1.

What do you mean by a company?

Company is an artificial person created by law to carry on a business for the profit with distinct legal existence. The company has transferable shares, limited liabilities, perpetual succession & a common seal. The company is managed by the representatives of shareholders called board of directors.In other words “company is a voluntary association of individuals for profit having capital divided into transferable shares the ownership  is the condition of membership”. According to Nepal Company Act 2053 “A Company refers to any company formed and registered under this act”.

 

2.

What are the main features of a company?

ans. A company is an entity created by law and is separated from its owners. It is  acorporate body formed to carry out certain activities for a particular purpose. There are many shareholder in an organization. The main features of a company are as follows;

Legal personality : A  company is an artificial person which is created by law. It exists only in contemplation  of law and, therefore , has no physical shape or form. Although invisible and intangible, as a legal person, it enjoys almost all the rights of a natural person. It has the rights to enter into contracts and it can buy and sell the properties in its own name. it can be sue and can be sued.

Perpetual existence: Being an independent body, the life of the company is not connected with the life of its shareholders. The law creates the company and the law brings it to an end. It is a corporate body. Its shareholders may transfer their shares and new persons may come in their place but the existence of the company is not affected .

limited liability.
 Representative management.
 Democratic management .
Transferability of shares.
 Common seal.
Publication of financial statements.

 

3.

How are the company classified?

Ans. Company is classified into 4 different types:

On the basis of incorporation:

a.  Chartered company.
b. Statutory company.
c.  Registered company

On the basis of liability:

a. Unlimited company.
b.  Limited company .
c. Company limited by guarantee.

On the basis of membership:

a. Private company
b. Public company

On the basis of ownership

a. Government company
b. Non-government company

 

4.

What does a private company mean? Write any five privileges of a private company?

Ans. A private limited company can be formed with the one member but the maximum number of shareholders cannot exceed fifty and restricts the transfer of share from one shareholder to another. It is not necessary to issue prospectus to collect share capital. It is not necessary to hold statutory meeting for private company. The private company must use the words “Pvt.Ltd” at the end of its name.
The five privileges of a private company are as follows;

Private company can be established by a single person.
It does not need to publish a prospectus at the time of the issue of its share.
The private company must use the words “Pvt.Ltd” at the end of its name.
It restricts the transfer of shares from one person to another person.
It is not required to hold statutory meeting.
It need not to obtain the certificate of the business before the commencement of the business.

 

5.

What does a public company mean? Mention its Advantages .

A Public company is a company the membership of which is open to the general public under the provisions of its Articles. The minimum number required for the formation is seven, but there is no upper limit. It offers its share to public through a Prospectus and any person can apply for its share.A Public limited company has to obtain the certificate of the commencement before starting its business along with the time of issuing shares incorporation.

Advantages of public company are as given below;

Its share are transferable
Liabilities of shareholders is limited
Free to invite people to subscribe to its share and debenture
Large capital not exceed to register capital can be collected for mass production purposes.
Effective and efficient management is possible.

 

6.

Differentiate between a private company and a public limited company.

Public limited company	Private limited company
A public limited company requires at least 7 members for its incorporation. Its maximum number is unlimited.	A private limited company can be established by a single member. Its maximum number is limited to 50.
it requires the ‘certificate of incorporation’ and the ‘certificate of commencement of business’ to start its business.	It requires only the ‘certificate of incorporation’ to start its business.
It does not restrict the transfer of its shares.	It restricts the transfer of its shares.
It has to publish its annual financial statements.	It is not required to publish its annual financial statements.
It must file a statutory report.	It need not file any statutory report.
It cannot allot shares without receiving the minimum subscription.	It can allot shares without raising the minimum subscription.
It uses the word  ‘Ltd’ after its name.	It uses the words ‘Pvt.Ltd’ after its name.

 

 

7.

Who is a company promoter? Explain.

Ans. Company promoters are the people who give birth to a company. Promoters generate the idea and discover business opportunities. They make detailed investigation about the feasibility of the business, financial sources and competitors. They prepare necessary document like the Memorandum of Association,  the Article of Association and the prospectus for the incorporation of the company.

 

8.

List out the document required for private companies and public limited companies.

Ans. Some important documents are required and prepare to submit to the office of company registar in the process of formation of a company. Some of these important documents are as follows:

#In case of private limited company:

i)Memorandum of Association
ii)Article of Association

#In case of public limited company:

i)Memorandum of Association
ii)Article of Association
iii)Prospectus

 

9.

What do you mean by an Article of Association?

Ans. Article of Association is another important document for establishment of the company. It relates with the internal rules and regulations of the company. It contains rules, regulations and by laws for the internal management of the company. Every company has to prepare articles of association along with other documents for incorporations. Matters related in the Article of Association should not be against the Memorandum of Association. Any content of Article of Association which disagree with the Memorandum of Association shall be invalid to the extent of such conflict. It shows the relation between the company and its member and relation among the members.

 

10.

What do you mean by the Memorandum of Association?

Ans.  Memorandum of Association is the first document in which the main objective and external rules and regulations of the company will be stated. It is the constitution of a company. The company should operates as per the terms and conditions mentioned in the MOA. If the company does not operate as per the MOA, it will be considered as illegal. In case of private limited company, at least , one promoter and in case of public limited company at least seven promoters have to sign on the MOA.
According to Lord Macmillan “The Memorandum of Association sets out the constitution of the company. It is, so to speak the charter of the company and providers the foundation on which the structure of the company is built.”

 

11.

What do you mean by a prospectus?

Ans. Prospectus is another major important document of the company. Simply, prospectus is the brief report of the company. In other words, Prospectus is an invitation to the general public to participate or purchase the shares of the company. We know that public limited company will manage the capital from the general public by issuing the shares. The prospectus should not be signed by the all the directors, but the prospectus which is to be published should be approved by the concerned department of Government of Nepal.

 

12.

Write in brief about an Article of Association.

Ans.The document, which defines the rights, power and duties of the management, the modes and manners of carrying the company’s  business is called Article of Association. It shows the relation between the company and its members and relation among the members.

1.

What do you mean by a company?

Company is an artificial person created by law to carry on a business for the profit with distinct legal existence. The company has transferable shares, limited liabilities, perpetual succession & a common seal. The company is managed by the representatives of shareholders called board of directors.In other words “company is a voluntary association of individuals for profit having capital divided into transferable shares the ownership  is the condition of membership”. According to Nepal Company Act 2053 “A Company refers to any company formed and registered under this act”.

 

2.

What are the main features of a company?

ans. A company is an entity created by law and is separated from its owners. It is  acorporate body formed to carry out certain activities for a particular purpose. There are many shareholder in an organization. The main features of a company are as follows;

Legal personality : A  company is an artificial person which is created by law. It exists only in contemplation  of law and, therefore , has no physical shape or form. Although invisible and intangible, as a legal person, it enjoys almost all the rights of a natural person. It has the rights to enter into contracts and it can buy and sell the properties in its own name. it can be sue and can be sued.

Perpetual existence: Being an independent body, the life of the company is not connected with the life of its shareholders. The law creates the company and the law brings it to an end. It is a corporate body. Its shareholders may transfer their shares and new persons may come in their place but the existence of the company is not affected .

limited liability.
 Representative management.
 Democratic management .
Transferability of shares.
 Common seal.
Publication of financial statements.

 

3.

How are the company classified?

Ans. Company is classified into 4 different types:

On the basis of incorporation:

a.  Chartered company.
b. Statutory company.
c.  Registered company

On the basis of liability:

a. Unlimited company.
b.  Limited company .
c. Company limited by guarantee.

On the basis of membership:

a. Private company
b. Public company

On the basis of ownership

a. Government company
b. Non-government company

 

4.

What does a private company mean? Write any five privileges of a private company?

Ans. A private limited company can be formed with the one member but the maximum number of shareholders cannot exceed fifty and restricts the transfer of share from one shareholder to another. It is not necessary to issue prospectus to collect share capital. It is not necessary to hold statutory meeting for private company. The private company must use the words “Pvt.Ltd” at the end of its name.
The five privileges of a private company are as follows;

Private company can be established by a single person.
It does not need to publish a prospectus at the time of the issue of its share.
The private company must use the words “Pvt.Ltd” at the end of its name.
It restricts the transfer of shares from one person to another person.
It is not required to hold statutory meeting.
It need not to obtain the certificate of the business before the commencement of the business.

 

5.

What does a public company mean? Mention its Advantages .

A Public company is a company the membership of which is open to the general public under the provisions of its Articles. The minimum number required for the formation is seven, but there is no upper limit. It offers its share to public through a Prospectus and any person can apply for its share.A Public limited company has to obtain the certificate of the commencement before starting its business along with the time of issuing shares incorporation.

Advantages of public company are as given below;

Its share are transferable
Liabilities of shareholders is limited
Free to invite people to subscribe to its share and debenture
Large capital not exceed to register capital can be collected for mass production purposes.
Effective and efficient management is possible.

 

6.

Differentiate between a private company and a public limited company.

Public limited company	Private limited company
A public limited company requires at least 7 members for its incorporation. Its maximum number is unlimited.	A private limited company can be established by a single member. Its maximum number is limited to 50.
it requires the ‘certificate of incorporation’ and the ‘certificate of commencement of business’ to start its business.	It requires only the ‘certificate of incorporation’ to start its business.
It does not restrict the transfer of its shares.	It restricts the transfer of its shares.
It has to publish its annual financial statements.	It is not required to publish its annual financial statements.
It must file a statutory report.	It need not file any statutory report.
It cannot allot shares without receiving the minimum subscription.	It can allot shares without raising the minimum subscription.
It uses the word  ‘Ltd’ after its name.	It uses the words ‘Pvt.Ltd’ after its name.

 

 

7.

Who is a company promoter? Explain.

Ans. Company promoters are the people who give birth to a company. Promoters generate the idea and discover business opportunities. They make detailed investigation about the feasibility of the business, financial sources and competitors. They prepare necessary document like the Memorandum of Association,  the Article of Association and the prospectus for the incorporation of the company.

 

8.

List out the document required for private companies and public limited companies.

Ans. Some important documents are required and prepare to submit to the office of company registar in the process of formation of a company. Some of these important documents are as follows:

#In case of private limited company:

i)Memorandum of Association
ii)Article of Association

#In case of public limited company:

i)Memorandum of Association
ii)Article of Association
iii)Prospectus

 

9.

What do you mean by an Article of Association?

Ans. Article of Association is another important document for establishment of the company. It relates with the internal rules and regulations of the company. It contains rules, regulations and by laws for the internal management of the company. Every company has to prepare articles of association along with other documents for incorporations. Matters related in the Article of Association should not be against the Memorandum of Association. Any content of Article of Association which disagree with the Memorandum of Association shall be invalid to the extent of such conflict. It shows the relation between the company and its member and relation among the members.

 

10.

What do you mean by the Memorandum of Association?

Ans.  Memorandum of Association is the first document in which the main objective and external rules and regulations of the company will be stated. It is the constitution of a company. The company should operates as per the terms and conditions mentioned in the MOA. If the company does not operate as per the MOA, it will be considered as illegal. In case of private limited company, at least , one promoter and in case of public limited company at least seven promoters have to sign on the MOA.
According to Lord Macmillan “The Memorandum of Association sets out the constitution of the company. It is, so to speak the charter of the company and providers the foundation on which the structure of the company is built.”

 

11.

What do you mean by a prospectus?

Ans. Prospectus is another major important document of the company. Simply, prospectus is the brief report of the company. In other words, Prospectus is an invitation to the general public to participate or purchase the shares of the company. We know that public limited company will manage the capital from the general public by issuing the shares. The prospectus should not be signed by the all the directors, but the prospectus which is to be published should be approved by the concerned department of Government of Nepal.

 

12.

Write in brief about an Article of Association.

Ans.The document, which defines the rights, power and duties of the management, the modes and manners of carrying the company’s  business is called Article of Association. It shows the relation between the company and its members and relation among the members.