Mid 1 Notes
Mid 1 Notes
Organization
An organization is a group of people working together in a formal way. Legal existence is must
for an organization.
People with particular skills set an organization to earn profit.
Sole Trader
Person who runs his own organization, if business is big than have to legalize it with any income
tax organization.
Everything is at his own risk if a business fails.
Partnership
Non limited company, group of people earning profit.
Problem => Share rate.
Cooperatives
Cooperatives are another way in which an organization can acquire a legal existence. They are
important in fields such as agriculture and enjoy a special legal status.
Limited Companies
Legal cooperative identity, a person different from the one who works there.
Ownership will be divided into shares and shares must be sold independently.
In case of debt, owner will not pay, most shareholder will do.
Constitution of a Limited Company
Memorandum
Company name should be unique.
Known office location
Type of business must be clear.
In the case of a company limited by shares, this clause merely states that the liability of
the members is limited.
The company’s authorized share capital and the number and nominal value of its shares.
Declaration of Association
We, the several persons whose names, addresses and descriptions are written below, are
desirous of being formed into a company in pursuance of this Memorandum of
Association, and we respectively agree to take the number of shares in the capital of the
company set out opposite our respective names.
Directors
The one who runs or direct the company
Has duty towards shareholders as well as company employees
Must devote himself to the companies benefits and avoid personal interest
Is liable for any wrong decision.
Non-Commercial Bodies
Non-profiting
Staff working as volunteers or nominal pay
Charity or Government runs it