Company Formation (Theory questions with answers)
Very short answer questions
Here are two contents typically included in a Memorandum of Association:
- Company Name: Specifies the name of the company. Objectives or Purpose: Describes the objectives or purposes for which the company is established.
2. Mention any two features of public ltd. company.
- Limited Liability: Shareholders' personal assets are protected, their liability is limited to the amount of their investment.
- Publicly Traded Shares: The company can raise capital by selling shares to the general public on stock exchanges.
3. Write any two features of preference share.
Fixed Dividend Priority: Preference shareholders receive a fixed dividend before common shareholders.
Priority in Liquidation: In case the company dissolves, preference shareholders have a higher claim on the company's assets than common shareholders.
4. Mention any two advantage of public limited company.
- Access to Capital: Public limited companies can raise capital by issuing shares to the public.
- Limited Liability: Shareholders have limited liability, protecting their personal assets from business debts.
5. Define Company.
A company is a legal entity formed by individuals or shareholders to conduct business activities, typically with the aim of generating profit.
6. What is issued capital?
Issued capital refers to the total value of shares that a company has issued to its shareholders. It represents the actual amount of capital that shareholders have invested in the company in exchange for ownership.
7. What is private company?
A private company is a business owned by a small group of individuals or entities, and its shares are not traded publicly on a stock exchange.
8. Write about authorized capital?
Authorized capital is the maximum value of shares a company can legally issue to its shareholders, as specified in its legal documents.
9. Define preference shares.
Preference shares are shares in a company that give holders priority for dividends and repayment of capital if the company goes out of business, but usually don't include voting rights.
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