Question 1
- Differentiate between public corporations and cooperative societies under the following headings:
(i) formation;
(ii) sources of funds;
(iii) management;
(iv) business motive;
(v) decision making.
- Explain five procedures to be followed in the formation of a private company.
Observation
Many candidates who attempted this question but did not do well in part 1a. They did not compare the two terms as required in the question. For 1b, most candidates who attempted the question performed well.
The expected responses to the question include:
1. (a) Differences between public corporations and cooperative societies
HEADING |
Public corporation |
Cooperative society |
Formation |
It is established by the government through legislation. |
It is formed by a group of individuals under the cooperative law. |
Sources of funds |
It is funded by the government through subvention/grants. |
It is funded by members through contributions and subscriptions. |
Management |
It is managed and controlled by a government appointed board. |
It is managed and controlled by an elected committee. |
Business motive |
It is less profit-oriented and geared towards providing essential services to the public. |
Its objective is to make and distribute profit to its members and provide them welfare services. |
Decision making |
Decisions are influenced by parliament and government interest. |
Members have equal voting rights at its meetings. |
(b) PROCEDURES TO BE FOLLOWED IN THE FORMATION OF A PRIVATE COMPANY
- Identification of promoters and directors: The promoters and directors should be chosen to carry out activities involved in setting up the business.
- Obtain directors’ identification details: The digital identification number of the directors and digital signature of one of the directors should be obtained to initiate registration.
- Identification of business name: The name of the business should be identified, and it should not be the same as that of any other existing registered business.
- Preparation and submission of documents: The documents for incorporation such as Memorandum of Association, Articles of Association, declaration, and affidavits of the directors are prepared and submitted to the Registrar of Companies.
- Obtain a certificate of incorporation: The certificate of incorporation would be delivered to the company if successful and can start operations immediately.