Company Accounts 12th Class | Issue Of Shares

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Company Accounts 

Sole proprietorship and partnership form of business organisation could not meet the growing demand of a very big business because of their limitations such as Limited Capital Limited , managerial ability , unlimited liability and other drawbacks. therefore,  a company form of business organisation came into existence to do away with the defects of sole proprietorship and partnership form of business organisations.

Definition :-

" A company is an artificial person created by law having separate entity with a perpetual succession and a common seal "

Characteristics Of A Company

1) Separate legal entity :- A company is a legal person and its entity is separate from its members. it can purchase and sale the property in its own name , can open bank account in its own name and can enter into contract.

2) Limited liability :-  The liability of the shareholder of a company is limited to the unpaid value of his shares. For example , if the face value of shares in a company is Rs. 10 and a shareholder has already paid Rs. 8 per share , he can be called upon to pay not more than to 2 per share.

3) Common seal :- Since the company has no physical existence , it must act through its agents, called directors. All documents prepared by the directors must bear the seal of the company.

4) Perpetual  Existence

                                    

5) Transferability Of Shares

6) Separation Of  Management From Ownership

Kinds Of A Company

Companies registered under the company act 2013 may be classified as below :-

Unlimited Company :- Unlimited company is a company where there is no limit on the liability of its members.

Company Limited By Guarantee :- In case of such a company the liability of the members is limited to the extent of the guarantee given by them.

Company limited by shares :- In this case , a company the liability of the members is strictly limited to the extent of the nominal value of shares held by each of them.

Types of companies

Private Company :- As per section 2 (68) of company act 2013 , a private company is one which by its articles of association

a) restricted the rights of transfer its shares.

b) limit the number of its members to 200 excluding its past or present employees members

c) prohibits any invitation to public to subscribe for any of a securities.

Public Company :- As per section 2 (71) of companies act , 2013 , a public company means a company which is not a private company.

One Person Company :- Section 2 (62) of the companies act 2013 States one person company is a company which has only one person as a member.

Note :-

Ø    Only an Indian citizen resident in India can form one person company for business purpose     only not charitable purpose.

Ø    Its paid up capital is not more than 50 lakh and minimum paid up capital should be 1 lakh

Ø    Its average annual turnover should not exceed 2 crore.

Meaning Of Shares :- Total capital of the company is divided into unit of small denominations. Each such unit is called 'shares'. for example if the total capital of the company is 10 lakh rupees is divided into 1,00,000 unit of 10 rupees each, each unit of 10 will be called a share