Which of the following statement is incorrect .
a. In a Private Ltd Company, the right to transfer the share is restricted .
b. A public Ltd Company allows the shareholders to transfer their shares .
c. In a sole proprietorship, two or more than two people handle and manage the entire business.
d. Cooperatives are a form of voluntary organisation .
Answers
Answer:
The right to transfer the share is restircted in Private company and not in public company because we transfer the shares without restriction in public company so the first is correct.
In public it can be restricted but we still transfer the shares.
The third option is wrong because it is controlled managed and governed by one unit, man, person or organization
The last option is also correct.
Explanation:
Answer:
Classification And Registration Of Companies
1. The Companies Act, 1956 broadly classifies the companies into private and public companies and provides for regulatory environment on the basis of such classification. However, with the growth of the economy and increase in the complexity of business operation, the forms of corporate organizations keep on changing. There is a need for the law to take into account the requirements of different kinds of companies that may exist and seek to provide common principles to which all kinds of companies may refer while devising their corporate governance structure. Rigid structures, unnecessary controls and regulations inhibit the risk taking initiatives of the entrepreneurs. Private companies and small companies, who do not generally go for public issues or deposits for their financial requirements but utilize their personal or in-house resources, need to be given flexibility and freedom of operation and compliance at a low cost. Equally, public companies that access capital from public need to be subjected to a more stringent regime of corporate governance. To enable a comprehensive framework for different forms of corporate organizations, the Company Law should ensure multiple classifications of companies. It should also enable smooth change-over of companies from one type to another.
Classification of Companies
2. The corporate form can take many shapes in order to respond efficiently to the environment. Company Law should therefore recognize a multiple classification of companies. The Committee indicates the criteria for classification on the basis of the forms discernible today, but recognizes that such classification can never be exhaustive.
i) On the basis of size: a) Small companies b) Other companies
ii) On the basis of number of members: a) One person company b) Private companies c) Public companies
iii) On the basis of control: a) Holding companies b) Subsidiary companies c) Associate companies
iv) On the basis of liability: a) Limited (I) by Shares (II) by Guarantee (with or without share capital) b) Unlimited
v) On the basis of manner of access to capital: a) Listed companies b) Un-listed companies
3. The law should recognize the potential for diversity in the forms of companies and rather than seeking to regulate specific aspects of each form, seek to provide for principles that enable economic inter-action for wealth creation on the basis of clear and widely accepted principles.
Small companies
4.1 The Committee sees no reason why small companies should suffer the consequences of regulation that may be designed to ensure balancing of interests of stakeholders of large, widely held corporates. Company law should enable simplified decision making procedures by relieving such companies from select statutory internal administrative procedures. Such companies should also be subjected to reduced financial reporting and audit requirements and simplified capital maintenance regimes. Essentially the regime for small companies should enable them to achieve transparency at a low cost through simplified requirements. Such a framework may be applied to small companies through exemptions, consolidated in the form of a Schedule to the Act.
4.2 Law could also consider an integrated approach whereby a deregulated framework for private companies may be provided, which may also apply to small companies. However a definition of small companies may be considered for enabling such a regime. There are bound to be problems associated in prescribing size. In our view, size may be assessed on the basis of gross assets comprising of fixed assets, current assets and investments not exceeding a particular limit as also turnover. Since the definition of “small” may change over time, this may be done through rules.
4.3 To qualify for exemptions, a small company should however neither be a holding nor a subsidiary of any other company. However, the Committee does not feel the need for providing a special internal governance and constitutional regime to small companies. This is likely to come in the way of their future growth. Instead the Committee recommends enabling of new vehicles for business, such as Limited Liability Partnerships, through separate legislation, if necessary.
4.4 Associations, Charitable Companies etc. licensed u/s 25 of the existing Companies Act, should not be treated as small companies irrespective of their gross assets.
4.5 The law should provide a framework compatible to growth of small corporate entities. Exemptions should however facilitate compliance by small companies in an easy and cost effective manner. These should not incentivize concealment of true size by any entity or be a barrier to growth of small companies.
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