Tag: commercial studies

Questions Related to commercial studies

Identify the advantage(s) of GDRs.

commercial studies sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

  1. GDR provides access to foreign capital markets.

  2. GDR can be freely transferred.

  3. GDR saves the taxes of an investor.

  4. All of the above

Show answer
Correct Option: D
Explanation:
GDR is a foreign currency denominated derivative instrument in the form of depository receipt created outside India and issued to non-resident investors. GDR stands for Global Depository Receipt. It is a bank certificate issued in more than one country for shares in a foreign company. Advantages of GDR are:a) GDR provides access to foreign capital markets.
b) GDR can be freely transferred.
c) GDR saves the taxes of an investor.

_____ is/are the disadvantage(s) of Global Depository Receipts.

commercial studies sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

  1. Dividends are paid in domestic countrys currency which is subject to volatility in the forex market.

  2. It is mostly beneficial to High Net-Worth Individual (HNI) investors.

  3. GDR is one of the expensive sources of finance.

  4. All of the above

Show answer
Correct Option: D
Explanation:
GDR is a foreign currency denominated derivative instrument in the form of depository receipt created outside India and issued to non-resident investors. GDR stands for Global Depository Receipt. It is a bank certificate issued in more than one country for shares in a foreign company. Disadvantages of GDR are:
a) Dividends are paid in domestic countrys currency which is subject to volatility in the forex market.
b) It is mostly beneficial to High Net-Worth Individual (HNI) investors.
c) GDR is one of the expensive sources of finance.

Which is the next step of GDR mechanism, after the overseas depository bank enter into a custodian agreement with the domestic custodian of such company?

commercial studies sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

  1. On the instruction of domestic custodian, the overseas depository bank issues shares to foreign investors.

  2. The domestic custodian holds the equity shares of the company.

  3. The domestic company enters into an agreement with the overseas depository bank for the purpose of issue of GDR.

  4. The whole process is carried out under strict guidelines.

Show answer
Correct Option: B
Explanation:

After the overseas depository bank enter into a custodian agreement with the domestic custodian of such company, the next step of GDR mechanism is: the domestic custodian holds the equity shares of the company.  Hence the equity shares is held by the domestic custodian when the overseas depository bank signs the agreement.

Depository bank has right to issue one GDR certificate for _______ shares.

commercial studies sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

  1. 2 to 10

  2. 3 to 5

  3. 4 to 8

  4. 5 to 10

Show answer
Correct Option: A
Explanation:

GDR is a foreign currency denominated derivative instrument in the form of depository receipt created outside India and issued to non-resident investors. GDR stands for Global Depository Receipt. It is a bank certificate issued in more than one country for shares in a foreign company.Depository bank has right to issue one GDR certificate for 2 to 10 shares.

GDRs can not be directly issued to foreign investors.

commercial studies sources of business finance - 2 gdrs, adrs and idrs depository receipts international sources

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

GDRs can not be directly issued to foreign investors- this is a true statement.GDR is a foreign currency denominated derivative instrument in the form of depository receipt created outside India and issued to non-resident investors. GDR stands for Global Depository Receipt. It is a bank certificate issued in more than one country for shares in a foreign company.

Under section 44 of the companies Act_________________.

commercial studies classification of commercial organisations public, private and joint sector private and public sector sectoral organisation of business departmental undertakings meaning and features of departmental undertaking

  1. A private company can convert into public company

  2. A private company can wound up

  3. A public company can wound up

  4. None of the above

Show answer
Correct Option: A
Explanation:

Section 44 of the Companies Act 2013: Nature of Shares or Debentures. The shares or debentures or other interest of any member in a company shall be movable property transferable in the manner provided by the articles of the company.

Minimum paid up share capital in case of a private company is _______.

commercial studies classification of commercial organisations public, private and joint sector private and public sector sectoral organisation of business departmental undertakings meaning and features of departmental undertaking

  1. $1$ Lakh

  2. $2$ Lakhs

  3. $3$ Lakhs

  4. $4$ Lakhs

Show answer
Correct Option: A
Explanation:

The Companies Act, 2013 earlier mandated that all Private Limited Companies have a minimum paid up capital of Rs.1 lakh. 

This meant that Rs.1 lakh worth of money had to be invested in the company by purchase of the company shares by the shareholders to start business.

If you want to recommend that your company upgrade its equipment, it would be most likely that you would write a _____________.

commercial studies classification of commercial organisations public, private and joint sector private and public sector sectoral organisation of business departmental undertakings meaning and features of departmental undertaking

  1. Feasibility report

  2. Closure report

  3. Justification report

  4. Formal proposal

Show answer
Correct Option: C
Explanation:

Justification Report is a document which serves as an annexure to the notice sent to the deductor. Also, Justification Report is made available in the TRACES portal. The user has to request and download the file from the TRACES portal.

Maximum no. of members in case of private company is_________________.

commercial studies classification of commercial organisations public, private and joint sector private and public sector sectoral organisation of business departmental undertakings meaning and features of departmental undertaking

  1. $50$

  2. $100$

  3. $150$

  4. $200$

Show answer
Correct Option: D
Explanation:

464 says "Provided that the number of persons which may be prescribed under this sub-section shall not exceed one hundred." i.e. by rules limit can be prescribed, but whatever limit is prescribed it must not be greater than 100 (i.e. upto 100). And, the limit prescribed is 50 as per rules. Hence, current limit is 50 for a private company. 

To start a company, a minimum number of 2 members are required and a maximum number of 200 members as per the provisions of the Companies Act, 2013.

Maximum number of members in case of a public company is ____________.

commercial studies classification of commercial organisations public, private and joint sector private and public sector sectoral organisation of business departmental undertakings meaning and features of departmental undertaking

  1. $0$

  2. unlimited

  3. $50$

  4. $200$

Show answer
Correct Option: B
Explanation:

There is no limit on maximum numbers of members in case of public companies (in India).