Ownership pattern & some important terms related to companies

1. Ownership pattern & some important terms related to companies

2. Ownership • Ownership of business is represented by the right of an individual or a group of individuals to acquire legal title to assets for the purpose of controlling them and to enjoy the gains or profits from such possession and use. For business purpose, therefore, the chief forms of ownership organizations are:- • Sole proprietorship. • Partnership. • Co-operative society. • Trust. • Joint stock company.

3. Ownership Sole proprietorship Partnership Trust Joint Stock Company Co-operative society Private Public

4. Sole Proprietorship • Single ownership. • One-man control. • Undivided risk. • Unlimited liability. • No government regulation. • No separate entity of the firm.

5. Partnership • Two or more Members. • Maximum number 20. • Businesses, organization, schools and govenrments can also be partners. • Sharing of Profit. • Unlimited Liability. • Voluntary Registration. • No Separate Legal Existence. • Restriction on Transfer of Interest. • Continuity of Business.

6.  Partners In Profit Only  • If a partner is entitled to receive certain share of profit and is not held liable for the losses, he is known as partner in profit only. • He is not allowed to take part in the management of the business. • Limited Liability Partnership • A limited liability partnership(LLP) still offers the partnership tax benefits, but also offers liability protection for its partners. Specifically, a limited liability partnership can only be sued for the total amount of assets in the business.

7. Example:- • Cable News Network-Indian Broadcasting Network (CNN-IBN) is an English-language Indian television news channel. • The network is a partnership between Global Broadcast News (GBN) and Turner International (Turner) in India (a subsidiary of Time Warner). • The Indian company GBN runs the channel completely but uses the CNN brand name, in return gave 26% stake to Time Warner.

8. Co- Operative Society • "an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly owned and democratically controlled enterprise.” • Voluntary association. • Finance is collected from its members. • Loans can also be taken from government. • Control and management is democratic. • Service motive. • Disposal of surplus as bonus.

9. Cont…….. • Fixed return on capital. • State control and supervision. • The minimum number of members required for the registration of co-operative society is 10. • No maximum limit, members can restrict the maximum number of members. • Registration is compulsory. • Separate legal entity.

10. Trust • A Trust is essentially a relationship between three parties, the donor of some assets, the trustees who hold the assets and the beneficiaries (those people who are eligible to benefit from the charity). • The trust has legal personality, and so can enter into contracts, such as employment contracts in its own name. • Approved by the Income Tax Department. • Donors also get exemption from tax.

11. Example:- • Tribune Trust:- The Tribune- English language daily. Dainik Tribune- Hindi language daily. Punjabi Tribune- Punjabi language daily.

12. Joint Stock Company • A company is an artificial person created by law, having a separate legal entity, with perpetual succession and a common seal. • Legal formation. • Artificial person. • Separate legal entity. • Common seal. • Perpetual existence. • Limited liability. • Democratic management.

13. Private Company • Minimum members 2. • Maximum members 50. • Minimum paid-up capital 1,00,000. • Shares are not freely transferable. • Can not raise money through open invitation. • Required to use private limited.

14. Example:- • Viacom 18 Media Pvt. Ltd.:- • 50/50 joint venture operation in India between Viacom and the Network 18Group. •  MTV, • ckelodeon,  • Vh1, • COLORS, • SONIC, • Comedy Central .

15. Public Company • Minimum members 7. • Maximum members - no limit. • Minimum paid-up capital 5,00,000. • Shares are freely transferable. • Can raise money through open invitation. • Required to use public limited or limited.

16. Example:- • HT Media Ltd.  Hindustan Times (HT) Mint (English business daily), Hindustan (Hindi Daily), Nandan (monthly children's magazine) Kadambani (monthly literary magazine)

17. Holding and Subsidiary Company • Sec 4 of the Companies Act, 1956 defines holding and subsidiary company. • (1) acquiring more than 50% of equity capital, • (2) having such powers which enables it to appoint or remove majority directors on other company's board, • (3) acquiring holding company of another company through one of the two modes above.Hence holding company(parent company) is the controlling company whereas subsidiary company is the controlled company.

18. Examples:- • State Bank of India has subsidiaries....1. SBI Mutual fund2. SBI Caps Ltd..3. SBI Housing Limited • Network18 Media & Investments Limited:- TV 18 (India)Viacom 18ibn 18HomeShop 18Sport 18Setpro 18

19. Share Capital • Authorized share capital registered capital. company is allowed (authorized) to issue. • Issued share capital share capital issued (allocated) to shareholders. • Subscribed capital  portion of the issued capital, subscribed by investors. • Called up share capital amount of issued capital shareholders are required to pay • Paid up share capital amount of share capital paid by the shareholders.

20. Cont…… • Face Value :Basic Value with out adding premium, it is mentioned on the face of share certificate. • Market Value: It is the value of a share after adding profit.

21. Shares • A unit of ownership. • An equal proportion of a company's capital. • It theshareholder an equal claim on the company's profits and an equal obligation for the company's debts and losses. • (1) Ordinary shares (common stock):- share in the earnings of the company and to vote at the company's annual general meetings. • (2) Preference shares (preferred stock):- fixed periodic income (interest) but generally do not give him votingrights.

22. Terms related to shares • Forfeiture of Shares:- When a shareholder fails to pay calls at time fixed for payment. • Surrender of Shares:-Such voluntary return of shares to the company by the shareholder himself. • Calls in Arrears:-If any amount has been called by the company a shareholder has not paid that money. • Can change interest @ 5 % according to AOA. • Calls in Advance:-some shareholders pays the amount of the rest of calls also in advance.

23. Bombay Stock Exchange • established in 1875 • commonly referred to as the BSE. •  located on Dalal Street, Mumbai, Maharashtra, India. • oldest stock exchange in Asia. • The equity market capitalization of the companies listed on the BSE wasUS $1 trillion as of December 2011. • 6th largest stock exchange in Asia. • 14th largest in the world. • The BSE has the largest number of listed companies in the world. •  BSE lists over 5,000 companies

24. National Stock Exchange •  located at Mumbai, Maharashtra, India. • Largest stock exchange in india. • 3rd largest stock exchange in the world. •  largest in India by daily turnover. • NSE has a market capitalization of around US$1 trillion. • over 1,652 listings as of July 2012. • set up by Government of India on the recommendation of Pherwani Committee in 1992. • Promoted by leading Financial institutions essentially led by IDBI.

25. Debenture • A debenture is a document issued under the seal of the company. • Bears the date of redemption and rate and mode of payment of interest. • Unit of loan. • Person is called debenture holder. • As per section 2(12) of companies Act 1956, “Debenture includes debenture stock, bond and any other securities of the company whether constituting a charge of the companies assets or not.”

26. Types of Debentures:- • From securities point of view:- 1- Secured or Mortgage debentures. 2-Unsecured debentures. • On the basis of redemption:- 1-Redeemable debentures. 2-Non redeemable debentures. • On the basis of records:- 1-Registered debentures. 2-Bearers debentures.

27. Cont…… • On the basis of convertibility:- 1-Convertible debentures. 2- Non convertible debentures. • On the basis of priority:- 1-First debentures. 2-Second debentures.

28. Difference between Share & debenture • Shareholder / Debenture holder. • Owner / Creditor. • Dividend / Interest. • Can’s converted / Can be converted. • No priority / Get priority at liquidation. • Legal formalities for issue at discount / No restriction. • Mortgage debentures / No Mortgage shares.

29. Merger, • Merger:- A merger involves the mutual decision of two companies to combine and become one entity; it can be seen as a decision made by two “equals”. • Merger means, the two merging companies became history and a new firm is established. Example:- Time Warner Inc.(1990)(formerly AOL Time Warner) is an American multinational media corporation headquartered in the Time Warner Center in New York City. Warner Communications andTime Inc

30. Acquisition • Acquisition:- friendly. one company purchases another and clearly establishes itself as the new owner . the target company still exists as an independent legal entity, which is controlled by the acquirer. Example:- JagaranPrakahsan ltd. has acquired naiduniya. naiduniya is still running by its own name as a legal entity controlled by JagaranPrakashan ltd.

31. Takeover • Takeover:- hostile. • A takeover is the purchase of one business or company by another company or other business entity but hostile in nature. • same like "acquisition", but generally a company buys another company which is not doing well or has gone bankrupt. Example:- Tata’s takeover of:- Tetley Tea (2000), Corus (2007),  $12.2 billion Jaguar Land Rover (2008), $2.3 billion

32. Joint Venture • A contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking. All parties agree to share in the profits and losses of the enterprise. • when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture where the parties are "co-venturers".

33. Example:- • Viacom 18 Media Pvt. Ltd.:- • 50/50 joint venture operation in India between Viacom and the Network 18 Group

34. Winding up, Liquidation and Dissolution • Winding up is a process to stop the company affairs. • Liquidation is the process of :- -A liquidator is appointed. -Assets of the company disposed off. -All the debts are paid off. -If surplus, distributed among the members. • When a company ceases to be going concern it must legally end its existence. This process is called dissolution of a company.

35. References • http://en.wikipedia.org/wiki/Share_capital • http://wiki.answers.com/Q/What_is_features_of_a_partnership_business • http//en.wikipedia.org/wiki/Trust_(property) • http//en.wikipedia.org/wiki/Joint_stock_company • http//en.wikipedia.org/wiki/Sole_proprietorship • http://in.answers.yahoo.com/question/index?qid=20080201071849AASMhxL • http://www.publishyourarticles.net/knowledge-hub/accounting/8-main-difference-between-debentures-and-share.html • http://www.businessdictionary.com/definition/share.html

36. Cont…… • http://www.publishyourarticles.net/knowledge-hub/accounting/difference-between-forfeiture-and-surrender-of-shares.html • http://www.publishyourarticles.net/knowledge-hub/accounting/difference-between-calls-in-arrears-and-calls-in-advance.html • http://www.caclubindia.com/articles/definition-type-and-issue-of-debentures-7305.asp#.UJdnc8VGKmg • http://www.ehow.com/info_8451348_difference-between-liquidation-winding-up.html • http://www.caclubindia.com/articles/details.asp?mod_id=8246#.UJfbwMVGKmg

37. Cont…… • http://en.wikipedia.org/wiki/Joint_venture • http://www.investorwords.com/2671/joint_venture.html • http://answers.yahoo.com/question/index?qid=20090803055222AAbXDtc • http//en.wikipedia.org/wiki/Viacom_18 • http//www.investopedia.com/ask/answers/05/mergervstakeover.asp#axzz2BSUWixTZ • http://in.answers.yahoo.com/question/index?qid=20081017065058AAJ3jd3 • https://www.onlinesbi.com/retail/login.htm • http://en.wikipedia.org/wiki/National_Stock_Exchange_of_India

38. Thank You Anuj Kumar Maurya MBA:MM, 3rd SEM MCU, BHOPAL