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, somethings 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 todays 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 Deed
Friday, 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 Societies
Monday, 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 society
Saturday, 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 Business
Friday, 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 Business
The following are the major functions of the business.



1. Creation and Distribution of Utilities
Business 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 Function
It 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 Function
Engineering 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 Function
This 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 Function
Manufacturing 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 Function
The 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 Function
Accounting 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 Function
It 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 Function
It 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.



Organization
Organization 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 Function
The 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 Responsibility
The 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. Adoptability
There 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. Delegation
The 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 Authority
The must be vertical structure indicating an unbroken line of authority from the highest level to
lowest.



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



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



Business Organization
Business 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. Soletradership
Sole 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-Ownership
It 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 Company
A 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 Undertaking
A 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. Combination
When 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 Association
Saturday, 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 Partnership
Friday, 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 Partnership
Friday, 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 Partnership
Friday, 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 his act.

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

There is restriction for minor to become a
regular partner according to partnership
Act. 1992.
ownership business.
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 AM
LABELS: 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 PARTNERSHIP
The 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 Business
Friday, 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 Partners
Wednesday, 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 COURT
Monday, 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 ORDER
Monday, 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 COURT
Monday, September 7, 2009
WI NDI NG UP UNDER THE SUPERVI SI ON 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 INTO
Monday, 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 below
Monday, 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 COURT
Monday, 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 Company
Sunday, 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.
Characteristics
The 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.