders who are the actual owners of the company are not allowed to participate directly in the management. So there is separation of ownership from control.

7.     Long Life

It enjoys continued existence. The death or retirement of any member cannot affect the running life of company. Its life is apart from its members. Its business continues until it is wound up by its members or creditors so it is called perpetual

succession.

8.     Larger Business

As there is no limit to the maximum number of shareholders in case of Public Company, capital may be increased and large business may be commenced. But it is not possible in other form of organization due to lack of capital.

9.     Trade Agreement

As joint stock company enjoys separate existence so it can join the agreement with other firm in its own name.

10.   Changing Nature of Business

In the partnership, the nature of business may easily be changed with mutual consent of partners. But object clause of the Memorandum of Association which also describes the nature of business may not be changed except the sanction of the court.

11.   Chances of Increasing Funds

There are many sources by which business funds and capital may be raised in the Public Company. It increases its capital by selling its debentures, shares, other securities and by incorporate saving. But these sources are not available in partnership.

12.   Loans in its own name

Company can receive loans in its own name which are payable by the company itself. But in the partnership, the loans are obtained by partners in their own personal liability.

13.   Numerous Rules

Its activities are controlled by many central or provincial departments. There are numerous rules which must have to be carried into effect by the company. It has to audit its accounts and to submit the various reports to Registrar office. It thus cannot operate freely without any interference.