Forms of Business Organisation-2 — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMForms of Business Organisation-22 Marks
Question
Explain any three characteristics of a company.
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Answer
$1.$ Legal entity:
Being an artificial person, a joint stock company has its own separate legal entity independent of its investors.
This means a company can own property, enter into contracts, it can sue and can be sued by others.
$2.$ Perpetual existence:
As per the law, a ‘company’ is separate from its investors. So, it is not affected by the death or insolvency of the members.
A company can be brought to an end only through liquidation procedure.
$3.$ Divison of capital in small fractions:
If for a public company, the capital to start the company is raised from the public in the form of shares.
The company asks the public to apply for purchasing shares of the company or in simple words ‘purchasing a share’ in the company.
People buy company’s shares from stock market and become shareholders. The company than starts its business with the share capital i.e. fund raised by selling the shares.
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