Questions in: Company LawCompliance

Right Answer:
Blue chip companies are large, well-established, and financially stable firms that have a history of reliable performance and strong market presence. They typically have a reputation for quality, reliability, and the ability to generate consistent profits, making them a safe investment choice.

Right Answer:
A chart of accounts is a list of all the accounts used by a company to organize its financial transactions. A company can have multiple charts of accounts, but typically, each company is assigned one primary chart of accounts.

Right Answer:
A private firm is owned by a single individual or a small group of individuals, and its ownership is not available to the public. A partnership firm, on the other hand, is owned by two or more individuals who share profits and responsibilities according to a partnership agreement.

Right Answer:
To change a private company into a public company in India, you need to file Form INC-27 with the Registrar of Companies (ROC). The essential requirements for this conversion include:

1. A special resolution passed by the shareholders.
2. Alteration of the Memorandum and Articles of Association to reflect the change.
3. Compliance with the minimum paid-up capital requirement for a public company.
4. Issuance of a prospectus if the company intends to raise funds from the public.

Right Answer:
When a company converts from private to public, it typically issues new shares to the public, which may involve reclassifying existing shares. The accounting for this change includes:

1. Adjusting the share capital account to reflect the new total number of shares issued.
2. Updating the share premium account if shares are issued at a premium.
3. Ensuring compliance with relevant regulations and reporting requirements for public companies.

The overall equity structure will be reflected in the company's balance sheet accordingly.

Right Answer:
Company law is the body of laws that governs the formation, operation, and dissolution of companies. It regulates the rights and obligations of companies, their shareholders, directors, and other stakeholders.

Right Answer:
Yes, I am interested in working for your company.

Right Answer:
To safeguard bank interest over credit funds, ensure timely repayment of loans, maintain a good credit score, diversify investments, and regularly review and optimize your financial strategy.

Right Answer:
The drawing power of directors is typically calculated based on the company's policy, which may allow directors to withdraw a certain percentage of their salary or a fixed amount as advances against their future earnings. The specific calculation can vary by company, but it generally considers the director's remuneration, the company's financial position, and any applicable limits set by the board or shareholders.

Right Answer:

Directors are individuals appointed to manage and oversee the affairs of a company. They act as the decision-makers and are legally responsible for ensuring that the company complies with applicable laws, protects shareholders’ interests, and operates ethically.

📌 Key Points:

• Directors form the Board of Directors.

• They are responsible for making key business and financial decisions.

• They must act in good faith and in the best interest of the company.

• Under company law (like the Companies Act, 2013 in India), certain qualifications, duties, and responsibilities are legally defined for directors.

• A company must have a minimum number of directors (e.g., 2 in a private company, 3 in a public company).

🎯 In Simple Words:
Directors are like the leaders of a company who ensure it runs properly, legally, and in the right direction.

Would you like a longer, detailed version or an HTML version for your website?

Right Answer:
The main differences between Old Schedule VI and New Schedule VI are:

1. **Format**: New Schedule VI introduces a more structured format with separate sections for the balance sheet and profit & loss account, while the old format was less structured.

2. **Presentation**: New Schedule VI emphasizes clarity and comparability, requiring companies to present financial statements in a way that enhances understanding.

3. **Classification**: New Schedule VI requires a clearer classification of assets and liabilities into current and non-current categories, whereas the old schedule had less emphasis on this distinction.

4. **Disclosure Requirements**: New Schedule VI has expanded disclosure requirements, providing more detailed information about financial items.

5. **Terminology**: Some terms and definitions have been updated in the new schedule to align with international accounting standards.

Overall, New Schedule VI aims to improve transparency and consistency in financial reporting.

Right Answer:
ROC stands for Registrar of Companies, which is a government authority responsible for the registration and regulation of companies in a specific jurisdiction. Companies must file various documents with the ROC to comply with legal requirements, including incorporation, annual returns, and financial statements.

Right Answer:
Mutual funds are investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities, managed by professional fund managers.

Right Answer:
Variance trend analysis is a method used to compare actual financial performance against budgeted or forecasted figures over time, identifying patterns and deviations to assess financial health and operational efficiency.

Right Answer:
A provision is an amount set aside in a company's accounts to cover a future liability or expense that is uncertain in timing or amount.

Right Answer:
**Mortgage:** A mortgage is a loan secured by real estate. Types include:

1. **Fixed-rate mortgage:** The interest rate remains the same throughout the loan term.
2. **Adjustable-rate mortgage (ARM):** The interest rate may change at specified times based on market conditions.
3. **Interest-only mortgage:** The borrower pays only interest for a certain period, after which they start paying principal.
4. **Reverse mortgage:** Available to seniors, allowing them to convert part of their home equity into cash.

**Pledge:** A pledge is a security interest in personal property where the borrower gives possession of the asset to the lender until the debt is repaid.

**Loan:** A loan is a sum of money borrowed that is expected to be paid back with interest.

**Hypothecation:** Hypothecation is the practice of pledging an asset as collateral for a loan without giving up possession of it.

Right Answer:
To improve a company's compliance policies, ensure they are clear and accessible, provide regular training for employees, establish a dedicated compliance team, implement a reporting system for violations, and regularly review and update policies based on feedback and regulatory changes.