Class 12

Balbharti Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 4 Issue of Debentures Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 4 Issue of Debentures

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
A company cannot issue ___________ with voting rights.
(a) Equity shares
(b) Debentures
(c) Securities
Answer:
(a) Equity shares

Question 2.
A company can issue ___________ convertible debentures.
(a) Only Partly
(b) Only fully
(c) Partly or fully
Answer:
(c) Partly or fully

Question 3.
Money from ___________ Account is used for redemption of debentures.
(a) Capital
(b) Debenture Redemption Reserve
(c) Profit or Loss
Answer:
(b) Debenture Redemption Reserve

Question 4.
___________ protects the interest of debenture holders.
(a) Debenture Trustees
(b) Debenture holders
(c) Redemption Reserve
Answer:
(a) Debenture Trustee

Question 5.
Secured debentures must be redeemed within ___________ from the date of its issue.
(a) 10 days
(b) 10 years
(c) 15 years
Answer:
(b) 10 years

Question 6.
A company issuing ___________ debenture must create a charge on the assets of the company.
(a) Secured
(b) Unsecured
(c) Redeemable
Answer:
(a) secured

Question 7.
Debenture certificate must be issued within ___________ of allotment of debentures.
(a) 3 months
(b) 6 months
(c) 60 days
Answer:
(b) 6 months

Question 8.
The details of allotment of Debentures must be entered in ___________
(a) Register of debenture
(b) Register of members
(c) Register of creditors
Answer:
(a) register of debenture

Question 9.
A company that issues a prospectus or invites more than 500 persons to buy its debenture has to appoint ___________
(a) Register of companies
(b) Debenture holders
(c) Debenture trustees
Answer:
(c) Debenture Trustees

Question 10.
The contract between the company and Debenture trustees of companies is called as ___________
(a) Debenture trust deed
(b) Letter of offer
(c) Prospectus
Answer:
(a) Debenture Trusts Deed

Question 11.
Procedure for allotment of Debenture should be completed within ___________ from the date of receipt of applications.
(a) 6 months
(b) 3 months
(c) 60 days
Answer:
(c) 60 days

1B. Match the pairs.

Question 1.

Answer:

Group ‘A’	Group ‘B’
a) Debenture Trustees	7) Protects interest of debenture holders
b) Debenture holders	5) No voting rights
c) Charge on assets	3) Secured debentures
d) Board of Directors	1) Power to issue debentures
e) Debenture certificate	10) Issued within 6 months of allotment of debentures

1C. Write a word or term or a phrase that can substitute each of the following statements.

Question 1.
Type of resolution needed to issue convertible debentures.
Answer:
Special Resolution

Question 2.
Account to be created for the redemption of debentures.
Answer:
Debenture Redemption Reserve Account

Question 3.
Institution appointed by the company to protect the interest of debenture holders.
Answer:
Debenture Trustee

Question 4.
Period within which secured debenture should be redeemed.
Answer:
10 years

Question 5.
Type of debentures on which the company has to create a charge on its assets.
Answer:
Secured Debenture

Question 6.
The document contains terms and conditions agreed upon by the company and the Debenture trustees.
Answer:
Debenture Trust Deed

Question 7.
The time period within which the procedure for allotment of debenture is to be completed from the date of receipt of applications.
Answer:
60 days

Question 8.
Period within which debenture certificate must be issued by a company.
Answer:
6 months

Question 9.
An institution that redresses grievances of debenture holders.
Answer:
Debenture Trustee/NCLT

Question 10.
The authority has the power to issue debentures.
Answer:
Board of Directors

1D. State whether the following statements are True or False.

Question 1.
Debenture holders have no voting rights.
Answer:
True

Question 2.
The company cannot issue non-convertible debentures.
Answer:
False

Question 3.
Special Resolution is needed to issue convertible debentures.
Answer:
True

Question 4.
Debentures holders are paid interest.
Answer:
True

Question 5.
Debenture Trustees cannot approach NCLT to redress grievances of debenture holders.
Answer:
False

Question 6.
All secured debentures should be redeemed within 20 years from the date of their issue.
Answer:
False

Question 7.
The company has to create a charge on its assets when it issues secured debentures.
Answer:
True

Question 8.
Debenture Trustees are appointed to protect shareholders.
Answer:
False

Question 9.
Debentures certificate should issue within 6 months of allotment of debentures.
Answer:
True

Question 10.
After allotment of Debentures names of Debenture holders is entered in the Register of Members.
Answer:
True

1E. Find the odd one.

Question 1.
Debenture holders, Interest, Dividend
Answer:
Dividend

Question 2.
Debenture Trustee, Court, NCLT
Answer:
Court

Question 3.
Secured debenture, convertible debenture, Irredeemable debenture
Answer:
Irredeemable

Question 4.
Debenture Trustee, Trust deed, Shareholder.
Answer:
Shareholder

1F. Complete the sentences.

Question 1.
A legal instrument conveying the assets of a company to the Debenture trustees is called ___________
Answer:
Debenture Trust Deed

Question 2.
To protect the interest of Debenture holders a company appoints ___________
Answer:
Debenture Trustee

Question 3.
On receipt of application and money, the procedure for allotment of debentures should be completed within ___________
Answer:
60 days

Question 4.
Authority to create charge on company’s assets is with the ___________
Answer:
Debenture Trustee

Question 5.
Secured debentures should be redeemed within ___________
Answer:
10 years

Question 6.
To stop a company from incurring further liabilities, the Debenture trustee can approach ___________
Answer:
NCLT

Question 7.
A company which issues prospectus or invites more than 500 persons to subscribe for its debentures, has to appoint ___________
Answer:
Debenture Trustee

Question 8.
Return on investment on debenture is called ___________
Answer:
Interest

Question 9.
For public issue of debentures of ₹ 100 crores, minimum subscription should be ___________
Answer:
75%

Question 10.
For public issue or rights issue of convertible debentures, as per SEBI, a company must obtain ___________
Answer:
Consent of shareholder

1G. Select the correct option from the bracket.

Question 1.

(Issued within 6 months of allotment, Names of debenture holders, Secured debentures, Trust Deed, Debenture holders)
Answer:

Group ‘A’	Group ‘B’
(1) Debenture Trustees	(a) Trust deed
(2) Secured debenture	(b) Charge on assets
(3) Register of Debenture	(c) Name of debenture holders
(4) Issued within 6 months of allotment	(d) Debenture certificate
(5) No voting rights	(e) Debenture holder

1H. Answer in one sentence.

Question 1.
Who are the debenture holders?
Answer:
Debenture holders are the applicants who purchase the debentures of the company. They are the creditors of the company.

Question 2.
What do debenture holders receive as a return on Investment?
Answer:
Debenture holders receive interest on investment.

Question 3.
Whom does the company appoint to protect the interest of debenture holders?
Answer:
Debenture Trustees are appointed to protect the interest of debenture holders.

Question 4.
Within what period should secured debenture be redeemed?
Answer:
Within 10 years, secured debenture should be redeemed.

Question 5.
Name of the document which acts as an agreement between company and trustee.
Answer:
The debenture Trust deed is a document that acts as an agreement between the company and the Trustee.

Question 6.
Who has the authority to create charges on assets of a company?
Answer:
Debenture Trustees have the authority to create charges on the assets of a company.

Question 7.
Name of the meeting in which approval for increasing the borrowing powers of the Board is passed.
Answer:
An Extra-Ordinary General Meeting, a resolution regarding the increase in borrowing powers of Board is passed.

Question 8.
Within what period should the debenture certificate be issued?
Answer:
A period of 6 months is required to issue a debenture certificate.

Question 9.
What is the minimum subscription that a company must collect for an issue of debentures of ₹ 100 crores?
Answer:
The minimum subscription that a company must collect for an issue of debentures of Rs.100 crores is 75% of the base issue size.

Question 10.
When should the company appoint a credit rating agency?
Answer:
In order to credit rating of securities, the company can appoint a Credit Rating Agency.

1I. Correct the underlined word and rewrite the following sentences.

Question 1.
The details of debenture holders are entered in the Register of Members.
Answer:
The details of debenture holders are entered in the Register of the debenture.

Question 2.
Secured debentures must be redeemed within 15 years from the date of its issue.
Answer:
Secured debentures must be redeemed within 10 years from the date of its issue.

Question 3.
A company issuing irredeemable debentures must create a charge on the assets of the company.
Answer:
A company issuing Secured Debentures must create a charge on assets of the company.

Question 4.
Return on investment on debentures is the dividend.
Answer:
Return on investment on debentures is Interest.

Question 5.
Debenture Trustees redress the grievances of shareholders.
Answer:
Debenture Trustees redress the grievances of Debenture holders.

Question 6.
Debenture certificates are issued within 3 months of allotment of debentures.
Answer:
Debenture certificates are issued within 6 months of allotment of debentures.

Question 7.
The procedure for allotment of debentures should be completed within 90 days from the date of receipt of applications.
Answer:
The procedure for allotment of debentures should be completed within 60 days from the date of receipt of applications.

Question 8.
To rate its debentures a company appoints underwrites.
Answer:
To rate its debentures a company appoints a Credit Rating Agency.

1J. Arrange in proper order.

Question 1.
(a) Obtain Credit Rating
(b) Entry in register of debenture
(c) Receive application with money
Answer:
(a) Obtain Credit Rating
(b) Receive application with money
(c) Entry in register of debenture

Question 2.
(a) Issue debenture certificate
(b) Issue prospectus
(c) Open Bank Account
Answer:
(a) Issue prospectus
(b) Open Bank Account
(c) Issue debenture certificate

Question 3.
(a) Hold Board Meeting for allotment
(b) Issue debenture certificate
(c) Receive application with money
Answer:
(a) Hold Board Meeting for allotment
(b) Receive application with money
(c) Issue debenture certificate

2. Explain the following terms/concepts.

Question 1.
Debenture Certificate
Answer:
A debenture Certificate is an acknowledgment issued by a company with its common seal and signature against debenture issued. It includes all the information of debenture issued, its face value, rate of interest details of debenture holder, etc. A debenture certificate should be issued by the company within 6 months -from the debenture’s allotment.

Question 2.
Debenture Trustee
Answer:
Debenture Trustees are institutions that are responsible to protect the interest of debenture holders. If the company invites more than 500 persons to buy debentures, then it has to appoint one more debenture trustee. The company issuing secured debentures also must appoint a debenture trustee. The company enters into a contract with debenture trustee

Question 3.
Charge on Assets
Answer:
Charge on assets means the right of the lender to be paid from a borrower’s asset if the debt is not paid on time. Every year the company must report its total debts secured by a charge on assets. The value of the charge should be adequate to cover the entire debenture issued.

Question 4.
Debenture Trust Deed
Answer:
Debenture Trust Deed is an agreement between the company and debenture trustees. It is a legal instrument stating a relationship between the company and the trustee. It covers all terms of conditions to be followed by the debenture trustee.

3. Study the following case/situation and express your opinion:

1. Rose limited company proposes to issue debenture to the public to raise funds. After discussion, the Board of directors has decided to issue secured, Redeemable non-convertible debentures with a tenure of ten years. Please advise the board on the following matters:

Question (a).
Should the company appoint a Debenture trustee?
Answer:
The company should appoint debenture trustees as they are responsible to protect the interests of debenture holders and they are the link between the company and Debenture holders.

Question (b).
Should the company create a charge on its assets?
Answer:
The company should create a charge on its assets because if the company failed to repay the amount to debenture holders, assets can be realized and the claim can be settled.

Question (c).
Can the tenure of debentures be less than ten years?
Answer:
The maximum tenure of redemption of secured debenture is 10 years. It can be less than 10 years. It shows the strong liquidity position of a company.

2. Violet Ltd. Company plans to raise ₹ 10 crores by issuing debentures. The Board of Directors has some queries. Please advise them on the following:

Question (a).
Can the company issue unsecured debentures?
Answer:
In India, as per the guidelines of SEBI, the issue of unsecured debenture is prohibited. So, the company can’t issue unsecured debenture.

Question (b).
Can they issue irredeemable debentures?
Answer:
The company can issue irredeemable debenture if it is permitted by the Ministry or department of central government or by RBI. It can be issued for a maximum period of 30 years.

Question (c).
As the company is offering debenture to its members, can such debentures have normal voting rights?
Answer:
As the company is offering debentures to its members, such debentures have no normal voting rights. It can enjoy the voting rights on the matters associated with them.

3. DDS financial plans to raise ₹ 10 crores by issuing secured, Non-convertible debentures. However, as per the Articles of Association, the board of directors has authority only to raise up to 5 crores. They are also considering whether to go for a private placement or make a public offer. Please advise them on the following:

Question (A).
What can be the maximum tenure of the debentures to be issued?
Answer:
All the secured debentures should be redeemed for 10 years. Only those companies permitted by RBI/ Dept. Of corporate affairs can issue debentures of more than 10 years but less than 30 years.

Question (b).
Is the proposed issue within the borrowing powers of the board?
Answer:
The proposed issue is not within the borrowing powers of the Board of Directors. If they want to increase their borrowing powers, they have to get the approval of shareholders.

Question (c).
Within what period should the company issue a Debenture certificate?
Answer:
A debenture certificate should be issued within 6 months from the date of allotment of debentures.

4. Answer in brief.

Question 1.
State any four provisions of the Companies act 2013 for the issue of debenture?
Answer:
The company can issue debentures to the public. But to issue debentures, companies need to follow provisions.
Following are the provisions of the Companies Act, 2013:
1. No Voting Rights:
A Company cannot issue debentures with voting rights. Debentures are the creditors of the company and hence, they do not have any voting rights. However, they can enjoy voting rights on the matters associated with them.

2. Payment of interest and redemption:
A debenture holder is responsible to get fixed interest on their investment from the company. The rate of interest is decided at the time of the issue of the debenture. A Company shall redeem the debentures after a specific period of time. It is a temporary capital of a company.

3. Debenture Certificate:
The company issues debenture certificates to the debenture holders. It should be issued by the company within six months from the date of allotment of debentures.

4. Create Debenture Redemption Reserve:
The company has to create a Debenture Redemption Reserve Account out of the profits of the company. Debenture Redemption Reserve is created for the payment of dividends and redemption of debentures only As per the Companies Amendment Act, 2019 no Listed companies, NBFC’s and Housing Finance Companies require Debenture Redemption Reserve.

Question 2.
What is Debenture Trust Deed?
OR
Write a note on Debenture Trust Deed.
Answer:

• A debenture is a loan document that helps the company to raise long-term loans from the Market.
• A person who purchases debenture of a company is called a debenture holder.
• A debenture holder is a creditor of the company and cannot participate in the management of the company.
• The company appoints debenture trustees to protect the interest of debenture holders.
• The company enters into the contract with debenture trustees, which is called as ‘Debenture Trust Deed’.
• The company can enter into a contract with one or more debenture trustees.
• The Terms and Conditions of debenture trustees are written into the debenture trust deed.
• It is a legal instrument conveying the assets of the company to the trustees.
• Debenture Trust Deed is a right of debenture holder and duty of debenture trustees.
• A company has to execute a trust deed within 3 months of the closure of the issue.
• Member and debenture holder can inspect the copy of the deed and also get the copy by paying a certain fee.

Question 3.
Who are debentures trustees?
Answer:

1. Debentures Trustee is a person or institution which protects the interest of the debenture holders. The Trustees become the custodian of the assets on which charge has been created.
2. A company that issues a prospectus or invites more than 500 persons to buy its debentures has to appoint one or more Debentures Trustees. Companies issuing secured debentures also must appoint Debentures Trustee.
3. Debentures Trustee is appointed before prospectus or letter of offer/offer letter is issued or within 60 days after the allotment of the debenture. The Trustees must give written consent to act as Debenture Trustees.
4. According to SEBI Rules, 1993 “debentures trustee” means a trustee of a trust deed for securing any issue of debentures of a body corporate (section 2 (bb)). (Applicable to public companies only).
5. The trustee can appoint a nominee to the board of directors of the company. Before the trustee appoints the nominee, the following conditions must be satisfied:
   • Two consecutive defaults made by the company in payment of interest to the debenture holders; or
   • Default in the creation of security for debentures or default in the redemption of debentures.

5. Justify the following statements.

Question 1.
A company has to create a charge on its asset for issuing secured debenture.
Answer:

• A debenture is a debt instrument, which helps the company to raise long-term loans.
• A secured debenture is a debenture against which a charge has been created.
• In case, if the company has failed to make redemption of debenture or interest, in that case by the order of NCLT, the charged asset can be realized by the company and dues can be settled.
• Thus, it is rightly said that a company has to create a charge on its asset for issuing secured debenture.

Question 2.
Debenture trustees are appointed by a company issuing debentures.
Answer:

• Debenture trustees are appointed when the company issues a prospectus or invites more than 500 people.
• They are appointed to protect the interest and redress the grievances of debenture holders.
• Debenture trustees act as custodians of assets and create a charge on assets of the company on behalf of debenture holders.
• In case, the company failed to redemption of a debenture or its interest, then debenture trustees by the order of NCLT can realize the assets and settle the dues.
• Thus, it is rightly said that debenture trustees are appointed by the company for issuing debenture.

Question 3.
A company can issue only certain types of debentures.
Answer:

• The debenture holders are the creditors of the company. They offered borrowed capital to the company but cannot participate in the management of the company.
• Therefore, in order to protect the interest of debenture holders, SEBI, through its guidelines allowing companies to issue certain types of debentures in India.
• Therefore, the companies operating in India can issue secured debentures, convertible debentures, redeemable debentures to the applicant.
• It protects the interest of creditors in the company.
• Thus, it is rightly said that a company can issue only certain types of debentures.

6. Answer the following questions.

Question 1.
Briefly explain the provisions of the Companies Act, 2013 for the issue of debentures.
OR
State the statutory provisions related to the issue of debentures.
Answer:
The company can issue debentures to the public. But to issue debentures companies need to follow provisions.
Following are the provisions of the Companies Act, 2013:
1. No Voting Rights:
A Company cannot issue debentures with voting rights. Debentures are the creditors of the company and hence, they do not have any voting rights. However, they can enjoy voting rights on the matters associated with them.

2. Types of Debentures:
There are various types of debentures like secured and unsecured debentures, convertible and non-convertible debentures, redeemable and irredeemable debentures, registered and bearer debentures, etc. All the debentures are redeemable in nature. A special resolution is to be passed in the general meeting for issuing convertible debentures.

3. Payment of interest and redemption:
A debenture holder is responsible to get fixed interest on his investment from the company. The rate of interest is decided at the time of the issue of the debenture. A Company shall redeem the debentures after a specific period of time. It is a temporary capital of a company.

4. Debenture Certificate:
The company issues debenture certificates to the debenture holders. It should be issued by the company within six months from the date of allotment of debentures.

5. Create Debenture Redemption Reserve:
The company has to create a Debenture Redemption Reserve Account out of the profits of the company. Debenture Redemption Reserve is created for the payment of dividends and redemption of debentures only. As per the Companies Amendment Act, 2019 no Listed companies, NBFC’s and Housing Finance Companies require Debenture Redemption Reserve.

6. Appointment of Debenture Trustees:
The company issuing debentures for more than 500 people or issuing prospectus has to appoint one or more Debenture Trustees. They are responsible to protect the interest of the debenture holders. Trustees are appointed by entering into the contract with the company which is called Debenture Trust Deed.

7. Debenture Trustees can approach NCLT:
Debenture Trustees have to redress the problem of debenture holders. Debenture Trustees can approach National Company Law Tribunal (NCLT) if the company fails to repay the principal amount on maturity or paying interest. NCLT can direct a defaulting company to repay the principal amount of interest.

8. Impose Restrictions:
Debenture Trustees can also approach NCLT when the company is not able to pay the principal amount of debentures, even after selling the company assets. In such a case, NCLT can order a company to restrict incurring further liabilities so as to protect the interest of the debenture holders.

9. Punishment for not complying with the provisions of the Companies Act:
If the company or any of its officers fails to comply with any of the provisions, then the company or the responsible officer who is in default will be liable to pay a fine or imprisonment or both as prescribed in the Act.

Question 2.
Explain briefly the procedure for the issue of debentures.
Answer:
A Company’s Secretary is mainly responsible to supervise the process of issue of the debenture. As the employee of the company, the secretary has to look into the matter that company complies with all the provisions.
Procedure for Issue of Debentures:

• Board Meeting and Resolution
• EOGM and Shareholder’s Approval
• Filing with Registrar of Companies
• Approval and Permission
• Credit Rating
• Underwriting Contract
• Trust Deed
• Issue of prospectus
• Open Bank Account with Scheduled Bank
• Receiving Applications and Allotment
• Board Meeting
• Issue Debenture Certificate
• Entries in register of member

1. Board Meeting and Resolution:

• Board Meetings should be conducted before issuing debentures. A resolution is passed before issuing debentures to the public. The resolution should specify the following points:
• Amount and type of debentures to be issued with terms and conditions
• Approve Prospectus/Offer Letter/Letter of Offer
• Appointment of Debenture Trustees with their consent
• Call Extra Ordinary General Meeting
• Opening of Separate Bank Account to receive money from applicants

2. EOGM and Shareholder’s Approval:
If the issue of debenture exceeds the limit of paid-up capital and free reserve, then the company needs to conduct extraordinary general meetings. An extraordinary General Meeting is held for passing a special resolution and getting the shareholder’s approval related to the increase in the issue of debentures.

3. Filing with Registrar of Companies:
Secretary has to file the special resolution and copy of the prospectus with the Registrar of Companies. It has to be filed within 30 days of the board meeting.

4. Approval and Permission:
Permission of SEBI is compulsory, in case the issue of debenture exceeds ₹ 1 crore or more. Simultaneously, approval of the stock exchange is required to be taken before a prospectus is issued to the public. It is mandatory to list the debentures on the recognized stock exchange before issuing them to the public.

5. Credit Rating:
As per SEBI guidelines, the company has to get its debenture rated by two recognized credit rating agencies such as CRISIL, CARE, ICRA, etc.

6. Underwriting contract:
The company may enter into an underwriting agreement with underwriters for its public issue of debentures. The appointment of underwriters must be mentioned in the prospectus.

7. Trust Deed:
The Trust Deed has to be executed between the company and trustees. Trustees give a guarantee of protection of debenture holder’s interest.

8. Issue of Prospectus/Letter of Offer/Offer Letter:
Company issues prospectus, if it is inviting the general public. An offer letter is issued if the company makes a private placement. Letter of Offer is issued for Right Issue (Offer to exist shareholders).

9. Appointment of Banker:
Issuing Company must appoint a ‘Scheduled Bank’ as a banker of the company. The company must open a separate account in the name of the company. This account is opened to receive the money from the applicants.

10. Receiving and Allotment of debenture:
A board meeting is held to decide and approve the allotment of debentures. Board also approves the creation of charges on the company assets. The company must make the arrangement to receive the application with application money. After Board Meeting, the company allows debentures to the applicants.

11. Issue of Debenture Certificate:
The allotment procedure has to be completed within 60 days from the receipt of application money. Debenture certificates are prepared by the secretary and issued to the debenture holders within 180 days from the date of allotment.

12. Entries in Register of Debenture:
If the debentures are issued in DEMAT form, the company does not maintain the Register of Debenture holders. After allotment, all details of debenture holders are entered in the register of the debenture. In case of debenture holders exceed 50, the company should maintain the ‘Index of Debenture holders.

Balbharti Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 3 Issue of Shares Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 3 Issue of Shares

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
___________ refers to capital made up of Equity and preference shares.
(a) Share capital
(b) Debt capital
(c) Reserve fund
Answer:
(a) Share capital

Question 2.
___________ capital refers to maximum capital a company can raise by issuing shares.
(a) Issued
(b) Authorised
(c) Paid up
Answer:
(b) Authorised

Question 3.
___________ means shares are offered to the public.
(a) Rights Issue
(b) Private Placement
(c) Public Issue
Answer:
(c) Public Issue

Question 4.
Under ___________ method, issue price of shares is based on bidding.
(a) Book Building
(b) Fixed Price
(c) Bonus Issue
Answer:
(a) Book Building

Question 5.
In ___________, shares of a company are offered to the public for the first time.
(a) Further Public Offer
(b) Initial Public Offer
(c) Public Offer
Answer:
(b) Initial Public Offer

Question 6.
___________ is offered to existing equity shareholders.
(a) IPO
(b) ESOS
(c) Rights Issue
Answer:
(c) Rights Issue

Question 7.
Bonus shares are issued free of cost to ___________
(a) existing Equity shareholders
(b) existing employees
(c) Directors
Answer:
(a) existing Equity shareholders

Question 8.
___________ are offered to permanent employees Directors and Officers of a company.
(a) Bonus Shares
(b) Rights Issue
(c) ESOS
Answer:
(c) ESOS

Question 9.
Under ___________, a company offers its securities to a select group of persons not exceeding 200.
(a) Private Placement
(b) IPO
(c) Public Offer
Answer:
(a) Private Placement

Question 10.
The ___________ have the power to allot shares.
(a) Director
(b) Board of Directors
(c) Company Secretary
Answer:
(b) Board of Directors

Question 11.
Letter of ___________ is sent to applicants who have been given shares by the company.
(a) Regret
(b) Renunciation
(c) Allotment
Answer:
(c) Allotment

Question 12.
___________ is a proof of title to Shares.
(a) Share Certificate
(b) Register of Member
(c) Letter of Allotment
Answer:
(a) Share Certificate

Question 13.
The gap between two calls should not be less than ___________
(a) 14 days
(b) One month
(c) 21 days
Answer:
(b) One month

Question 14.
Company can ___________ shares on non-payment of calls.
(a) forfeit
(b) surrender
(c) allot
Answer:
(a) forfeit

Question 15.
Voluntarily giving away one’s share to another person is called as ___________ of shares.
(a) Transfer
(b) Transmission
(c) Surrender
Answer:
(a) Transfer

Question 16.
___________ of shares takes place due to operation of law.
(a) Forfeiture
(b) Allotment
(c) Transmission
Answer:
(c) Transmission

1B. Match the Pairs.

Question (I).

Answer:

Group ‘A’	Group ‘B’
(a) Death of member	(5) Transmission of shares
(b) Voluntary return of shares to company by member	(4) Surrender of shares
(c) Price of shares mentioned in prospectus	(7) Offered to existing Equity Shareholders
(d) ESPS	(3) Offered to existing employees
(e) Regret Letter	(6) Non-allotment of shares

Question (II).

Answer:

Group ‘A’	Group ‘B’
(a) Issued capital	(4) Capital offered to public to subscribe
(b) FPO	(8) Maximum capital a company can raise
(c) Bonus shares	(7) Free shares issued to existing equity shareholder
(d) Issued within two months of allotment of shares	(5) Share Certificate
(e) Forfeiture of shares	(1) Non-payment of calls

1C. Write a word or a term or a phrase which can substitute each of the following statements.

Question 1.
Capital collected by way of issue of Equity and Preference shares.
Answer:
Share Capital

Question 2.
Part of issued capital subscribed by investors.
Answer:
Subscribed capital

Question 3.
Capital that will be collected only at the time of winding up of a company.
Answer:
Reserve capital

Question 4.
Highest bid price in Book Building method.
Answer:
Cap price

Question 5.
Offering of shares by a company to the public for the first time.
Answer:
IPO

Question 6.
Subsequent issue of shares after an IPO.
Answer:
FPO

Question 7.
Pre-emptive right given to existing Equity shareholders to subscribe to new issue of shares by company.
Answer:
Rights issue/shares

Question 8.
It is also called as ‘Capitalization of Profits’.
Answer:
Bonus shares

Question 9.
Appropriation of shares to an applicant.
Answer:
Allotment of shares

Question 10.
Committee set up to decide the formula for allotment of shares in case of over-subscription.
Answer:
Allotment committee

Question 11.
Minimum amount to be collected from subscribers within thirty days of issue of prospectus.
Answer:
Minimum subscription

Question 12.
Document which is a prima facie evidence of ownership of certain shares of a company.
Answer:
Share certificate

Question 13.
Penal action taken by company on non-payment of calls.
Answer:
Forfeiture of shares

Question 14.
Person to whom transferor is transferring the shares.
Answer:
Transferee

Question 15.
Transfer of shares due to operation of law.
Answer:
Transmission of shares

1D. State whether the following statements are true or false.

Question 1.
Only fully paid-up shares can be forfeited.
Answer:
False

Question 2.
The member transferring shares is called a transferor.
Answer:
True

Question 3.
A share certificate is issued for partly or fully paid up shares.
Answer:
True

Question 4.
Allotment of shares must be done within one month of receipt of application money.
Answer:
False

Question 5.
Sweat Equity shares are offered to Directors or employees of a company.
Answer:
True

Question 6.
Bonus Shares are issued at a discounted price to the Equity Shareholder.
Answer:
False

Question 7.
The floor price is the highest bid price under the Book Building method.
Answer:
False

Question 8.
Calls not paid by shareholders are called calls in arrears.
Answer:
True

Question 9.
Shares not offered to the public for subscription are called subscribed capital.
Answer:
False

Question 10.
Authorized capital is mentioned in the capital clause of the Memorandum of Association.
Answer:
True

1E. Find the odd one.

Question 1.
Authorized capital, Equity share capital, Issued capital, Paid-up Capital.
Answer:
Equity share capital

Question 2.
ESOS, ESPS, Rights Shares, Sweat Equity.
Answer:
Rights Shares

Question 3.
Floor Price, Cap Price, Cut-off price, Face Value.
Answer:
Face Value

Question 4.
Bonus Shares, Rights Shares, ESOS.
Answer:
ESOS

Question 5.
Allotment of Shares, Forfeiture of shares, Surrender of shares.
Answer:
Allotment of shares

1F. Complete the sentences.

Question 1.
Share Capital refers to capital made up of Equity shares and ___________
Answer:
Preference Share

Question 2.
Reserve capital is part of ___________
Answer:
Uncalled Capital

Question 3.
Transfer of shares due to death, insolvency, or insanity of the member is called ___________
Answer:
Transmission Shares

Question 4.
The two parties involved in transfer of shares are transferor and ___________
Answer:
transferee

Question 5.
Voluntarily giving up of shares by a member due to inability to pay calls is called as ___________
Answer:
surrender of shares

Question 6.
Company can forfeit only ___________ paid shares.
Answer:
partly

Question 7.
In case the original Share Certificate is torn or mutilated, company can issue ___________
Answer:
Duplicate Share Certificate

Question 8.
In case of transfer of shares, the company has to issue to the transferee a new share certificate within ___________
Answer:
one month

Question 9.
Letter sent to applicants for informing them shares are allotted is called as ___________
Answer:
Letter of Allotment

Question 10.
When applications received is more than the number of shares offered, it is called as ___________
Answer:
Over Subscription

Question 11.
In Book Building Method, the final price at which shares are offered to investors is called as ___________
Answer:
Cut-off price

Question 12.
Shares issued free of cost to existing Equity shareholders is called as ___________
Answer:
Bonus Shares

1G. Select the correct option from the bracket.

Question 1.

(The first-time offer of shares, Shares offered to the public, Shares offered to exist, Equity shareholders, Shares offered to exist, employees, Transmission of shares)
Answer:

Group ‘A’	Group ‘B’
(a) Public offer of shares	(1) Shares offered to Public
(b) First time offer of shares	(2) Initial public offer
(c) Rights Issue	(3) Shares offered to existing equity share holders
(d) Shares offered to existing employees	(4) ESOS
(e) Operation of law	(5) Transmission of Shares

1H. Answer in one sentence.

Question 1.
When does the transmission of shares take place?
Answer:
Transmission of Shares takes place on death, insolvency, or insanity of the members.

Question 2.
Name the two parties involved in the transfer of shares.
Answer:
The transferor and Transferee are the two parties involved in the transfer of shares.

Question 3.
What is the time limit to issue a share certificate on allotment of shares?
Answer:
Secretary should issue share certificate within two months of allotment of shares.

Question 4.
What is the time limit for Filing a Return of Allotment with the Registrar on the allotment of shares?
Answer:
Secretary has to file a ‘Return of Allotment’ with the Registrar of Companies within 30 days of allotment of shares.

Question 5.
When can a company forfeit shares?
Answer:
If a shareholder fails to pay calls on shares within a certain period company can forfeit shares.

Question 6.
What is a share certificate?
Answer:
Share Certificate is a registered document issued by a company that is evidence of ownership of a specified number of shares of the company.

Question 7.
What is the minimum application money to be collected by Company as per the Companies Act?
Answer:
As per the companies act, the company should collect a minimum of 25% of the nominal value of shares.

Question 8.
To whom should the prospectus be filed before issuing it to the public?
Answer:
The prospectus should be filed with the Registrar of Companies before issuing it to the public.

Question 9.
What is meant by private placement?
Answer:
When a company offers its securities to a select group of persons not exceeding 200, it is called Private Placement.

Question 10.
To whom is Sweat Equity shares offered by a company?
Answer:
Sweat equity shares are issued to directors or employees of the company.

Question 11.
To whom can a company issue Bonus Shares?
Answer:
The company can issue Bonus Shares to its existing equity shares.

Question 12.
What is the subsequent issue after IPO called as?
Answer:
The subsequent issue after IPO is called FPO.

Question 13.
Name the method under which the issue price of shares is fixed through a bidding process.
Answer:
Under the Book Building method, the issue price of shares is fixed through a bidding process.

Question 14.
What is Public Issue?
Answer:
Public issue or offer means offering the shares to the public. The company invites the public to subscribe to its shares by issuing a prospectus.

Question 15.
Name the capital which is mentioned in the capital clause of the Memorandum of Association.
Answer:
Authorized Capital is mentioned in the capital clause of the Memorandum of Association.

1I. Correct the underlined words/and rewrite the following sentences.

Question 1.
Issued capital is the maximum capital that a company can raise by issuing shares.
Answer:
Authorized capital is the maximum capital that a company can raise by issuing shares.

Question 2.
Under the Fixed-Price issue method, the price of shares is fixed through a bidding process.
Answer:
Under Book Building Method the price of shares is fixed through a bidding process.

Question 3.
FPO refers to offering shares to the public for the first time.
Answer:
IPO refers to the offering of shares to the public for the first time.

Question 4.
Only Fully paid up shares can be forfeited.
Answer:
Only Partly paid-up shares can be forfeited.

Question 5.
Bonus shares are offered to existing employees of a company.
Answer:
Bonus shares are offered to existing shareholders of a company.

Question 6.
The company enters into an underwriting agreement with the shareholders.
Answer:
The company enters into an underwriting agreement with the underwriters.

Question 7.
Letter of Allotment is sent to applicants when no shares are allotted to them.
Answer:
Letter of Regret is sent to applicants when no shares are allotted to them.

Question 7.
IPO refers to the offering of shares to the public for the second time.
Answer:
FPO refers to offering shares to the public for the second time.

Question 8.
A duplicate share certificate must be issued within one month from the date of application.
Answer:
A duplicate share certificate must be issued within three months from the date of application.

Question 9.
Call money can not exceed 5% of the nominal value of shares.
Answer:
Call money can not exceed 25% of the nominal value of shares.

1J. Arrange in proper order.

Question 1.
(a) Forfeiture of shares
(b) Calls on shares
(c) Allotment of shares
Answer:
(a) Allotment of shares
(b) Calls on shares
(c) forfeiture of shares

Question 2.
(a) Share certificate
(b) Allotment letter
(c) Application from
Answer:
(a) Application form
(b) Allotment letter
(c) share certificate

Question 3.
(a) Return of allotment
(b) Application form
(c) Minimum Subscription
Answer:
(a) Minimum subscription
(b) Application form
(c) Return of allocation

2. Explain the following terms/concepts.

Question 1.
Transmission of shares.
Answer:

• Transmission of shares means the transfer of the title of shares by the operation of law.
• When the shares of a member are automatically transferred to another person on the death, insolvency, or insanity of a member it is called Transmission of shares.
• Transmission of shares is an involuntary action.
• There is only one party i.e., a legal heir who indicates the process of transmission.
• The legal heir or official receiver need not pay any consideration for the shares.
• There is no need to submit an Instrument of Transfer of pay stamp duty.

Question 2.
Bonus shares
Answer:

• Bonus Shares are shares distributed by a company to its current shareholders as fully paid shares free of charge.
• The Bonus Shares are given to the existing equity shareholders according to their existing proportion of equity shareholdings.

Question 3.
Allotment of Shares
Answer:

• Allotment means the distribution of shares among the applicants. It means giving shares to share applicants of to specific persons with whom the company has entered into the contract.
• Allotment of shares is a procedure in which shares are distributed to those applicants who have submitted a written application along with the application money.

Question 4.
Employees Stock Option Scheme
Answer:
An employee stock option plan is an employee benefits scheme under which the company encourages its employees to acquire ownership in the form of shares. Under this scheme, permanent employees, Directors or Officers of the Company or its holding company or subsidiary company are offered the benefit or right to purchase the equity shares of the company at a future date at a predetermined price.

Question 5.
Surrender of Shares
Answer:

• This means the voluntary return of shares by the member to the company for cancellation.
• Surrender of shares is allowed only if there is no other option but to forfeit the shares.
• Only partly paid-up shares can be surrendered.
• Surrendered shares can be surrendered when a company provides for such surrender of shares.

Question 6.
Sweat equity shares
Answer:
These are shares issued by a company to its directors or employees at a discount or for consideration other than cash. It is one of the modes of making share-based payments to employees. It is issued in recognition of their valuable contribution to the prosperity of the company.

Question 7.
Share Certificate
Answer:
A Share certificate refers to documents that are issued by a company evidencing that a person named in such certificate is the owner of the shares of the company stated in the share certificate. Share certificate has to be issued under the common seal of the company. It should be issued within 2 months from the date of allotment against the allotment letter.

Question 8.
Authorized Capital
Answer:

• The Authorized capital is the maximum amount of capital that a company can raise through the issue of shares to the shareholders.
• The Authorized capital of a company is also called Registered Capital or Nominal Capital.
• Authorized capital is the maximum capital that is authorized by the company’s memorandum of Association.

Question 9.
Forfeiture of shares
Answer:
If a shareholder, who is called upon to pay any call fails to pay the amount, even after sending many reminders the company may forfeit its shares. Thus forfeiture of shares means cancellation of shares.

Question 10.
Paid-up capital
Answer:

• Paid-up capital is the amount of money a company has received from shareholders in exchange for shares.
• It is the total amount of money paid up by the shareholders when the company has called up or demanded them to pay.
• The paid-up capital can be equal to or less than the authorized capital.

Question 11.
Calls on Shares
Answer:

• Whenever a company issue shares, the company may ask shareholders to pay the value of shares in installment which is known as calls on shares.
• The company can demand part or full amount of the balance amount of unpaid shares.

Question 12.
Subscribed Capital.
Answer:

• Subscribed share capital is that part of issued share capital for which a company has positively received a subscription from the investor.
• It is a part of Issued Capital that has been subscribed by investors or purchased by the general public.

Question 13.
Minimum Subscription
Answer:
Minimum subscription means a minimum amount decided by the ROC which should be build-up by the company by issuing securities to the general public. If the company failed in minimum subscription then it has to return the entire amount back to the applicants.

Question 14.
Transfer of shares
Answer:

• Transfer of shares means the transfer of ownership of the shares from one person to another against consideration.
• Transfer of shares is effected by removing the name of the existing shareholders (transferor) from the register of members and inserting the name of the new member (transferee).
• Transfer of shares is a voluntary process of transferring shares by a member of a company.

Question 15.
Initial Public Offer (IPO)
Answer:
The initial public offering is the sale of equity shares to the public first time in order to raise capital. This is the most popular and common method used by companies. The company invites the public to subscribe to its shares by issuing prospects.

Question 16.
Blank Transfer
Answer:

• The Blank transfer means the sale or transfer of securities in which the name of the buyer or transferee is not recorded.
• When a member signs the Instrument of transfer without filling in the name of the transferee and hands it over to the transferee with the share certificate it is called ‘Blank Transfer.’
• The blank transfer enables easy to purchase and sale of shares as the blank transfer form can be sold any number of times.
• The intermediate buyers need not pay stamp duty.

Question 17.
Further Public Offer (FPO)
Answer:
It is also called a follow-on public offer. When the company issue shares to the public after IPO, it is called a further public offer. Thus every issue of shares by a listed company after its IPO is called an FPO. FPO leads to an increase in the subscribed capital of the company.

Question 18.
Forged Transfer
Answer:

• An instrument on which if the signature of the transferor is forged is called forged transfer.
• It is a null transfer and does not counter any title.
• As the signature of the transferor is forged, the company should not register such transfer of shares.

Question 19.
Rights issue
Answer:
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. A rights issue is a way by which a listed company can raise additional capital.

Question 20.
Private Placement
Answer:
When a company offers its securities to a selected group of persons not exceeding 200, it is called private placement. Here securities are not offered to the general public.

5. Study the following cases and express your opinion.

1. Eva Ltd. Company’s capital structure is made up of 1,00,000 equity shares having a face value of ₹ 10/- each. The company has offered to the public 40,000 equity shares and out of this, the public has subscribed for 30,000 equity shares. State the following in rupees-

Question (a).
Authorized capital
Answer:
The authorized capital is ₹ 10,00,000 (1,00,000 equity shares × ₹ 10/- each)

Question (b).
Subscribed capital
Ans. The subscribed capital is ₹ 3,00,000 (30,000 equity shares × ₹ 10/- each)

Question (c).
Issued capital
Answer:
The issued capital is ₹ 4,00,000 (40,000 equity shares × ₹ 10/- each)

2. TRI. Ltd company is a newly incorporated public company and wants to raise share capital by issuing equity shares in the market. The board of directors is considering various options for this. Advise the board on the following matters:

Question (a).
What should the company offer – IPO or FPO?
Answer:
The Company should offer IPO.

Question (b).
Can the company offer Bonus shares to raise its capital?
Answer:
The company cannot offer Bonus Shares. Bonus Shares are given out of only accumulated capital or reserves only.

Question (c).
Can the company enter into an underwriting Agreement?
Answer:
Yes. The company can enter into an Underwriting Agreement. The underwriters assure the company to take up the unsold shares so that company can be able to raise the minimum subscription.

3. Silver ltd. The company has recently come out with its public offer through FPO. Their issue was over-subscribed. The board of directors now wants to start the allotment process.

Question (a).
Should the company set up an allotment committee?
Answer:
Yes. The company should set up an allotment committee as the issue is over-subscribed so the Board has to set up an allotment committee.

Question (b).
How should the company information to whom the company is allotting shares?
Answer:
The company should inform the applicants through a letter of allotment for allotting shares.

Question (c).
Within what period should the company issue a share certificate?
Answer:
The company should issue share certificates within two months from the date of allotment.

4. Red Tubes Ltd. has made a demand on its shareholders to pay the balance unpaid amount of ₹ 20/- per share (having a face value of ₹ 100) held by them. The company has sent letters asking the shareholders to pay the money to its Bankers within the specified time.

Question (a).
Are the shareholders liable to pay ₹ 20/- for the shares held by them?
Answer:
Yes. The shareholders are liable to pay ₹ 20 for the shares held by them. When a company demands the shareholder to pay a part or full amount of the balance amount unpaid on shares it is called ‘calls on shares’.

Question (b).
Name the letter sent by the company to its shareholders asking them to pay ₹ 20/-
Answer:
The company will send a ‘Call Letter’ to its shareholders for asking them to pay ₹ 20.

Question (c).
What happens if the shareholders fail to pay the money within a specific time?
Answer:
If a shareholder fails to pay call money within the specified time, the company can forfeit the shares.

5. X owns 100 shares and Y owns 500 shares of RED tubes. The company has asked all its shareholders to pay the balance unpaid amount of rupees 20. X pays full money demanded by the company and Y failed to pay the money due to poor financial condition.

Question (a).
Can the company forfeit the shares of Y?
Answer:
Yes. The company can forfeit the shares of ‘Y’ as he failed to pay calls on shares within a certain period.

Question (b).
Can the company forfeit the shares of X?
Answer:
The company cannot forfeit the shares of ‘X’ as he paid the full amount of shares. Only partly paid-up shares can be forfeited.

Question (c).
Can X transfer his shares?
Answer:
Yes. X can transfer his shares by filling Instrument of transfer.

4. Distinguish between the following.

Question 1.
Initial Public Offer and Further Public Offer
Answer:

Points	Initial Public offer	Further Public offer
1. Meaning	IPO refers to an offer of Securities by an unlisted public company to the public for the first time.	FPO means an offer of securities by a listed public company to the public to raise subsequent capital.
2. Raising Money	Raising Money for the first time from the public.	Before FPO Company has already raised money through an IPO.
3. When Issued	It is usually issued by an existing company that wants to raise capital from the public for the first time.	It is usually issued by a listed public company when it wants to raise further capital from the public.
4. Order of Issue	IPO precedes FPO. IPO is the first time sale of shares to the public.	FPO is always done after IPO. FPO is the second or subsequent sale of shares to the public.
5. Listing	The company has to get itself listed for the first time before issuing IPO.	A company making an FPO is already a listed company.
6. Risk	It is very risky for the investor as he cannot predict the company’s performance.	It is less risky for the investor as he has an idea of the company’s past performance and can judge its future performance.

Question 2.
Fixed Price Issue Method and Book Building Method
Answer:

Points	Fixed Price Issue Method	Book Building Method
1. Meaning	Under this method, the issue price of shares is mentioned in the prospectus and investors have to buy shares at that price only.	Under this method, the issue price is determined by a bidding process.
2. Price of Shares	The exact price of shares is known in advance and it is mentioned in the prospectus.	The price of shares is not known in advance only the minimum price and maximum price at which the company is willing to sell the shares is known in advance.
3. Prospectus	The company has to issue a prospectus and it contains the details of the price at which shares are offered and the total number of shares offered by the company.	The company issues a Red Herring Prospectus. It contains only the price band and the total size of the issue.
4. Determination of Demand	The company comes to know the public demand for its shares only after the closure of the issue.	The company comes to know the public demand for its shares every day. The bids are registered in the book .everyday till the closure of the issue.
5. Payment of Application Money	Application money or entire money has to be paid by the investor at the time of submitting the application for shares.	Only application money has to be paid at the time of bidding. Money will be collected only after the issue price has been fixed.
6. When Used	It can be used for any issue i.e., Public issues, Rights Issues, FSOS, etc.	It is usually used in public issues i.e., IPO and FPO

Question 3.
Right shares and Bonus shares
Answer:

Points	Rights Shares	Bonus Shares
1. Meaning	In the rights issues, shares are offered to the existing equity shareholders.	Bonus shares are issued to the existing equity shareholders free of cost.
2. Payment	Subscribers have to pay for the Right Shares.	Bonus Shares are issued free of cost to the shareholders.
3. Partly/Fully paid-up shares	Shareholders have to pay for these shares as Application Money, Allotment, Call money, etc.	Bonus Shares are fully paid up shares so no money has to be paid by shareholders to the company.
4. Minimum Subscription	The company has to obtain a minimum subscription for Rights shares.	There is no minimum Subscription to be collected for Bonus shares.
5. Right to Renounce	The shareholders can renounce their shares.	Shareholders cannot renounce their bonus share.
6. Purpose of Issue	The main purpose to issue rights shares is to raise fresh funds and along with it to give a chance to their existing members to increase their shareholding.	The main purpose of issuing bonus shares, is to give rewards to its existing equity shareholders out of its accumulated huge profits or Reserves.

Question 4.
Transfer of shares and Transmission of shares
Answer:

Points	Transfer of shares	Transmission of shares
1. Meaning	Transfer of shares means the transfer of ownership of shares from one person to another by entering into a contract.	It means the transfer of ownership of a member’s shares to his legal representative due to the operation of law. It takes place on the death of insolvency or insanity of the members.
2. When Done	It is done when the member wants to sell his shares or give his shares as a gift.	It is done when the member dies or becomes insolvent or suffering from insanity.
3. Nature of Action	It is a voluntary action taken by the member.	It is an involuntary action. It is performed by operation of law.
4. Parties Involved	In the transfer of shares, there are two parties involved – the member who is called as transferor and the buyer who is called as transferee.	There is only one party e.g., the nominee of the members in case of death of the member or the legal representative.
5. Instrument of transfer	Transfer requires an Instrument of transfer.	No instrument of transfer is needed.
6. Initiated by	The transferor initiates the transfer process.	Legal representative or official receiver initiates the process of transmission.
7. Consideration	Transfer of shares is done often by the member to receiving some consideration e.g., money.	In the transmission of shares, no consideration is involved.
8. Liability	The liability of the transferor ends after the shares are transferred.	Original liability of the member continues in case of transmission of shares.
9. Stamp duty	Stamp duty as per the market value of shares has to be paid.	No stamp duty is to be paid.

5. Answer in brief.

Question 1.
What is Book Building Method?
Answer:

• The method of offering shares by providing a price range is called the book building method.
• In the book, building method shares will be sold by the bidding process.
• The company issues a Red Herring Prospectus which contains a price range or price band and as the investor to bid on it.
• In this method, the company doesn’t fix up a particular price for the share but gives a price range e.g., ₹ 80 to ₹ 100.
• When bidding for the shares, investors have to decide at which price they would like to bid for the shares e.g. ₹ 80, ₹ 90, ₹ 100.
• The lower price band (₹ 80) is known as the floor price and the highest price band (₹ 100) is known as the cap price. The final price at which shares are offered to investors is called the cut-off price.
• Board on the demand and supply of the shares, decides the final price is to be fixed.
• Investors can bid on any number of shares that they are willing to buy at a given price band. Such Bidding is kept open for 5 days.
• The bids with application money are to be submitted to the Lead Merchant Bankers called ‘Book Runners’ who enter the bids in a book.
• After bidding, the company fixes a cut-off price at which shares on offer can be sold.
• The company issues a prospectus that contains the final price.
• Book Building method is used for public issues i.e., IPO and FPO.

Question 2.
State the provisions for the Rights issue.
Answer:

• When a company wants to issue further capital it can issue shares to its existing equity shareholders which are called Rights Issue.
• According to the Companies Act, 2013 company has to fulfill certain provisions for making a Rights Issue.
• the provisions are
  • Rights shares are sold to the existing shareholders at a price that is lesser than its market price.
  • A company has to send a ‘Letter of offer’ to the existing shareholders at the time of issuing Rights Shares.
  • The letter of offer shall mention
  • The number of shares offered.
  • The period of offer i.e., offer is valid for a period not less than fifteen days and not exceeding thirty days from the date of offer.
  • The letter of offer can be sent by registered post, speed post, courier, or through electronic mode.
  • If a shareholder does not respond to the Rights Issue offer within a given time, it is implied that he is not interested in the offer and the company can offer the unsold shares to new Investors.

Question 3.
State the provisions related to Bonus Shares.
Answer:

• Bonus Shares are fully paid shares issued free of cost to the existing equity shareholders.
• According to Companies Act 2013, every company has to follow certain provisions to issue Bonus Shares.

Following are the provisions related to Bonus Issue-

• A company can issue Bonus Shares only out of
  • Free reserves or
  • Securities Premium Account
  • Capital Redemption Reserve Account
• A company cannot issue Bonus Shares only out of Reserves credited by the Revaluation of Assets.
• It also cannot issue Bonus Shares instead of paying dividend.
• Once the announcement for Bonus Shares is made by the Board of Directors, it cannot be then withdrawn.
• Bonus shares are fully paid up shares.
• Shareholders cannot renounce i.e give away their Bonus Shares to another person.
• There is no minimum subscription to be collected.

Question 4.
State the general principles/rules for allotment of shares.
Answer:
Every company issuing shares has to follow rules or general principles given by the Companies Act 2013 as follows:

• Proper Authority: The Board of Directors or the allotment committee set up by the Board has the authority to allot shares.
• Allotment must be against application only: A Company can allot shares only if it has received a written application for shares from the applicant. Allotment of shares cannot take place on the basis of an oral request.
• Reasonable time: As per the Act, allotment shall be done within 60 days of receipt of application money. Allotment can be made from the fifth day from the date of issue of prospectus.
• Absolute and Unconditional allotment: Shares should be allotted on the same terms as stated in the prospectus and application form. No change in terms of allotment or new conditions can be added at the time of allotment.
• Communication: Company has to inform the applicant that shares have been allotted, to him by sending a letter of allotment or allotment advice. The letter gives details of a number of shares allotted amount of Allotment money to be paid etc.
• Allotment should not be in Contravention (Violation) of any other laws: A company cannot allot shares by violating or contradicting any other existing laws e.g., shares cannot be allotted to a minor, of a country where a company operates its business.

Question 5.
State the contents of the Share Certificate.
Answer:
A Share certificate refers to a document which is issued by a company evidencing that a person named in such certificate is the owner of the shares of the company stated in the share certificate.
Share certificate has to be issued under the common seal of the company. It should be issued within 2 months from the date of allotment against the allotment letter.

Contents of Share Certificate:
Share Certificate should be in Form SH – 1 as prescribed under Companies (Share Capital and Debenture) Rules 2014.

• Name of the company with Registered office address
• Folio Number
• Share Certificate Number
• Name of Member
• Nature of share number of shares and a distinctive number of shares.
• Amount paid on shares
• Common seal, if any, and signature of two directors and company secretary.

Question 6.
What are the effects of forfeiture of shares?
Answer:
If a shareholder, who is called upon to pay any call fails to pay the amount, even after sending many reminders the company may forfeit his shares. Thus forfeiture of shares means cancellation of shares.

Effects of Forfeiture

• Cessation of Membership: On forfeiture, a member ceases to be a member of a company and loses all membership rights. The member’s name is removed from the Register of Members.
• Liability of Member: A member is liable for unpaid calls even after forfeiture of shares. The liability ceases only when the company reissues the forfeited shares.
• Liquidation of Company: If a company goes in for liquidation within one year of forfeiture of shares, the member whose shares have been forfeited is liable to pay the calls as a past member.

Question 7.
When can the Board of Directors refuse the transfer of shares?
Answer:

• Board of Directors can refuse transfer of shares as they have authority to refuse registration of transfer of shares.
• A notice of refusal of transfer is to be sent by the board to a member within 30 days from the date on which the instrument of transfer is received by the company.
• The board may refuse to register the transfer under following conditions.
  • When the provisions for transfer of shares as given in the Articles of Association are not fulfilled by the member.
  • When the instrument of transfer is not as per the rules prescribed under the Companies Act.
  • When the instrument is not accompanied by the share certificate.
  • When the company has a lien on the shares to be transferred.

Question 8.
Explain Employee Stock Option Scheme.
Answer:
An employee stock option plan is an employee benefits scheme under which the company encourages its employees to acquire ownership in the form of shares. Under this scheme, permanent employees, Directors or Officers of the Company or its holding company or subsidiary company are offered the benefit or right to purchase the equity shares of the company at a future date at a predetermined price. Generally these shares are issued at discount. The shares are offered at a price lesser than their market price.

Following are the provisions related to ESOS:

• A company may offer the shares directly to the employees or through an Employee Welfare Trust.
• The shares are offered at a price lesser than their market price.
• There is a minimum vesting period of one year.
• Company specifies the lock-in period. It is a minimum of one year between grant of option and vesting.
• Shares issued under this scheme enjoys dividend or voting rights only after buying by employees.
• Company has to get the approval of shareholders through a special resolution to issue ESOS.
• Employee neither transfer his option to any other person nor pledge/mortgage the shares issued under ESOS.
• Company has to set up a compensation committee to administer ESOS.
• The company has to fulfil the provision of SEBI (Share Based Employee Benefits) Regulations, 2014.

Question 9.
What are Calls on shares?
Answer:

• Whenever a company issues shares, the company may ask its shareholder to pay value of shares in installment which is known as calls on shares.
• Company can demand part or full amount of balance amount of unpaid shares.
• Beside the application money and allotment money if a company demands the balance unpaid amount on shares it is called as calls on shares.
• The unpaid amount on partly paid-up shares is a liability of the shareholders.
• Calls on shares can be made by the Board of Directors in the interest of the company.
• To make a call on shares, company has to send a call letter or notice to the shareholders. This notice is drafted by a secretary and issued in the name of the board of directors. The company gives them a minimum of 14 days notice to pay calls money to the Company’s Banker.
• No call can be made for more than 25% of the nominal value of shares.

Question 10.
Explain private placement method for the issue of shares.
Answer:

• When a company offers its securities to a select group of persons not exceeding 200, it is called a private placement.
• In private placement, the company offers its securities only to identified person and not to the general public.
• Statement in lieu of prospectus should be filed by the company with ROC before making a private placement.
• The Board of directors selects or identify the persons to be included in the select group. They can be mutual funds, Institutional Investors etc.
• Company has to issue private placement offer letter along with the application.
• The shares offered can be fully or partly paid up and the consideration should be paid by cheque, Demand Draft, etc. but not by cash.
• Right to renunciation is not given to applicants under private placement. The company has to get approval of shareholders through a special resolution.
• A company can make private placement through a rights issue and preferential allotment.

6. Justify the following statements.

Question 1.
Company has to fulfill certain provisions while making Right Issue.
Answer:

• When a company wants to issue further capital it can issue shares to its existing equity shareholders which is called Rights Issue.
• According to the Companies Act 2013 company has to fulfil certain provisions for a making Rights Issue.
• The provisions are
  • Rights shares are sold to the existing shareholders at a price that is lesser than its market price.
  • A company has to send ‘Letter of offer’ to the existing shareholders at the time of issuing Right Shares.
  • The letter of offer shall mention
    • The number of shares offered.
    • The Period of offer i.e., offer is valid for a period not less than fifteen days and not exceeding thirty days from the date of offer.
  • The letter of offer can be sent by registered post, speed post, courier or through electronic mode.
  • If a shareholder does not respond to the Rights Issue offer within a given time, it is implied that he is not interested in the offer and company can offer the unsold shares to new Investors.

Question 2.
To issue Bonus shares a company has to fulfil certain provisions.
Answer:

• Bonus shares are fully paid shares issued free of cost to the existing equity shareholders.
• According to Companies Act 2013, every company has to follow certain provisions to issue Bonus Shares.

Following are the provisions related to Bonus Issue-

• A company can issue Bonus shares only out of
  • Free reserves or
  • Securities Premium Account
  • Capital Redemption Reserve Account
• A company cannot issue Bonus Shares only out of Reserves credited by the Revaluation of Assets.
• It also cannot issue Bonus Shares instead of paying dividends.
• Once the announcement for Bonus Shares is made by the Board of Directors, it cannot be then withdrawn.
• Bonus shares are fully paid up shares.
• Shareholders cannot renounce i.e., give away their Bonus Shares to another person.
• There is no minimum subscription to be collected.

Question 3.
ESOS is offered by a company to its permanent employees, Directors, and officers.
Answer:

• A company can raise funds by offering shares to its existing permanent employees by ESOS Scheme.
• Under this scheme permanent employees Directors or officers of the company are offered the benefit or right to purchase the equity shares of the company at a future date with a pre-determined price.
• ESOS is followed by the company to encourage its employees and to give certain benefits to them.
• Through ESOS, the company can retain its good and talented employees.
• A company may offer the shares directly to the employees or through an Employee Welfare Trust.
• It is helpful to the company to generate goodwill in the market also.

Question 4.
The company has to fulfill general principles/rules for allotment of shares.
Answer:
Every company issuing shares has to follow rules or general principles given by the Companies Act, 2013 as follows:

• Proper Authority: The Board of Directors or the allotment committee set up by the Board has the authority to allot shares.
• Allotment must be against application only: A Company can allot shares only if it has received a written application for shares from the applicant. Allotment of shares cannot take place on the basis of an oral request.
• Reasonable time: As per the Act, allotment shall be done within 60 days of receipt of application money. Allotment can be made from the fifth day from the date of issue of prospectus.
• Absolute and Unconditional allotment: Shares should be allotted on the same terms as stated in the prospectus and application form. No change in terms of allotment or new conditions can be added at the time of allotment.
• Communication: Company has to inform the applicant that shares have been allotted to him by sending a letter of allotment or allotment advice. The letter gives details of a number of shares allotted, amount of Allotment Money to be paid etc.
• Allotment should not be in Contravention (Violation) of any other laws: A company cannot allot shares by violating or contradicting any other existing laws e.g., shares cannot be allotted to a minor, of a country where a company operates its business.

Question 5.
A Company can issue a duplicate share certificate.
Answer:
A Company can issue a duplicate share certificate in the following circumstances:

• If original share certificate has been defaced, mutilated or tom and is surrendered to the company.
• If it has been proved by the holder that the original share certificate is lost or destroyed.
• In case of loss of share certificate, the company puts up a notice in the newspaper to announce the loss of the share certificate.
• If the company does not get any response from the public within the specified time, then the company issues a duplicate share certificate.
• Duplicate share certificate should be issued within three months from the date of application.
• Duplicate share certificate should be issued within 3 months from the date of application with bold ‘duplicate share certificate’ marked on it.

Question 6.
Board of directors has the authority to forfeit shares.
Answer:

• Forfeiture of shares is a process where the company forfeits the shares of a member or shareholder who fails to pay a call on shares. The forfeiture of a share is a forceful activity performed by a company due to non-payment of calls by shareholders.
• Only the Board of directors can forfeit the shares if the process of forfeiture is authorised by the Articles of Association.
• Board of directors can forfeit shares only in the interest of the company.
• A 14 days of notice should be sent to a concerned member.
• Thus Board of directors can make forfeiture of shares.

Question 7.
A member of a public company can transfer shares.
Answer:

• Transfer of shares means voluntary transfer of shares by a member of a company to another person against consideration.
• In the case of public companies, shares are freely transferable subject to provisions of the Articles of Association.
• A member has to apply to the company for the transfer of shares by filling the ‘Instrument of Transfer’.
• Member who is transferring the shares is called as Transferor and to whom shares are transferred is called Transferee.
• Transfer is said to be completed only when the transfer is registered in the Register of Members.

Question 8.
The Board of Directors can refuse the transfer of shares.
Answer:

• Board of Directors can refuse transfer of shares as they have authority to refuse registration of transfer of shares.
• A notice of refusal of transfer is to be sent by the board to a member within 30 days from the date on which the instrument of transfer is received by the company.
• The board may refuse to register the transfer under the following conditions.
  • When the provisions for transfer of shares as given in the Articles of Association is not fulfilled by the member.
  • When the instrument of transfer is not as per the rules prescribed under the Companies Act.
  • When the instrument is not accompanied by the share certificate.
  • When the company has a lien on the shares to be transferred.

7. Answer the following questions.

Question 1.
Explain the classification of Share Capital.
OR
Explain types of Share Capital.
Answer:
Share capital is the capital that is built up by the company by issuing shares in the market. Share capital consist of capital that is made up of Equity shares and Preference shares.
Share capital can be classified as-

(i) Authorised or Nominal or Registered Capital

• The Authorized capital is the maximum amount of capital that a company can raise through the issue of shares to the shareholders.
• The Authorized capital of a company is also called as the Registered capital or Nominal Capital.
• Authorized capital is the maximum capital that is authorized by the company’s Memorandum of Association.
• The Authorized capital is mentioned in the Memorandum of Association of the company under the heading ‘capital clause’ and the company pays stamp duty on this amount at the time of incorporation.
• Authorized capital is also called as ‘Nominal Capital’ as usually a company never issues the entire Authorized Capital.
• A company can increase its Authorized Capital by altering its Memorandum of Association.
• The maximum limit of authorized capital is registered with the registrar of the companies.
• Example of Authorized Capital: XYZ Ltd. Company has an authorized capital of ₹ 10,00,000, then it can issue shares worth up to ₹ 10,00,000 to its shareholders and cannot issue anything beyond it.

(ii) Issued and Unissued capital:

• Issued capital is that portion of authorized shares capital that had been raised by issuing shares to the general public.
• These are the shares that the company offers to prospective investors for a subscription.
• The issued capital of a company may be equal to or less than the Authorized Capital of incorporation.
• The balance part of Authorized Capital which is not offered to the public for subscription is called ‘unissued capital’.
• Unissued capital is that capital which a Company is authorized to issue but has not issued as shares.
• Unissued capital is the balance part of Authorised capital which is not offered to the public.
• Example of Issued and Unissued Capital: XYZ Ltd Company can have issued Capital of ₹ 4,00,000 divided into 40,000
• Equity Shares at Face Value of ₹ 10/- each and the Unissued Capital 6,00,000 divided into 60,000 equity shares of ₹ 10/- each.

(iii) Subscribed and Unsubscribed Capital:

• Subscribed share capital is that part of issued share capital for which a company has positively received a subscription from the investor.
• It is a part of Issued Capital that has been subscribed by investors or purchased by the general public.
• The subscribed capital may be equal to or less than the issued capital.
• The part of the Issued Capital which is not subscribed by the investors is called as ‘Unsubscribed Capital’.
• Example of Issued and Unissued capital: If XYZ Ltd company has issued capital ₹ 4,00,000 i.e., it has issued 40,000 equity shares of ₹ 10 each and company has received subscription for 30,000 shares i.e., for 30,000 equity shares of ₹ 10/- each then its subscribed capital is ₹ 3,00,000 and unsubscribed capital will be ₹ 1,00,000 divided into 10,000 Equity shares of ₹ 10/- each.

(iv) Called up and Uncalled capital and Reserve capital:

• Called up share capital is that part of share capital that has been called by the company for payment from shareholders.
• The company collects the full value of shares in installments and each installment is called a ‘call’.
• Uncalled Capital is that part of subscribed capital that is not demanded from the shareholders.
• A company can decide to keep aside a part of its uncalled capital to be called up only at the time of winding up of a company to meet its financial requirements. Which is called a Reserve Capital.

Example of call up, uncalled and Reserve Capital.
If XYZ Ltd company is to subscribed capital is ₹ 3,00,000 i.e., 30,000 equity shares of face value of ₹ 10/- each. Out of which company made first call of ₹ 5/- per share, so company called up capital will be ₹ 1,50,000 (30,000 Equity shares × ₹ 5/- each = ₹ 1,50,000)

If the company decides to keep ₹ 1/- per share as capital to be collected at the time of the winding-up, the Reserve Capital will be 30,000 (30,000 equity shares of ₹ 10 each.)
Uncalled Capital will be ₹ 1,20,000 (30,000 equity shares were 4 per share which will be called up in the future.)

(v) Paid-up capital and calls in Arrears:

• Paid-up capital is the amount of money a company has received from shareholders in exchange for shares.
• It is the total amount of money paid up by the shareholders when the company has called up or demanded them to pay.
• The paid-up capital can be equal to or less than the authorized capital.
• Unpaid capital means any uncalled or unpaid share capital. The amount not paid to shareholders is also called as calls in Arrears.
• Every shareholder has to pay calls as and when the company demands, failure to pay the calls may lead to future forfeiture of shares (cancellation of shares).

Example of paid up capital and calls in Arrears.
‘XYZ’ Ltd Company has made a call of ₹ 5/- per share on 30,000 equity shares, so if all the shareholder have paid the calls, then paid-up capital will be ₹ 1,50,000 (30,000 equity shares of ₹ 5/- per share). But if 10,000 Equity Shareholders have not paid calls then the paid-up capital will be ₹ 1,00,000 (20,000 Equity Shares × ₹ 5/- per share) and calls in Arrears will be ₹ 50,000 (10,000 Equity Shares × ₹ 5/- per share).

Question 2.
What are the methods of issue of shares to the public through public offer?
Answer:
Issue of shares is the process in which companies offer new shares to shareholders. The company follows different methods prescribed by the Companies Act 2013 while issuing the shares. There are two methods of issue of shares to the public through public offer, they are – Public issue or Public offer of shares.

A public offering is the sale of equity shares to the public in order to raise capital. This is the most popular and common method used by companies. The company invites the public to subscribe to its shares by issuing prospects. A company can use two pricing methods to offer shares to the public.

(i) Fixed Price Issue method:

• In an initial public offering (IPO), if the shares are offered at a fixed price such issue is known as Fixed Price issue.
• In this method, company mentions the Quantity and the price at which shares are offered.
• Investors can pay a certain portion of face value of shares or the entire issue price along with the application.
• Company issues shares at par. E.g., shares having a face value of ₹ 100 and is issued as ₹ 100, at premium e.g., a share having a face value of 100 and is issued at ₹ 150, or at discount e.g., face value is ₹ 100 and the insured price is ₹ 80/-.
• Fixed price method is used for all types of issues i.e. Public issue, Right issue, Esos etc.

(ii) Book Building Method:

• The method of offering shares by providing a price range is called the book building method.
• In the book building method shares will be sold by the bidding process.
• The company issues a Red Herring Prospectus which contains a price range or price band and asks the investor to bid on it.
• In this method the company doesn’t fix up a particular price for the share but gives a price range e.g., ₹ 80 to 100.
• When bidding for the shares, investors have to decide at which price they would like to bid for the shares e.g., ₹ 80, ₹ 90, ₹ 100.
• The lower price band (₹ 80) is known as the floor price and the highest price band (₹ 100) is known as cap price. The final price at which shares are offered to investors is called cut off price.
• Based on the demand and supply of the shares, the final price is fixed.
• Investors can bid on any number of shares that they are willing to buy at given price band. Such bidding is kept open for 5 days.
• The bids with application money is to be submitted to the Lead Merchant Bankers called ‘Book Runners’ who enter the bids in a book.
• After bidding, the company fixes cut off the price at which shares on offer can be sold.
• Company issues a prospectus which contains the final price.
• Book Building method is used for public issues i.e. IPO and FPO.

Further public offer:
It is also called a follow on public offer. When the company issue shares to the public after IPO, it is called a a further public offer. Thus every issue of shares by a listed company after its IPO is called as FPO. FPO leads to an increase in the subscribed capital of the company.

Question 3.
Explain briefly the different types of shares offered by a company to its existing equity shareholders.
Answer:
The company issues equity shares in the market. The equity shareholders are the real owner of the company.
A company can raise funds by offering shares to its existing equity shareholders as follows.

(i) Right Issue:
A right issue is an invitation to existing shareholders to purchase additional new shares in the company. A right issue is a way by which a listed company can raise additional capital. Instead of going for the public issue of shares, the company gives its existing shareholders, the right to subscribe to newly issued shares in proportion to their existing equity shareholding.

Whenever a company makes the further issue of shares the existing equity shareholders have preemptive rights means the first option to buy shares.

Company making rights issue has to fulfil the following provision:

• Rights shares are sold to the existing shareholders at a price that is lesser than its market price.
• A company has to send a ‘Letter of offer’ to the existing shareholders at the time of issuing Rights Shares.
• The letter of offer shall mention
• The number of shares offered.
• The period of offer i.e., offer is valid for a period not less than fifteen days and not exceeding thirty days from the date of the offer.
• The letter of offer can be sent by registered post, speed post, courier or through electronic mode.
• If a shareholder does not respond to the Rights Issue offer within a given time, it is implied that he is not interested in the offer and company can offer the unsold shares to new Investors.

(ii) Bonus Issue/Bonus Shares:
Bonus Shares are shares distributed by a company to its current shareholders as fully paid shares free of charge. The Bonus shares are given to the existing equity shareholders according to their existing proportion of equity shareholdings.

Like for example, a company declaring one for two bonus share proportion means that an existing shareholder would get one bonus share of the company for every two shares held. Financially sound companies issue Bonus shares out of their accumulated distributable profits or reserves. Hence as the profits or reserves are capitalized, it is called “Capitalisation of Profits or Reserves.”

Following are the provisions related to Bonus Issue-

• A company can issue Bonus shares only out of
• Free reserves or
• Securities Premium Account
• Capital Redemption Reserve Account
• A company cannot issue bonus shares only out of Reserves Credited by the Revaluation of Assets.
• It also cannot issue Bonus Shares instead of paying dividends.
• Once the announcement for Bonus shares is made by the Board of Directors, it cannot be then withdrawn.
• Bonus shares are fully paid up shares.
• Shareholders cannot renounce i.e, give away their Bonus Shares to another person.
• There is no minimum subscription to be collected.

Question 4.
Explain the statutory provisions for the allotment of shares.
Answer:

• The allotment of shares is the issuing of new shares to an applicant based on the application submitted or to the existing shareholders.
• Every company has to fulfill the provisions of the Companies Act for making allotment of shares.
• The provisions which are laid down by the Companies Act, 2013 are called statutory provisions.

(i) Registration of Prospectus:

• A copy of the prospectus must be filed with the Registrar of Companies for registration on or before the date of its publication.
• In the case of the newly formed company, a prospectus must be signed by every proposed director or director or his duly authorized advocate. The copy of the prospectus is drafted by the secretary of the company with the permission of the board of directors.

(ii) Application Money:

• The applicant has to pay a minimum of 5% of nominal amount of the shares along with the application form.
• For public limited companies SEBI has specified that application money should be minimum of 25% of the nominal amount of shares.
• The application money is to be paid in the Bank specified by the company.

(iii) Minimum Subscription:

• Minimum Subscription is the amount which is mentioned in the prospectus. It is the minimum amount of shares which should be bought by the subscribers.
• According to SEBI minimum subscription should be 90% of the issue.
• In case the minimum subscription is not collected within the specified time, the company has to return the entire amount of application money to the subscribers.

(iv) Closing of Subscription list:

• According to SEBI a company has to keep open its subscription list for at least three working days and not more than ten working days.
• Applicants can apply for shares only when the subscription list is open.

(v) Basic of allotment:

• Allotment of shares will be decided on the basis of each category of subscribers.
• Allotment of shares will be as per the minimum application size which is fixed by the company.

(vi) Over Subscription:

• Oversubscription refers to a situation in which a company receives more application of shares than the number of shares offered.
• SEBI does not allow any allotment which is in excess of the offer given by the company through a document or prospectus.
• SEBI may permit to allot the shares not more than 10% of the net offer.

(vii) Permission to deal on Stock Exchanges:

• Every company, before making a public offer shall apply to one or more recognized Stock Exchanges to take permission for listing its shares with them
• The prospectus must mention the name of the stock exchange in which the company is listed.
• The prospectus should also state the fact that an application for permission to list in that stock exchange has been made by the company.

(viii) Appointment of Managers to the issue and various other agencies.

• The company has to appoint one or more Merchant Bankers to act as managers to the public issue.
• The company has to appoint Registrar to the issue (institutions that keeps the records of the issue), collecting bankers and underwriters to the issue as well as brokers to the issue.
• The company has to also appoint self-certified syndicate banks (banks certified by SEBI which offers ASBA facility to investors), which are certified by SEBI, advertising agents, etc.

Question 5.
Explain briefly the procedure for allotment of shares.
Answer:
Allotment of Shares:

• Allotment means distribution of shares among the applicants. It means giving shares to share applicants or to specific persons with whom the company has entered into contract.
• Allotment of shares is a procedure in which shares are distributed to those applicants who have submitted a written application along with the application money. If company allots shares alter fulfilling all statutory and general provisions of Companies Act, 2013 such allotment is called as “Regular Allotment”.

Procedure for Allotment of Shares
(i) Appointment of Allotment Committee

• When the subscription list is closed the secretary informs the Board of Directors to make preparations for allotment of shares.
• If the issue is par subscribed or under subscribed, the Board can do the allotment of shares.
• In case of over subscription the board has to appoint and Allotment Committee to undertake the work of Allotment.
• The Allotment Committees decides the basis of allotment and submits a report to the Board.

(ii) Hold Board Meeting to Decide Basis of Allotment

• Board meeting is held to approve the allotment formula suggested by the Allotment Committee.
• A representative of SEBI should be present when the allotment committee prepares the allotment formula.
• After approval of the allotment formula, an allotment list is made.
• If the shares are listed, then the company should take the permission of the concerned stock exchange.
• The allotment list contains the names of allotters. Which should be signed by the chairman and secretary.

(iii) Pass Board Resolution for allotment:

• A resolution is passed to allot shares in board meeting.
• Secretary sends ‘Letter of Allotment’ to allotters those applicant whom shares are allotted.
• Secretary has to send a ‘Letter of Regret’ to those applicants to whom no shares have been issued.
• Along with the letter of Regret the application money is also refunded.
• The company that issues shares in electronic form informs respective Depository (NSDL or CDSL) about allotment of shares.
• It also provides details of applicants whom shares are allotted, number of shares allotted, etc.

(iv) Collection of Allotment Money:

• The letter of allotment states the money to be paid by the applicant on the allotment of shares.
• The money has to be paid in the Bank specified by the company within the stipulated time.
• For all public issues and rights issues ASBA is compulsory since January 2016.

(v) Arrangement Relating to Letters of Renunciation:

• An applicant who has been allotted shares can renounce the shares in favor of another person.
• The applicant has to fill up a form for renunciation to the company with the original copy of the letter of allotment.
• After the permission of the board, the secretary enters the detail of the new person in the application and allotment list.

(vi) Arrangement Relating to Splitting of Allotment letters:

• An applicant who has been allotted shares can request for the splitting of allotment shares.
• After getting the approval of the Board for the splitting. Secretary enters the details of the split in the list of split allotment for which secretary has to ensure spilled letter.

(vii) File Return of Allotment:

• Secretary has to file a “Return of Allotment’ with the Registrar of Companies within 30 days of allotment of shares.
• The return of allotment contains details of allotment of shares which includes the names and addresses of allotters, the value of shares allotted amount paid or payable on each share, etc.

(viii) Prepare Register of Members and Issue of Share Certificate

• Secretary has to enter the names of all those applicants who have paid the allotment money in the Register of Members.
• Secretary also has to prepare the share certificates and distributes them to all the members within two months from the date of allotment of shares.

Balbharti Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 2 Sources of Corporate Finance Textbook Exercise Questions and Answers.

Maharashtra State Board Class 12 Secretarial Practice Solutions Chapter 2 Sources of Corporate Finance

1A. Select the correct answer from the options given below and rewrite the statements.

Question 1.
___________ is the smallest unit in the total share capital of the company.
(a) Debenture
(b) Bonds
(c) Share
Answer:
(c) Share

Question 2.
The benefit of Depository Receipt is ability to raise capital in ___________ market.
(a) national
(b) local
(c) international
Answer:
(c) international

Question 3.
___________ are residual claimants against the income or assets of the company.
(a) Bondholders
(b) Equity shareholders
(c) Debenture holders
Answer:
(b) Equity shareholders

Question 4.
___________ participate in the management of their company.
(a) Preference shareholders
(b) Depositors
(c) Equity shareholders.
Answer:
(c) Equity shareholders

Question 5.
___________ shares are issued free of cost to existing equity shareholders.
(a) Bonus
(b) Right
(c) Equity
Answer:
(a) Bonus

Question 6.
The holder of preference share has the right to receive ___________ rate of dividend.
(a) fixed
(b) fluctuating
(c) lower
Answer:
(a) Fixed

Question 7.
Accumulated dividend is paid to ___________ preference shares.
(a) redeemable
(b) cumulative
(c) convertible
Answer:
(b) Cumulative

Question 8.
The holder of ___________ preference shares has the right to convert their shares into equity shares.
(a) cumulative
(b) convertible
(c) redeemable
Answer:
(b) Convertible

Question 9.
Debenture holders are ___________ of the company.
(a) creditors
(b) owners
(c) suppliers
Answer:
(a) creditors

Question 10.
___________ is paid on borrowed capital.
(a) Interest
(b) Discount
(c) Dividend
Answer:
(a) Interest

Question 11.
Debenture holders get fixed rate of ___________ return on their investment.
(a) interest
(b) dividend
(c) discount
Answer:
(a) interest

Question 12.
Convertible debentures are converted into ___________ after a specific period.
(a) equity shares
(b) deposits
(c) bonds
Answer:
(a) equity shares

Question 13.
Retained earnings are ___________ source of financing.
(a) internal
(b) external
(c) additional
Answer:
(a) internal

Question 14.
The holder of bond is ___________ of the company.
(a) secretary
(b) owner
(c) creditor
Answer:
(c) creditor

Question 15.
Company can accept deposits from public, minimum for ___________ months.
(a) six
(b) nine
(c) twelve
Answer:
(a) six

Question 16.
Company can accept deposits from public maximum for ___________ months.
(a) 12
(b) 24
(c) 36
Answer:
(c) 36

Question 17.
A depository receipt traded in ___________ is called American Depository Receipt.
(a) London
(b) Japan
(c) USA
Answer:
(c) the USA

1B. Match the pairs.

Question 1.

Answer:

Group ‘A’	Group ‘B’
(a) Equity share capital	(1) Venture capital
(b) Debenture Trustees	(2) Trust Deed
(c) Preference shareholders	(3) Cautious investor
(d) Debenture Certificate	(4) Instrument of Debt
(e) Bonus shares	(5) Capitalisation of profit

1C. Write a word or a term or a phrase that can substitute each of the following statements.

Question 1.
The real masters of the company.
Answer:
Equity shareholders

Question 2.
A document of ownership of shares.
Answer:
Share certificate

Question 3.
The holders of these shares are entitled to participate in surplus profits.
Answer:
Participating preference shares

Question 4.
A party through whom the company deals with debenture holders.
Answer:
Debenture trustees

Question 5.
Name the shareholder who participates in the management.
Answer:
Equity shareholders

Question 6.
The value of a share is written on the share certificate.
Answer:
Face value

Question 7.
The value of a share is determined by demand and supply forces in the share market.
Answer:
Market value

Question 8.
The policy of using undistributed profit for the business.
Answer:
Retained earnings/ploughing back of profit

Question 9.
It is an acknowledgment of a loan issued by the company to the depositor.
Answer:
Deposit receipt

Question 10.
A dollar-denominated instrument trader in the USA.
Answer:
American Depository Receipt

Question 11.
The Depository Receipt is traded in a country other than the USA.
Answer:
Global depository receipt

Question 12.
Money raised by the company from the public for a minimum of 6 months to a maximum of 39 months.
Answer:
Public Deposits

Question 13.
Credit extended by the suppliers with an intention to increase their sales.
Answer:
Trade Credit

Question 14.
The credit facility is provided to a company having a current account with the bank.
Answer:
Overdraft

1D. State Whether the following statements are True or False.

Question 1.
Equity share capital is known as venture capital.
Answer:
True

Question 2.
Equity shareholders enjoy a fixed rate of dividends.
Answer:
False

Question 3.
Debenture holders have the right to vote at a general meeting of the company.
Answer:
False

Question 4.
Equity shareholders are described as ‘shock absorbers’ when a company has a financial crisis.
Answer:
True

Question 5.
Bondholders are owners of the company.
Answer:
True

Question 6.
Cash credit is given against hypothecation of goods and security.
Answer:
True

Question 7.
Trade credit is a major source of long-term finance.
Answer:
False

Question 8.
Depository bank stores the shares on behalf of the GDR holder.
Answer:
True

Question 9.
Financial institutions underwrite the issue of securities.
Answer:
True

1E. Find the odd one.

Question 1.
Debenture, Public Deposit, Retained Earnings
Answer:
Retained earnings

Question 2.
Face value, Market value, Redemption value
Answer:
Redemption value

Question 3.
Share certificate, Debenture certificate, ADR
Answer:
ADR

Question 4.
Trade credit, Overdraft, Cash credit
Answer:
Trade credit

1F. Complete the sentences.

Question 1.
The finance needed by business organisation is termed as ___________
Answer:
Capital

Question 2.
The convertible preference shareholders have a right to convert their shares into ___________
Answer:
Equity shares

Question 3.
Equity shareholders elect their representative Called ___________
Answer:
Directors

Question 4.
Bonus shares are issued as gift to ___________
Answer:
Equity share holders

Question 5.
The bondholders are ___________of the company.
Answer:
Creditors

Question 6.
Depository receipt traded in a country other than USA is called ___________
Answer:
Global Depository Receipt

Question 7.
First Industrial policy was declared in the year ___________
Answer:
1948

Question 8.
When goods are delivered by the supplier to the customer on the basis of deferred payment is called as ___________
Answer:
Trade credit

1G. Select the correct option from the bracket.

Question 1.

(Fluctuating rate of dividend, Preference shares, Interest at fixed rate, Retained earnings, short term loan)
Answer:

Group ‘A’	Group ‘B’
(a) Equity shares	(1) Fluctuating rate of dividend
(b) Preference shares	(2) Dividend at a fixed rate
(c) Debentures	(3) Interest at a fixed rate
(d) Retained earnings	(4) Accumulated corporate profit
(e) Public Deposit	(5) short term loan

1H. Answer in one sentence.

Question 1.
What is a share?
Answer:
A share is the smallest unit of the share capital of a company.

Question 2.
What are equity shares?
Answer:
Equity shares are shares that do not preference shares and do not carry priority in receiving dividends nor repayment of capital.

Question 3.
What are preference shares?
Answer:
Preference shares are shares that have preferential rights with regard to receiving dividends and repayment of capital.

Question 4.
What are retained earnings?
Answer:
A part of the net profit which is not distributed to shareholders as dividend but retained by the company as reserve fund is retained earnings.

Question 5.
What is a debenture?
Answer:
It is a document/instrument issued in the form of a debenture certificate under the common seal of the company acknowledging/evidencing the debt.

Question 6.
What is a bond?
Answer:
A bond is a debt security and a formal contract to repay borrowed money with interest.

Question 7.
In which country can ADR be issued?
Answer:
ADR (American Depository Receipt) is a depository Receipt that is issued in the USA.

Question 8.
In which country can GDR be issued?
Answer:
GDR (Global depository receipt) can be issued in countries other than the USA.

Question 9.
What are convertible debentures?
Answer:
Convertible debentures are debentures that are converted into equity shares after a specific period as specified at the time of issue.

Question 10.
What are cumulative preference shares?
Answer:
Cumulative preference shares are shares where dividend, if not paid in a year accumulates till it is paid.

1I. Correct the underlined words and rewrite the following sentences.

Question 1.
Owned capital is temporary capital.
Answer:
Owned capital is permanent capital.

Question 2.
Equity shares get dividends at a fixed rate.
Answer:
Equity shares get dividends at fluctuating rates.

Question 3.
Preference shares get dividends at fluctuating rates.
Answer:
Preference shares get dividends at a fixed rate.

Question 4.
Retained earnings are an external source of finance.
Answer:
Retained earnings are an internal source of finance.

Question 5.
The debenture holder is the owner of the company.
Answer:
The debenture holder is a creditor of the company.

Question 6.
Bond is a source of short-term finance.
Answer:
Bond is a source of long-term finance.

Question 7.
Depository receipt traded in the USA is called Global Depository Receipt.
Answer:
Depository receipt traded in the USA is called American Depository Receipt.

2. Explain the following terms/Concepts.

Question 1.
Borrowed capital
Answer:

• It consists of capital that is raised through borrowings.
• It can be raised by issuing debentures, deposits, loans from banks or financial institutions.

Question 2.
Owned capital
Answer:

• Owned capital is the capital raised by the company with the help of owners (shareholders).
• It can be raised by issuing equity and preference shares.

Question 3.
Ploughing back of profit
Answer:

• Ploughing back of profit or retained earnings is a management policy under which all profits are not distributed amongst shareholders.
• It is an internal source of financing or self-financing as when the need arises, such reserves are ploughed back, brought into the business to meet the financial needs.

Question 4.
Overdraft
Answer:

• It is a credit agreement made with a bank that allows an account holder to withdraw more money than what a company has in its account up to a specific/prescribed limit.
• This facility is available to current account holders.

Question 5.
Trade Credit
Answer:

• Trade credit is credit extended by one trader to another when goods and services are bought/sold on credit.
• It facilitates the purchase of supplies without making an immediate payment.
• It is used by business organisations as a source of short-term financing and granted to those having reasonable standing and goodwill.

3. Study the following case/situation and express your opinion.

1. The Balance sheet of a Donald Company for the year 2018-19 reveals equity share capital of Rs. 25,00,000 and retained earnings of Rs. 50,00,000.

Question (a).
Is the company financially sound?
Answer:
The company is financially sound as it has double the amount as reserves or retained earnings or kept aside profits.

Question (b).
Can the retained earnings be converted into capital?
Answer:
Yes, the retained earnings can be converted into capital by means of capitalisation of reserves.

Question (c).
What type of source retained earning is?
Answer:
Retained earning is self-financing or an internal source of finance.

2. Mr. Satish is a speculator. He desires to take advantage of the growing market for the company’s products and earn handsomely.

Question (a).
According to you, which type of share Mr. Satish will choose to invest in.
Answer:
As Mr. Satish is a speculator, he will choose equity shares to invest in because if there are good earnings/profits, so will be the rate of dividend.

Question (b).
What does he receive as a return on investment?
Answer:
He receives a fluctuating rate of dividends.

Question (C).
State anyone, right he will enjoy as a shareholder.
Answer:
The right to attend the meeting and vote on resolutions can be the right Mr. Satish can exercise as a member.

3. Mr. Rohit, an individual investor, invests his own funds in the securities. He depends on investment income and does not want to take any risk. He is interested in the definite rate of income and safety of the principal.

Question (a).
Name the type of security that Mr. Rohit will opt for.
Answer:
As Mr. Rohit does not want to take risks, he will opt for preference shares which will assure him of steady income and safety of his investment.

Question (b).
What does he receive as a return on his investment?
Answer:
Mr. Rohit will receive dividends in return.

Question (c).
The return on investment which he receives is fixed or fluctuating.
Answer:
The return on his investment will be fixed and not fluctuating.

4. Distinguish between the following.

Question 1.
Equity Shares and Preference Shares
Answer:

Points	Equity Shares	Preference Shares
1. Meaning	Shares that are not preference shares are called equity shares i.e. these shares do not have the preferential rights for payment of dividends and repayment of capital.	Preferences shares are shares that carry preferential rights as to payment of: Dividend and Repayment of capital.
2. Rate of Dividend	Equity shares are given dividends at a fluctuating rate depending upon the profits of the company.	Preference shareholders get dividends at a fixed rate.
3. Voting Right	Equity shareholders enjoy normal voting rights. They participate in the management of their company.	Preference shareholders do not enjoy normal voting right. They can vote only on matters affecting their interest.
4. Return of Capital	Equity capital can not be returned during the lifetime of the company, (except in case of buyback).	A company can issue redeemable preference shares, which can be repaid during the lifetime of the company.
5. Nature of capital	Equity capital is known as ‘Risk Capital’.	Preference capital is ‘Safe Capital’ with a stable return.
6. Nature of investor	The investors who are ready to take risks to invest in equity shares.	Investors who are cautious about the safety of their investment invest in preference shares.
7. Face Value	The face value of equity shares is generally ₹ 1/- or ₹ 10/- it is relatively low.	The face value of preference shares is relatively higher i.e. ₹ 100/- and so on.
8. Right and bonus issue	Equity shareholder is entitled to get bonus and right issue.	Preference shareholders are not eligible for bonuses and right issues.
9. Capital appreciation	The market value of equity shares increases with the prosperity of the company. It leads to an increase in the value of shares.	The market value of preference shares does not fluctuate, so there is no possibility/cheques of capital appreciation.
10. Risk	Equity shares are subject to higher risk.	Preference shares are subject to less risk.
11. Types	Equity shares are classified into: Equity shares with normal voting rights. Equity shares with differential voting rights.	Preference shares are classified as: Cumulative Preference Shares Non-Cumulative Preference Shares Convertible Preference Shares Non-Convertible Preference Shares Redeemable Preference Shares Irredeemable Preference Shares Participating Preference Shares Non-Participating Preference Shares

Question 2.
Shares and Debentures
Answer:

Points	Shares	Debentures
1. Meaning	Share is the smallest unit in the total share capital of the company. It is known as ownership securities.	A debenture is an instrument evidencing debt under the seal of the Company. They are also known as creditor ship securities.
2. Status	A holder of shares is the owner of the company. Hence, share capital is owned capital.	A holder of debenture is the creditor of the company. Hence, Debenture capital is loan capital or borrowed capital.
3. Nature	It is permanent capital. It is not repaid during the lifetime of the company.	It is temporary capital. Generally, it is repaid after a specific period.
4. Voting/Right	Shareholders being owners enjoy normal voting rights in general meetings and can participate in the management of the company.	Debenture holders being creditors, do not have any voting right and can not participate in the management of the company.
5. Return on Investment	Return on shares is called a dividend. Equity shareholders receive dividends at a fluctuating rate whereas preference shareholders receive dividends at a fixed rate.	Return on debenture is called interest. It is fixed at the time of issue. Interest is paid even when a company has no profit.
6. Security	Share capital is unsecured capital. No security is offered to the shareholder.	Debenture capital being loan capital is secured by creating a charge on Company’s property.
7. Time of Issue	Shares are issued in the initial stages of the company formation.	Debentures are issued at a later stage when the company has properties to offer as security.
8. Suitability	Shares are suitable for long-term finance.	Debentures are suitable for medium-term finance.
9. Types	Shares are classified into: Equity shares Preference	A debenture is classified as: Registered Debentures Bearer Debentures Secured Debentures Unsecured Debentures Redeemable Debentures Irredeemable Debentures Convertible Debentures Non-Convertible Debentures
10. Position on liquidation	On liquidation of a company, shareholders rank last in the list of claimants.	Debenture holders being creditors, rank prior to shareholders for repayment on liquidation of the company.

Question 3.
Owned Capital and Borrowed Capital
Answer:

Points	Owned Capital	Borrowed Capital
1. Meaning	It is that capital that is contributed by shareholders.	It is that capital that is borrowed from creditors. It is also known as debt capital.
2. Sources	This capital is collected by the issue of equity shares and preference shares, ploughing back of profits (ownership securities).	It is collected by way of the issue of debentures, fixed deposits, loans from banks/financial institutions, etc. (loan, borrowings).
3. Return on Investment	The shareholders get dividends as income on their investment. The rate of dividend is fluctuating, in the case of equity shares but is fixed in the case of preference shares.	The debt capital holders get interested as income on their investment. Interest is paid at a fixed rate.
4. Status	The shareholders are owners of the company.	The debt holders are creditors of the company.
5. Voting right	The equity shareholders enjoy normal voting right at the general meetings.	The creditors do not enjoy voting rights at the general meeting.
6. Repayment of Capital Redemption	The shareholders do not enjoy priority over creditors. They are eligible for repayment of Capital only after making payment to creditors at the time of windings up of the company.	The creditors get priority over the shareholders in case of return of principal amount at the time of winding up of the company.
7. Charge on assets	The shareholders do not have any charge on the assets of the company.	The secured debenture holders have a change on the assets of the company.

5. Answer in brief:

Question 1.
What is a public deposit?
Answer:

• Public deposit is an important source of financing short-term requirements of the company.
• Companies generally receive public deposits for a period ranging from 6 months to 36 months.
• Interest is paid by the companies on such deposits.
• The company issues a’ Deposit Receipt’ to the depositor.
• The receipt is an acknowledgment of debt/loan by the company.
• Deposits are either secured or unsecured loans offered by a company.
• It is considered a risky investment but investors can earn high returns on public deposits.

Advantages of deposits to the company

• It is an easier method of mobilizing funds during periods of credit squeeze.
• The rate of interest payable by the company on public deposits is lower than the interest from banks and financial institutions.
• It helps the company to borrow funds from a larger segment and thus, reduces dependence on financial institutions.

Question 2.
What are Global Depository Receipt and American Depository Receipt?
Answer:

• The shares that are issued by public limited companies are traded in various share markets.
• In India, shares are traded in the Bombay Stock Exchange (BSE) National Stock Exchange (NSE), etc.
• Similarly, Shares are traded in foreign stock exchanges like NYSE (New York Stock Exchange) or NASDAQ (National Association of Securities Dealers Automated Quotation).
• Companies that cannot list directly on foreign stock exchange get listed indirectly using GDR & ADR.
• GDR and ADR are Dollar/Euro denominated instruments traded on stock exchanges of foreign countries and are depository receipts containing a fixed number of shares.
• The Depository Receipts which are traded in the USA are called ADRs and Depository Receipts which are traded in all foreign countries other than the USA are called GDR.
• Indian Companies raise equity capital in the international market through GDR and ADR.
• Companies issue shares to an intermediary called ‘depository’.
• Bank of New York, Citigroup, etc act as Foreign Depository Bank.
• The Depository Banks issue GDRs or ADRs to investors against Indian Company’s shares.
• These ‘Depository Receipts’ are then, sold to foreign investors who wish to invest their savings in Indian Cost.
• The Depository Receipts are listed on the stock exchanges like regular shares.
• It is a depository bank that stores the shares on behalf of the receipt holder.
• NRI and foreign investors buy Depository Receipt Using their regular equity trading account.
• The company pays dividends in the home currency to the depository and the depository converts them into the currency of investor and pays dividends.
• Indian Companies like HDFC, ICICI, Infosys Technologies, MTNL, WIPRO have ADR and GDR.
  • Tata Motors and VSNL have ADRs.
  • Bajaj Auto Limited ITC, L&T, Hindalco, Ranbaxy Laboratories, and SBI have GDRs.
  • ADR allows the sale of securities only in the American market whereas GDR allows the sale of securities globally.

Question 3.
What is Trade Credit?
Answer:

• Every business requires trade credit and is common to all business types.
• Credit sales or granting of credit is inevitable in the present competitive business world.
• It is short-term financing to businesses.
• The small retailers, to a large extent, rely on obtaining trade credit from their suppliers.
• The cheapest method of financing; it is an easy kind of credit that can be obtained without signing any debt instrument.
• This is not a cash loan. It results from a sale of goods services which have to be paid sometime after the sale takes place.
• It is given by one trader to another trader to delay payment for goods and services involved in the transaction.
• Suppliers sell goods and willingly allow 30 days or more credit period for the bill to be paid.
• They offer discounts if bills are cleared within a short period such as 10 or 15 days.
• Such credit is given/granted to those having reasonable standing and goodwill.

Advantages of Trade Credit:

• Trade Credit is the cheapest and easiest method for raising short-term finance.
• It can be obtained without making any formal and written agreement or signing the same.
• It is readily available whenever goods and services are purchased on credit in bulk.
• It is free of cost source of financing.
• The terms of trade are lenient and not rigid.

Question 4.
What are the schemes for disbursement of credit by banks?
Answer:
Meaning: Banks play an important role in terms of providing finance to the companies.
They provide short-term finance for working capital, in the form of bank and trade credits.

The innovative schemes by banks for disbursement of credit are as follows:
(i) Overdraft:

• A company having a current account with the bank is allowed an overdraft facility.
• The borrower can withdraw funds/overdraw on his current account up to the credit limit sanctioned by the bank.
• Any number of drawings up to the sanctioned limit is allowed for a stipulated term period.
• Interest is determined/calculated on the basis of the actual amount overdrawn.
• Repayments can be made during the time period.

(ii) Cash Credit:

• The borrower can withdraw the amount from his cash credit up to a stipulated/granted limit based on security margin.
• Cash credit is given against pledge or hypothecation of goods or by providing alternate securities.
• Interest is charged on the outstanding amount borrowed and not on the credit limit sanctioned.

(iii) Cash Loans:

• In this, the total amount of the loan is credited by the bank to the borrower’s account.
• Interest is payable on the actual outstanding balance.

(iv) Discounting bills of exchange:

• In the bill of exchange, the drawer of the bill (seller) receives money from the drawee (buyer) on the date or after the due date (the term mentioned in the bill).
• But due to discounting facility the drawer can receive money before the due date by discounting the bill with the bank (by giving the bill as security to the bank).
• The bank gives money to the drawer less than the face value of the bill (amount mentioned in the bill) after deducting a certain amount known as discounting charges.
• The bills are usually traded bills i.e. outcome of trade transactions.
• The bills are accepted by the banks and cash is advanced against them.

Question 5.
State the features of bonds.
Answer:
Definition:
According to Webster Dictionary, “a bond is an interest bearing certificate issued by a Government or business firm promising to pay the holder a specific sum at a specified date”.
A bond is thus-

• A formal contract to repay borrowed money with interest.
• Interest is payable at a fixed internal or on the maturity of the bond.
• A bond is a loan.
• The holder is a lender to the company.
• He gets a fixed rate of interest.

Features:
(i) Nature of finance:

• It is debt or loan finance.
• It provides long-term finance of 5 years, 10 years, 25 years, 50 years.

(ii) Status of investor:

• The bondholders are creditors.
• They are non-owners and hence, not entitled to participate in the general meetings.
• The bondholder has no right to vote.

(iii) Return on bonds:

• The bondholders get a fixed rate of interest.
• It is payable on maturity or at a regular interval.
• Interest is paid to the bondholder at a fixed rate.

(iv) Repayment:

• A bond is a formal contract to repay borrowed money.
• Bonds have a specific maturity date, on which the principal amount is repaid.

6. Justify the following statements:

Question 1.
Equity shareholders are real owners and controllers of the company.
Answer:

• They do not have special preferential rights as to dividends or returns of capital in the event of the winding-up of the company.
• They are joint owners and thus, have ownership rights.
• They have the right to participate in the management of the company and to vote on every resolution in the meetings thus, having exclusive voting rights.
• They use the right to vote to appoint directors, amend Memorandum of Association, Articles of Association, can remove directors appoint bankers, etc.
• Their shares bear ultimate risks associated with ownership.
• Thus, it is rightly said, that the equity shareholders are real owners and controllers of the company.

Question 2.
Preference Shares do not carry normal voting rights.
Answer:

• Preference shares enjoy priority or preference over equity shareholders as regards payment of dividends and repayment of capital.
• They carry a fixed rate of dividend.
• They do not take much risk as they are cautious investors.
• They attend class meetings if they have any problem affecting their interests or dividend is not paid to them for two or more consecutive years.
• As they do not take risks, they do not attend general meetings or take part in the management nor vote at the meetings.
• Thus, it is rightly said, that the preference shares do not carry voting rights.

Question 3.
The debenture is secured by a charge on assets of the company.
Answer:

• A debenture is a document that grants lenders a charge over a company’s assets giving them a means of collecting debt if a default occurs.
• The charges may be floating or fixed.
• A specific property is pledged as security.
• In case the debenture is not redeemed or exercised, the lenders can recover the cost by selling the fixed assets.
• Thus, it is rightly said, that the debenture is secured by a charge on assets of the company.

Question 4.
Retained earnings are the simple and cheapest method of raising finance.
Answer:

• Retained earnings is an internal source of financing used by established companies.
• Retained earnings is a kept aside profit by the company instead of distributing all the dividends to the shareholders.
• The accumulated profits are re-invested by the companies by issuing bonus shares.
• It does not create a charge on assets, nor dilute the shareholdings.
• Thus, it is rightly said, that the retained earnings also known as ploughing back of profit/capitalization of reserves/self-financing are the simple and cheapest methods of raising finance.

Question 5.
Public deposit is a good source of short-term financing.
Answer:

• Deposits can be accepted by the general public by public limited companies and not private limited companies.
• Deposits are accepted from the general public for a short term i.e. minimum 6 months and a maximum of 36 months or a 3-year term.
• The amount so raised is used for short-term financial requirements.
• The time of deposit is predetermined in advance and paid after the expiry of such period as per terms and conditions agreed.
• The depositors form the general public not necessarily equity shareholders.
• The administrative cost of deposits of the company is lower than that involved in the issue of shares and debentures.
• The rate of interest payable is lower than other loans. Thus, it is rightly said, that the public deposit is a good source for meeting short-term requirements.

Question 6.
The bondholder is a creditor of the company.
Answer:

• A bond is a debt security which the company borrows for long-term finance and issues certificates under its seal as acknowledgment.
• The owners get interested as a return on their investment which is decided and fixed at the time of issue.
• The interest payable to bondholders is a fixed charge and a direct expenditure.
• It has to be paid whether the company makes a profit or not.
• As the bondholders are creditors they do not have the right to attend meetings or participate in management.
• Thus, it is rightly said, that the bondholder is a creditor of the company.

Question 7.
Trade credit is not a cash loan.
Answer:

• Trade credit is a business-to-business agreement wherein there is an arrangement to purchase goods and services on credit and pays at a later date and not immediately.
• The credit period extends up to a month.
• Discount is given if the same is paid earlier.
• It is an interest-free loan given by one businessman to another.
• It does not involve loan formalities but only a trade transaction. Hence, not a cash loan.
• Thus, it is rightly said, that the trade credit is not a cash loan.

Question 8.
Different investors have different preferences.
Answer:

• Investors make different decisions and have different risk preferences when getting gains and losses.
• Educated ones may opt for capital markets as compared to others who may invest in gold or silver.
• Cautious investors are ready to have steady income rather than fluctuations.
• Risk-takers are ready to face the ups and downs of their invested money and on their returns.
• Active investors try to beat the market while passive track the market index.
• Thus, it is rightly said, that the different investors have different choices and preferences.

Question 9.
Equity Capital is risk capital.
Answer:

• Equity shareholders have a claim over residual proceeds of the company.
• In the event of winding up, they are the last to be paid off after setting the claims of creditors and external liabilities.
• They have fluctuating returns and risk of fluctuating market value.
• Equity capital is permanent capital and not refunded during the lifetime of the company.
• Not having any assurance as regards dividend, repayment of capital Equity Capital becomes risk capital.
• Thus, it is rightly said, that equity capital is risk capital.

7. Answer the following questions.

Question 1.
What are a share and state its features?
Answer:

• The term share is defined by section 2(84) of the Companies Act 2013 ‘Share means a share in the share capital of a company and includes stock.’ The capital of a company is divided into a large number of shares.
• It facilitates the public to subscribe to the company’s capital in smaller amounts.
• The share is thus, an indivisible unit of share capital.
• It is a unit by which the share capital is divided.
• The total capital is divided into small parts and each such part is called a share.
• The value of each part/unit is known as face value.
• A person can purchase any number of shares as and when he or she desires.
• A person who purchases shares of the company is known as a shareholder of the company.
• Generally, companies issue equity shares and preference shares in the market.

Features of shares:
(i) Meaning:

• Share is the smallest unit in the total share capital of a company.
• The total share capital of a company is divided into small parts and each part is called a share.

(ii) Ownership:

• A share shows the ownership of the shareholder.
• The owner of the share is called a shareholder.

(iii) Distinctive number:

• Unless dematerialized, each share has a distinct number, which is noted in the share certificate.
• A share has a distinct number for identification.

(iv) Evidence of title:

• The company issues a share certificate under its common seal.
• It is a document of title of ownership of the share.
• A share is not a visible thing.
• It is shown by share certificate or in the form of ‘Demat share’

(v) Value of a share:

• Each share has a value expressed in terms of money.
• Face value: This value is written on the share certificate and mentioned in the Memorandum of Association.
• Issue Value: It is the price at which a company sells its shares. At par – equal to face value; At premium – more than the face value; At discount – Less than the face value.

(vi) Rights:

• A share confers/gives certain rights to the shareholders.
• Rights such as the right to receive dividends, right to inspect statutory books, right to attend shareholders’ meetings, right to vote in meetings, etc. (group rights), and right to receive notice, circulars, dividends, bonus shares, rights issue, etc. (individual rights).

(vii) Income:

• A shareholder is entitled to get a share in the net profit of the company.
• It is called a dividend.

(viii) Transferability:

• The shares of the public Ltd. company are freely transferable as per the rules laid down in the Articles of Association.
• Shares of a private company cannot be transferred.

(ix) Property of shareholder:

• A share is a movable property of a member.
• It can be transferred (gifted, sold) or transmitted (passed on to the legal heir after/due to death, insolvency or insanity of a member).

(x) Kinds of shares:

• A company issues two types of shares depending upon the right to control, income and risk.
• Equity shares – which do not carry preferential right to receive dividend or repayment of capital when the company winds up its activities.
• Preference shares – which carry preferential rights as regards dividend and repayment of capital in the event of winding up of the company.

Question 2.
What is an equity share? Explain its features.
Answer:

• Equity shares are the fundamental and basic source of financing activities of the business.
• Equity shares are also known as ordinary shares.
• Indian Companies Act 1956 defines equity shares as those shares which do not preference shares.
• The equity shares do not enjoy a preference in getting dividends.

Features of equity shares:
(i) Permanent Capital:

• Equity shares are irredeemable shares. It is permanent capital.
• The amount received from equity shares is not refunded by the company during its lifetime.
• Equity shares become redeemable/refundable only in the event of the winding-up of the company or the company decides to buy back shares.
• Equity shareholders provide long-term and permanent capital to the company.

(ii) Fluctuating dividend:

• Equity shares do not have a fixed rate of dividend.
• The rate of dividend depends upon the amount of profit earned by the company.
• If a company earns more profit, the dividend is paid at a higher rate.
• If there is insufficient profit, the Board of Directors may postpone the payment of dividends.
• The shareholders cannot compel them to declare and pay the dividend.
• The dividend is thus, always uncertain and fluctuating.
• The income of equity shares is uncertain and irregular.

(iii) Rights:

• Equity shareholders enjoy certain rights.
• Right to share in profit when distributed as dividend.
• Right to vote by which they elect Directors, amend Memorandum, Articles, etc.
• Right to inspect books of account of their company.
• Right to transfer shares.
• Participation in management.
• Enjoy Right Issue and Bonus Issue.

(iv) No preferential right:

• Equity shareholders do not enjoy preferential rights in respect to the payment of dividends.
• They are paid dividends only after the dividend is paid to preference shareholders.
• At the time of winding up, they are the last claimants. They are paid last after all the other claims are settled.

(v) Controlling power:

• The control of a company vests in the hands of equity shareholders.
• They are often described as real masters of the company as they enjoy exclusive voting rights.
• Equity shareholders may exercise their voting right by proxies, without attending the meeting in person.
• The Act provides the right to cast vote in proportion to the number of shareholdings.
• They participate in the management of the company.
• They elect their representatives called the Board of Directors for management of the company.

(vi) Risk:

• Equity shareholders bear maximum risk in the company.
• They are described as ‘shock absorbers when the company is in a financial crisis.
• The rate of dividend falls if the income of the company falls.
• The market value of shares goes down resulting in capital loss.

(vii) Residual claimants:

• A residual claim means the last claim on the earnings of the company.
• Equity shareholders are owners and they are residual claimants to all earnings after expenses, taxes, dividends, interests are paid.
• Even though equity shareholders are the last claimants, they have the advantage of receiving the entire earnings that are leftover.

(viii) No charge on assets:

• The equity share does not create any charge over the assets of the company.
• There is no security/guarantee of capital invested being returned.

(ix) Bonus issue:

• Bonus shares are issued as gifts to equity shareholders.
• They are issued ‘free of cost’.
• These shares are issued out of accumulated profits.
• These shares are issued to existing equity shareholders in a certain ratio or proportion of their existing shareholdings.
• Capital investment of equity shareholders grows on its own.
• This facility is available only to equity shareholders.

(x) Rights issue:

• Equity shareholders get the benefit of rights issues.
• When a company raises further capital by issue of shares, the existing shareholders are given priority to get newly offered shares, known as a rights issue.

(xi) Face value:

• The face value of equity share is very less.
• It can be ₹ 10 per share or even ₹ 1/- per share

(xii) Market value:

• Market value fluctuates, according to the demand and supply of shares.
• The demand and supply of equity shares depend on profits earned and dividends declared.
• When a company earns huge profits, the market value of shares increases.
• When it incurs a loss, the market value of shares decreases.
• There are frequent fluctuations in the market value of shares in comparison to other securities.
• Equity shares are more appealing to speculators.

(xiii) Capital Appreciation:

• Share capital appreciation takes place when the market value of share increases in the share market.
• The profitability and prosperity of a company enhance the reputation of the company in the share market and thus, facilitates appreciation of the market value of equity shares.

Question 3.
Define preference shares/What are preference shares? What are the different types of preference shares?
Answer:

• These shares have certain privileges and preferential rights such as to payment of dividends, return of capital, etc.
• Preference Share has which fixed rate of dividend is prescribed at the time of issue.
• The preference shareholders are co-owners but not controllers.
• They are cautious investors as they are interested in the safety of the investment.

(i) Cumulative Preference Shares:

• Cumulative preference shares are those shares on which dividend accumulates until it is fully paid.
• That is if the dividend is not paid in one or more years due to inadequate profit, then such unpaid dividend gets accumulated and is carried forward till next year.
• The accumulated dividend is paid when the company performs well.
• The arrears of dividends are paid before making payment to equity shareholders.
• The preference shares are always cumulative unless otherwise stated in Articles of Association.

(ii) Non-Cumulative Preference Shares:

• The dividend on these shares does not accumulate.
• That is the dividend on shares can be paid only out of profits of that particular year.
• The right to claim dividends will lapse if the company does not make a profit in that particular year.
• If the dividend is not paid in a year, it is lost.

(iii) Participating Preference Shares:

• The holders of these shares are entitled to participate in surplus profit besides preferential dividends. They participate in the high-profit condition of the company.
• Surplus profit here means excess profit that remains after making payment of dividends to equity shareholders.
• Such surplus profit up to a certain limit is distributed to preference shareholders.

(iv) Non-Participating Preference Shares:

• The preference shares are deemed to be non-participating if there is no clear provision in Articles of Association regarding participation in surplus profit.
• Such shareholders are entitled to receive a fixed rate of a dividend prescribed in the issue.

(v) Convertible Preference Shares:

• These shares have a right to convert their preference shares into equity shares.
• The conversion takes place within a certain agreed fixed period.

(vi) Non-Convertible Preference Shares:

• These shares are not converted into equity shares.
• They will remain as preference shares forever till paid back.

(vii) Redeemable Preference Shares:

• Shares that can be redeemed after a certain fixed period are called redeemable preference shares.
• A company limited by shares if authorized by Articles of Association issues redeemable preference shares.
• Such shares must be fully paid.
• The shares are redeemed out of divisible profit or out of the fresh issue of shares made for this purpose.

(viii) Irredeemable Preference Shares:

• Shares which are not redeemable are payable only on winding up of the company and are called irredeemable preference shares.
• As per section 55(1) of the Companies Act 2013, the company cannot issue irredeemable preference shares in India.
• Thus, are the types of preference shares.

Question 4.
What are preference shares? State its features.
Answer:

• The shares which carry preferential rights are termed preference shares.
• These shares have certain privileges and preferential rights such as payment of dividend, return of capital, etc.
• The preference shareholders are co-owners but not controllers.
• They are cautious investors as they are interested in the safety of the investment.
• They prefer a steady rate of returns on investment.

Features of preference shares:
(i) Preference for dividend:

• They have the first charge on the distributable amount of annual profits.
• The dividend is payable to preference shareholders before anything else is paid to equity shares, but after the settlement of dues of debentures, bonds and loans.

(ii) Prior repayment of capital:

• Preference shareholders have a preference over equity shareholders in respect of return of capital when the company is liquidated.
• It saves preference shareholders from capital losses.

(iii) Fixed return:

• These shares carry dividends at a fixed rate.
• The rate of dividend is predetermined at the time of issue.
• It may be in the form of a fixed sum or may be calculated at a fixed rate.
• The preference shareholders are entitled to dividends which can be paid only out of profit.
• Though the rate of dividend is fixed, the director in the financial crisis of the company may decide that no dividend be paid if there are no profits, the preference shareholders would have no claims for the dividend.

(iv) Nature of capital:

• Preference share capital is safe capital as the rate of dividend and market value do not fluctuate.
• Preference shares do not provide permanent share capital.
• They are redeemed after a certain period of time.
• It is generally issued at a later stage when a company gets established business.
• They are used to satisfy the need for additional capital of the company.

(v) Market value:

• The market value of preference shares does not change as the rate of dividend payable to them is fixed.
• The capital appreciation is considered to be low as compared with equity shares.

(vi) Voting right:

• The preference shares do not have normal voting rights.
• They have voting rights in matters that affect their interests – change of rights in terms of repayment of capital, or dividend payable to them are in arrears for two or more years.

(vii) Risk:

• Cautious investors generally purchase preference shares.
• Safety of capital and fixed return on investment are advantages attached with preference shares.
• These shares are a boon for shareholders during the depression when the interest rate is continuously falling.

(viii) Face value:

• The face value of preference shares is relatively higher than equity shares.
• They are normally issued at a face value of ₹ 100/-

(ix) Right or Bonus issue:

• Preference shareholders are not entitled to bonus or rights issues.
• It can be issued to the equity shares only.

(x) Nature of investor:

• Preference shares attract a moderate type of investors.
• Investors who are conservative, cautious, interested in the safety of capital, expect a steady rate of returns on investment purchase preference shares.

Question 5.
What is Debenture/Define Debenture. Discuss the different types of Debentures.
Answer:

• Debentures are one of the main sources of raising debt capital for meeting long-term and medium-term financial needs.
• Debentures represent borrowed capital.
• A person who purchased debenture is called a debenture holder.
• The holders get a fixed rate of interest as a return on their investment.
• The Board of Directors has the power to issue debentures.

Definitions:
Topham defines: “A debenture is a document given by a company as evidence of debt to the holder, usually arising out of the loan and most commonly secured by the charge.”

They are as follows:
(i) Secured Debentures:

• The debentures can be secured.
• The property of a company is charged as security for the loan.
• The security may be for some particular asset (fixed charge) or it may be the asset in general (floating charge).
• The debentures are secured through ‘Trust Deed’.

(ii) Unsecured Debentures:

• These debentures do not have security.
• The issue of unsecured debentures is prohibited by the Companies Act, 2013.

(iii) Registered Debentures:

• They are the ones whose details are mentioned in the Register of debenture maintained by the company.
• The details include the name, address, particulars of
• The transfer of such debentures requires the execution of regular transfer deeds.
• Interest is paid through Dividend warrants.

(iv) Bearer Debentures:

• The details of the debentures are not recorded in the register of the debenture.
• Their names do not appear in the Register of Debenture Holders.
• Such debentures are transferred by mere delivery.
• Payment of interest is made by means of coupons attached to the debentures certificate.

(v) Redeemable Debentures:

• Debentures are mostly redeemable i.e. payable at the end of some fixed period, mentioned on the Debentures Certificate.
• Repayment may be made at a fixed date, at the end of a specific period, or six installments during the lifetime of the company.
• The provision of repayment is normally made in Trust Deed.

(vi) Irredeemable Debentures:

• These debentures are not repayable during the lifetime of the company.
• They are repayable only on liquidation of the company or when there is a breach of any condition or in contingencies.

(vii) Convertible Debentures:

• These debentures give the right to the holder to convert the debentures into equity shares after a specific period.
  the period of conversion is mentioned in the debenture certificate.
• The issue must be approved by a special resolution in the general meeting before they are issued to the public.
• A Convertible debentures holder is hence entitled to equity shares at a rate lower than the market value after which he can participate in the profits and meetings of the company.

(viii) Non-Convertible Debentures:

• These are not convertible into equity shares on maturity.
• They are normally redeemed on the maturity date.
• There is no appreciation in their value which acts as a disadvantage.

Question 6.
Define Debenture/What is a debenture? Explain the features of debenture?
Answer:

• A debenture is one of the main sources of raising debt capital for meeting long-term and medium-term financial needs.
• Debentures represent borrowed capital.
• A person who purchases debenture is called a debenture holder.
• The holders get a fixed rate of interest as a return on their investment.
• The Board of Directors has the power to issue debentures.

Definitions:
Topham defines: “A debenture is a document given by a company as evidence of debt to the holder, usually arising out of the loan and most commonly secured by the charge.”
A debenture is evidence of indebtedness.

Features of Debenture:
(i) Written Promise:

• A debenture is a written promise by a company that it owes a specified sum of money to the holder of the debenture.

(ii) Face Value:

• The face value of debenture normally carries a high denomination.
• It is ₹ 100 or multiples of ₹ 100.

(iii) Time of payment:

• A debenture is issued with the due date stated in the Debenture Certificate.
• It provides for repayment of the principal amount on the maturity date.

(iv) Priority of Payment:

• Debenture holders have a priority in repayment of their capital over other claimants of the company.
• The amounts of debentures are settled before shareholders.

(v) Assurance of repayment:

• Debenture constitutes a long-term debt.
• They carry an assurance of repayment on the due date.

(vi) Terms of issue and redemption of Debenture:

• Debenture can be issued at par, premium, and even at discount.
• Its redemption takes place only at par and premium.

(vii) Authority to issue:
Board of Directors has the authority/power to issue debenture as per Companies Act 2013 Section 179(3).

(viii) Interest:

• A fixed-rate of interest is agreed upon and is paid periodically.
• The rate of interest that a company pays/offers depends upon the market conditions and nature of the business.
• Payment of interest is a liability of the company. It has to be paid whether the company makes a profit or not.

(ix) Parties to Debenture:

• Company: This is an entity that borrows money.
• Trustees: The company has to appoint Debenture Trust if it is offering debenture to more than 500 people.
• Trust is a party through whom the company deals with debenture holders and enters into an agreement known as Trust Deed.
• Trust Deed contains obligations of the company rights of debenture holders, power of trustees, etc.
• Debenture holders: They are the parties who provide loans to the company and receive a ‘Debenture Certificate’ as evidence.

(x) Status of debenture holder:

• The debenture holder is a creditor of the company.
• Debenture being loan taken by the company interest is payable on it at a fixed interval and fixed-rate till redeemed/paid.
• They cannot participate in the management of the company.

(xi) No Voting Right:

• According to sec. 71 (2) of Companies Act 2013, no company shall issue debenture carrying voting rights.
• Debenture holders do not have the right to vote in the general meetings of the company.

(xii) Security:

• Debenture can be secured with some property of the company by fixed or floating charge.
• Debenture holders can sell of charged property of the company and recover their money if the company is not in a position to make payment of interest or repayment of capital.

(xiii) Issuers:

• Debenture can be issued by both, private as well as public limited companies.

(xiv) Listing:

• A debenture must be listed with at least one recognized stock exchange.

(xv) Transferability:

• Debentures can be easily transferred through instruments of transfer.

Balbharti Maharashtra State Board 12th Chemistry Important Questions Chapter 14 Biomolecules Important Questions and Answers.

Maharashtra State Board 12th Chemistry Important Questions Chapter 14 Biomolecules

Question 1.
What are biomolecules? Give examples of biomolecules.
Answer:
Biomolecules: The lifeless, complex organic molecules which combine in a specific manner to produce life or control biological reactions are called biomolecules.

Examples: Carbohydrates, lipids (fats and oils), nucleic acids, enzymes.

Question 2.
What is the importance of biomolecules?
Answer:
Biomolecules are organic molecules which combine in a particular fashion to give complex substances which help to sustain life and produce identical daughter cells and play an important role in the actions of an organism.

• Carbohydrates are the major constituents of food and source of energy.
• Proteins help in proper functioning of living beings. They are important constituents of skin, hair, muscles. Enzymes which catalyse chemical reactions that take place in cells are proteins.
• Lipids (fats and oils) function as the storehouses of energy.
• Nucleic acids, the ribonucleic acid (RNA), and deoxyribonucleic acid (DNA) are responsible for genetic characteristics and synthesis of proteins.

Question 3.
What are carbohydrates?
OR
Define the term : Carbohydrates.
Answer:
Carbohydrates : Carbohydrates are optically active polyhydroxy aldehydes or polyhydroxy ketones, or the compounds which on hydrolysis produce polyhydroxy aldehydes or polyhydroxy ketones.

Examples : Glucose, sucrose, fructose.

Question 4.
What is monosaccharide?
Answer:
The basic unit of all carbohydrates which is a simple carbohydrate and cannot be hydrolysed further is known as monosaccharide. The monosaccharide is crystalline and soluble in water. E.g. Glucose, fructose, ribose.

Question 5.
Mention the names of monosaccharides or simple carbohydrates.
Answer:
Monosaccharides are (1) glucose (2) fructose (3) ribose.

Question 6.
State the basic unit of all carbohydrates.
Answer:
The basic unit of all carbohydrates which is a simple carbohydrate and cannot be hydrolysed further is known as monosaccharide.

Question 7.
How are carbohydrates classified?
OR
Classification of carbohydrates with examples.
Answer:
Carbohydrates are classified as monosaccharides oligosaccharides and polysaccharides.
(1) Monosaccharides : These carbohydrates cannot be further hydrolysed into smaller units. They are basic units of all carbohydrates, and are called monosaccharides.

Examples : Glucose, fructose, ribose

(2) Oligosaccharides : An oligosaccharide is a carbohydrate (sugar) which on hydrolysis gives two to ten monosaccharide units.
Depending on the number of monosaccharides produced on hydrolysis, oligosaccharides are further classified as :

Oligosaccharide is homogeneous. In this, each molecule of oligosaccharide contains the same number of monosaccharide units joined together in the same order as every other molecule of the same oligosaccharide.

(3) Polysaccharides : These are carbohydrates which on hydrolysis give a large number of monosaccharides.

Polysaccharides are tasteless, amorphous, insoluble in water. They are long chain, naturally αcurring polymers of carbohydrates.

Example : Cellulose, starch, glycogen.

Question 8.
Classify the following carbohydrates into Monosaccharide, Disaccharide, Oligosaccharide, Polysaccharide.
(1) Glucose
(2) Starch
(3) Sucrose
(4) Maltose
(5) Galactose
(6) Lactose
(7) Ribose.
Answer:

Carbohydrates	Class
(1) Glucose	Monosaccharide
(2) Starch	Polysaccharide
(3) Sucrose	Disaccharide
(4) Maltose	Disaccharide
(5) Galactose	Monosaccharide
(6) Lactose	Disaccharide
(7) Ribose	Monosaccharide

Question 9.
Classify the following carbohydrates.
(1) Cellulose,
(2) Maltose,
(3) Raffinose,
(4) Fructose.
Answer:

Carbohydrates	Class
(1)     Cellulose (2)     Maltose (3)     Raffinose (4)     Fructose	Polysaccharide Disaccharide Trisaccharide Monosaccharide

Question 10.
Classify the following into monosaccharides, oligosaccharides and polysaccharides.
(1) Starch
(2) Glucose
(3) Stachyose
(4) Maltose
(5) Raffinose
(6) Cellulose
(7) Sucrose
(8) Lactose.
Answer:

Monosaccharides	Glucose
Oligosaccharides	Stachyose, maltose, raffinose, sucrose, lactose
Polysaccharides	Starch, cellulose

Question 11.
Classify the following into monosaccharides and disaccharides.
Ribose, maltose, galactose, fructose and lactose (~2 mark each)
Answer:

Monosaccharides	Ribose, galactose, fructose
Disaccharides	Maltose, lactose

Question 12.
Give the preparation of glucose from sucrose or cane sugar.
OR
Describe the laboratory method of preparation of glucose.
Answer:
Preparation of glucose from sucrose (cane sugar) : Laboratory method.

Glucose is prepared in the laboratory by hydrolysis of sucrose by boiling it with dilute hydrαhloric acid or dilute sulphuric acid for about two hours. On hydrolysis, sucrose gives one molecule of glucose and one molecule of fructose.

Alcohol is added during cooling to separate glucose and fructose since, glucose is almost insoluble in alcohol, hence it crystallizes out first. Fructose remains in the solution as it is more soluble than glucose.

Crystals of glucose are separated out by filtration and purified by recrystallization.

Question 13.
Give the preparation of glucose from starch.
OR
How is glucose prepared on commercial scale?
Answer:
Commercially, on a large scale, glucose is prepared by hydrolysis of starch with dilute sulphuric acid. Starchy material is mixed with water and dilute sulphuric acid and heated at 393 K under 2 to 3-atm pressure. Starch is hydrolysed to give glucose.

Question 14.
Explain the structure of glucose.
Answer:
Molecular formula of glucose is C₆H₁₂O₆.

Glucose has an aldohexose structure. In other words, glucose molecule contains one aldehydic, that is, formyl group and the remaining five carbons carry one hydroxyl group (-OH) each. The six carbons in glucose form one straight chain.

Question 15.
Describe the action of following reagents on glucose :
(1) HI
(2) Hydroxyl amine (NH₂OH)
(3) Hydrogen cyanide
(4) Bromine water
(5) dil. Nitric acid
(6) Acetic anhydride.
Answer:
(1) Action of HI : Glucose on prolonged heating with HI gives n-hexane, indicates that all the six carbon atoms are linked in straight chain.

(2) Action of hydroxyl amine : Glucose reacts with hydroxyl amine in an aqueous solution to form glucose oxime. This indicates the presence of CHO group in glucose.

(3) Action of hydrogen cyanide : Glucose reacts with hydrogen cyanide to form glucose cyanohydrin.

(4) Action of bromine water : Glucose on oxidation with mild oxidising agent like bromine water gives gluconic acid, which shows that the carbonyl group in glucose is aldehyde group.

(5) Action of dll. nitric acid : Glucose on oxidation with dilute nitric acid forms dicarboxylic acid, saccharic acid. This indicates the presence of a primary alcoholic group (-CH₂OH) in glucose.

(6) Action of acetic anhydride : When glucose is heated with acetic anhydride in the presence of catalyst pyridine, glucose penta acetate is formed. It indicates that glucose is a stable compound and contains five hydroxyl groups.

Question 16.
Write Fischer projection formulae for
(1) Glucose
(2) Gluconic acid
(3) Saccharic acid.
Answer:
Fischer projection formulae of glucose, gluconic acid and saccharic acid :

Question 17.
Explain D and L configuration in sugars.
Answer:
The simplest carbohydrates glyceraldehyde is chosen as the standard, to assign D and L configuration to monosaccharides. Glyceraldehyde contains one asymmetric carbon atom and exist in two enantiomeric forms

The dextro entantiomer is represented as (+) glyceraldehyde and it is referred as D-configuration i.e., D-glyceraldehyde. The laevo enantiomer of glyceraldehyde is represented as ( -) glyceraldehyde and it corelated as L-configuration i.e., L-glyceraldehyde.

In Fischer projection formula, a monosaccharide is assigned D-configuration if the (- OH) hydroxyl group at the last chiral carbon and lies towards right hand side. On the other hand it is assigned L-configuration if the – OH group on the last chiral carbon atom and lies on the left hand side. In monosaccharides, the most oxidised carbon (i.e., -CHO) is at the top.

Examples :

Question 18.
Write Fischer projection formulae for (a) L-( + )-erythrose (b) L-( +) ribulose.
Answer:

Question 19.
Is the following sugar, D-sugar or L-sugar?

Answer:
The compound is L-sugar.
The compound is L-sugar.

Question 20.
Assign D/L configuration to the following monosaccharides.


Answer:

Question 21.
Explain ring structure of glucose.
Answer:

Glucose has two cyclic structures (II and III) which are in equilibrium with each other through the open chain structure (I) in aqueous solution.

The ring structure of glucose is formed by reaction between the formyl ( – CHO) group and the alcoholic (- OH) group at C – 5. Thus, the ring structure is called a hemiacetal. The two hemiacetal structures (II and III) differ only in the configuration of C – I (Fig.), the additional chiral centre resulting from ring closure. The two ring structures are called α- and β- anomers of glucose and C-l is called the anomeric carbon. The ring of the cyclic structure of glucose contains five carbons and one oxygen. Thus, it is a six membered ring. It is called pyranose structure, in analogy with the six membered heterαyclic compound pyran (IV). Hence glucose is also called glucopyranose.

Question 22.
Write the structures of α-D-( + )-glucopyranose and β-D-( +) glucopyranose.
Answer:

Question 23.
Explain Haworth formula of glycopyranose.
Answer:

In the Haworth formula the pyranose ring is considered to be in a perpendicular plane with respect to the plane of paper. The carbons and oxygen in the ring are in the places as they appear in figure. The lower side of the ring is called α-side and the upper side is the β-side. The α-anomer has its anomeric hydroxyl (- OH) group (at C-l) on the α-side, whereas the β-anomer has its anomeric hydroxyl (- OH) group (at C-l) on the β-side. The groups which appear on right side in the Fischer projection formula appear on α-side in the Haworth formula, and the groups which appear on left side in the fischer projection formula appear on a β-side in the Haworth formula.

Question 24.
Explain the structure of fructose.
Answer:
Fructose has molecular formula C₆H₁₂O₆. It contains ketonic functional group at carbon number 2 and six carbon atoms in straight chain. It belongs to D-series and is a laevo rotatory compound. It is written as D-( – )-fructose. Being an α-hydroxy keto compound fructose is a reducing sugar.

Question 25.
Draw mirror images of glucose and fructose.
Answer:
(1) Glucose

(2) Fructose

Question 26.
Write the two cyclic structures of α-D-( – )-fructofuranose and β-D-( – )-fructofuranose exist in equilibrium with open chain structure.
Answer:

Question 27.
Write the Haworth projection formulae for α -D-( -) – Fructofuranose and β – D – ( -) – Fructo- furanose.
Answer:

Question 28.
Explain the structure of sucrose.
Answer:
Sucrose is a hexasaccharide and has molecular formula C₁₂H₂₂O₁₁. The structure of shcrose contains glycosidic linkage between C – 1 of α-glucose and C – 2 of β-fructose. Since aldehyde and ketone groups of both monosaccharide units are involved in the formation of glycosidic bond, sucrose is a nonreducing sugar.

Sucrose is dextrorotatory, on hydrolysis with dilute acid or an enzyme invertase gives equimolar mixture of dextrorotatory glucose and laevorotatory fructose.

The solution is laevorotatory because laevo rotation of fructose (- 92.4°) is more than dextrorotation of glucose ( + 52.50), hence the sign of rotation is changed from (+) to (-) after hydrolysis, the product is called invert sugar.

Question 29.
Explain the structure of maltose.
Answer:
Maltose is another disaccharide obtained by partial hydrolysis of starch or made of two units of D-glucose. In maltose, C-l of one α-D-glucose is linked to C-4 of another α-D-glucose molecule by glycosidic linkage. The glucose ring which uses its hydroxyl group at C-1 is α – 1 → 4 glycosidic linkage. It is a reducing sugar because a free aldehyde group can be produced at C₁ of second glucose molecule. Maltose on hydrolysis with dilute acids gives glucose.

Question 30.
Draw a neat diagram for Haworth formula of maltose.

Question 31.
Explain the structure of lactose.
Answer:

Lactose (C₁₂H₂₂O₁₁) is a disaccharide. It is found in milk, therefore, it is also known as milk sugar. It is formed from two monosaccharide units, namely D – galactose and D – glucose. The glycosidic linkage is formed between C-l of β-D-galactose and C -4 of glucose. Therefore the linkage in lactose is called β – 1,4 – glycosidic linkage. The hemiacetal group at C-l of the glucose unit is not involved in glycosidic linkage but is free. Hence lactose is a reducing sugar. The above figure shows Haworth formula of lactose.

Question 32.
What are the hydrolysis products of (1) lactose (2) sucrose?
Answer:
(1) Lactose on hydrolysis in presence of an acid or enzyme lactase gives one molecule each of glucose and galactose

(2) Sucrose on hydrolysis in the presence of dii. acid or the enzyme invertase gives one molecule each of glucose and fructose.

Question 33.
Explain the structure of starch.
Answer:
Starch is found in cereal grains, roots, tubers, potatoes, etc. It is a polymer of α-D-glucose and consists of two components, amylose and amylopectin.

Amylose is water soluble component forms blue coloured complex with iodine. It constitutes about 20 % of starch. Amylose contains 200 to 1000 α-D-glucose units linked together by glycosidic linkage between C-l of one unit and C-4 of another unit. i.e. α-1, 4 glycosidic linkages.

Amylopectin is insoluble in water and constitutes about 80 % starch which forms blue-violet coloured complex with iodine. It is a branched chain polymer. In amylopectin, α-D-glucose molecules are linked together by glycosidic linkage between C₁ – of one unit and C-4 of another unit to form long chain and branching αcurs by glycosidic linkage between C-l and C6 glycosidic linkage.

Question 34.
What are polysaccharides?
Answer:
A large number of same or different monosaccharides are joined together by glycosidic linkages are called polysaccharides. They have general formula (C₆H₁₀O₅)_n.

Question 35.
Explain the structure of cellulose.
Answer:

Cellulose mainly αcurs in plants. Cell wall of plant cells is made up of cellulose. It is a long chain polymer. In cellulose, β-D-glucose units are linked by glycosidic linkage between C₁-of one unit of glucose and C₄ of another glucose unit. Thus cellulose contains 1 → 4β glycosidic linkages like those in cellobiose.

Question 36.
Explain the structure of glycogen.
Answer:
The glucose is stored in animal body in the form of glycogen. It is also known as animal starch because its structure is similar to amylopectin. Glycogen is highly branched. Whenever the body is required glucose, enzymes breaks the glycogen to glucose.

Question 37.
How is glycogen different from starch?
Answer:
Starch is the main storage molecules of plants whereas glycogen is the main storage molecule of animals. Starch is found in cereals, roots, tubers, etc. Glycogen is present in liver, muscles and brain.

Question 38.
What do you understand by the term glycosidic linkage?
Answer:
The linkage between two monosaccharide units through oxygen atom is called glycosidic linkage.

Question 39.
What is the basic structural difference between starch and cellulose?
Answer:
Starch is a polymer of a-glucose and consists of two components-amylose and amylopectin. In amylose α-D-D-( + )-glucose units held by C,-C4 glycosidic linkage and in amylopectin, α-D-glucose units held by C1-C4 glycosidic linkage whereas branching αcurs by C₁-C₆ glycosidic linkage. [Refer Question 35 (i) (ii) Fig.] Cellulose is a straight chain polysaccharide composed only of β-D-glucose units held by C₁-C₄ glycosidic linkage. (Refer Question 37 Fig.)

Question 40.
Define the term : Protein OR What are proteins?
Answer:
Chemically proteins are polyamides which are high molecular weight polymers of the monomer units i.e. α-amino acids. OR It can also be defined as Proteins are the biopolymers of a large number of a-amino acids and they are naturally occurring polymeric nitrogenous organic compounds containing 16% nitrogen and peptide linkages (-CO-NH-).

Question 41.
Write the common sources of protein.
Answer:
Common sources of proteins are milk, pulses, peanuts, eggs, fishes, cheese, cereals, etc. They are also the principal materials of muscle, nerves, tendons, skin, blood, enzymes, many hormones and antibiotics.

Question 42.
What are the products of hydrolysis of proteins?
Answer:
On hydrolysis, proteins give a mixture of α-anlino acids.

The α-carbon in α-amino acids ohtained by hydrolysis of proteins has ‘L’ configuration.

Question 43.
What are the a-amino acids?
Answer:
α-Amino acids are carboxylic acids having an amino (- NH₂) group bonded to the α-carbon, i.e. the carbon next to the carboxyl (- COOH) group.

α-amino acids are derivatives of carboxylic acids, obtained by replacing – H atom by amino group. They are bifunctional compounds containing acidic and basic – NH₂ groups.
Example : (where R is an alkyl group or aryl group).

The amino acids are colourless, crystalline, water soluble, high melting solids. These acids in their aqueous solutions behave like salts due to presence of both acidic, and basic. (- NH₂) groups in the same molecule.

Such a doubly charged ion is known as zwitter ion. Example :

Question 44.
What are the final products of hydrolysis of proteins?
Answer:
Proteins on hydrolysis with dilute solution of acids, alkalies or enzymes give a mixture of large number of a-amino acids as final products.

For example :

Question 45.
Write the classification of amino acids, giving examples.
Answer:
The amino acids are of three types : acidic, basic and neutral. The symbol ‘R’ in the structure of a-amino acids represents side chain and may contain additional functional groups.

(1) Acidic amino acids : If ‘R’ contains a carboxyl (- COOH) group the amino acid is acidic amino acid, i.e. If carboxyl groups are more in number than amino groups, then amino acids are acidic in nature.

Examples : Glutamic acid HOOC-CH₂-CH₂-; Aspartic acid HOO-CH₂–

(2) Basic amino acids : If ‘R’ contains an amino (1°, 2°, or 3°) group, it is called basic amino acid i.e. If amino groups are more in number than carboxyl groups then amino acids are basic in nature.

Examples : Arginine

(3) Neutral amino acids : The other amino acids having neutral or no functional group in ‘R’ are called neutral amino acids, i.e. The amino acids having equal number of amino and carboxyl groups are neutral amino acids.

Examples : Alanine CH₃-; Valine (CH₃)₂-CH

Question 46.
What are essential and non-essential amino acids? Give two examples of each.
Answer:
The amino acids, which cannot be synthesised in the body and are supplied through diet are called essential amino acids. Examples : Lysine H₂N-(CH₂)₄-; Valine (CH₃)₂CH- The amino acids which are synthesized in the body are called non-essential amino acids.

Examples : Glutamic acid HOO-CH₂-CH₂-; Serine HO-CH₂–

Question 47.
What is meant by Zwitter ion?
Answer:
An a-amino acid molecule contains both acidic carboxyl ( – COOH) group as well as basic amino (- NH₂) group. Proton transfer from acidic group to basic group of amino acid forms a salt, which is a dipolar ion called a zwitterion.

Question 48.
Draw zwitter ion of alanine and other two forms.
Answer:

Question 49.
What is a peptide bond (peptide linkage)?
OR
Define peptide bond.
Answer:
Proteins are the polymers of a-amino acids and they are connected to each other. The bond that connects a-amino acids to each other is called peptide bond (peptide linkage, – CONH -).

Question 50.
How is peptide linkage (dipeptide linkage) formed in proteins? How is tripeptide formed?
Answer:
Peptide linkage is formed by condensation of acidic group of one molecule of a-amino acid and basic -NH₂ group of other molecule of α-amino acid with elimination of water.

When one more molecule of amino acid combines with dipeptide, it forms tripeptide.

Thus, it forms tetra, penta and finally a polypeptide chain i.e. proteins. Hence, proteins are basically polypeptides.

Question 51.
Write the structures of all possible dipeptides which can be obtained from glycine and alanine.
Answer:
(1) Dipeptide from glycine :
Carboxylic group of glycine reacting with amino group another molecule of glycine to form dipeptide

(2) Dipeptide from alanine :
Carboxylic goup of alanine reaction with amino goup of another molecule of alamine to form dipeptide

(3) Dipeptide from glycine and alanine :
Carboxylic group of glycine reacting with amino group another molecule of alanine to form dipeptide

Question 52.
How are proteins classified on the basis of molecular shapes?
Answer:
On the basis of their molecular shapes proteins are classified as :
(1) Fibrous proteins : The proteins in which the polypeptide chains lie parallel (side by side) to form fibre-like structure, are called fibrous proteins. The polypeptide chains held together by hydrogen bonds. These proteins are insoluble in water.

The fibrous proteins are tough and insoluble in water, and dilute acids or bases.

Example : myαin (in muscles), keratin (in hair, nails, skin), fibroin (in silk), collagen (in tendons), etc.

(2) Globular proteins : The proteins have spherical shape. This shape results from coiling around of the polypeptide chain of protein, and have intramolecular hydrogen bonding are called globular proteins.

They are soluble in water and dilute acids or bases.

Example : Haemoglobin (in blood), albumin (in eggs), insulin (in pancreas), etc.

Question 53.
Distinguish between globular and fibrous proteins.
Answer:

Globular proteins	Fibrous proteins
(1) The chains of polypeptides of protein coil around to give a spherical shape. (2) Globular proteins are soluble in water. (3) They are sensitive to small changes of temperature and pH. (4) They possess biological activity.	(1) The proteins in which the polypeptide chains lie parallel to form fibre like structure. (2) Fibrous proteins are insoluble in water. (3) They are stable to moderate changes of temperature and pH. (4) They do not possess biological activity.

Question 54.
Draw a neat labelled diagram for the secondary structure of protein.
Answer:
Secondary structure of proteins : The three-dimensional arrangement of lαalized regions of a long polypeptide chain is called the secondary structure of protein. Hydrogen bonding between N-H proton of one amide linkage and C = O oxygen of another gives rise to the secondary structure. There are two different types of secondary structures i.e. α-helix and β-pleated sheet.

α-Helix : In a-helix structure, a polypeptide chain gets coiled by twisting into a right handed or clαkwise spiral known as a-helixn. The characteristic features of α-helical structure of protein are :

(1) Each turn of the helix has 3.6 amino acids.
(2) A C = O group of one amino acid is hydrogen bonded to N – H group of the fourth amino acid along the chain.
(3) Hydrogen bonds are parallel to the axis of helix while R groups extend outward from the helix core.
Myosin in muscle and a-keratin in hair are proteins with almost entire a-helical secondary structure.

β-Pleated sheet : In secondary structure, when two or more polypeptide chains (strands) line up side-by-side is called β-pleated sheets. The β-picate sheet structure of protein consists of extended strands of polypeptide chains held together by intermolecular hydrogen bonding. The characteristics of β-pleated sheet structure are :

• The C = O and N – H bonds lie in the planes of the sheet.
• Hydrogen bonding occurs between the N – H and C = O groups of nearby amino acid residues in the neighbouring chains.
• The R groups are oriented above and below the plane of the sheet.

The β-pleated sheet arrangement is favoured by amino acids with small R groups.

Question 55.
What is denaturation of proteins? How is denaturation brought about?
OR
What is the effect of denaturation on the structure of proteins?
Answer:
The prαess by which the molecular shape of protein changes without breaking the amide / peptide bonds that form the primary structure is called denaturation. OR Proteins gets easily precipitated. It is an irreversible change and the prαess is called denaturation of proteins.

Denaturation uncoils the protein and destroys the shape and thus loses their characteristic biological activity. Denaturation is brought about by heating the protein with alcohol, concentrated inorganic acids or by salts of heavy metals. During denaturation secondary and tertiary and quternary structures are destroyed but primary structure remains intact.

Example : Boiling of egg to coagulate egg white, conversion of milk to curd.

Question 56.
Define : Enzymes
Answer:
All biological reactions are catalysed by bio-catalyst in living organisms called enzymes.

Question 57.
What are enzymes? Explain with suitable example.
Answer:
All biological or bio-catalysts which catalyse the reactions in living organisms are called enzymes. Chemically all enzymes are proteins. They are required in very small quantities as they are catalyst also they reduce the activation energy for a particular reaction.

Example : Enzyme maltase converts maltose to glucose.

Question 58.
Explain the catalytic action of enzymes.

Answer:
Mechanism of enzyme catalysis : Action of an enzyme on a substrate is known as lock-and-key mechanism.

Accordingly, the enzyme has active site on its surface. A substrate molecule can attach to this active site only if it has the right size and shape. Once in the active site, the substrate is held in the correct orientation, enzymes provide functional group which will attack the substrate and forms the products of reaction. The products leave the active site and the enzyme is ready to act as catalyst again.

Question 59.
Give examples of industrial application of enzyme catalysis.
Answer:

• Glucose Isomerase (enzyme) is used in conversion of glucose to sweet-tasting fructose.
• New antibiotics are manufactured using penicillin acylase (enzyme).
• Laundry detergentts are manufactured using proteases (enzyme).
• Esters used in cosmetics are manufactured using genetically engineered enzyme.

Question 60.
Draw a neat diagram for enzyme catalysis.
Answer:

Question 61.
State the main functions of enzymes.
Answer:
Enzymes are biological catalyst and they are highly specific in nature. The two main functions are as follows :
(1) They lower the requirement of activation energy.
(2) They speed up the rate of reaction.
E.g. Enzyme maltase catalyses maltose to glucose.
\(\mathrm{C}_{12} \mathrm{H}_{22} \mathrm{O}_{11}+\mathrm{H}_{2} \mathrm{O} \stackrel{\text { Maltase }}{\longrightarrow} 2 \mathrm{C}_{6} \mathrm{H}_{12} \mathrm{O}_{6}\)

Question 62.
What are nucleic acids?
Answer:
Nucleic acids are unbranched polymers of repeating monomers i.e. nucleotides. In other words, nucleic acids have a polynucleotide structure which in turn consists of a base, a pentose sugar and phosphate moiety.

Nucleic acids are biomolecules which are found in the nuclei of all living cells in the form of nucleoproteins or chromosomes.

(Nucleoproteins = Proteins + Nucleic acid)
(prosthetic group)

Question 63.
State the types of nucleic acids.
Answer:
The types of nucleic acids are : Ribonucleic acid (RNA) and deoxy ribonucleic acid (DNA). DNA molecules contain several million nucleotides while RNA molecules contain a few thousand nucleotides.

Question 64.
Explain chemical composition of nucleic acids.
Answer:
Nucleic acids have a polynucleotide structure. Nucleic acids (RNA and DNA) consists of three components :
(1) monosaccharide (sugar)
(2) nitrogen containing base and
(3) phosphate group.

(1) Monosaccharides : Nucleotides of both RNA consist of five membered monosaccharide ring (furanose), called as simply sugar component.

In RNA, the sugar component of nucleotide units is D-ribose and in DNA 2-deoxy-D-ribose.
2 – deoxy means no – OH group at C₂ position.

(2) Nitrogen containing base : Total five nitrogen – containing bases are present in nucleic acids. Three bases with one ring (cytosine, uracil and thymine) are derived from the parent compound pyrimidine. Two bases with two rings (adenine and guanine) are derived from the parent compound purine. Each base in designated by a one-letter symbol. Uracil (U) αcurs only in RNA while thymine (T) ocurs only in DNA.

(3) Phosphate group : The sugar units are joined to phosphate through C₃ and C₅ hydroxyl groups.

Question 65.
What is meant by nucleosides?
OR
Write the structure of nucleoside. Give examples.
Answer:

A nucleoside contains two basic components of nucleic acids i.e. a pentose sugar and a nitrogenous base.

A nucleoside is formed when 1 -position of a pyrimidine (cytosine, thymine or uracil) or 9-position of guanine or adenine base is attached to C- l of sugar by β-linkage.

Examples: Formation of nucleoside:

Question 66.
What is meant by nucleotide?
OR
Write the structure of nucleotide. Give example.
Answer:

A nucleotide contains all three basic components of nucleic acids i.e., a pentose sugar, a phosphoric acid and a nitrogenous base. These are obtained by esterification of \(\mathrm{C}_{5}^{1}-\mathrm{OH}\) group of the pentose sugar by phosphoric acid. Nucleotides are joined together through phosphate ester linkage. Thus, nucleotides are monophosphates of nucleosides. Abridged names of some nucleotides are AMP, dAMP, UMP, dTMP and so on. Here, the first capital letter is derived from the corresponding base. MP stands for monophosphate. Small letter ‘d’ in the beginning indicates deoxyribose in the nucleotide.

Example :

 

Question 67.
Write the structure of nucleic acids.

Answer:
Nucleic acids, both DNA and RNA, are polymers of nucleotides, formed by joining the 3′ – OH group of one nucleotide with 5′ – phosphate of another nucleotide. Two ends of polynucleotide chain are distinct from each other. One end having free phosphate group of 5′ position is called 5′ end. The other end is 3′ end and has free OH – group at 3′ position.

Question 68.
Draw a schematic representation of polynucleotide structure of nucleic acids.
Answer:

Question 69.
Explain double helix.
OR
State the salient features of the Watson and Crick mode of DNA.
Answer:

The Salient features are :

1. DNA is made of two polynucleotide strands that wind into a right-handed double helix.
2. The two strands run in opposite directions: one from the Y end to the 3’ end, while the other from the 3’ end to the Y end.
3. Pcrpcndicular to the axis of the helix, the sugar – phosphate backbone lies on the outside of the helix and the bases lic on the inside.
4. The hydrogen bonding between the hases of the two DNA strands stabilizes the double helix. This gives rise to a ladder-like structure of DNA double helix.
5. Adenine always forms two hydrogen bonds with thymine and guanine forms three hydrogen bonds with cytosinc. Thus A – T arid C – G arc complementary hase pairs and the Two strands of the double helix arc complementary to each other.

Question 70.
Give scientific reasons :
1. In the preparation of glucose from sucrose, ethyl alcohol is added at the time of cooling.
Answer:
Hydrolysis of sucrose with dilute hydrαhloric acid gives glucose along with fructose.

Ethyl alcohol is added at the time of cooling in the preparation of glucose, to separate glucose from fructose. Glucose being insoluble in alcohol, crystallizes out first, while fructose being more soluble in alcohol, remains in the solution.

Question 71.
Answer in one sentence :

(1) How is glucose stored in the animal body?
Answer:
Glucose is stored in the form of glycogen in the animal body.

(2) Write other term used for carbohydrates.
Answer:
Carbohydrates are often termed as saccharides or sugars.

(3) How many moles of acetic anhydride will be required to form glucose penta acetate from 1 mole of glucose?
Answer:
10 moles of acetic anhydride.

(4) What are reducing sugars?
Answer:
Reducing sugars : Carbohydrates which reduce Fehling solution to red ppt of Cu₂0 or Tollen’s reagent to shining metallic silver are called reducing sugars. All monosaccharides and oligosaccharides except sucrose are reducing sugars.

(5) What are non-reducing sugars?
Answer:
Non-reducing sugars : Carbohydrates which do not reduce Fehling solution and Tollen’s reagent are called non-reducing sugars. E.g. sucrose.

(6) Give an example each of reducing and non-reducing sugars.
Answer:
Reducing sugars : Maltose or lactose
Non-reducing sugars : Sucrose.

(7) Name the linkage which joins two monosaccharide units through oxygen atom.
Answer:
The linkage which joins two monosaccharide units through oxygen atom is called glycosidic linkage.

(8) Name the sugar present in DNA.
Answer:
The sugar present in DNA is deoxyribose.

(9) A nucleotide from DNA containing thymine is hydrolysed. What are the products formed?
Answer:
When nucleotide from DNA containing thymine is hydrolysed, 2-deoxy-D-ribose, thymine and phosphoric acid is obtained.

(10) How is zwitterion formed?
Answer:
In aqueous solution, the carboxyl group loses a proton while the amino group accepts it, as a result, a dipolar or zwitter ion is formed.

(11) Name the amino acids which are synthesized in the body.
Answer:
The amino acids which are synthesized in the body are called non-essential amino acids. Examples : Glutamic acid, serine.

(12) Name the four bases present in DNA which of these is not present in RNA.
Answer:
Purines-adenine (A) and guanine (G); Pyrimidines-thymine (T) and cytosine (C), these four bases are present in DNA. Out of these, thymine (T) is not present in RNA.

(13) What are different types of RNA which are found in the cell?
Answer:
There are three different types of RNA found in the cell. (1) The messenger RNA which carries the message to the ribosome (2) Ribosomal RNA where synthesis of protein takes place (3) The transport RNA.

(14) State the functions of RNA and DNA.
Answer:
RNA and DNA are responsible for generic characteristics : DNA preserves the information and uses it by producing duplicate identical DNA molecules. RNA carries messages and transports them.

Multiple Choice Questions

Question 72.
Select and write the most appropriate answer from the given alternatives for each subquestion :

1. Which of the following is not sugar?
(a) Sucrose
(b) Starch
(c) Fructose
(d) Glucose
Answer:
(b) Starch

2. Which of the following is the example of disaccharide?
(a) Glucose
(b) Raffinose
(c) Cellulose
(d) Sucrose
Answer:
(d) Sucrose

3. Fructose is
(a) aldopentose
(b) aldohexose
(c) ketopentose
(d) ketohexose
Answer:
(d) ketohexose

4. Oxidation product of glucose with bromine water is
(a) sorbitol
(b) gluconic acid
(c) glutamic acid
(d) saccharic acid
Answer:
(b) gluconic acid

5. The general formula of carbohydrates is
(a) C(H₂O)
(b) C_x(H₂O)_y
(c) C_x(H₂O)
(d) C_x(H₂O)_x
Answer:
(b) C_x(H₂O)_y

6. Monosaccharides containing aldehyde group are called
(a) aldoses
(b) ketoses
(c) polysaccharides
(d) disaccharides
Answer:
(a) aldoses

7. Which of the following sugars can be used to prepare glucose on a large scale?
(a) Cellulose
(b) Cane sugar
(c) Galactose
(d) Starch
Answer:
(d) Starch

8. Which of the following carbohydrates cannot undergo hydrolysis?
(a) Glucose
(b) Sucrose
(c) Cellulose
(d) Maltose
Answer:
(a) Glucose

9. Glucose differs from fructose in
(a) the functional group
(b) the number of chiral carbon atoms
(c) the number of carbon atoms
(d) both (a) and (b)
Answer:
(d) both (a) and (b)

10. The example of aldopentose is
(a) arabinose
(b) glucose
(c) fructose
(d) sucrose
Answer:
(a) arabinose

11. Dextrose, grape sugar and blood sugar αcurs in
(a) fructose
(b) glucose
(c) sucrose
(d) starch
Answer:
(b) glucose

12. The example of ketopentose is
(a) galactose
(b) ribose
(c) raffinose
(d) maltose
Answer:
(b) ribose

13. Cane sugar on hydrolysis gives
(a) glucose and maltose
(b) glucose and lactose
(c) glucose and fructose
(d) only glucose
Answer:
(c) glucose and fructose

14. On commerical scale, glucose is prepared from
(a) starch
(b) potato pulp
(c) sucrose
(d) both (a) and (b)
Answer:
(d) both (a) and (b)

15. The number of monosaccharide units formed on hydrolysis of glucose are
(a) zero
(b) one
(c) two
(d) three
Answer:
(a) zero

16. Which of the following is NOT TRUE about glucose?
(a) It is monosaccharide
(b) It is a polyhydroxy aldehyde
(c) It is polyhydroxy ketone
(d) It contains six carbon atoms
Answer:
(c) It is polyhydroxy ketone

17. Final hydrolysis product of simple protein is
(a) carboxylic acid
(b) α-amino acid
(c) mineral acid
(d) acetic acid
Answer:
(b) α-amino acid

18. Haemoglobin is the example of-
(a) simple protein
(b) derived protein
(c) fibrous protein
(d) conjugated protein
Answer:
(d) conjugated protein

19. Protein are also called
(a) polysaccharides
(b) polypeptides
(c) polyglycerides
(d) polyster
Answer:
(b) polypeptides

20. The simplest amino acid is
(a) glycine
(b) oxalic acid
(c) adipic acid
(d) caprolactam
Answer:
(a) glycine

21. Amino acids usually exist in the form of zwitter ion which consist of
(a) the basic group-NH₂ and the acidic group -COOH
(b) the acidic group -N⁺H₃ and the basic group COO^–
(c) the acidic group -COO⁺ and the acidic group NH^3-
(d) acidic or basic group
Answer:
(b) the acidic group -N⁺H₃ and the basic group COO-

22. The water insoluble protein is
(a) casein of milk
(b) albumin
(c) serum albumin
(d) keratin of hair
Answer:
(d) keratin of hair

23. The main structural feature of a protein molecule is the presence of
(a) an ester linkage
(b) an ether linkage
(c) a peptide linkage
(d) all of these
Answer:
(c) a peptide linkage

24. Milk sugar is
(a) sucrose
(b) lactose
(c) maltose
(d) glucose
Answer:
(b) lactose

25. The carbohydrates used for silvering of mirror is
(a) fructose
(b) starch
(c) glucose
(d) cellulose
Answer:
(c) glucose

26. Which one of the following is NOT produced by human body?
(a) DNA
(b) Hormones
(c) Enzymes
(d) Vitamins
Answer:
(c) Enzymes

27. A biological catalyst is essentially
(a) an amino acid
(b) an enzyme
(c) a nitrogen molecule
(d) a carbohydrate
Answer:
(d) a carbohydrate

28. Which one of the following is not a constituent of RNA?
(a) Ribose
(b) Uracil
(c) Thymine
(d) Phosphate
Answer:
(b) Uracil

29. DNA is a polymer of units of
(a) sugars
(b) ribose
(c) amino acids
(d) nucleotides
Answer:
(c) amino acids

30. Which one of the following molecules will form zwitter ion?
(a) CH₃COOH
(b) CH₃CH₂NH₂
(c) CCl₃NO₂
(d) NH₂CH₂COOH
Answer:
(d) NH₂CH₂COOH

31. In metabolic prαess the maximum energy is given by
(a) carbohydrates
(b) proteins
(c) vitamins
(d) fats
Answer:
(d) fats

32. DNA has a structure of helix was reported by
(a) Herman Fischer
(b) Fedrick Sauger
(c) Andreas Marggraf
(d) Watson and Crick
Answer:
(d) Watson and Crick

33. The secondary structure of a protein is determined by
(a) co-ordinate bond
(b) covalent bond
(c) ionic bond
(d) hydrogen bond
Answer:
(d) hydrogen bond

34. In maltose, glycosidic linkage is present between the two glucose units at positions
(a) 1, 2
(b) 1, 1
(c) 1, 3
(d) 1, 4
Answer:
(d) 1, 4

35. Which of the following amino acids is basic in nature?
(a) Valine
(b) Tyrosine
(c) Arginine
(d) Luecine
Answer:
(c) Arginine

36. Sucrose molecules consists of
(a) a glucofuranose and a fructopyranose
(b) a glucofuranose and a fructofuranose
(c) a glucopyranose and a fructopyranose
(d) a glucopyranose and a’ fructofuranose
Answer:
(d) a glucopyranose and a’ fructofuranose

37. Which one of the following statements is not correct about DNA molecule?
(a) It has double helix structure
(b) It serves as hereditary material
(c) The two DNA strands are exactly similar
(d) Its replication is called semi-conservative mode of replication
Answer:
(c) The two DNA strands are exactly similar

38. Glycine on heating forms


Answer:
(a)

39. Acidic amino acid is
(a) Glutamine
(b) Glutamic acid
(c) Tyrosine
(d) Lysine
Answer:
(b) Glutamic acid

40. Basic amino acid is
(a) Lysine
(b) Glycine
(c) Cystine
(d) Alanine
Answer:
(a) Lysine

41. Precipitation of protein is referred to as
(a) destruction of proteins
(b) separation of proteins
(c) denaturation of proteins
(d) fragmentation of proteins
Answer:
(c) denaturation of proteins

42. An amino acid containing sulphur is
(a) serine
(b) cysteine
(c) valine
(d) asparagine
Answer:
(b) cysteine

43. Rhamnose is a
(a) carbohydrate
(b) protein
(c) lipid
(d) vitamin
Answer:
(a) carbohydrate

44. Lactose on hydrolysis gives
(a) glucose + glucose
(b) glucose + fructose
(c) glucose + galactose
(d) fructose + galactose
Answer:
(c) glucose + galactose

45. Raffinose on hydrolysis gives
(a) glucose + glucose + galactose
(b) glucose + fructose + galactose
(c) glucose + galactose + galactose
(d) fructose + galactose + galactose
Answer:
(b) glucose + fructose + galactose

46. Naturally αcurring glucose is
(a) dextro rotatory
(b) laevo rotatory
(c) racemic mixture
(d) all of these
Answer:
(a) dextro rotatory

47. Amylopectin is
(a) soluble in water and constitutes about 80% of starch
(b) insoluble in water and constitutes about 80% of starch
(c) Soluble in alcohol and constitutes about 60% of starch
(d) in soluble in alcohol and constitutes about 60% of starch
Answer:
(b) insoluble in water and constitutes about 80% of starch

48. Insulin contains
(a) 51 amino acids
(b) 151 amino acids
(c) 15 amino acids
(d) 115 amino acids
Answer:
(a) 51 amino acids

49. Pyranose structure of glucose is
(a) an open chain structure of glucose
(b) a structure of reduction product of glucose
(c) a cyclic six-membered structure of glucose
(d) a four-membered cyclic form of glucose
Answer:
(c) a cyclic six-membered structure of glucose

50. The number of – OH groups present in ribulose is
(a) 3
(b) 4
(c) 6
(d) 5
Answer:
(b) 4

51. Peptide linkage is

Answer:
(d)

52. Stachyose is an example of
(a) monosaccharides
(b) disaccharides
(c) trisaccharides
(d) tetrasaccharides
Answer:
(d) tetrasaccharides

53. How many moles of (CH₃CO)₂O will be required to form glucose pentaacetate form 2 moles of glucose?
(a) 2
(b) 5
(c) 10
(d) 2.5
Answer:
(c) 10

54. Which of the following NOT present in DNA?
(a) Adenine
(b) Guanine
(c) Thymine
(d) Uracil
Answer:
(d) Uracil

55. Maltose is a
(a) polysaccharide
(b) disaccharide
(c) trisaccharide
(d) monosaccharide
Answer:
(b) disaccharide

Balbharti Maharashtra State Board Class 12 History Solutions Chapter 12 India Transformed Part 2 Textbook Exercise Questions and Answers.

Std 12 History Chapter 1 Question Answer Renaissance in Europe and Development of Science Maharashtra Board

Class 12 History Chapter 1 Renaissance in Europe and Development of Science Question Answer Maharashtra Board

History Class 12 Chapter 1 Question Answer Maharashtra Board

1A. Choose the correct alternative and rewrite the statement.

Question 1.
In 1995, the health department of the Indian government launched the campaign, dubbed as __________
(a) Measles-Rubella
(b) Pulse Polio
(c) B.C.G.
(d) Triple vaccine
Answer:
(b) Pulse Polio

Question 2.
The first district in __________ to become completely literate was Ernakulum.
(a) Gujrat
(b) Kerala
(c) Karnataka
(d) Tamil Nadu
Answer:
(b) Kerala

1B. Find the incorrect pair from group ‘B’ and write the corrected one.

Question 1.

Group ‘A’	Group ‘B’
(a) National Human Rights Commission	Protection of Human Rights
(b) Centre for Science and Environment	Study of Pollution in Delhi
(c) SEESCAP	Institute for conservation of turtles
(d) INTACH	Organisation creating awareness for conservation of heritage

Answer:
SEESCAP – Institute for conservation of long-billed vultures

2. Write the names of historical places/persons/events.

Question 1.
Commission established vide Human Right Protection Act –
Answer:
National Human Rights Commission

Question 2.
The player who was awarded the highest title, ‘Bharat Ratna’ –
Answer:
Mr. Sachin Tendulkar

3. Complete the following concept map.

Question 1.

Answer:

4. Write short notes.

Question 1.
Speed Post
Answer:

• The Indian postal department started the service of speed post in 1986 which changed the nature of post service.
• This service was used by the majority of Indians, more than three crore letters and parcels were delivered from this service.
• The customer will get the message of successful delivery of their items.
• The postal department now offers courier services like passport delivery, business parcels, cash-on-delivery, logistics posts, and air freights.
• The post office even offers a packaging service. Over one lakh and fifty thousand post offices are offering the services like paying bills, sending festive cards and other objects.
• Since 2016, the postal department has started service of delivering Ganges water from Rishikesh and Gangotri at personal addresses.
• Buying personalised postage stamps with personal photographs and special schemes for philatelists are also available at ‘Post Shops’ opened at 80 post offices.

Question 2.
Air Pollution
Answer:

• The entire world, nowadays, is facing the problem of air pollution which is mainly done by vehicles.
• All most every state in India is facing the problem of air pollution.
• The ‘Centre for Science and Environment’, studied and proved that the increasing number of automobiles and vehicles of poor maintenance are the causes of air pollution in Delhi.
• The institution recommended the following suggestions to curb air pollution:
  • Use of CNG (Compressed Natural Gas) as fuel.
  • It was decided that vehicles without a ‘PUC’ certificate will not qualify for insurance and renewal of insurance.
• In this way, we can curb air pollution and make our environment clean and pure.

Question 3.
Eradication of Polio.
Answer:

• The government of India launched a campaign for the eradication of polio from India.
• The health department of the Indian government launched the campaign known as ‘Pulse Polio’ which was started with the joint sponsorship of‘World Health Organisation – WHO, Rotary International, UNICEF, and Indian Government.’
• The objective of the campaign was not to leave a single child under the age of five years without administering the polio vaccine.
• Awareness camps, home visits, and extensive advertising made this campaign successful.

5. Answer the following questions in detail.

Question 1.
Explain the sports policy of the Government of India.
Answer:
India is home to a diverse population playing and showing their talent in a variety of different sports. Every nation needs a well-knit sports policy.

• In 2001, the Government of India announced its sports policy. The main objective of this policy is:
  • To take sports to all parts of India.
  • To help the players to develop special skills.
  • To build supportive and fundamental sports facilities.
  • To help the National Sports Federation of India and associated institutions to search for sports talent.
  • To initiate co-operation from industries, corporate and private institutions for the cause of sports.
  • To create awareness of the importance of sports and interest in sports among people.
• In 2011, the Indian government announced a novel scheme for sports named ‘Come and Play’.
• Sports Authority of India gave permission to use five sports complexes in Delhi to local youths.
• They were also provided an opportunity to train under Sports Authority of India (SAI) coaches.
• The National Sports University was founded in Manipur in 2018.
• This university offers different courses from Bachelor and Masters to M.Phil. and Ph.D. Apart from this, sports universities also offer courses in sports, education, sports management, sports psychology, coaching, etc. Research in sports is also encouraged in the sports university.
• Khelo India.

Question 2.
Which programmes and facilities are created by the Ministry of Tourism of the Indian government to attract tourists?
Answer:
India has a rich cultural heritage. Several tourists visit India each year to see its cultural heritage, monuments, etc. The tourism industry is a continuously growing industry which also gives foreign exchange to the country. The Indian Government has adopted different policies to attract tourists. They are as follows:

• The government provides different facilities to the tourists who visit India. The three ministries of home affairs, tourism, and foreign affairs together created the facility of e-visa which included e-business visas, e-medical visas, and e-visa.
• A facility of giving information to tourists on mobile in Hindi and 10 other foreign languages, for 24 hours throughout the week was started.
• To avail of this facility, tourists have to dial 1363. The information regarding cruise tours, health, and sports tourism, eco-friendly tourism, adventurous sports tourism, film festivals are given through this service.
• Hotels with amenities and premium quality accommodation including luxurious services are available to the tourists.
• The Institutes which offer training courses in ‘Hospitality and Hotel Management’ have been established in major cities of India.
• An advertisement campaign called ‘Atulya Bharat’ was designed to attract tourists.
• A travel show entitled ‘GONORTHEAST’ was released on the Discovery channel to boost the tourism of beautiful places in the northeastern states of India.
• The government took the help of electronic and digital media channels like Discovery, BBC, History is showcasing various programs introducing India’s historical and cultural heritage.
• Swadesh’ and ‘Prasad’ schemes were launched by the Ministry of Tourism of Government of India to encourage visits to 95 pilgrimage and spiritual centers in India.
• The Ministry of Tourism, Government of India, and Federation of Associations in Indian Tourism and Hospitality (FAITH) organized Indian Tourism Mart – 2018. This was the first event based on the model of International Tourism Marts in other countries.

6. State your opinion.

Question 1.
Joint military practice sessions are beneficial for both participant countries.
Answer:

• Such sessions are extremely helpful for both countries because of the technological exchange that happens on these occasions.
• It also helps the armies of both the countries to know, learn and practice new methods of resolving problems.
• The process of modernization of arms gives impetus to further research.
• Due to the development of science and technology, there is increasing scope for the exchange of the latest technology to fight terrorism, to augment our own competencies, and optimum use of modern technology for the end of terrorism.
• The Indian army carried out exercises with different countries e.g., exercise with Oman army at Bakloh, there were combined exercises of Mangolian army and Jammu and Kashmir Rifles.

Question 2.
All of us have the responsibility of taking care of our heritage places.
Answer:

• India has an extraordinary and vast cultural heritage. It is in the form of ancient monuments, buildings, and other archaeological sites and remains.
• These monuments are the living witnesses of our golden historic era.
• It is our duty to preserve the monuments for the next generations. A little initiate from our side can save our heritage.
• The tourism industry generated foreign exchange on a large scale. Tourists come to India every year to see its cultural heritage. Therefore, it is our duty to preserve and protect our heritage.
• As a citizen of India, we should spread awareness among the people about the importance of the preservation of monuments. A little effort on our side can create desirable changes which will make past, present, and future generations of the country and the entire world proud of us.

Class 12 History Chapter 12 India Transformed Part 2 Intext Questions and Answers

Try to do this: (Textbook Page No. 100)

NRHM – Make a list of the benefits of the National Rural Health Mission to people.
Answer:

• The Indian government launched National Rural Health Mission (NRHM) in April 2005 with an aim to strengthen the health systems in rural and urban areas. The list of the benefits of the NRHM are as follows:
• It aims to provide equitable, affordable, and quality healthcare services.
• It has strengthened the healthcare infrastructure.
• It has brought down the maternal mortality rate among poor pregnant women.
• The prevalence of tobacco use and the number of tobacco users have been reduced.
• The Janani Shishu Suraksha Karyakram entitles pregnant women to give birth in public health institutions at no expense.
• The government launched different schemes for community participation under NRHM. Rogi Kalyan Samiti is responsible for maintaining the facilities and ensuring the provision of better facilities for the patients in the hospital.
• Established the Global Knowledge Hub for smokeless tobacco. It also issued an advisory to ban Electronic Nicotine Delivery Systems.
• After the implementation of various initiates under NHRM many states have shown improved progress in healthcare facilities.

Try to do this: (Textbook Page No. 100)

Make a list of solutions to reduce the levels of air pollution.
Answer:
Air pollution is the biggest threat to the environment and to all living species. Following are some of the solutions to reduce the level of air pollution:

• Public Transport: Encourage greater use of public transport i.e. the use of railways, bus services or metros, etc. Instead of using private vehicles, people should encourage to use public transport.
• Use of CNG Vehicles: Citizens should also be encouraged to use CNG vehicles as it is a much cleaner fuel than petrol or diesel. New registration should be discouraged by increasing registration charges of vehicles.
• Use bicycles: Using bicycles is the best way to reduce air pollution. The government should mark out bicycle lanes in residential colonies as well as on roads.
• Plant and care for trees: Trees filter pollutants and absorb carbon dioxide. Trees release oxygen into the atmosphere. The practice of planting trees provides more benefits to the environment.
• Use less energy: Use energy-efficient appliances. Turn off electrical appliances when not in use. Get an energy audit done and follow the advice.
• Avoid the use of crackers: Avoid the use of crackers during festivals and weddings as it creates a lot of air pollution and is harmful to birds and animals including human beings.
• Reuse, Reduce and Recycle: The three ‘Rs’ are the best way to reduce air pollution.
• Avoid using chemical products: Avoid using chemical products like paint, perfumes, sprays, etc as they contain harmful products. Try to use products with less chemical content.
• Prevention of forest fires and burning of garbage: Don’t burn garbage or leaves because it releases harmful smoke in the air which decreases the quality of air.

Try to do this: (Textbook Page No. 102)

1990 was the ‘International Year of Literacy’. Make a list of similarly declared international years for special causes and campaigns launched on the occasion.
Answer:
The following are the international years currently observed by the United Nations.
2024:

• International Year of Camelids

2022:

• International Year of Artisanal Fisheries and Aquaculture

2021:

• International Year of Peace and Trust
• International Year of Creative Economy for Sustainable Development
• International Year of Fruits and Vegetables
• International Year of Eliminations of Child Labour

2020:

• International Year of Planet Health
• International Year of the Nurse and Midwife

2019:

• International Year of Indigenous Languages
• International Year of Moderation
• International Year of Periodic Table of Chemical Elements

2017:

• International Year of Sustainable Tourism for Development.

2016:

• International Year of Pulses

2015:

• International Year of Light and Light-based Technologies
• International Year of Soils

2014:

• International Year of Solidarity with the Palestinian People
• International Year of Small Island Developing States
• International Year of Crystallography
• International Year of Family Farming

2013:

• International Year of Water cooperation
• International Year of Quinoa

2012:

• International Year of Cooperatives
• International Year of Sustainable Energy for All

2011:

• International Year of Forest
• International Year of Chemistry
• The International Year of African Descent

2010:

• The International Year of Biodiversity
• The International Year for the Rapprochement of cultures
• The International Year of Youth

2009:

• The International Year of Astronomy
• The International Year of Human Rights Learning
• The International Year of Natural Fibres
• The International Year of Reconciliation

2008:

• The International Year of Languages
• The International Year of Planet Earth
• The International Year of the Potato
• The International Year of Sanitation

2007-08:

• International Polar Year

2006:

• International Year of Deserts and Desertification

2005:

• International Year of Physics
• International Year of Sport and Physical Education
• International Year of Microcredit

2004:

• International Year of Rice
• International Year to Commemorate the Struggle against Slavery and its Abolition

2003:

• International Year of Freshwater
• Year of Kyrgyz Statehood

2002:

• International Year of Mountains
• International Year of Eco-tourism
• United Nations Year for Cultural Heritage

2001:

• International Year of Volunteers
• International Year of Mobilisation against Racism, Racial Discrimination, Xenophobia, and Related Intolerance
• United Nations Year of Dialogue among Civilisation

2000:

• International Year of Thanksgiving
• International Year for the Culture of Peace

Find out and tell us (Textbook Page No. 106)

Make a list of employment opportunities generated by the tourism industry.
Answer:
The travel and tourism industry in India is growing rapidly so many opportunities are available in the coming years in this field. Some of the opportunities that are available in the tourism industry are as follows:
(i) Hotels: Many job perspectives are available in the hotel industry. Some fields of hotel industries are

• Manager
• Operations
• Housekeeping
• Food and Beverage
• Front office
• Gardener
• Security officer/personnel etc.

(ii) Airlines: One can take up the following job in airlines

• Pilot
• Ground staff (Traffic Assistant, Counter staff, Booking, and Reservation)
• Flight Attendant

(iii) Tourism Department:

• Tour guides
• Tour planner
• Information assistants
• Reservation and counter staffs
• Sales and Marketing
• Interpreters
• Translators

(iv) Transportation Industry:
This is an ever-growing industry where one can have many job opportunities. Job opportunities are available in all types of transportation i.e.

• Railway service
• Bus service
• Cruise service or ferry service
• Private transportation – Cars, Rickshaws, Horse riding, etc.

(v) The employment opportunities are also available in the management of adventure sports, theme parks, amusement parks, water sports, mountaineering, children’s fantasy land, etc.

(vi) The other job opportunities in this field include Destination Manager, Itinerary Planner, Travel Agent, Foreign Exchange, Counselor, etc.

Find out and tell us (Textbook Page No. 106)

Suggest ways and means to enhance the heritage and historical tourism in India.
Answer:
Heritage and historical tourism tend to attract many tourists. Different ways and means to enhance, this type of tourism are as follows:

• Build better roads and access points to the heritage sites, packaged train travel, proper bus connections should be provided to the tourists.
• Aggressive tourism and marketing strategies are also necessary whether it is broadcasting the ‘Incredible India’ campaign abroad, holding different seminars, or offering Indian locations with facilities to promote foreign film productions in the country are some of the strategies.
• The Government of India has already started making a lot of improvements in this area. We need to capitalize on India as a destination. The government should make a documentary based on the heritage of India. One can even design a promotional campaign to enhance historical tourism.
• The historical places always have a story to tell. They offer amazing aesthetics and attract people from all over the world. If tourism is accompanied by mind-blowing hotels, resorts, good public transportation facilities, and delectable cuisine then it becomes an added advantage to the tourist.

Project (Textbook Page No. 108)

Make a list of various business opportunities available at tourist destinations.
Answer:
Introduction: Tourism is a continuously growing industry. By the early 21st century, international tourism had become one of the world’s most important activities. Various business opportunities are available at the tourist destinations and they are as follows:
(i) Travel Agency: Everyone needs a platform where customers can come to and take advice about tour packages of different places which travel agency provides. The travel agency helps tourists in planning their travel for which they charge their commission.

(ii) Hotel: Hotel business is the best opportunity from which you can gain a high rate of return as well as expand your chain of hotels in the future.

(iii) Online Travel Business: In the modern era, the way of doing business is changing. Now everything is available online. With the change in technology, the way of doing business has also changed. One can start an online business portal where customers have easy access to everything online.

(iv) Photography: Tourists always want to save the memories of the places they visit and a photographer helps them to restore their memories through their art of photography. There is a huge demand for photographers.

(v) Vehicle Renting: Some tourists like to plan their tours according to their own wishes. They don’t want any unknown person to be a part of their travel for safety reasons. Such tourists search for a vehicle that they can get on rent and go in the direction that they want. To invest in this business is profitable.

(vi) Tour Guide: A Tourist guide is a person who guides visitors in the language of their choice and interprets the cultural and natural history of the particular place. This is a challenging field with an increase in tours and travels.

(vii) Executive Chef: The executive chef is in charge of a restaurant’s kitchen and is responsible for managing the kitchen staff, planning the menu, and making sure that food hygiene is maintained. This is a well suitable job for people who are passionate about cooking.

12th Std History Questions And Answers:

• Renaissance in Europe and Development of Science Class 11 History Questions And Answers
• European Colonialism Class 11 History Questions And Answers
• India and European Colonialism Class 11 History Questions And Answers
• Colonialism and the Marathas Class 11 History Questions And Answers
• India: Social and Religious Reforms Class 11 History Questions And Answers
• Indian Struggle against Colonialism Class 11 History Questions And Answers
• Decolonisation to Political Integration of India Class 11 History Questions And Answers
• World Wars and India Class 11 History Questions And Answers
• World: Decolonisation Class 11 History Questions And Answers
• Cold War Class 11 History Questions And Answers
• India Transformed Part 1 Class 11 History Questions And Answers
• India Transformed Part 2 Class 11 History Questions And Answers