Test: Forms Of Business Organisations - 2 - Commerce MCQ

Life of sole proprietorship business is unstable because in sole trade only one person do all task of business but in situation of death of partner business will shut down completely.And sole trade have many limitation like unlimited liability, lake of resources, improper management etc. So it is unstable.

The Hindu Succession Act, 1956 is an Act of the Parliament of India enacted to amend and codify the law relating to intestate or unwilled succession, among Hindus, Buddhists, Jains, and Sikhs. The Act lays down a uniform and comprehensive system of inheritance and succession into one Act.

This type of entity limits the owner's liability to their ownership stake and restricts shareholders from publicly trading shares. Members: You can start a private limited company with a minimum of only 2 members (and maximum of 200), as per the provisions of the Companies Act 2013. Minimum 2 and Maximum 20 can only be a part of partnership firm while for private limited company, 2 to 50 members in case of Private Company and Minimum 7 members in case of Public Company can be a part and in LLP's there has to be minimum 2 partners and there is no limitation of maximum number of partners.

A Company is required to be registered under The Companies Act, 2013, only after that it will get recognition in the market.

Joint Hindu Family:
- Minimum requirement for a Joint Hindu Family is 2 male adults.
- There is no maximum limit for the number of adult members in a Joint Hindu Family.
Cooperative Society:
- Minimum requirement for a Cooperative Society is 10 adult members.
- There is no maximum limit for the number of adult members in a Cooperative Society.
Company:
- Minimum requirement for a Company is 2 adult members in case of a private limited company and 7 adult members in case of a public limited company.
- There is no maximum limit for the number of adult members in a Company.
Partnership:
- Minimum requirement for a Partnership is 2 adult partners.
- There is no maximum limit for the number of adult partners in a Partnership.
Therefore, the correct answer is option B: Cooperative Society, as it has a minimum requirement of 10 adult members and no maximum limit.

Private Company does not invite the public to subscribe to its share capital.
- Private Company is a type of company that is privately owned and has restrictions on the transfer of shares. It is not listed on a stock exchange and does not offer its shares to the public.
- The shareholders of a private company are usually limited in number and can be individuals, other companies, or even a single shareholder.
- The ownership and control of a private company are usually concentrated in the hands of a few individuals or a single entity.
- Private companies are typically smaller in size and have less regulatory requirements compared to public companies.
- The shares of a private company are generally not freely tradable and cannot be bought or sold on a stock exchange.
- Private companies often have more flexibility in their decision-making processes and can operate with more secrecy and privacy compared to public companies.
Therefore, the correct answer is C: Private Company.

It is required to appoint only 2 directors. All its directors can be permanent life directors; the requirement of retirement by rotation does not apply. The special 14 days notice required by the section 257(1) for the appointment of a new director in place of a retiring one does not apply to the case of a private company. It can even increase the number of directors beyond the permissible limit.

Explanation:
The correct answer is D: Lack of business continuity. Here is a detailed explanation of each option:
A: Artificial person:
A joint stock company is considered an artificial person in the eyes of the law. It has its own legal existence separate from its members or shareholders.
B: Separate legal entity:
One of the main features of a joint stock company is that it is a separate legal entity. This means that the company is distinct from its shareholders, and it can own property, enter into contracts, and sue or be sued in its own name.
C: Formation:
Formation is an essential feature of a joint stock company. It involves the process of creating the company, which typically includes registration, filing of necessary documents, and compliance with legal requirements.
D: Lack of business continuity:
This option is not a feature of a joint stock company. In fact, one of the advantages of a joint stock company is its ability to have perpetual existence, meaning it continues to exist even if its shareholders change over time or if there are changes in management.
In conclusion, the correct answer is D: Lack of business continuity. The other options (A, B, and C) are all features of a joint stock company.

Partner by holding out (Section 28)

Partnership by holding out is also called as a partnership by estoppel. This is when an individual holds himself out as a partner or allows others to do so, the person is then stopped from denying the character he has assumed and upon the faith of which creditors may be presumed to have acted. When an individual represents himself or knowingly permits himself, to be represented as a partner in a partnership firm (when in fact he is not) he is liable, like a partner in the firm to anyone who on the faith of such representation, had given credit to the firm.

Nominal Partner: A person who is of great reputation in the market and lends his name to the firm is known as Nominal Partner. Such a partner neither contributes capital nor takes part in the management of business of the firm.

Answer:
Definition:
A person who contributes capital, takes part in management, shares profits/losses, and has unlimited liability towards the creditors but unknown to the general public is called a secret partner.
Explanation:
In a partnership, there are different types of partners based on their roles and responsibilities. A secret partner is one such type of partner who remains unknown to the general public. Here is the detailed explanation of a secret partner:
- Contributing Capital: A secret partner is someone who invests capital or assets into the partnership business. Their contribution helps in financing the business operations.
- Participation in Management: A secret partner actively takes part in the management of the partnership. They have a say in decision-making processes and contribute to the overall functioning of the business.
- Sharing Profits/Losses: Like other partners, a secret partner is entitled to a share in the profits or losses of the partnership. The exact percentage of profit/loss distribution is usually mentioned in the partnership agreement.
- Unlimited Liability: A secret partner has unlimited liability towards the creditors. This means that in case the partnership is unable to meet its financial obligations, the secret partner can be held personally liable for the debts of the partnership. They may have to use their personal assets to satisfy the creditors' claims.
- Unknown to the General Public: The key characteristic of a secret partner is that their identity is not disclosed to the general public. This allows them to remain anonymous and not be associated with the partnership publicly.
Conclusion:
A secret partner is a partner who contributes capital, actively participates in management, shares profits/losses, and has unlimited liability towards the creditors. However, their identity remains undisclosed to the general public.

A corporation is a large structure of organization which has all the legal rights of an individual, except for the right to vote and certain other limitations. A corporation out of all given choices is the largest amongst them, so definitely a corporation has the largest sales volume.
And multinational is a form of a corporation only, therefore, corporation will be the most suitable answer here.

Partnership at Will:
- Partnership at will refers to a partnership agreement where there is no fixed duration or specific terms mentioned.
- It is a type of partnership where partners continue their business relationship for as long as they want, without any predetermined end date.
Continuation of Partnership at Will:
Partnership at will can continue:
- As long as partners want: The partners have the flexibility to continue the partnership as long as they mutually agree and desire to do so. There is no legal requirement for retirement or termination unless specified in the partnership agreement.
- Till the date of retirement: While partnership at will does not have a mandatory retirement age, partners can choose to end the partnership upon reaching their retirement age or as per their personal preferences.
- Till the registration ends: Partnership at will does not have a specific registration period. As long as the partners comply with the legal requirements and maintain their registration, the partnership can continue indefinitely.
- None of these: This option is incorrect as partnership at will does not have a fixed end date or specific conditions for termination.
Overall, partnership at will provides partners with the freedom to determine the duration of their business relationship, allowing it to continue as long as they mutually agree to do so.

Answer:
In a Limited Partnership, the liability of at least one partner is unlimited. Here's a detailed explanation:

• Partnership at will: In this type of partnership, partners agree to carry on the business without any specific time limit or duration. The liability of partners is generally limited.


• General Partnership: In a general partnership, all partners have unlimited liability. This means that each partner is personally responsible for the debts and obligations of the partnership.


• Limited Partnership: In a limited partnership, there are two types of partners: general partners and limited partners. The general partners have unlimited liability, while the limited partners have limited liability. Limited partners are only liable up to the amount of their investment in the partnership.


• None of these: This option is incorrect because the correct answer is C, Limited Partnership.

Therefore, in a Limited Partnership, the liability of at least one partner is unlimited.

Partnership Deed
The partnership deed is a legal document that outlines the terms and conditions agreed upon by the partners of a partnership. It is an important document that governs the relationship between the partners and the operation of the partnership. The partnership deed generally includes the following:
Name of Firm:
- The partnership deed includes the name under which the partnership will operate. This is the official name of the partnership and is used for all legal and business purposes.
Nature of Business:
- The partnership deed specifies the nature of the business that the partnership will engage in. It describes the type of products or services that will be provided by the partnership.
Location of Business:
- The partnership deed includes the address or addresses where the partnership will carry out its business activities. This may include the main office or headquarters as well as any branch offices or additional locations.
All of These:
- The correct answer is option D, which states that all of the above options (A, B, and C) are included in the partnership deed. The name of the firm, nature of business, and location of the business are all important details that need to be specified in the partnership deed.
In conclusion, the partnership deed is a comprehensive document that includes important details about the partnership such as the name of the firm, nature of business, and location of the business. It is essential for partners to have a clear understanding of these details to ensure a smooth operation of the partnership.

According to partnership act ,1932 .if the partner become die ,insolvency ,and retirement. Then the partnership agreement again signed by the partner who want to continue this partnership.They do not continue old partnership because new ratio will be determined in which profit and loss distributed.

According to Partnership Act 1932,  A Partnership Firm can be formed by two or more persons with (or) without registration of the firm. If the firm is registered with the consent of all the partners they have to publish their accounts and submit its report to the registar of firms of that particular state. In case if the firm is not registered  then they don't need to submit their accounts to the legal authority.

Cooperative Societies Act and Registration
The Cooperative Societies Act provides a legal framework for the formation and functioning of cooperative societies. In this case, the cooperative society must be registered under the Cooperative Societies Act.
Answer: C: 1912
Explanation:
Here is a detailed explanation of the Cooperative Societies Act and its registration requirements:
1. Cooperative Societies Act: The Cooperative Societies Act is a legislation that governs the establishment, operation, and regulation of cooperative societies in a particular jurisdiction. It provides a legal framework for their functioning, management, and governance.
2. Registration Requirement: The cooperative society is compulsorily required to be registered under the Cooperative Societies Act. Registration is a legal process that ensures the society's compliance with the provisions and regulations set forth by the Act.
3. Year of the Act: The correct answer is C: 1912. The Cooperative Societies Act, 1912 is one of the earliest legislations governing cooperative societies in India. It was enacted to provide a legal structure for the promotion and development of cooperative organizations.
4. Purpose of Registration: Registration under the Cooperative Societies Act provides several benefits, including legal recognition, protection of members' interests, access to government schemes and funding, and the ability to enter into contracts and agreements.
5. Registration Process: The process for registering a cooperative society may vary depending on the jurisdiction, but it generally involves the following steps:
- Formation of a society with a minimum number of members as specified by the Act.
- Preparation of a set of bylaws or rules that govern the society's operations.
- Submission of the necessary documents and application to the Registrar of Cooperative Societies.
- Payment of the prescribed registration fees.
- Scrutiny and verification of the documents by the Registrar.
- Issuance of a certificate of registration upon fulfillment of all requirements.
6. Benefits of Registration: Once registered, a cooperative society can enjoy various benefits, including:
- Separate legal entity status, distinct from its members.
- Limited liability protection for the society and its members.
- Access to government support, grants, and subsidies.
- Ability to raise funds from members and external sources.
- Democratic decision-making through the election of a managing committee.
- Promotion of cooperative principles and values.
In conclusion, the Cooperative Societies Act, 1912 is the legislation under which a cooperative society is compulsorily required to be registered. Registration provides legal recognition and various benefits to the society and its members.

Sole Proprietorship, first of all, is not a company. It is an unincorporated business type, and needs no registration to be created. The biggest disadvantage of a Sole Proprietorship is Unlimited Liability. As it is not considered to be a separate entity in the eyes of the law, the owner bears complete responsibility towards any debts or damages caused with respect to the business; even at the stake of your personal assets.

MUTUAL AGENCY IN A PARTNERSHIP The fifth element in the definition of partnership provides that the business must be carried on by all the partners or any (one or more) of them acting for them all, i.e. there must be a mutual agency. Thus, every partner, is both an agent and principal for himself and other partners, i.e. he can bind by his acts the other persons and can be bound by the acts of other partners. The importance of the element of mutual agency lies in the fact that it enables every partner to carry on the business on behalf of others.