Prospectus | 1St Year Principal of Commerce Notes

Chapter – 6

Prospectus 

Introduction

After the company have been registered, it promoters take upon themselves the task of making the existence of the company known, as widely as possible and inviting the public to subscribe to its share so that the company may have sufficient capital to commence its business. This is done by preparation and issuing of another document known as prospectus. Only a public limited company issues the prospectus.
A prospectus cannot be issued to public limited company unless a copy of its has been filed with registrars and every prospectus must state that a copy of prospectus have been filed with the registrar. A public limited company may not issue a prospectus to public when the capital raised from the original members is sufficient for the purpose. But it then must file the statement in the lieu of prospectus.

Object Of Prospectus

1. To inform the public about the newly formed company.
2. To create firm believes and confidence in the minds of the prospective investors and to induce them to invest their saving to the company.
3. To assure investor that the information, terms and condition specified in the prospectus are reliable and backed by relevant documents which are kept in the company ordinance.
4. To express the director’s liabilities for information served in the prospectus.
5. To describe prospectus of company and advantages that one can gain by becoming the share holder.

CONTENTS OF PROSPECTUS

Generally the prospectus contained the following:
1. Name and object of company
2. Name, address and occupation of the signatories to the memorandum of association and article of association along with the number of shares purchased by them.
3. Directors qualification shares and remuneration of directors for their service.
4. The name , addresses, occupation of directors, managing directors and other officers together with their description. 5. The name and address of the auditors.
6. The name and address of the bankers where accounts of the company has been kept.
7. The minimum subscription on which the director may proceed to allot share to general public.
8. Share capital, with number of share , their face values
9. The name and address and occupation of vendors of any property purchased by the company and the amount paid or payable in cash shares or debentures.
10. The amount estimated or preliminary expense and person by whom any of this expense have been paid or payable.
11. The voting rights and meeting of the company.
12. The number of founder or promoters of company and the extent of their interest in profit and property of the company.
13. Particulars of any contracts entered into the prospectus.
14. Any provision for payment of brokerage and commission to brokers and commission agents.
15. Full particulars of interest if any of directors or promoters and whether any amount is payable to the directors for their services or not.
16. Names of under writers if any opinion of directors that are resource of underwriter are sufficient to discharge there obligation.
17. A declaration that a copy of prospectus has been filed with the registrar, before the issue of prospectus.

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First Year Principal of Commerce Notes | XI – Class Notes

TABLE OF CONTENTS

Chapter – 01 | Commerce and Its Scope

Chapter – 02 | Commencement of New Business     

Chapter – 03 | Types of Organization

Chapter – 04 | Joint Stock Company

Chapter – 05 | Debentures

Chapter – 06 | Prospectus

Chapter – 07 | Import

Chapter – 08 | Export

Chapter – 09 | Marketing

Chapter – 10 | Wholesale Trade

Chapter – 11 | Retail Trade

Chapter – 12 | Finance

Chapter – 13 | Filing

Chapter – 14 | Indexing

Chapter – 15 | Inflow and Outflow of Paper

Chapter – 16 | Labor Saving Devices

Chapter – 17 | Importance of Advertising

Chapter – 18 | Middlemen and TheirDifferent Kinds

Chapter – 19 | Chamber of Commerce

Chapter – 20 | Co-Operative Society

Chapter – 21 | Salesmanship

Chapter – 22 | Correspondence

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Chapter- 22

Correspondence 

Letters are usually classified as
1. Private for correspondence between the friends and relative.
2. Commercial or business for correspondence between traders , bankers , financiers, merchants, manufacturers and agents.
3. Official
For correspondence between and national and local public bodies and their correspondence concerning the government and its various form of administration.

BUSINESS LETTERS

It refers to the letters entering into business transactions. Modern businessman has to write a large number of letters. The larger the business the greater is the volume of correspondence.

MECHANICAL PARTS OF BUSINESS LETTER —

A business letter consist of following parts:

1. HEADING
It is sort of advertisement and that is why they are set up in a very attractive ,manner. The heading is printed at the top pf a letter paper. It should be compact and well arranged. It should consist of printed names and address of individual firms company or corporation sending the letter. The telephone number, telegraphic address, codes used, date and reference number are also given with the letter head.

2. INSIDE ADDRESS
It is the name and address of the party which is being address. It should be exactly the same as the outside address on the envelope. The name of the person or the firm used is an inside address must have proper courtesy titles. The common prefix for a man is Mr. if a person hold a degree or a title it must be added to his name such as Dr. Khan., if a person holds a university degree, it will precedes his designation as Mr. Raus-UL- Hasan M.Com, M.A, S.E.S.

3. SALUTATION
This is the compliment or greeting preceding the body of the letter. It would always be in harmony with the personal relations of the writer except in care of official letters which invariably have Sir for situation. The most common forms of salutation in a commercial letter are Dear Sir when addressing one gentle man, Dear Sirs for a firm or company.

4. THE BODY OF THE LETTER
The entire letter is to be divided into suitable paragraph which ius not only the question of appearance but giving the reader breathing times. Each paragraph should contain one topic. The correspondent should commence a new paragraph whenever he switches on a new topic. The introductory paragraph should be very carefully written. In subsequent paragraphs the discussion should continue dealing with the main subject matter of the letter. The last paragraph should be written in good spirit.

5. COMPLEMENTARY CLOSE
It consist of words of respects like “ Yours faithfully” , yours sincerely etc.

6. SIGNATURE
The writer of the letter has to put down his signature in ink just below the complimentary close. A letter without signature is unauthentic.

7. DIRECTORS AND STENOGRAPHER’S INITIAL
These initials are usually placed in the lower left hand corner of the letter. These are put down with a view to hold the persons responsible. The usual method of writing is thus;
AS/HK
The letters AS indicates the initials of the person and HK of the typist.

8. POST SCRIPTS OR PS
If due to some after thoughts the writer wants to add something after the completion of the letter he puts down PS and after that writes down what ever he wants. PS should also be signed by the writer.

9. ENCLOSURES
If the letter is sent along with the documents, it should be indicated by writing about the enclosures on the left hand at the bottom corner of the letter paper.

ARRANGEMENT OF THE BUSINESS LETTER
(1) Heading
(2) Inside Address (Place and Date)
(3) Salutation
(4) Body of the Letter
First Para ——————————————————————————–
Second Para ——————————————————————————-
Third Para ——————————————————————————–
(5) Complimentary Close
(6) Signature
(7) Enclosures
(8) Stenographer’s Initials
(9) Post Script

Characteristics Of Business Letters
A good business letter is the one which achieves the object for which is being written. Some of the essentials to make a business letter effective are given below:

1. CLEARNESS
It must be so lucid that the subject is clear, even at rapid reading. As it is not possible for the busy business man to give much time on reading. This can be achieved only when the writer understating the subject and has command on language.

2. ACCURACY OF STATEMENT
Whatever is written must be correct. There should not be any incorrect statement. Special care is to be taken in writing amounts.

3. COMPLETENESS
It should be complete in all respects so that no information is e.g. order for goods must give quality, price, mode of carriage, methods of payment etc.

4. COURTESY
All correspondent are o be treated ad gentlemen. It does not mean humility. What is required is honest , frank and straight, forward statement of facts worded in polite and courteous language. Special care is to be taken when drafting dunning letters of complaint.

5. BREVITY OR CONCISENESS
The letter should be as short as possible in view clearness, completeness and courtesy. Brevity should not be at the expense of completeness. There is no place for flowery language in business letter.

6. SOURCEFULLNESS
The letter must be effective convincing and impressive. These are the days of competition and many times it depends on a letter that business is created and goods sold.

7. NEATNESS AND DISPLAY

The letter must be clearly written or typed, properly folded and put into proper size envelope.

8. ORIGINALITY
Age long phrases are not to be copies but the writer should try to be original so that he is able to assert his individuality. American writers and businessmen has been first to discard old and ancient ways. A letter is written in original fashion will soon attract the attention among thousands in stereotyped manner.

9. UNITY
Clearness of letter depends to great extent on its unity or oneness. One thought should naturally follow another and each sentences must show proper arrangement.

VARIOUS TYPES OF LETTER

Wanted accurate typist preferably knowing shorthand at salary of Rs.250/- per month. Hand written application with testimonial to be addressed to CIBA (Pakistan) Ltd., P.O. Box No. 63.-“Dawn dated 27th December, 1974”.

The manager,
CIBA (PAK) Ltd.,
P.O. Box No. 163,
Karachi.

Sir,

In response to your advertisement in dawn of 27th December, 1974, I wish to apply for the post
of typist advertised by you.

I passed the intermediate commerce examination in 1969 from the board of secondary education,
Lahore getting distinction in the steno-typing and was placed in the second division.

I was employed by M/s. Ali Automobiles, Ltd., Lahore in1970 as a steno-typist which company I
have been serving since then.

I easily type 50 words per minute quite easily neatly and accurately and my speed in shorthand

is 120 words per minute. I am drawing Rs. 175/- per month and my relation with my present employers are quite happy. But they are unable to offer me attractive prospects that are why I am applying for the post.
I am young man of 25 years of age and posses a robust health. I have active and sober habits.

I enclose two copies of testimonial. I am also pleased to refer you my present employers.

I shall be glad to come for interview when convenient to you.

You’re respectfully,
Mohammad Ali.
Encl :2
Habib Vila,
Lawrence road,
Lahore,
January 1,1973.

Statement of qualification and experience

NAME……………………………………….Mohammad Ali
AGE AND HEALTH…………………………….25 years and posses a robust health
EDUCATIONAL QUALIFICATION…………………Passed high school examination from government model school, Lahore in 1968, with commerce and typewriting as optional course, passed intermediate examination of Punjab board in second in the year 1070 with shorthand and typewriting as optional object.
EXPERIENCE…………………………Since 1970 I am working as a stenographer with m/s Ali automobiles Ltd. Lahore.
PRESENT SALARY AND REASON FOR LEAVING JOB ……………….. Drawing a salary of Rs.2700/- per month and have very good relations with employers. Leaving the service for better future prospects.
REFERENCE ……………………………. Reference may be made to M/S ALI automobiles Ltd.Lahore.

APPOINTMENTS

CIBA (PAKISTAN) LTD .chemists and druggists

I.I Chundrigar road,
Karachi.
25th January ,1975.

MR.Mohammad Ali
Habib Vila
Lawrence road,
Lahore.

Dear sir,

We have your application of 1s t January,1975 for the post of stenographer. We are glad to
inform you that we have decided to appoint you as stenographer in our firm on a salary of Rs.350/- per month. Please let us know by return post when we may except you to join us.

Your’s Faithfully,
CIBA Pak Ltd.

PAKISTAN CHEMICAL INDUSTRIES

5, New Queens Road,
Karachi
January

Hassan ahmed Chemicals,
Purani anarkali’
Lahore.

Dear sir,

Having some prospects of concluding substantial business with the firm mentioned on the
slip attached below, who have given us your reference, we write this letter. As the firm in question had no previous business dealings with us , we are not aware of their financial status ,business conduct and the reputation of the persons controlling the firm.

We shall be pleased to learn if you deem them worthy of a credit upto Rs.10,000.

We thank you in advance for any information with which you can favour us as to the

solidity of the firm and we assure that the information supplied b you will be kept strictly confidential and we would be glade to place ourselves at your service in similar matters.

Yours faithfully ,
Pakistan chemical industries.

REPLY
Dear sirs,

Today we received your enquiry about the standing and financial position of messes. Noorani

&Co, of your city. We are glad to say that we can give you nothing but favorable reply as we have dealt with the team to last five years and have never experienced any difficulty in recovering our dues . they have considerable amount of capital and have never known to have sufficient losses .

We shall have a no hesitation in according them the credit mentioned by you however this is
without obligation on your part and hope this information will serve your purposes .

Yours faithfully
Ahmed Chemicals

ORDER LETTER

EASTERN CARPET HOUSE CARPETS &DARI MERCHANTS

|M.A |Jinnah Road,
Lahore.
20th January,1975

Modern Carpet and Dari house ,
Carpets & |Dari Merchants ,
M.A Jinnah Road ,
Karachi.

Dear sirs,

We thank you for quotations dated January 4,1975 and shall be glad if you will send us by good train as early as possible the following :- Carpet as per

sample No .213_ _ 20’X15’_ _ _4 pieces Carpet as per sample No .312_ _ 20’X20’_ _ _3 pieces Please send us the Railway Receipt properly endorsed in our favor and drawn up our bankers Habib Bank Ltd . Abdullah Hoaroon Road Branch for the invoice value after deducting 2% cash discount .

We trust this will receive your immediate attention as we are much short of stock at present
and have large outstanding orders .

Yours faithfully
Eastern Carpet House

DIAMOND SILK HOUSE
Silk Merchants
Cloth Market , M.A Jinnah Road ,
Karachi.

The Chief commercial Manager,
Pakistan Western Railway ,
Lahore.

Dear sirs,

We took delivery this morning of ten bales of cloth consigned to us by Massrs. Lyallpur, silk mills Ltd, Lyallpur, as per R/P No.42072 dated January 5,0976.two of the bales bore distinct evidence of having been tempered with in transit . We noted down this fact on the Railway Receipt while surrendering it to the |Railway authorities at Karachi.
We find that hundred yards of printed silk has been removed from both the bales. Our estimate of damage is Rs . 1,000/_ .we are enclosing a copy of the invoice and the certificates given by the Staten

|Master ,Karachi ,in whose presence we opened the bales .
We request you to please accept our claim promptly.

Your faithfully | Diamond silk House.

MOHD . RAIZ MOHD SHAFI

EXPOTETERS & IMPOTERS
32, I .I chundrigar Road, Karachi.

Messrs .Ramzan Bros.,
5,M.A Jinnah Road ,
Lahore.

Dear sirs,

We have to bring to your notice a change in the constitution of our firm . Mr.fazal raza, our valued partner has been serving from ill health for the last 12 months an d he find him selves unable to take up the responsibilities of an active business carrier. He has , therefore decided to retrieve from business from the 1st march 1975. we are really very sorry to lose his valuable partnership but consideration of health do not permit us to force him to continue shouldering the responsibility. We are , how ever , glad to inform you that we have arrange to take Mr. Muhammad Shafi who is the man of wide experience and fixed well for a business like yours. Further more his inclusion into business will enable us too continue the present policy of business to cause a large increase also.

In order to settle all matters in connection with the old account we have reconciled accounts on the 20th instant and shall be glad if you will please forward us a cheque of Rs. 59/- only for the amount due on you.
Hoping to receive your immediate attention.

Yours faithfully
Mohd. Shafi.

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Salesmanship | 1St Year Principal of Commerce Notes

Chapter – 21

Salesmanship 

Introduction And Definition

Advertising and salesman are two aspects of the marketing goods and services. Salesmanship is the basis of all trade, the first and last object of which is to market goods and services to the mutual profit and tasting satisfaction of buyers and the sellers. This service is essential for the producer. The distribution of goods as personal or impersonal of assisting the prospective customer to buy a commodity or service. As salesman has to sell ideas; ideas of beauty, of health, of economy, of prosperity, of service etc. the salesman therefore must know not only the details of his commodity but also know human nature so as to lend his customer to accept his ideas.

Qualities Of A Good Salesman

1. Education

He should be an educated person, and should have studied the subject of salesmanship so as to know certain essential connected with this field.

2. Courtesy

He should respect to his customers, and should not become angry even if his customer gives the lowest offer.

3. Loyalty

He should show the customer that he is the well wisher of the customer and wants to give him the article which is best suitable for him.

4. Attentiveness

He should attend to his customer in a nice way and should show the articles which he needs.

5. Tact

He should have the tact to attract customers either by calling or by his motions and should be able to show the goods tactfully which his customer needs.

6. Honesty

He should be honest with his customer and should make the customer known the prices which are reasonable.

7. Imagination

He should have the capability to imagine the things which his customers want.

8. Politeness

He should be polite with his customer and should talk with him such a way so as to show that he is his well-wisher.

9. Cheerfulness

He should have a smiling face and should never make his customer fearful. Cheerfulness makes the customer friend of salesman.

10. Patience

A salesman should always be patient and should always think in term of progress.

11. Character

He should have a sound moral character and should not commit such fruits with male and female customers which may dis-name his organization i.e he should not be corrupted.

12. Behavior

He should think that customer are his masters, which is usually thought of by a good and reputed salesman.

13. Personality

He should have attractive personality because it helps him in convincing the customers and affecting sales.

                                                                                           

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Co-Operative Society | 1St Year Principal of Commerce Notes

CHAPTER – 20

Co-Operative Society 

Introduction

Co-operative society is voluntary association of small producers or consumers for their mutual benefits. It is formed for producing and supplying goods in accordance with the needs and requirements of the member who compose it. The members form and carry on the business of co-operative societies themselves. They are the owners, workers and mangers of the society. They have democratic control over its organization and management. It is formed for the purpose of achieving economic, social and educative benefits. Profit making is not the man aim of such organizations. Its aim is to eliminate the services of middlemen. It brings benefits for the welfare of the members with the help of applying the principals of all for each and each for all into practice. Its success depends on how much mutual co-operation in between the members has been developed.

Characteristics of Co-Operative Society:

The following are the main features of the Co-operative society:-

1. Object

Its main aim is to bring mutual benefit to the members who compose it. Money making is not the main aim of the Co-operative Society. The Society looks after the welfare of the members. It aims producing and supplying goods to meet requirement of the members.

2. Capital

It collects capital from the members. The members purchase shares in the cooperative society and provide necessary capital to it. The cooperate society is divided into fix number of shares. To become a member of the society one must purchase at least one share.

3. Membership

There must be at least 15 members in a cooperative society. But one cannot become a member of the society unless he attains the age of maturity.

4. Democratic Principle

The co-operate society is based on the principle of democracy. Every member enjoys rights. Everyone has got only one vote. Policies of the society can be criticized by the members. So the members have a democratic control over the affairs of the society.

5. Transferability of Share

The shares of the cooperative society can be transferred to the members of the society. They cannot be transferred to nonmember.

6. Division of Profit

Although it is not the main idea of the cooperative society to earn profit at any cost yet it often earns a handsome profit. The profit of the society is distributed to the members on the paid up capital but the profits of the consumers cooperative society are distributed in proportion to their total purchases during the trading period.

7. Entity

The cooperative society has a separate artificial entity. Thus its entity is independent of the members.

Advantages of Cooperative Society

1. Elimination of Middleman

The consumers get their requirements direct from the producers or they supply their own requirements. hence the cooperative society eliminated middleman and makes the goods available to the consumers at cheaper rate.

2. Economy

Certain economies can be enjoyed by the members of cooperative society in the field of production an distribution. The society has not to bother from marketing the goods. the members are its regular customers and it need not advertise its good in the market.

3. Capture Market

The cooperative society sells goods at a cheaper rate. hence it can easily attract a good number of customers.

4. No Surplus Stock

The society has got regular customers so it has not to keep any surplus stock in hand.

5. Saving of Management Expense

Sometimes the members render free services to manage the affairs of the society. They do not demand any remuneration.

6. Educative Value

The members are able to learn the principles of cooperation. They learn how to render services for the mutual benefits of themselves. They learn about economic and social aspects of human life.

7. Provision for The Maintenance of The Poor

Poor people accumulate and invest their small saving in the society which brings for them a better standard of living particularly it increases the income of agriculturists and the people who have been engaged in small and cottage industry.

8. Social Benefits

It develops self-confidence and self -reliance among the general people. They learn the principal ‘Self-help is the best help’. At the same time it develops them a sense of cooperation and sacrifices.

9. Provision for Employment

It solves unemployment problems of the under developed countries. People find employment in small and cottage industries to earn their livelihood.

10. Integration

Under this system of production and distribution a complete integration between the manufacturers wholesalers and the retailers is possible.

11. Equal Distribution of Wealth

Under the system of production and distribution wealth cannot be concentrated in few hands. Equal distribution of wealth takes place under this system.

12. Equal Status

There is no master servant relationship in between the members of cooperative society. All are the owners managers, and workers of the cooperative society.

Disadvantages of Cooperative Society

1. Lack of Capital

It suffers from lack of capital because it is an organization of poor people. They cannot afford large amount of capital so they cannot afford to expand the size of the business.

2. Lack of Interest

As the market for the products of cooperative society has been guaranteed so the organizers and managers do not pay keen interest in the management of cooperative society.

3. Lack of Efficient Person

It fails to accommodate men of talent, skills and initiative because it requires free services from them. Such people may not be interested to join the cooperative society.

4. Lack of Cooperation

It requires cooperation and selflessness and other facilities which are rarely found in the general people. There is no scarcity of mean minded people living within individuals of the society. The society remains for its success.

5. Un-Education

Most of the members of the cooperative society are uneducated and unskilled. So the management of the society may fall in the clutches of selfish people.

6. Frequent Change in Demand Of Goods

The cooperative society cannot be carried on successively in the fields where the demand for goods changes frequently.

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