DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : R.Dasharatham
Designation : Lecturer
Branch : D.C.C.P.
Institute : GPW, Warangal
Year : I year
Subject : Business Organization
Subject code : CCP-104
Topic : Formation of a Joint Stock Company
Duration : 50 mts
Sub topic : Incorporation of JSC-Part-III
Teaching Aids: : P.P.T., Animation, Photos

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Objectives

On the completion of this topic the student will be

able to:
 Financing, Control and management of Joint Stock
Company

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Recap
In the Previous Class, we have discussed about:

 Important documents for Incorporation of a Company

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 COMPANY FORMATION

II. LEGAL ASPECT

I. BUSINESS
ASPECT
1. PROMOTION 3. PROSPECTUS
2. INCORPORATION

A. DISCOVERY OF NEW
IDEA

B. ASSEMBLING A. MEMORANDUM OF B. ARTICLES OF C. WRITTEN D

ASSOCIATIONN ASSOCIATION CONSENT NOT
ICE

C. PREPARATION OF
FINAL PLAN

4. COMMENCEMENT CERTIFICATE

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Financing

 In private limited company capital contributed by

members through mutual agreement
 In public limited company capital collected from
public through sale of shares

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Prospectus

 Issued to offer shares of debentures to public

 Shares are the units of the capital of the company.

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 The issue of prospectus involves additional costs.
 Large capital is pooled from people spread
throughout the country
 People who buy shares called shareholders

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Minimum subscription

 It is the amount that the directors of the company

consider necessary to start business.
 A company must collect at least the minimum
subscription.

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Commencement of business

 A public company must issue prospects

 Get at least minimum subscription amount
 Then Registrar issues “Certificate of Commencement
of Business”

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 Share holders have ultimate control over company’s
assets
 Approval of share holders for all important decisions in
company.

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Management

 Company is separate legal entity

 Ownership separate from management
 Share holders elect a group from among them
called board of directors

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Board of directors

 Look after actual management

 Lay down the corporate objectives
 Implement them

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Duration

 Perpetual existence
 Uninterrupted by death, insolvency or withdrawal
of a member
 Can be wound up only according to the
provisions of companies act

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Taxation
 A company’s profits are taxed at a flat rate
against slab rates changed for non-corporate
bodies.
 The rate of income tax for a company will be the
same irrespective of whether the profits are high
or low.
 Partnership or a sole proprietorship will pay tax at
increasing rates with increase in the amount of
assessable income.
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Summary

We have discussed about:

 Financing
 Control
 Management of a company

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Quiz

Q1:What is a Prospectus

1. It is Notice
2. It is an Acceptance
3. It is an Offer
4. It is a Memo

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Quiz

Q2: Shareholders are the

A) Creditors
B) Debtors
C) Customers
D) Owners

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Frequently asked Questions in the
Examination

 What is a Prospectus?

 Who looks after the management in a Joint Stock

Company?

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Assignment

 From where does a company get finance?

 Who are the real owners of a company?

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Thank You

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