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Disadvantages of company Organisation

Although the company organisation offers a variety of advantages, yet is suffers from certain disabilities and demerits which are summarised as follows:

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Advantages of Company Organisation

Following are the chief merits of company as a form of organisation:

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The Prospectus

In case of most of the public Companies, it becomes necessary to sell shares or debentures among the public. For this purpose a Prospectus has to be prepared.

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The Articles of Association

The Articles of Association are rules and regulations for the internal working of a company.

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Importance of the Memorandum of Association

All those who deal with the company are supposed to have knowledge of the contents of the Memorandum of Association.

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The Memorandum of Association Basic Company Documents

The Memorandum of Association is the most important document of the company. It is known as the charter of the company and sets out the limits outside which the company will never be able to function. In other words, the company must always remain within the terms of the Memorandum.

Click to read - The Memorandum of Association Basic Company Documents

Consent of the Controller of Capital Issues

Prior to November 1966, it was obligatory for a company to obtain previous permission of the Controller of Capital Issues if it intended to raise more than Rs. 25 lakhs capital by the issue of shares or debentures.

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Commencement of Business

A private company can commence business immediately after it receives the Certificate of incorporation. This is because a private company cannot invite public to subscribe to its shares and must arrange to raise the capital privately.

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Incorporation of a company

The incorporation of a company involves steps which need to be taken towards the formation of a comp as a legal entity recognised by law.

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Government Company of public interest

A company is called a 'Government Company' under Section 617 of the Companies Act.

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Public Company of public interest

The companies Act gives a negative definition for a public limited company. A public limited company is a company which is not a private limited company.

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Private Company of public interest

A private company is defined as a company, which by its articles-

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Kinds of Companies

Companies may be classified from four different points of view:

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Characteristics of Joint Stock Company

On the basis of the analysis of the above definition, following are the characteristics of a company

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Joint Stock Company

In simple worlds, it can be described as an association of individuals who pool their financial resources to run a business and this associations registered under the law It has its capital, called share capital, divided into parts called the shares.

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