Book 9 Account for 2077_final

a. Capital investment Capital investment is a major requirement of business. It is needed for establishment and regular operation of business. If any activity is done without capital investment, it cannot be said as business. Thus, the profession and employment though they have economic dealing can not be called business. Such activities are performed without capital investment. b. Economic activity Memory Tips Business is human economic activity which  Capital investment can be measured in terms of monetary value.  Economic activity Thus, it involves the exchange of goods or  Dealing in goods or services services for money. Non economic activities  Production and exchange like social, political and religious activities are  Regularity in transaction not included in the term business.  Profit motive  Customer satisfaction c. Dealing in goods or services  Risk and uncertainty Business involves in dealing with goods or services. It produces and exchanges the consumer goods like foods, clothes etc and the industrial goods such as machine and equipments, tools etc. On the other hand, business may offer the various service facilities to the consumers in the form of banking, transportation, insurance, water and electricity supply, communication etc. d. Production and exchange Every business activity involves the production and exchange of goods or services directly or indirectly. The goods or services produced by a business organization are exchanged for money. Thus, the production of goods or service for individual consumption does not constitute a business. e. Regularity in transaction Business activities should be carried out on a regular basis. One time transaction or a single transaction of sale or exchange does not mean for business. For example, if a person sells his old car for Rs. 1,50,000, it is not called a business. But if he/she sells old car regularly as second hand car dealer, it is called business activity. f. Profit motive The main objective of business is to earn profit. Thus, all the business activities are directed towards earning profit. If any activity is performed without profit motive, it is not a business. The survival of a business depends upon its ability to earn the profit through production and distribution of goods or services. g. Customer satisfaction The ultimate goal of every business is to satisfy the customers by producing goods or services and to earn profit. The business should make the goods or service available at a convenient place at reasonable price. Thus, the business cannot operate its activities in long run without satisfying customers. Introduction to Business 101

h. Risk and uncertainty Risk is the chance of occurring loss in business. The business always involves some risks. Every business organization wants to earn profit. However, due to risk and uncertainties in the future, it may not earn more profit as expected or even goes on loss. The various risks associated with business are change in demand of customers, change in fashion or technology, strike by employees, shortage of materials, tough competition etc. Thus, the risk and uncertainty is always involved in business. Importance of business Today, the business activity has become the important part of human life. It is the back bone of the nation’s economy. Business plays an important role in the country for maintaining economic and political stability by developing the business sector. Without business, we can not imagine the over all development of modern life. Most of the countries in the world like America, Japan, Korea are developed due to their business success. Thus, the business has greater importance. The following points further highlight the importance of business: a. Utilization of resources There are various resources like human resources, natural resources and financial M Tresources. In the world, business needs to utilize all types of resources for the purpose of emory ips producing and distributing goods or services. Business involves industrial and commercial  Utilization of resources activities which require manpower and other  Economic development resources. The different industries utilize the  Employment opportunities raw materials drawn from agriculture, forest  Source of national revenue  Increase in living standard  Maintain international relationship  Earning foreign currency and other sectors and produce final consumer products. Besides this, the financial resources are also utilized with the help of business in the country. b. Economic development The economic development of any country depends upon the development of business sector. Business also includes various sectors like industry, commerce, banking, insurance, transportation etc. If all the sectors are well developed, the country becomes self dependant. Thus, the economic condition of the country is possible by the development of business activities. c. Employment opportunities The development of business helps to solve the unemployment problem in the country. The establishment of industrial and commercial organizations require different administrative and technical manpower. So, a great number of people 102 Office Management and Accountancy

are employed in different sectors. Thus, it helps to minimize the unemployment problem to some extent. d. Source of national revenue The development of business causes the establishment of number of business organizations in the country. Such business organizations also pay the huge amount of tax to the government. On the other hand, individuals also should pay tax to the government on their income. As a result, the income of the nation will be increased. e. Increase in living standard The development of business also helps to improve the living standard of the general peoples. The availability of employment opportunities increases the income of people. So, they can consume the facilities required for maintaining quality of life. As a result, living standard of the people will be improved. f. Maintain international relationship The development and expansion of business increases the import and export of goods or services. Due to expansion of foreign trade, the businessmen of different countries come in contact with each other. It helps to create help and co-operation, mutual understanding and cordial relationship among themselves. Thus, the business helps to maintain good international relationship for long-term mutual benefit. g. Earning foreign currency Business is the major source of earning foreign currencies. The different industrial and commercial organizations produce goods or services in the country. Such goods may be of international quality and standard. After the domestic consumption of goods or services, the surplus goods or services can be exported to different countries. It extends the foreign market and helps to earn foreign currency. Classification of business On the basis of nature of economic activity, the business can be classified as follows: Industry Industry is the main part of business. It is the act of manufacturing raw materials and finished goods by the way of extraction, reproduction or construction. Thus, industry means the production of goods through utilization of various inputs or the process of creating utilities to the customers. The customers may be industrial users or final consumers. The goods produced by an industry are used either by other industries for further production or by the final users to satisfy their wants. Introduction to Business 103

Figure: 7.2 Types of business Business Industry Commerce Raw material Finished goods Trade Service production industry production industry business Home trade Foreign trade Wholesale trade Retail trade Import Export Entreport Industry refers to the process of manufacturing raw materials, semi-finished goods and finished goods by way of extraction, production or construction through utilization of various inputs that create utility to the customers. According to the process of production and the nature of the products, industry may be classified as follows: a. Raw materials production industry Raw material production industry refers to the industry related to the extraction of raw materials from the land or the mine which are used by another industry. The products produced by such industries are the basic inputs for other industries. Raw iron, wood, raw leather, gas, bee keeping, fish industries etc. are some of the examples of raw material production industry. Such industries are also known as primary industry. b. Finished goods production industry Finished goods production industry refers to the industry which produces the finished product by converting the raw materials supplied by raw material production industry. Such industry converts the raw materials and semi-finished goods into finished products by way of processing the materials, assembling components, constructing materials and manufacturing products etc. The 104 Office Management and Accountancy

products of this industry may be directly consumed by final consumers. Shoe industry, steel industry, furniture industry etc. are the examples of such industry. Short Notes to Remember (SNR 7.2)  The industry which is related to the extraction of raw materials from the land or the mine for the use of other industries is known as raw materials production industry.  The industry which produces the finished product by converting the raw materials by way of processing, assembling and constructing job is known as finished goods production industry. Commerce Commerce is the another part of business. It refers to the act of buying, selling and distributing goods or services produced by different industries. It acts as a mediator to transfer the goods from the place of production to the destination of consumers. It is concerned with the supply of goods or services to the consumers at the right place and right time. It conducts the activity related to the buying and selling of goods with the help of other auxiliary services like banking, insurance, transportation, warehousing, communication, advertising etc. Commerce is the organized system of buying and selling of goods with the help of other auxiliary services like banking, insurance, transportation, warehousing, communication and advertising etc. Commerce may be classified as follows: Trade The word trade refers to the activity of buying and selling of goods or services between the individuals or organizations. It is to the process of transferring ownership of goods or services from the seller to the buyer for earning profit. It makes the link between the producer or manufacturer and final users of the products. Thus, the trade is an integral part of business for economic development of the nation. It delivers the goods from manufacturer to the ultimate users. Trade helps the general people to fulfil their unlimited wants. The persons or parties engaged in the trade are called traders. Trade is the act of buying and selling of goods or services between the seller and buyer for earning profit. On the basis of geographical area that it covers, trade may be classified into the following types: a. Home trade Home trade is conducted inside the country. Thus, the act of buying and selling of goods within a country is called home trade. It includes the purchase and sale of goods within Introduction to Business 105

the geographical boundary of the same country. It is performed between the persons of different places in a country. Home trade is also known as domestic or internal or national trade. Under this trade, payments are received and made in local or national currency. The parties involved in home trade are called buyer and seller. The person or party involved in buying of goods is called buyer and the person or party involved in sale of goods is called seller. The trade performed between the merchant of Biratnagar and Butwal is an example of home trade. Home trade is the act of buying and selling of goods or services within the geographical boundary of the same country. Following are the types of home trade: i. Wholesale trade Under wholesale trade, large quantity of goods are purchased directly from the manufacturer or producer and resold to the retailers in smaller quantity. It transfers the goods from producer to retailer. The person or organization involved in wholesale trade is called wholesaler. He acts as a middleman between manufacturer and retailer and deals in few specialized items of goods. ii. Retail trade Under retail trade, goods are purchased from the wholesaler and supplied to the final consumers in required quantity. It is the act of transferring goods from wholesaler to the final users. The person engaged in retail trade is called retailer. The retailer provides the opportunity to the users for selection of the products. Short Notes to Remember (SNR 7.3)  Wholesale trade is the act of buying goods in large quantity directly from the producer and selling them to the retailer in smaller quantity.  Retail trade is the act of buying goods from the wholesaler in smaller quantity and selling them to the final users in required quantity. b. Foreign trade The trade conducted between two or more countries in the world is called foreign trade. It is the act of buying and selling goods or services between the individuals or organization of two different countries. It is also called external or international trade. The payment of foreign trade is made on foreign currency. The parties involved in foreign trade are called importer and exporter instead of buyer and seller. It means the buyer is called importer and seller is called exporter. The trade conducted between Nepal and China or Nepal and India are the examples of foreign trade. 106 Office Management and Accountancy

Foreign trade is the act of buying and selling of goods or services between the individuals or organizations of two different countries. Following are the types of foreign trade: i. Import trade If a trader of one country purchases the goods from the trader of another country, it is called import trade. Nepal imports machinery from America, Japan, Korea etc. and petroleum products from Arab countries through India. ii. Export trade If a trader of one country sells the goods to other countries, it is called export trade. Nepal exports garments, handicrafts, herbs, carpets, vegetables etc. to different countries. iii. Entreport trade If the goods are imported from one country and exported to another country for earning profit, it is called entreport trade. It is the act of buying goods from one country and selling the same goods to another country. Hongkong imports the gold from Brazil and exports to Nepal and India. It is entreport trade for Hongkong. Short Notes to Remember (SNR 7.4)  Import trade is the act of purchasing goods from another country for domestic use.  Export trade is the act of selling goods to other countries with a view to earn profit.  Entreport trade is the act of buying goods from one country and selling them to other countries with a view to earn profit. Service business Service business refers to the activity of rendering varieties of services rather than producing and exchanging tangible goods. It involves the various enterprises engaged in providing different services of economic nature for earning profit. Thus, they do not involve in buying and selling of goods but involve in providing services to the clients. Hotel, nursing home, film hall, travel agency, audit firm, law firm, private educational institutions are some of the examples of service business. Such services also include banking and finance, insurance, advertising, warehousing, communication, transportation etc. Introduction to Business 107

Key Terms Autonomous – governed or run itself. Business – act of producing and distributing the goods or services for earning profit. Dissolution – closing down or winding up. Economic activity – activities performed with the intention of maximizing wealth having monetary value. Industry – act of producing raw materials, semi finished goods or finished goods. Unlimited liability – financial liability of an owner or partner which is not limited to his capital invested in the organization. Voluntary – done intentionally or willingly. A. Very short answer questions 1. What is meant by economic activity? 2. Write any four examples of economic activity. 3. State any two characteristics of business. 4. Write any two importance of business. 5. Define industry in one sentence. 6. Define commerce in one sentence. 7. What is trade ? 8. State the types of home trade. 9. What is foreign trade? 10. Mention the types of foreign trade. B. Short answer questions 1. What is business? Explain its major features. 2. Define trade and explain its types. 3. Define commerce and describe its types. C. Long answer questions 1. Define business and describe its any eight importance. 2. What is industry? Explain its types. 3. Explain the different types of business activities.  108 Office Management and Accountancy

8 FORMS OF BUSINESS Chapter ORGANIZATION Learning Objectives After studying this chapter, the readers will be able to :  define business organization and list the different forms of business organization,  define sole trading concern and partnership firm and explain their merits and demerits,  define joint stock company and explain its features, advantages and disadvantages,  explain the need and importance of public enterprise,  define co-operative society, explain it features and describe the types of co-operatives operated in Nepal,  define multinational company and explain its features. Introduction Business organization may be established in different forms. It may be a sole trading concern or partnership firm or joint stock company. Business may be conducted at national or international level. Some business organizations are established with the investment of general people where as some others may be established by the government. Some business may be established with government-private participation. According to the nature of business organization, the registration and operation procedure may differ. Generally the business firms involve sole trading concern, partnership firm, joint stock company, multinational company, public enterprise and cooperative society. The selection of business firm depends on many factors like capital, interest, skill, knowledge, future market, technology and other internal and external factors. The concept of globalisation has brought opportunities and threats equally in the market. Thus, the prospective business should register and operate the appropriate type of business organization considering the number of factors. Forms of Business Organization 109

Concept and definition The term “business organization” has the combination of two different words i.e. business and organization. The term 'business' refers to all the economic activities which are carried on by individuals and enterprises in order to maximize wealth and generate income. It involves production and distribution of goods or services for earning profit. On the other hand, 'organization' refers to the association of persons or group of persons integrated for achieving common goal. It means the business organization is the act of maintaining effective and efficient combination among various resources for production and distribution of goods or services. It is an integrated mechanism of human and other physical resources working together towards the accomplishment of a specific goal. Hence, the business organization means the systematic combination of human and physical resources for acquiring wealth through the regular process of production and distribution of goods or services. It makes an effort to combine the various means of production like land, labour, capital and management for the purpose of maximizing wealth through production and distribution of goods or services. Thus, the various factors of production or resources may be combined or managed either by an individual or by a group of individuals. Following are some of the definitions of business organization: “Business organization is a concern company or enterprise which buys and sells, owned by the person or group of persons and is managed under a specific set of operating policies.” Wheeler “Business organization is the act of bringing into effective cooperation the available resources for production and distribution of goods with a view to earn profit.” A.N.Agrawala Business organization is the legally incorporated institution which preforms the economics activities related to production and distribution of goods or services with the help of various factors of production for earning profit. Forms of business organization Business organization may be established in different forms. It may be established by a single person or a group of persons, government or others. Thus, on the basis of ownership, management and operation, business organizations are of following forms: Figure: 8.1 Forms of business organization Business organization Sole trading Partnership Joint stock Public Cooperative Multinational concern firm company enterprise organization company 110 Office Management and Accountancy

SOLE TRADING CONCERN Concept and definition Sole trading concern is a form of business which is owned, managed and controlled by a single person. In this type of business organization, a single person invests the capital, runs his business, takes whole profit and bears all the risks created in day to day activities. He may appoint other staffs to look after business activities but the owner is fully responsible for all kinds of functions. It is the oldest and simplest form of business organization in the world. The person who establishes and runs this type of business is called sole trader. It is also called sole proprietorship or single ownership. In sole trading concern, the single person plays the role of investor, owner, manager, decision maker, controller, risk bearer, profit taker etc. The sole trading concern can be established by registering under private firm registration act 2014 in the concerned department of government of Nepal. The local shops like stationery, grocery, garment, beauty parlor, hotel, restaurant etc. are the examples of this form of business organization. Followings are some of the definitions of sole trading concern: “The individual proprietorship form of business organization is an organization at the head of which stands an individual as the one who is responsible, who directs its operations and who alone runs the risks of failure.” L.H. Haney “A sole trader is a person who carries on business exclusively by and for himself., He is not only the owner of the capital of the undertaking but is usually the organizer and manager and takes all the profit or responsibility for losses.” James Stephenson “A sole proprietorship is a business whose ownership and management are vested in one person, this individual assumes all risks of loss and failure of the enterprises and takes all profit from its successful operation.” Peterson and Plowman Sole trading concern is a business organization established, managed and controlled by a single person having right to take whole profit and responsibility to bear whole losses resulted from the business operations. Advantages of sole trading concern Following are the advantages of sole trading concern: a. Easy to establish A sole trading concern is a simple type of business organization. It can be established easily and quickly. It does not require a large amount of capital. There Forms of Business Organization 111

are no more legal formalities to follow for the formation of sole trading concern. It can be established just by registering under the “private firm registration act 2014.” Thus, easy formation is one of the advantages of sole trading concern. b. Quick decision The sole trader is a single decision maker M emory Tips in sole trading concern. He can make the  Easy to establish decision on important matters immediately.  Quick decision It is not necessary to consult with others frequently. He is independent in making  Secrecy  No need of huge capital decision on various business issues. Thus, the  No need to share profit decision regarding capital, product, pricing,  High incentive and motivation  Flexibility manpower etc. can be made quickly. Besides,  Easy to get loan quick decision helps to grab the opportunity  Direct relation with the parties and solve the organizational problems.  Easy to dissolve c. Secrecy Sole trading concern has no legal compulsion to disclose the business information. It does not require to publish the financial statements like profit and loss account and balance sheet as in other business organizations. Due to presence of single person, the data, information and decisions are not disclosed to the public. Thus, it is possible to maintain the secrecy completely in this type of business. Maintaining secrecy on managerial and financial matter is one of the key factors for getting success and achieving goal. d. No need of huge capital The sole trading concern can be established even with less amount of capital. It does not require high registration and set up cost for establishment. Thus, the small traders having small capital can also establish and operate this type of business firm. e. No need to share profit There is a single person in sole trading business. He looks after all the business activities alone. He is the owner or investor of the business. Thus, the owner takes whole amount of profit and bears whole amount of loss resulted from the business. It is not necessary to share the profit earned by the business firm. f. High incentive and motivation The sole trader has right to take whole amount of profit of the business. There are more chances of earning high profit in this business due to efficient management and quick decision. In case of earning high profit, a sole trader will be highly 112 Office Management and Accountancy

motivated and encouraged to work hard using his talents and creativity. The sole receipt of profit becomes incentive factor for growth and development of business. Thus, it has direct relationship between efforts and rewards. g. Flexibility The sole trading concern is more flexible in operation than other types of business organizations. There are no partners in this organization. It does not require to take agreement for expansion and contraction of business activities. Thus, it can be run by the interest and desire of a single person. h. Easy to get loan The sole trader may require loan for operation of business activities. In case of business failure he has to repay the loan amount even by using his private properties like land, building etc. Due to this, lenders have high confidence regarding the recovery of their loan amount. Further more, there will be no any dispute and conflict regarding the repayment of loan. As a result, they provide loan to the sole trader easily. i. Direct relation with the parties In sole trading concern, a single person has to look after all the business operations. He can maintain the direct relationship with customers, suppliers and outsiders. The sole trader becomes sincere towards the customer interest and wants. Thus, he adopts all the strategies to maximize sales revenue. It helps to earn goodwill and prestige of the business. j. Easy to dissolve Like formation of sole trading concern, it can also be dissolved easily. A sole trader can dissolve his business as per his wish and desire. He does not require to take permission from others for its dissolution. Further more, it is not necessary to give justification to others regarding the dissolution of business. There are no complex legal formalities to to dissolve the business. Disadvantages of sole trading concern Following are the main disadvantages of sole trading concern: a. Limited capital The sole trading concern is established with the investment of single person. It is not possible to collect huge capital from the small saving and borrowing of sole investor. Further, financial institutions also do not provide huge loan to the sole trading concern. Thus, the capital invested and utilized in this business organization is always limited in comparison to other business firms. It hampers the expansion and promotion of the business activities. Forms of Business Organization 113

b. Unlimited liability The sole trader has unlimited liability towards his business. If the business is running continuously in loss and business properties cannot recover such loss, a sole M Ttrader is legally liable to pay the business  emory ips debt from his own private property. Thus,  Limited capital  Unlimited liability a sole trader has fear of losing his private  Limited managerial ability property like land, building and other assets.  Chance of wrong decision  Loss in absence  Uncertain legal existence c. Limited managerial ability  Limited opportunity for employees The sole trading concern is managed and  Limited scope for expansion controlled by a single owner. A single person  Limited public relation may not be expert and skillful in all the sectors. In order to get success in business, all the sectors must be equally sound. However, a sole trader can not pay his enough attention to all the managerial aspects due to his limited skill and ability. Besides, there is no one to help, advise and suggest on the business issues. It affects the growth and expansion of the business. d. Chance of wrong decision The sole trader is the single judge of sole trading business. He takes all types of business decisions without consulting others. He takes the decision using his own judgment and managerial logic. But the decision made by a single person may not be always practicable as he is not perfect in all the managerial issues. Thus, there may be more chances of making impracticable decision. It affects the survival and growth of the business. e. Loss in absence The sole trader sometimes may be absent in his business due to private and business matters. He may be absent for longer period due to illness, foreign visit or other social and religious functions. In such situation, it causes huge loss in the business. He may assign business responsibilities to his family member or any other representative. But, he may not pay seriousness and attention towards the business. Further, he may not have same skill, ability, knowledge and interest towards the business firm that may hamper business in long run. f. Uncertain legal existence The survival, growth and expansion of the sole trading concern always depends upon the physical and mental condition of the owner. The business may be dissolved at any time in case of death, insolvency, disability or lunacy of the owner. Thus, the life of sole trading concern is not certain and permanent. 114 Office Management and Accountancy

g. Limited opportunity for employees The sole trading concern is a small scale business established with the sole investment. Due to limited financial resources, it may not appoint highly qualified and trained human resource. It can not provide more opportunities to staffs for their career development. It also cannot provide more financial and fringe benefits to the employees. Thus, due to limited resources, the employee do not get opportunity of training, further study, visit, medical and education allowance, provident fund, pension etc. in sole trading concern. h. Limited scope for expansion The capital, managerial ability and other resources are always limited in sole trading concern. Due to this, its business activities cannot be expanded to the large extent. It cannot introduce advanced technology, professional management and specialization in production. Thus, it has less scope for expansion in the future. i. Limited public relation The sole trader spends most of his time in managing, controlling and decision making on the various business matters. He does not have enough time to know the interest and wants of the customers and outsiders. Due to this, he may not be able to maintain enough public relation. In absence of effective public relation, no organization can get success. Thus, it may lead the sole trading concern towards failure. PARTNERSHIP FIRM Concept and definition Partnership firm is an association of two or more individuals established to conduct the business operations by sharing the combined resources with a view to earn profit. This type of business organization has evolved due to many disadvantages of sole trading concern like less capital, limited managerial ability, limited scope for expansion, loss in absence etc. In this type of business, two or more individuals take joint responsibility for the running of business and to share profit or loss resulted from operations. In this business organization, the persons make an agreement to contribute capital, manage the business and expand its activities for earning profit. The individuals who enter into the agreement and involve in partnership are known as partners. They are equally responsible for managing and controlling the overall business activities. In Nepal, partnership firm should be registered under the partnership act 2020 in the concerned department of government of Nepal. The following are some of the definitions of partnership organization: Forms of Business Organization 115

“In a more specific business sense, the partnership may be defined as the relation existing between persons who agree to carry on a business in common with a view of private gain. Prof. L.H. Haney “Partnership means any business registered in the books of government of Nepal which is carried on by some persons under one name for sharing the profit and with the agreement of participation in the transactions by all partners or a single partner acting for all.” Nepal Partnership Act 2020 “Partnership has two or more partners, each of whom is responsible for the obligation of the partnership Each of the partners may bind the others and the assets of the partners may be taken for the debts of the partnership.” W.R. Spriegal Partnership firm is the association of two or more individuals established with joint investment to run on the business under joint ownership management and agreement for mutual benefit. Types of partnership On the basis of objective, duration and liability, partnership may be classified as follows: Figure: 8.2 Types of partnership Partnership Unlimited partnership Limited partnership Partnership for Partnership for uncertain period certain period Unlimited partnership The partnership business where all the partners have unlimited liability towards their business debts is known as unlimited partnership. It is also known as general partnership. Under this type of partnership, the liability of each partner is not defined. They have to recover the business loss equally and jointly in case the business properties are insufficient. Thus, the liability of a partner is not limited to his/her capital invested in the partnership firm. In this partnership, all the partners have equal right to participate in day to day activities of the firm. It may be classified as follows: 116 Office Management and Accountancy

a. Partnership for uncertain period In this type of unlimited partnership, the time duration of a firm is not specified in agreement paper. It can be run or dissolved at the will of a partner or the partners. This type of partnership is also known as partnership at will. Thus, such type of partnership exists till the faith and cooperation among partners. Any partner can dissolve the partnership at any time giving a written notice to other partners. b. Partnership for certain period In this type of unlimited partnership, the time duration of a firm is specified prior to its incorporation. Such partnership is automatically dissolved after the expiry of specified period. Thus, it can be established or formed to complete a certain job with the joint efforts of partners. This type of partnership is also called particular partnership. Limited partnership The partnership business in which at least one partner has unlimited liability and others have limited liability is known as limited partnership. The liability of limited partners is limited to the extent of their amount of investment. This type of partnership business has not been formed in Nepal and India yet. However, it can be found in USA, UK and some other Western development countries. Types of partner The persons involved in partnership business are individually called partners. According to their participation and responsibility towards the firm, partners are classified as follows: a. Active partner M emory Tips The partner who invests capital, shares  Active partner profit, bears loss and takes active  Passive partner participation in day to day operation and  Nominal partner management of the firm is known as active  Profit sharing partner  Incoming partner partner. He is also known as working partner  Outgoing partner as he actively takes part in all the matters of  Secret partner the business and also involves in decision  Quasi partner  Minor partner making process. b. Passive partner The partner who invests capital, shares profit, bears loss but does not take active participation in day to day management and operation of the business is known as passive partner. He is also called sleeping or dormant partner. The passive partner does not involve actively in the decision making process of the firm. Forms of Business Organization 117

c. Nominal partner The partner who neither contributes capital nor shares profit or loss but wants to be called as a partner just for name is known as nominal partner. He lends his name and reputation to the firm for increasing goodwill and reputation of the business firm. He is not a real partner. Nominal partner is liable towards them who believe him as a partner and needs to meet the business debts. d. Profit sharing partner The partner who contributes capital, shares profit but does not bear loss is known as profit sharing partner. Such a partner has limited liability towards the business and does not become responsible for the business debts. Some reputed personalities having huge capital and good reputation in society may be made profit sharing partner. e. Incoming partner The partner who is newly joined as a partner in the existing organization on the mutual agreement of other partners is called incoming partner. He contributes capital and agrees to share profit or loss of the firm after his admission. But, the incoming partner will not be responsible for any type of business dealing made before his involvement. He is also not entitled to claim on profit earned before the date of entrance. f. Outgoing partner The partner who gets retirement from the existing business on the agreement of all other partners is called outgoing partner. He is also called retiring partner. The partner wishing to leave the organization has to give a written notice to the remaining partners for approval. While retiring from the organization, he withdraws his capital, shares profit and bears loss of the firm. But, he will not be liable to any dealing of the firm made after his retirement. g. Secret partner The partner who contributes capital, shares profit or loss but does not want to disclose his name as a partner to the outsiders is known as secret partner. He can take active participation in day to day operation of the firm but does not want to be exposed to the public. h. Quasi partner The partner who provides money to the firm not in the form of capital but as loan is known as quasi partner. The quasi partner has no concern regarding the profit of the firm. But he charges interest at certain rate on the amount provided as loan. Such a partner has no right to take part in the management and control of the firm. Truely speaking, a quasi partner is no longer a partner in the firm. i. Minor partner The person who is not eligible in age to be a partner according to the law of country is known as minor partner. He contributes capital, shares profit or loss 118 Office Management and Accountancy

but can not make signature on the contract paper and other legal documents. The minor partner has limited liability towards the business and he has right to check books of account. When he attains the age of maturity, he should give a notice to public about his continuity in the firm. Thereafter, he can enjoy all the rights and needs to fulfill the responsibilities of the firm. Then, he will have unlimited liability. Advantages of partnership firm Following are the main advantages of a partnership firm: a. Easy to establish Like sole trading concern, partnership firm can also be easily established. It requires M T only a mutual agreement of partners in  emory ips written form to get the firm registered. It can be easily established just by forwarding  Easy to establish written application and agreement paper to  Huge capital the concerned office. Thus, it has no more  Efficient management legal formalities for formation. It also does  Secrecy  Facility of loan  Flexibility  Direct motivation  Easy to dissolve not require high initial cost for registration and incorporation. b. Huge capital The partnership firm can collect the larger amount of capital in comparison to sole trading concern. In this organization, two or more individuals contribute capital according to the requirement by making an agreement. Thus, it accumulates the larger funds that help to conduct various profitable programmes and projects. c. Efficient management The partnership firm is established through cambined capital, knowledge, skill, ability and efforts of different individuals. Due to such combination, its management is efficient than of sole trading concern. All the partners make mutual agreement to perform the jobs and take decision on various business matters. They believe in team work for effective mobilization of human, physical and financial resources. This causes the sound and effective management of the firm. d. Secrecy Like sole trading concern, partnership firm can also maintain secrecy. All the secret matters and decisions remain in the hand of partners. Besides, it does not require to publish the financial statements for public knowledge. Thus, the secrecy can be maintained in the partnership firm. Forms of Business Organization 119

e. Facility of loan Like in sole trading concern, the partners have unlimited liability in partnership firm. In case of business failure, they are liable to pay the business debts even by selling their private property. Besides, the individual trustworthiness, credibility of the partners and their joint efforts enables the lenders to avail the loan and credit facility. Such loan and credit facility helps in financial management, production and distribution of goods or services. f. Flexibility The partnership firm is established and run as per the agreement of the partners. Thus, the partners can change or amend various matters such as capital, number of partners, objective, size of business etc by making an agreement. It helps to grab the various business opportunities. g. Direct motivation The whole profit or loss of the partnership firm is shared among partners. The partners are the owner of the firm. In case of earning higher profit, each partner receives the share of profit according to the ratio of investment. Besides, all the partners have joint ownership and their efforts are directed towards the betterment of the business. The greater the profit of the firm, the greater the share of each partner. Thus, all the partners are highly encouraged for further expansion of the business. h. Easy to dissolve The partnership firm can be easily dissolved as its establishment. It does not require to follow the complex legal formalities and procedures for dissolution. It requires to submit an application to the concerned department of the government along with the agreement paper of the partners with decision. Disadvantages of partnership firm Following are the main disadvantages of a partnership firm: a. Limited capital Though a partnership firm can collect a larger amount of capital than sole trading concern, it has still inadequacy of capital. It is not sufficient for the operation of large scale business. It cannot invite public to contribute the capital. Thus, it is limited only to a certain members and relatives and can raise only a limited capital. b. Unlimited liability The liability of the partners in the partnership firm is unlimited. In case of business failure, they are liable to pay the business debt even by selling their private property. Thus, the partners are always afraid of losing their private property in case of economic crisis. 120 Office Management and Accountancy

c. Delay in decision making Like in sole trading concern, in the partnership firm also the decision cannot be made easily M T  emory ips and quickly. Due to joint ownership of number  Limited capital of partners, it requires to take the decision  Unlimited liability with consent of all of them. They may have  Delay in decision making different interests and desires and may put  Chances of conflict  Difficult to transfer ownership  Chances of inefficient partner disagreement regarding the decision. Thus, it  Uncertain existence may take a longer time to make decision on  Lack of public faith a problem or matter. Due to delay in making decision, the organization has to lose various opportunities. d. Chances of conflict The partnership firm is an association of number of individuals. They may have different natures, attitudes, interests and desires. Every partner wants his own favorable situation and superiority in the organization. It may cause the conflict and debate among the partners and brings friction among them. It may lack team spirit that hampers for the smooth operation of the business. Finally, it leads the organization towards financial loss and even to the situation of dissolution. e. Difficult to transfer ownership In partnership firm, transferring ownership by a partner is a difficult process. One cannot sell or transfer his ownership to others as per his wish. He needs to take the agreement of all the partners. When they are not agreed upon the wish of a partner willing to transfer share, he should remain in the organization even unwillingly. Due to this reason, most of the people do not want to join the partnership business as partner. f. Chances of inefficient partner The partnership firm is a joint effort of number of individuals. However, all of them may not be equally able, talented, qualified and skillful. Thus, there may be the chance of any partner being inefficient in the business. Due to involvement of even a single inefficient partner, the entire managerial matters may be affected. An inefficient partner can not make the decision correctly and thus mutual agreement cannot be drawn easily. As a result, it creates serious problem in team spirit of the organization. g. Uncertain existence Like sole trading concern, partnership firm also suffers from uncertain existence. It may be dissolved on the death, lunacy or insolvency of any of the partners or even on their agreement to dissolve it. Thus, no one can estimate the life of this type of business that how long it runs. Forms of Business Organization 121

h. Lack of public faith The partnership firm has uncertain life. On the other hand, it does not disclose its financial information and status to the public. Thus, the general people do not know about the organization. Besides, due to chance of conflict among partners, uncertain existence etc, the public do not believe in the partnership firm. Differences between sole trading concern and partnership firm Following are the main differences between a sole trading concern and a partnership firm: Basis of Sole trading concern Partnership firm difference 1. No. of members It is established and It is established and managed by a single managed by two or more person. individuals. 2. Registration act It should be registered in It should be registered in Nepal under “private firm Nepal under “partnership 3.   Volume of registration act 2014.” act 2020”. capital It has less amount of capital It has comparatively larger as a single person invests capital as two or more in business. individuals contribute the capital in business. 4.   Decision The sole trader can take It requires to take agreement making all the business decisions of all the partners to make independently and quickly. decision. 5.   Sharing profit It is not necessary to share It requires to share the profit 6.   Management the profit as single person among partners according has right to take all the to the ratio of investment. 7. Responsibility profit of the business. The management of sole The management of trading concern is less efficient partnership firm is more and effective. efficient and effective. A single person is All the partners are equally responsible for bearing all responsible for bearing the the risks of the business risk of business opration. operation. 122 Office Management and Accountancy

JOINT STOCK COMPANY Concept and definition Sole trading concern and partnership firms are not sufficient for large scale production and distribution of goods or services mainly due to limited capital of sole trader or even partners. Thus, a huge form of business organization came into existance to avoid those disadvantages which is called joint stock company. It is established under the certain act of the country. It is a morden form of business organization. It is a voluntary association of number of persons or organizations created by law under company act. It collects large amount of capital by issuing a number of transferable shares to the public. In Nepal, public limited companies are registered under company act 2063. The persons or organizations who invest in the company are called shareholders. The day to day management of joint stock company is handled by a separate body which is called board of directors. The members of the board are elected by the shareholders through election. Joint stock company distributes the profit to the shareholders in the form of dividend according to the ratio of their capital. It has permanent life and thus incoming, outgoing or even death of any shareholder does not affect the survival of the company. Some of the definitions of joint stock company are as follows: “A joint stock company is a voluntary association of individuals for profit having a capital divided into transferable shares, the ownership of which is the condition of membership.” Prof. L.H. Haney “A joint stock company is an association of individuals for the purpose of carrying on some trade, business or undertaking usually with limited liability, but sometimes with unlimited liabili. Heelis “A joint stock company is an incorporated association which is an artificial person created by law having a common seal and perpetual succession.” Sherlekar Joint stock company is a voluntary association of number of individuals established under company act that collects huge capital for running business by issuing transferable shares with limited financial liability and perpetual existence. Features of joint stock company Following are the main features of joint stock company: a. Voluntary association A joint stock company is a voluntary association of number of persons. A single person can establish private company as per his willingness. In case of public company, seven members are required for its formation. The maximum number of members in private company is limited to fifty and no limitation in public company. Thus, any person can willingly become its member and can leave the company freely. Forms of Business Organization 123

b. Transferable shares M T A share refers to the part of capital having  emory ips certain value. The joint stock company collects its capital by selling shares. Each  Voluntary association share indicates the partial ownership of  Transferable shares the company. The shares of public limited  Legal artificial person company are easily transferrable from  Limited liability one person to other. The company invites  Common seal  Perpetual legal existence  Provision of board of directors application from the public for purchasing  Democratic management its shares. All the general people and  Provision of annual general assembly institutions can apply for the share fulfilling  Publication of financial statements certain requirements. Thus, it sells the huge number of shares to the public and collects larger capital. c. Legal artificial person A joint stock company is a legal artificial person. It can conduct its work independently like a natural person with the help of representative. It can buy and sell the assets and properties in its own name. It can register the case against the person or outsiders and outsiders can also register the case in its name. d. Limited liability All the shareholders of joint stock company have limited liability. They are liable only to the extent of their capital investment made in shares. They can not be made liable to pay the business debt from their private property in case of business failure. e. Common seal The common seal means the official name, symbol and signature of the company accepted by law. All the documents of a company must have common seal for the approval. Thus, even there is signature of concerned authority, they will not be legally valid in absence of common seal. f. Perpetual legal existence The joint stock company is a long term and permanent type of business organization. It is created by law and can be dissolved only by law. Its life and operation does not depend upon the condition of its shareholders. Thus, the death, lunacy or insolvency of the shareholders does not affect for smooth functioning of the company. The existing shareholders may leave the company by transferring or selling shares and new shareholders may join a company. But, the company runs continuously onwards. g. Provision of board of directors For smooth functioning of joint stock ompanies, the representatives are elected 124 Office Management and Accountancy

by the shareholders among themselves for certain period which is known as board of directors. The board of directors manages, operates and controls the company. Thus, all the shareholders do not have right to participate in the management and day to day operation of the business activities. Thus, there is separation of ownership and management in joint stock company. h. Democratic management In joint stock company, there is participation of all types of individuals. The decisions are drawn in annual general meeting and board meeting on the basis of majority of the members. The board is also formed and dismissed through election as per the provision of company act. Thus, the joint stock company is more democratic in nature. i. Provision of annual general assembly According to the provision made in company act, the joint stock company has to conduct the annual general assembly once a year. In such assembly, the discussion is held about the progress and achievement made by the company during a year. j. Publication of financial statements The joint stock company has to publish its audited financial statements in a national level newspaper to disclose knowledge to the public. Such statements include income statement, balance sheet etc. It gives knowledge about profit or loss and financial condition of a company during a period. Advantages of joint stock company Following are the major advantages of joint stock company: a. Huge capital M T The joint stock company can issue  emory ips transferable shares to the public. The large number of general people may participate by  Huge capital  Transferable shares purchasing such shares. Thus, the company  Limited liability  Efficient and effective management can collect huge capital which can be used  Perpetual existenc for various purposes.  More public confidence b. Transferable shares  Employment opportunity  Social benefits The shares issued by a joint stock company are easily transferable. Any shareholder can transfer or sell his shares freely to others without taking permission of other shareholders and management. Thus, the large number of people want to buy the shares of joint stock company. Forms of Business Organization 125

c. Limited liability The liability of each shareholder of joint stock company is limited up to the value of shares purchased by them. The company cannot claim over their private property in case of business failure. Thus, the general people are attracted towards the investment in joint stock company. d. Efficient and effective management The management and control of joint stock company is handled by a separate body i.e. board of directors. The members of board of directors are elected by the shareholders. For efficient management of joint stock company, only the capable and experienced directors are elected. Thus, the overall management of such company is more efficient and effective than the sole trading concern and partnership organization. e. Perpetual existence The joint stock company is an artificial person created by law. It can conduct its business activities continuously without any disturbance. The death, lunacy, insolvency or disability of the shareholders do not affect the existence of a company. Thus, a joint stock company has perpetual legal existence. f. More public confidence The joint stock company is established by the investment of general public. It also makes its activities transparent by publishing the financial statements. The general people also get chance to know about managerial and financial matter. As a result, joint stock company gets more faith and confidence from the general public. g. Employment opportunity The joint stock company is a huge type of business organization. It is established and conducted in large scale. It produces the goods or services in large volume. Thus, it requires a greater number of staffs to carry out its activities. Thus, it provides various employment opportunities to the people. h. Social benefits The joint stock company utilizes the huge capital, modern technology and managerial expertise for providing the large quantity of goods. It reduces the per unit cost of product. The goods produced using modern technology will be of international standard. Thus, the general public will get the quality product at cheaper price. It also provides investment opportunity for the people and thus encourages for regular saving. Thus, a joint stock company provides a number of benefits to the society. 126 Office Management and Accountancy

Disadvantages of joint stock company Following are the disadvantages of a joint stock company: a. Difficult to establish M T In comparison to other business firms, it is   emory ips difficult to establish a joint stock company. It requires to prepare a number of documents  Difficult to establish  Lack of quick decision and follow more legal formalities for  Lack of secrecy  Chances of frauds incorporation. Even after its establishment,  Conflict for self interest it has to face many legal procedures such as  Lack of incentive to employees issue of shares, holding meeting, publication  Bad impact in case of failure  Unnecessary legal control of financial statements etc. b. Lack of quick decision In joint stock company, important decisions can not be taken easily. Meetings are to be called in order to make decisions on certain matters. Meeting is also held in certain interval of time. Sometimes, meeting may be postponed due to lack of quorum. Thus, the process of making decisions in a joint stock company is lengthy. c. Lack of secrecy The management and control of joint stock company remains in the hand of board of directors. It cannot maintain the secrecy of any matter due to frequent changing of directors after certain duration. It also has to publish its annual report, financial statements and other matters due to which secrecy can not be maintained. d. Chances of frauds The management and control of joint stock company remains in few hands. The directors remained in a board may take the unsound decision for their self welfare and benefit ignoring the benefit of other shareholders. They may commit frauds by exaggerating the financial figure and information, submitting false documents and other possible causes. So, there is a greater chance of frauds by directors. e. Conflict for self-interest There are a number of parties associated with joint stock company. They are shareholders, employees, debtors, creditors, government etc. They have different interests and expectations from a company. The shareholders expect high rate of dividend and increment in the value of share. The employees want attractive salary and other benefits. The customers expect qualitative products at lower Forms of Business Organization 127

price. The creditors want to collect their dues as soon as possible. Similarly, the government wants to collect large amount of tax from company. However, it becomes almost impossible to mange and satisfy all the parties. Thus, the conflict for self interest of different parties hampers the progress of company. f. Lack of incentive to employees The joint stock company is managed by the paid managers who have less attention towards the progress of the company. On the other hand, employees have no right to claim over the division of profit earned by a company. Due to this reason, the employees are not motivated to promote the company for further progress and development. g. Bad impact in case of failure The joint stock company faces a number of risks and uncertainties in its operations. It may be failed and dissolved due to various decisions. In case of business failure, the different parties associated with joint stock company are badly affected. A large number of people may lose their employment, shareholders lose their investment and dividends, the customers lose the supply of goods. Similarly, the government loses its tax revenue etc. Thus, the failure of joint stock company has greater impact in national and international sector. h. Unnecessary legal control The joint stock company has to follow more legal formalities as per the company act of a country. A lot of time of the managerial and administrative body is spent fulfilling the legal obligations of a company. Due to this reason, they can not pay more attention towards the progress of the company. PUBLIC ENTERPRISE Concept and definition Public enterprise is a form of business organization which is established, managed and controlled by the government. It is incorporated by the government holding at least 51% share in investment of the government. It provides various goods and services to the general people at reasonable price. Traditionally, the role of government was to maintain peace and order in the country and to perform the constructional and maintenance works of religious place and properties. However in modern days, it led the government to enter into business activities mainly in public utility sectors like water, electricity, transport , communication, banking, insurance etc. Thus, the different industrial and commercial organizations are established under the full or partial ownership of the government in order to supply the goods or service of 128 Office Management and Accountancy

basic utility. The main objective of public enterprise is to render services to the general people of the society. Public enterprises are also called corporations. Nepal Bank Ltd., Nepal Oil Corporation, Dairy Development Corporation, Nepal Food Corporation, Nepal Airlines Corporation, Nepal Electricity Authority are some examples of public enterprise. The major definitions of public enterprise are given below: “Public enterprises are autonomous bodies, which are owned and managed by the government and which provide goods or services for a price. The ownership with the government should be 51% or more to make an entity public enterprise.” Laxmi Narayan “Public enterprises may be defined as an undertaking that is owned by a national, state or local government and supplies services or goods at a price and operated on a more or less self supporting basis.” Encyclopedia Britannica “Public enterprises mean state ownership and operation of industrial, agricultural, financial and commercial undertakings.” A.H. Hansen Public enterprise is a state owned enterprise having full or partial investment of the government which is established to supply the qualitative goods or services to the public at fair price. Objectives of public enterprise The main objective of public enterprises are as follows:  To develop the industrial and commercial sectors of the country in planned way.  To maintain the role of government in economic sector of the country.  To maintain regional balance through equal distribution of goods, services, expenditures and revenues.  To increase the governmental revenue through business activities.  To modernize the country by launching bigger project and programmes.  To develop economic, social and cultural sectors for the welfare of public people.  To create employment opportunities by utilizing all the available resources in the country.  To provide qualitative goods and services to the public at reasonable price.  To maintain the effective control over monopolistic situation and unfair trade practices in supply of goods or services. Short Notes to Remember (SNR 8.1)  The first public enterprise of Nepal is Nepal Bank Ltd. It was established in 1994 B.S.  The need or importance of public enterprise are : - Balanced economic development - Equal distribution of wealth - Employment opportunities - Utilization of resources - Increase in governmental revenue - Control over monopoly - Modernization of the country - Supply of qualitative goods or services Forms of Business Organization 129

COOPERATIVE ORGANIZATION Concept and definition A cooperative organization is a form of business organization where the different individuals associate themselves together under equality basis for the promotion of economic, social and cultural benefits. The growth and development of other forms of business organization led the world towards profit and ignored the consumer welfare. Such organizations created the complicated hierarchy of middlemen between producers and consumers. Due to this, middle and lower class people are highly exploited. As a result, the consumers started to unite themselves to fulfill their desires and to protect the people from economic exploitation by eliminating the role of middlemen. The main slogan of cooperative organization is ‘each for all and all for each’. It works with the motto of service rendering rather than profit maximization. It utilises the co-ordinated effort of all the members jointly to fulfill their requirements by working under self help and mutual cooperation. It is a voluntary association of number of persons. It is run under democratic management having separate legal entity. Some of the definitions of cooperative organization are as follows: “A cooperative is an organization wherein persons voluntarily associate together as human beings on the basis of equality for the promotion of economic interest of themselves.” Prof E. Henry Calvert “Cooperative organization will be formed with a view to increase self-reliance, mutual cooperation and economy for the development of farmers, draftsmen and capital constrained persons.” Cooperative act 2048 “A cooperative is an association of the weak who gather for a common economic need and try to lift themselves from weakness into strength through business organization.” Talmaki Cooperative organization is a voluntary association of individuals which is formed to fulfill the social, economic and cultural expectations of all the members through mutual cooperation. Short Notes to Remember (SNR 8.2)  The pioneer of cooperative movement is Robert Owen an English industrialist. He established a cooperative named Rochdale Society of Equitable pioneers in Rochdale of England on 24th October 1844 AD to control exploitation and competition on the basis of mutual help and respect. 130 Office Management and Accountancy

Features of cooperative organization Following are the main features of cooperative organization: a. Voluntary association and open membership Cooperativesocietyis a voluntaryassociation of individuals having common interest and desires. The individual who want to join can get the membership voluntarily. Thus, everyone has right to join and leave the organization openly whenever they want. At least twenty five members are needed to establish a cooperative organization in Nepal. b. Service motive M T The cooperative society is a fully service emory ips oriented organization. It is established with the aim of providing services rather than  Voluntary association and open membership earning profit. It offers various services to  Service motive  Equality its members such as granting loan at lower  Democratic management interest rate, supply of qualitative goods  Limited liability and services at reasonable price, creation of  Cash transaction market, conduction of training etc.  Mutual help and cooperation c. Equality  Perpetual existence  Nominal interest on capital The cooperative organization is established  Distribution of profit and run through the principle of equality. There is equal right of all the members in this organization. It makes no discrimination among the members as per capital investment, caste, religion or political belief and thought etc. d. Democratic management The cooperative organization is democratic in nature. It is managed and controlled by a board or committee formed through election. The members of a board or committee are elected from annual general meeting under the principle of one man one vote system. Thus, every member of cooperative society has equal right to take participation in day to day activities and decision making process.
 e. Limited liability Like in joint stock company, the members of cooperative society have also limited liability. They do not have to pay the organizational debt from their personal properties in case of loss. f. Cash transactions The cooperative organization is established to raise the economic condition of poor people through collective efforts. It requires to have funds for regular supply of goods or services to the member at reasonable price. Hence, it performs all the transactions on cash basis not on credit. Forms of Business Organization 131

g. Mutual help and cooperation The cooperative organization is incorporated under the main concept of team work. Every member of this organization works in the general interest of the organization as a whole. All the cooperative organizations function with the motto “Each for all and all for each.” It helps to fulfill their basic needs with the collective efforts of all the members. h. Perpetual existence The cooperative organization is also established by law and can be dissolved only by law. Its operation and existence does not depend upon the condition of members. Thus, the death, illness, lunacy or insolvency of any member does not affect the survival and operation of the cooperative society. i. Nominal interest on capital Generally, the interest is not provided on the capital of members in cooperative organization. However, the provision can be made as per the decision of board or committee to pay interest. If there is provision of paying interest on capital, its rate will be very nominal i.e. lower than of other financial institutions. j. Distribution of profit Though a cooperative organization is established for providing services, it may earn profit in long run. After meeting expenditures, transferring the part of profit to reserve funds and conducting other welfare activities, the surplus if any will be distributed among its members equally. Types of cooperative organization The main purpose of cooperative organization is to eliminate the poverty and create the feeling of mutual help and cooperation. Cooperative organization may be established in different sectors with different objectives and services. Thus, the major types of cooperatives established and operated in financial, commercial and industrial sectors are briefly described below: a. Consumers’ cooperative The cooperative organization established M Tby a group of consumers for supply of daily consumable products at reasonable price is emory ips called consumers’ cooperative. The main  Consumers’ cooperative objective of such cooperative is to provide the  Saving and credit cooperative qualitative goods or services to its members  Marketing cooperative at cheaper price. It directly purchases the  Producers’ cooperative goods from producer or distributor in large  Housing cooperative  Multipurpose cooperative  Miscellaneous cooperative quantity and supplies to its members. It tries to eliminate the role of middlemen in distribution of goods and thus reduces the cost. Such cooperatives aim to protect the weaker section of community 132 Office Management and Accountancy

to increase their purchasing power, raise economic standard and ensure the regular supply of goods or services at convenient place at reasonable price. Consumer cooperative is a type of organization established by a group of consumers to supply the goods of daily requirement to the members at reasonable price. b. Saving and credit cooperative The cooperative society formed by the poor people with a view to encourage for regular saving and grant loan to the members at lower rate of interest is called saving and credit cooperative. The main objective of such cooperative is to protect the poor people of rural areas from economic exploitation of money lenders. It encourages them for regular saving and grant loan to fulfill the basic needs. Nowadays, a number of such organizations have been established in our country in the name of saving and credit cooperatives. Saving and credit cooperative is a type of organization established by a group of economically poor individuals to encourage people for regular saving and grant loan to the members at lower rate of interest. c. Marketing cooperative The cooperative society formed to mange a systematic market for sale of agricultural products produced by farmers is known as marketing cooperative. It collects the agricultural products from farmers, stores them in its warehouse and sells when price is favorable. It also provides loan to the farmers against the deposit of goods. Thus, such cooperative avoids the difficulty in marketing of agricultural products. The main aim of this cooperative is to provide the proper value of the agricultural products to the farmers and create a favourable market for them. Thus, it sells the products when price goes up and returns the surplus after deducting loan amount. Besides, it also performs other marketing functions like transportation, warehousing, processing, grading and packaging of the products. Marketing cooperative is a form of cooperatives established to manage and organize market for supply of agricultural outputs produced by the farmers. d. Producers’ cooperative The cooperative established by small scale producers for supply of raw materials, tools, equipment and other accessories required for production is known as producers cooperative. Since the small producers can not buy expensive plant and machinery and raw materials, such cooperatives purchase in bulk quantity and sell them at fair price. The main objective of such cooperative is to increase the income level of small producers by providing loan or other required materials for production. The small producers will get loan to buy raw materials, tools and equipment and other things at reasonable rate of interest. Forms of Business Organization 133

Thus, it aims to develop small and cottage industries of country and improve their economic status. Producers cooperative is a type of organization established to facilitate the production of industrial goods by supplying raw material, tools and equipments and credit facility to the small scale producers at reasonable interest rate. e. Housing cooperative The cooperative established by the people having limited resources to provide housing facility to its members is known as housing cooperative. Under this cooperative, a group of people buy a big plot of land, construct a number of buildings and provide to members at minimum rental charge. It also sells the flat or whole building on installment basis. Such cooperative society also provides loan to the members for construction of their own building at low rate of interest. Thus, housing cooperative provides accommodation facility with other requirements like electricity, water supply, communication, garden, road etc to its members. Housing cooperative is a type of organization established to provide housing facility to the members at minimum installment payment and rental charge. f. Multipurpose cooperative The cooperative established for providing several facilities to its members through a single organization is called multipurpose cooperative. It performs the functions in different sectors and provides services to its members. It may perform the functions in different areas such as production, marketing, housing, industry, health, education etc. Such cooperatives are very much helpful to get varieties of services in different sectors. Multipurpose cooperative is a type of organization which provides the services to its members in more than a single sector. g. Miscellaneous cooperative The cooperatives established in different sectors other than mentioned above are called miscellaneous cooperatives. Such cooperatives provide facility and service to the needy people in different areas. Farming cooperative, poultry farming cooperative, dairy products cooperative, fishery cooperative are some examples of miscellaneous cooperatives. Miscellaneous cooperatives are the organizations established in different sectors like farming poultry firm, dairy product, fishing etc. 134 Office Management and Accountancy

MULTINATIONAL COMPANY Concept and definition Multinational company is a business organization having its head office in one country and branches or subsidiary companies in two or more countries in the world. In other words, multinational company is a company whose ownership, management and control is extended over two or more countries of the world. It is bigger form of business organization having huge capital and advanced technology which produces and sells its goods or services in many countries. It establishes its head office in one country and operates its business activities in two or more countries with the help of subsidiary companies. Multinational company is involved in large scale production and sale of goods or services using advanced technology. It produces the goods or services of international standard and covers the market share. The ownership of multinational company depends upon the capital investment of head office and its subsidiary companies. However, the management and controlling functions will be in the hand of head or parent company. Pepsi-cola Company, Coca-cola Company, Nepal Unilever Ltd., Asian Paints, Nepal Arab Bank, Sony Company, Honda Company etc are some examples of multinational company. Some of the definitions of multinational company are given below: “A multinational company is any firm which performs its main operations either manufacturer or the provision of service, in at least two countries. M.Z. Brook and H.L. Remmers “Multinational companies are corporations which have their home is one country but operate and live under the laws and customs of other countries as well. David E. Lilenthal “Multinational company can be defined in the broad sense to cover all enterprises which control assets, factories, mines, sales and the other in two or more countries.” Nations Development of Economic Social Affairs Multinational company is a huge business organization established with huge capital and advanced technology to operate business activities in two or more countries under same name and trademark. Features of multinational company The main features of multinational company are explained below: a. Productive organization The multinational company is a productive organization. It produces the goods or services of international standard in different countries using same technology and trademark. It aims to earn profit by selling such goods or services in the world. Forms of Business Organization 135

b. Large scale business The multinational company collects and M Tinvests huge capital in the business. It operates its business activities in large scale. It extends emory ips its operation in two or more countries in the world.  Productive organization  Large scale business  Advanced technology  Global area of operation  Mass production and distribution c. Advanced technology  Efficient management and control The multinational company uses modern  Monopoly and advanced technology for production of goods. It produces the goods of international standard. The parent company transfers its advanced technology to the subsidiary company established in developing countries. d. Global area of operation The multinational company is not limited to a single country for its operation. It operates its production and distribution activities in two or more than two countries. It establishes its parent company in one country and operates its activities through subsidiary company established in different countries. Thus, the area of operation of multinational company is very wide. e. Mass production and distribution The multinational company is a large scale business organization. It has huge capital and advanced technology. Thus, it produces the goods in large quantity and distributes in many countries of the world. The production of goods in large quantity reduces the per unit cost and offers benefit to the users. f. Efficient management and control Generally, both the companies i.e. parent company and subsidiary company invest in multinational company. Thus, its ownership, management and control remain jointly in both the companies. However, the parent company may hold more right to manage and control the activities of company due to huge investment, goodwill, trademark etc. Whatever the ratio of investment and management, it hires trained, qualified and skillful managers having professional expertise in management. Thus, its management and control will be more efficient. g. Monopoly The multinational company has huge capital and advanced technology. Thus, it produces a large quantity of goods and services at cheaper price. On the other hand, goods are of quality and international standard. It covers most of the markets in the world. Thus, due to mass production and selling, own trade mark, cheaper and competitive price, reliable product etc, it creates monopoly in the market. 136 Office Management and Accountancy

Key - effective combination of factors of production and other Terms resources to produce and distribute goods or services. Business organization – voluntary association of financially weaker persons Cooperative organization established to meet social, economic and cultural benefits. – establishment Incorporation – business organization having perpetual legal existence. Joint stock company – financial liability of shareholders which is limited upto the Limited liability capital investment. Monopolistic market – existence of few number of organizations providing or Multinational company selling a specific type of goods or service. – business organization carrying out the business activities Partnership firm worldwide using advanced technology and huge capital. Perpetual existence – business organization having ownership and management Public enterprise of two or more individuals. Share – long term or permanent life. Sole trading concern – business organization having full or partial ownership Trade of the government and established to provide goods or services to the people at reasonable price. – a divided part of capital having certain monetary value. – a business firm established, owned and run by a single person. – act of buying and selling of goods for earning profit. A. Very short answer questions 1. What is business organization? 2. Mention any two types of business organization. 3. Define sole trading concern in one sentence. 4. State any two benefits of sole trading concern. 5. What is partnership business? 6. State any two types of partner. 7. What is joint stock company? 8. Mention any two features of joint stock company. 9. Which is the first public enterprise of Nepal? 10. Write any two features of cooperative society. 11. Name any two types of cooperative society. Forms of Business Organization 137

12. What is meant by limited liability? 13. Under which act the partnership firms are registered in Nepal ? 14. Give any two examples of public limited company in Nepal. 15. Under which act the cooperative organizations are registered in Nepal? 16. Who is the pioneer of cooperative movement? 17. Why is the date October 24, 1844AD important in the history of cooperatives? B. Short answer questions 1. Define sole trading concern and explain its advantages. 2. What is partnership firm? Describe in brief about the types of partnership. 3. Differentiate between sole trading concern and partnership organization. 4. Define joint stock company and explain its features. 5. What do you mean by cooperative society? Also describe its features. 6. Introduce public enterprise and state its importance. 7. What is multinational company? Explain its characteristics in brief. C. Long answer questions 1. Describe the advantages and disadvantages of sole trading concern. 2. Define partnership firm and describe the types of partner. 3. Describe briefly the merits and demerits of a partnership business. 4. Explain the advantages and disadvantages of joint stock company. 5. Discuss about the different types of cooperative organization.  138 Office Management and Accountancy

9 MEETING, ASSEMBLY Chapter AND SEMINAR Learning Objectives After studying this chapter, the readers will be able to :  define meeting and explain its types,  define assembly and explain its types,  define seminar and state the sequential steps for conducting seminar,  define minutes of meeting and explain its importance,  tell the meaning of endorsement of minutes. Introduction All types of organizations are established with definite aims and objectives. They need to formulate plans and policies and implement accordingly to attain those objectives. They also have to make decision over various day to day activities. Today, it requires a greater participation of all the concerned individuals to make the decision. The decisions taken by a single or few individuals will not be accepted for all. On the other hand, it is most essential to make the decision on more democratic way. Thus, the management of every organization requires to inform all the shareholders, employees and other concerned parties about the past and present activities and future policies. To do all these things, it requires to hold a gathering or assembly of the concerned individuals at a certain place and time which is known as meeting. Today, the words meeting, assembly, conference, seminar etc have been regular phenomenon in our daily life. These programmes are organized for various purposes. They help to exchange news, views, ideas or experiences, to reach at conclusion over certain matter, to get a final decision on a certain problem or to inform about the organizational progress, achievement and problems. Meeting, Assembly and Seminar 139

MEETING Concept and definition Meeting is a gathering or assembly of two or more individuals with certain objectives. It is the formal process of getting together in response to a prior notice on a certain date, place and time to hold discussion and take decision on certain matter or agenda. The act of organizing meeting is the democratic way of presenting the problems, discussing over it and getting solution. In meeting, agendas are put, discussion is held and decisions are taken with the consent of majority of members. Meeting is important for all the organizations due to the following reasons:  To collect the opinions and suggestions of all the members.  To provide guidelines to run the organization.  To formulate plans, policies, rules and regulations.  To make the decision on democratic manner.  To legalise the decision and its records. Following is a definition of meeting: “A meeting is a formal gathering of related members of an organization to review its activities, performance, position and to pass resolutions.” M. C. Kuchhal Meeting is a gathering of two or more individuals at the certain date, place and time to share information, present the problems and get the solution through mutual discussion and decision. Short Notes to Remember (SNR 9.1)  Meeting requires the presence of at least two or more than two individuals.  The prior notice should be issued to the concerned persons mentioning the date, place and time of calling meeting.  The meeting should be called and conducted according to the rules and provision of the organization. Types of meeting Meeting is held in different organizations for different purposes. It is conducted according to the time, objective and situation. Some of the common types of meeting are described below: 140 Office Management and Accountancy

Figure: 9.1 Types of meeting Meeting Secret or private Committee Unilateral and Regular and Board meeting meeting multilateral meeting urgent meeting meeting Secret or private meeting The meeting which is organized between a few individuals to discuss and decide over very important and secret matter is known as secret or private meeting. The prior information of such meeting like date, place, time and agenda is also given to the concerned members secretly through written means like letter and circular. The resolutions passed through such meeting are also kept secret among the members. Thus, the decisions are not disclosed to the public. Secret meeting is conducted mainly to make decision on specific matter like formulation of plan and policy, maintenance of law and order and peace and security in the country. In government sector, secret meeting is held in the participation of high ranking officials and organizational heads. Secret meeting is a gathering of few number of individuals which is held to discuss and take decision on some urgent, important and secret matters. Committee meeting Generally, a committee refers to a group of people formed for specific purpose. The committee may be formed by the government or other organizations to perform a certain job. Such committee is given a particular job to complete on time or assigned a certain duty. In order to do the given task, the committee holds the meeting between or among its members which is known as committee meeting. It may be held frequently to discuss and decide over the certain problems faced by the committee members. According to the purpose of forming committee, it studies, investigates and reports to the related body on a certain event or happening. The findings, facts and information of the committee are discussed in meeting and finally presented to the concerned authority for implementation of the recommendations. Examination committee, account committee, executive committee, inspection committee etc are some of the examples of committee formed by different organizations. Committee meeting is the gathering of members of committee which is held to discuss over the findings, performance, progress and achievement of the certain job assigned to the members. Meeting, Assembly and Seminar 141

Uni-lateral and multilateral meeting Meeting can be organized between or among the members of single organization or among the members of two different organizations. Sometimes, meeting is held among the members of more than two organizations. When a meeting is held between or among the members of single organization to hold discussion on specific issues and take decisions, it is called unilateral meeting. On the other hand, the meeting which is conducted with the involvement of more than two organizations or parties is known as multilateral meeting. It is held to take decision on the matter of mutual interest for different organizations or parties. The meeting held among the members of one political party is an example of unilateral meeting whereas the meeting held between the leaders or representatives of two different political parties is an example of bilateral meeting. Furthermore, the meeting held among the representatives of different political parties is an example of multilateral meeting. Similarly, the meeting held between the representatives of two countries is bilateral meeting and the meeting held among the representatives of more than two countries is known as multilateral meeting. Such meetings are more useful in solving the problems between or among the organizations and countries.  Unilateral meeting is the gathering of members of particular organization to discuss and draw conclusion over the specific matters and issues.  Multilateral meeting is the gathering held among the members of more than two organizations or executives of more than two countries to discuss and draw conclusion over the specific matters and issues. Regular and urgent meeting The meeting which is held in any organization regularly on a certain period and date as per prior decision and schedule is known as regular meeting. Regular meeting is conducted regularly in certain interval of time period. On the other hand, the meeting held urgently between or among the members of any firm or party before holding regular meeting is called urgent or occasional meeting. Urgent meeting is held in specific situation. Sometimes, the organization may not have time and condition to wait till its regular meeting to discuss and decide on some matters that have to be actioned immediately. In such condition, urgent meeting is called by serving short notice to its members. The decisions taken on such meeting may also be passed or approved from regular or general meeting. Regular meeting is held on executive level regularly at certain period and date. 142 Office Management and Accountancy

 Regular meeting is the gathering of members of which is held in certain duration as per pre-plan and schedule to discuss and decide over the day to day activities and issues of organization.  Urgent meeting is the gathering of concerned persons which is held urgently without pre-plan and schedule to discuss and draw conclusion over the specific matter. Board meeting A board refers to the group of shareholders elected or nominated from among the shareholders for internal management of the company. Board members are fully responsible for management and control of the company’s activities. They meet together frequently for various purposes. Thus, it holds the meeting of board members to discuss over the management and operation of the company and take various decisions which is known as board meeting. Specially, such meeting is organized to discuss on current problems and issues, plans and policies as well as management and administration of the company. According to Nepal company act 2063, board meeting of public limited company must be held at least six times a year and the duration of two meetings should not be more than three months. At least 51% of the board of directors should be present as quorum to hold the meeting. The pre-notice should be issued to the members through written means in case the gap is longer. It evaluates the implementation of past decisions and also decides the date, place and time for next meeting. Board meeting is the gathering of members of board in a company which is held to discuss and take decision on the plans, policies and programmes for smooth operation of the company. ASSEMBLY Concept and definition The formal gathering of large number of individuals to express the views, opinions and provide information on specific matter and issues is called assembly. Generally, the assembly is organized to address on important topics like political, social, economic and cultural issues which are concerned for a large number of people. In assembly, all the participants do not get chance to speak on the matter. A few selected persons deliver their speech and others just listen to them. Thus, there is no provision of interaction between the speaker and listener. It draws the attention of large number of people to the current social, political and national issues. It is organized in response to the pre-notice which is issued through radio, television, daily newspaper etc. The Meeting, Assembly and Seminar 143

conclusion and resolutions of such assembly are also communicated to the people through radio, television, newspaper etc. Constitutional assembly of political parties, assembly of shareholders of a company, joint assembly of teachers, parents and students etc are some of the examples of assembly. Assembly is a gathering of large number of individuals which is organized to express the views, opinions and provide information on important political, social, economical or cultural issues to the concerned parties or public. Types of assembly The main types of assembly are explained below: Figure: 9.2 Types of assembly Assembly Mass assembly Annual general Extra-ordinary Conference assembly assembly Mass assembly An assembly which is organized with the involvement of large number of people is called mass assembly. In mass assembly, all the interested individuals people are invited to participate in the assembly. It is organized to know the social, political, economic and cultural interest and opinions of the public and provide them information regarding such issues. The prior notice regarding agenda, venue, date and time is issued through mass media like radio, television, newspaper, loudspeaker, pamphlets etc. Only a few selected persons deliver their speech and others just listen to them. The name list of speakers delivering speech and program is fixed before conducting the assembly. There should be the participation of individuals from all castes, groups, areas, communities, sex and professions. Annual general assembly An assembly of a company or any firm which is held once a year is called annual general assembly. It is organized to inform the shareholders about progress, achievement and problems of a company and to approve the future plans and policies. It is the assembly of shareholders. All the shareholders can take participation in this assembly. According 144 Office Management and Accountancy

to company act 2063, to call this assembly, a notice about date, place, time and agenda should be issued to the shareholders at least 21 days before the assembly. The notice should also be published in national level newspaper in case of public limited company. Further, a copy of auditor’s report and board of director’s report also should be attached with the notice. As per the company act 2063, the duration between two assembly should not be more than fifteen months. Following are the important agenda for discussion and decision in annual general assembly.  Evaluation on the progress, achievement, problems, and program of the company,  Discussion about income and expenditure report,  Presentation of budget for forthcoming fiscal year,  Appointment of auditor and fixation of remuneration,  Declaration of dividend,  Discussion over the board of director’s report,  Election /Nomination of the executives,  Amendment in article of association,  Other main issues related to company. Extra-ordinary assembly An assembly which is organized urgently without any pre-planned schedule to take immediate decision on some urgent and important matters is known as extra ordinary assembly. Sometimes, a company may not be in condition to wait till the annual general assembly and needs to take immediate action on some urgent matters. In such case, extra ordinary assembly is called by issuing notice to all the shareholders. The notice includes the date, place, time and agenda of the assembly and it should be dispatched to the shareholders before 15 days. Extra-ordinary assembly is generally called by the board of directors. It is held between the gap of two annual general assembly. It is held only in urgent case and thus overall evaluation of a company is not done. Thus, the agenda of annual general meeting is not discussed in extra ordinary assembly. Conference An assembly which is commonly organized by the high level organization of the political parties is known as conference. It may be held at district and national level. In this assembly, only the selected members of the political party take participation. Meeting, Assembly and Seminar 145

A conference is organized to elect the leaders of the party, amend the constitution of the party, formulate and change policies and give direction to the party for smooth and efficient operation of the activities. It holds the discussion on the current political issues, system and the future policies to be adopted and take proper decision. Generally in conference, reports are presented, discussed and approved by the majority of the participants. Differences between meeting and assembly In general sense, the words ‘meeting’ and ‘assembly’ are taken as the same meaning. Both of them refer to the gathering of individuals at certain place, date and time for a specific purpose. But, there are some basic differences between these two words. Some of the differences are as follows: Basis of Meeting Assembly difference 1. Number of It holds a few number of It holds a large number of participants individuals. individuals. 2. Purpose Its purpose is to hold Its purpose is to provide discussion and take decision information to the mass of people over the certain matter or on specific matter or issue. problem. 3. Regularity It is held regularly in interval It is held occasionally whenever of time period. needed. 4. Chance to It allows all the members to It allows only to the selected speak express their opinions and individuals or experts to express 5. Nature thoughts on the specified their opinions and thoughts agenda. regarding the agenda. It is generally a close and It is generally a mass and open secret type of gathering of type of gathering of number of the individuals. individuals. Forms of meeting or assembly Meeting and assembly both are important process of communication. These processes help to exchange views, opinions and provide information to the concerned parties. Meeting or assembly is organized to exchange views and take collective responsibilities on a certain matter or issues. According to the agenda and the process of making decision, meeting or assembly are of following forms: 146 Office Management and Accountancy

Figure: 9.2 Forms of meeting or assembly Forms of meeting/assembly Notice meeting Discussion meeting Approval meeting or assembly or assembly or assembly Notice meeting or assembly When any organization organizes the meeting or assembly with a view to provide information about its activities, future plan, policy and programmes, it is known as notice meeting or assembly. It is also organized to disclose the decision and publicise the circular to the concerned persons or parties. It is expected to make the participation of all the concerned individuals and parties. Discussion meeting or assembly When any organization or committee holds the meeting or assembly with a view to take decision for formulation of plans, policies and programmes through mutual discussion, it is called discussion meeting or assembly. In this form of meeting, every participants will be provided the agenda or subject in advance so that the discussion becomes more effective and result oriented. This type of meeting will be of regular nature. All the participants concentrate their discussion on specific matter in order to reach at particular decision. Approval meeting or assembly When the meeting or assembly is organized to give approval to the decisions made by the chairperson of the committee or organization, it is called approval meeting or assembly. Such meeting or assembly also approves the decisions made by the lower level management or executives from the upper level executives or management. This type of meeting is also held to give approval to the decisions made by the top leaders of political parties with necessary changes and amendments. SEMINAR Concept and definition Seminar is a gathering of the academicians, professional experts or specialist of a particular sector or subject which is held to exchange opinions, hold discussion and draw the conclusions. A seminar identifies the current problem on a certain matter, provides the various alternatives and draws the conclusion. It is conducted mainly Meeting, Assembly and Seminar 147

to throw lights on a particular matter or subject with the expression of all the experts and specialists. Seminar is the formal gathering of the experts, specialists, academicians or professionals on a particular subject or area which is held to exchange opinions, provide solutions to the problem and draw the final conclusion. Steps of seminar A seminar is of formal nature. It strictly follows the following sequential steps:  Arrival or attendance of the participants,  Taking seat by the chairperson,  Taking seat by the chief guest and guests,  Inauguration of the seminar,  Delivery of welcome speech,  Delivery of speech by different personalities,  Group discussion on the subject and issue of seminar,  Presentation and conclusion on group work of seminar,  Final conclusion of the seminar,  Completion or closing of the seminar. Minute of a meeting or assembly In meeting or assembly, important decisions are taken on a certain problem, subject or issues. Such decisions are more useful for the future reference. Thus, all the decisions drawn from each meeting or assembly should be recorded and preserved in systematic manner by maintaining separate book. This record is known as minuting of the meeting or assembly. The minute is the evidence of meeting or assembly as it provides information about presentees, agenda, proposal and final decision in sequential order. Every organization or committee maintains the separate minute book according to the type of meeting or assembly. Minuting is the act of maintaining the systematic record of the decisions drawn in the meeting or assembly by maintaining a separate book. Short Notes to Remember (SNR 9.2)  A separate book which is maintained for proper and systematic recording of different decisions drawn from the meeting or assembly is called minute book.  Separate minute books should be maintained for each types of meeting or assembly. 148 Office Management and Accountancy

Importance of minute Minute is a very important document. It provides the systematic recording of the decisions of every meeting or assembly. Its importance to the organization or concerned parties are mentioned below:  It provides information to the concerned persons or parties about the past activities and decisions.  It facilitates the formulation of plan and policy and its implementation into actual practice.  It acts as a written proof for the settlement of disputes and misunderstanding between or among the parties.  It provides guidelines to the executives to carry out various organizational activities.  It provides direction to the employees for smooth and efficient operation of the official activities.  It gives legal validity and authorization to the decisions. Drafting a minute Drafting a minute means the act of noting down the decisions in a minute book mentioning the types of meeting, date and place of meeting, presented members and the resolutions. In case of company, a secretary should draft the minute and in other places, an experienced person having well knowledge can do it. The act of drafting the minute is not an easy task as it requires detailed knowledge of legal rules and provisions. A minute should be drafted in simple and clear way in sequential order. It should follow the prevalent laws and acts. Following are the basic guidelines or considerations for drafting the minute:  Separate minute books should be maintained according to the types of meeting or assembly.  The type of meeting or assembly, its date, place and time should be mentioned on the top.  The name of chairman under whose chairmanship the meeting or assembly is being held should be written clearly.  The name of the members presented in the meeting or assembly should be written in order of their rank and post.  It should be written in simple, clear and understandable language so that everyone can read and understand it.  The decisions should be written according to the sequence of the subject or agenda. Meeting, Assembly and Seminar 149

 The decisions of the meeting or assembly should be forwarded to each member within 15 days for confirmation.  It should not have crossing and rubbing as far as possible. If any, the signature of the chairman should be made in such place.  The additional page or piece of paper must not be attached to the minute book using gum or tape.  Finally, the signature of the chairman, secretary and the presented members should be collected at the bottom of each page of the minute to make it legally valid. Endorsement or confirmation of minute When a secretary drafts the minute as per the rules and provision in sequential order, it should be approved by every member presented in the meeting or assembly. The minute becomes legally valid and authentic only when all the concerned members make it approved by their signature. Thus, the process of collecting signature from every member and giving validity to the decisions valid is called endorsement or confirmation of minute. Thus, the minute is made legally valid by collecting the signature of the chairman, the secretary and other members. It requires to follow some procedures for confirmation of minute. If the decisions are short and contain few lines, the secretary drafts the fair minute in the book immediately and requests all the members to read and make signature. Then, the concerned members once read the minute and make signature on the same meeting or assembly. It will be then confirmed or approved. But, if the minute book contains many pages and decisions are too long, it is not possible to read all the matters on the same day. In such a case, the rough copy of minute having authorized signature is distributed to every member giving certain time i.e. 24 hours, 36 hours or certain period for opposition. Any member can oppose the decisions within the given time period. If no opposition is made by any member regarding the decisions within such time, the minute is said to be endorsed or confirmed. Then, the secretary drafts a fair minutes and requests the members to put their signature in next meeting. Endorsement of minute means the process of giving legalisation to the decisions by collecting the signatures of chairman, secretary and members presented in the meeting or assembly. Short Notes to Remember (SNR 9.3)  Endorsement of minute is called “Nirnaya Pustikaran” in Nepali.  If the decisions are very short, signature is collected on the same day and get it approved.  If the decisions are long, rough copy of minute is forwarded to the members for reading and approving the decisions.  The minute is approved or confirmed by collecting signature of all the presented members of the meeting or assembly. 150 Office Management and Accountancy