Are you preparing for the JAIIB/CAIIB FM Exam? Do Company Accounts concepts seem confusing? 🤔 Don’t worry! This session will make things super simple for you!
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- What is a company?
- Features & types of companies
- Share capital, equity, preference shares, and more
- Issuance of shares, journal entries, forfeiture & reissue
- Bonus shares, ESOPs, and Sweat Equity shares
- Differences between Company and Partnership
- Importance of understanding financial statements in Company Accounts
This session is perfect for bankers, finance professionals, and students preparing for their JAIIB/CAIIB exams.
👉 Before we dive in, watch this video for a complete breakdown:
📌 What is a Company?
A company is an artificial person created by law to conduct business activities. It has separate legal entity status, meaning it is distinct from its owners.
Key Features of a Company
- Separate Legal Entity – Owners and the company are different entities under the law.
- Limited Liability – Shareholders’ liability is limited to their investment.
- Perpetual Existence – A company continues even if ownership changes.
- Transferability of Shares – Shares can be bought/sold freely in public companies.
- Separate Management – Managed by a Board of Directors, not shareholders directly.
- Legal Compliance – Companies must comply with regulatory laws and file annual financial statements.
📌 Types of Companies
Based on Incorporation
- Chartered Companies – Created by royal charter (e.g., East India Company).
- Statutory Companies – Formed by an Act of Parliament (e.g., RBI, LIC).
- Registered Companies – Registered under Companies Act 2013.
Based on Ownership
- Private Limited Company – Restricts share transfer, min 2 and max 200 members.
- Public Limited Company – Shares are freely transferable, minimum 7 members.
- Government Company – 51%+ shares owned by govt (e.g., ONGC, SBI).
📌 Importance of Company Accounts in Financial Decision Making
Understanding company accounts is crucial for:
- Bankers – To evaluate companies before lending.
- Investors – To make informed investment decisions.
- Finance Professionals – To analyze company growth & stability.
📌 Bonus Shares & Employee Stock Options
- Bonus Shares – Free shares issued from reserves to reward investors.
- ESOPs – Employees get shares at a discounted price as an incentive.
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