Maharashtra State Board Class 12th SP Question Paper 2024 with Solutions Answers Pdf Download.
Class 12 SP Question Paper 2024 Maharashtra State Board with Solutions
Time : 3 Hrs
Max. Marks: 80
Note:
(1) All questions are compulsory.
(2) Figures to the right indicate full marks for the questions.
(3) Figures to the left indicate question numbers.
(4) Answer to every question must be started on a new page.
Question 1.
(A) Select the correct answer from the options given below and rewrite the sentences: (5)[20]
(1) Finance is the management of affairs of __________ the company. (a)
(a) monetary
(b) marketing
(c) production
Answer:
(a) monetary
(2) Company can accept deposits from public, minimum for __________ months. (b)
(a) nine
(b) six
(c) twelve
Answer:
(b) six
(3) A company can issue __________ convertible debentures. (c)
(a) only partly
(b) only fully
(c) partly or fully
Answer:
(c) partly or fully
(4) Debenture capital is a __________ capital of a company. (a)
(a) borrowed
(b) owned
(c) permanent
Answer:
(a) borrowed
(5) __________ is a return paid to creditors by the company. (b)
(a) Dividend
(b) Interest
(c) Rent
Answer:
(b) interest
(B) Match the pairs: (5)
| Group ‘A’ | Group ‘B’ |
| (a) Capital budgeting | (1) Unsecured Debenture |
| (b) Regret Letter | (2) 1956 |
| (c) Board of Directors | (3) Investment decision |
| (d) Depository Act | (4) Allotment of shares |
| (e) Final Dividend | (5) Decided and declared by Board of Directors |
| (6) Financing decision | |
| (7) Decided by Board and declared by members | |
| (8) 1996 | |
| (9) Power to issue debentures | |
| (10) Non-Allotment of shares |
Answer:
| Group ‘A’ | Group ‘B’ |
| (a) Capital budgeting | (3) Investment decision |
| (b) Regret Letter | (10) Non-Allotment of shares |
| (c) Board of Directors | (9) Power to issue debentures |
| (d) Depository Act | (8) 1996 |
| (e) Final Dividend | (7) Decided by Board and declared by members |
(C) Find the odd one: (5)
(1) Debenture, Public Deposit, Retained earnings
Answer:
Retained earnings
(2) Bonus shares. Rights shares, Employees Stock Option Scheme (ESOS)
Answer:
Employees Stock Options Scheme (ESOS)
(3) Private company, Non-Eligible public company, Government company
Answer:
Government company
(4) Depository, D.P., RBI
Answer:
RBI
(5) Private Placement, Commercial Paper, Further Public Offer (FPO)
Answer:
Commercial Paper
(D) Correct the underlined words and rewrite the following sentences: (5)
(1) Owned capital is temporary capital.
Answer:
Permanent
(2) FPO refers to offering of shares to the public for the first time.
Answer:
IPO
(3) Dividend is recommended by shareholders.
Answer:
Board of Directors
(4) Deposit is a Iong term source of capital.
Answer:
Short
(5) A stock market is an important constituent of money market.
Answer:
Capital
Question 2.
Explain the following terms/ concepts: (Any FOUR) [8]
(1) Fixed capital
(2) Borrowed capital
(3) Bonus shares
(4) Depository system
(5) Secondary market
(6) Stock Exchange
Answer:
(1) Fixed Capital:
Fixed capital is the type of capital which is used for buying fixed assets which are used for a longer period of time in the business. These assets are not meant for resale. In simple words, fixed capital refers to capital invested for acquiring fixed assets. It stays in the business for long period, almost permanently. Examples of fixed capital are – capital used for purchasing land and building, furniture, plant and machinery etc. Such capital is required usually at the time of establishment of a new company. However, existing companies may also need such capital for their expansion and development, replacement of equipments, etc.
(2) Borrowed Capital:
It is that capital which is borrowed from creditors. It is also known as debt capital. The debt holders are creditors of the company and they get interest as income on their investment. Interest is paid at fixed rate which is collected by the way of issue of debentures, fixed deposits, loan from bank/financial institutions, etc. The creditors do not enjoy voting rights at the general meeting.
(3) Bonus Share:
Bonus shares are fully paid shares issued free of cost to the existing equity shareholders in proportion to their shareholdings. Usually financially sound companies issue Bonus Shares out of its accumulated distributable profits or reserves. Hence as the profits or reserves are capitalised, it is also called as ‘Capitalisation of Profits or Reserves’. Shareholders cannot renounce his bonus shares. When company has accumulated huge profits or reserves and company wants to reward its existing Equity shareholders, company issues Bonus shares.
(4) Depository System:
In Depository System, securities are held in electronic form. The transfer and settlement of securities are done electronically. The Depository System maintains accounts of the shareholder, enables transfer, collects dividends, bonus shares, etc. on behalf of the shareholder. This system is also called as scripless trading system. In India the Depository System was introduced by passing the Depository Act in 1996. Under this Act, a competitive multi-depository system consisting of two depositories, viz. NSDL and CDSL was set up. The world’s first Depository was set up in 1947 in Germany.
(5) Secondary Market:
Secondary market is more commonly known as the stock market or the stock exchange. Here the previously issued securities are bought and sold by the investors. After IPO, when the shares are listed at the Stock Exchange, they can be traded in the secondqry market. In this market the securities are traded between investors. There is no fresh issue in the secondary market. The main difference between the primary and the secondary market is that, in the primary market only new securities are issued, whereas in the secondary market the already existing securities are traded.
(6) Stock Exchange:
Stock exchange is a specific place where various types of securities are purchased and sold. The term securities include equity shares, preference shares, debentures, government securities and bonds, etc. including units of Mutual Funds. Stock markets act as intermediary between investors and borrowers. To provide safety and stability to the investors, Stock exchanges in India are regulated by SEBI.
Question 3.
Study the following case/situation and express your opinion. (Any TWO) [6]
(1) Violet Ltd. company plans to raise ₹ 10 crores by issuing debentures. The Board of Directors have some queries. Please advise them on the following:
(a) Can they issue convertible debentures?
(b) As the company is offering debentures to its members, can such debentures have normal voting rights?
(c) Capital raised by issuing debentures will be Owned Capital or Borrowed Capital?
(2) Mr. Satish holds 100 shares of Raj Company Ltd. in physical mode and wishes to convert the same into electronic mode:
(a) Mr. Satish holds a Savings Bank Account with SBI.
Can he deposit his shares in this account for demat?
(b) What type of account is needed for the same?
(c) Is it the RBI which will be the custodian of shares of Mr. Satish after demoting?
(3) GOLD Co. Ltd. declares a dividend of 10/- per share for F.Y. 2019-2020:
(a) Is company under default, if dividend was not paid within 30 days of its declaration?
(b) Is company right in transferring the unpaid dividend to its Debenture Reserve Account?
(c) Does the company have to transfer the amount of unpaid dividend to IEPF after 30 days?
Answer:
(1)(a) Yes, company can issue convertible debenture.
(b) As the company is offering debentures to its members, such debentures have no normal voting rights. They can enjoy the voting rights on the matters associated with them.
(c) Capital raised by issuing debentures will be known as borrowed capital.
(2) (a) No, he can’t as it is a saving bank account.
(b) For holding electronic securities, he needs to open a demat account with depository participant (DP).
(c) No, RBI won’t be the custodian. After demoting concerned depository (NSDL/CDSL) will be the custodian of the shares of Mr. Satish.
(3) (a) Yes, the company is at default as the time limit within which the company must pay the dividends after declaration is 30 days.
(b) No, the company has to transfer the total amount of dividend which remains unpaid/unclaimed to the Unpaid dividend Account.
(c) No, any amount in the unpaid dividend account of a company that remains unpaid or unclaimed for period of 7 years from the date of such transfer, should be transferred to ‘Investor’s Education and Protection Fund’ (IEPF).
Question 4.
Distinguish between the following: (Any THREE) [12]
(1) Fixed capital and Working capital.
(2) Rights shares and Bonus shares.
(3) Dematerialization and Rematerialization.
(4) Dividend and Interest.
Answer:
(1) Fixed Capital and Working Capital
| Points | Fixed Capital | Working Capital |
| 1. Meaning | Fixed capital refers to any kind of physical asset i.e. fixed assets. | Working capital refers to the sum of current assets. |
| 2. Nature | It stays in the business almost permanently. | Working capital is circulating capital. It keeps changing. |
| 3. Purpose | It is invested in fixed assets such as land, building, equipments, etc. | Working capital is invested in short term assets such as cash, account receivable, inventory, etc. |
| 4. Sources | Fixed capital funding can come from selling shares, debentures, bonds, long term loans, etc. | Working capital can be funded with short term loans, deposits, trade credit, etc. |
| 5. Objectives of Investors | Investors invest money in fixed capital hoping to make future profit. | Investors invest money in working capital for getting immediate returns. |
| 6. Risk | Investment in fixed capital implies more risk. | Investment in working capital is less risky. |
4. (2) Rights Shares and Bonus Shares
| Points | Rights Shares | Bonus Shares |
| 1. Meaning | In rights issue, shares are offered to the existing equity shareholders i.e. Company offers the shareholders the first option to buy the shares of the company. | Bonus shares are issued to the existing equity shareholders free of cost. |
| 2. Payment | Subscriber’s have to pay for the Rights Shares. Company only gives them a right to buy these 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. till the full money on shares is paid up. | Bonus shares are fully paid up shares. So no money has to be paid by the shareholders to the company. |
| 4. Right to Renounce | The shareholders can renounce his shares. | Shareholders cannot renounce his bonus shares. |
| 5. Minimum Subscription | Company has to obtain minimum subscription. If the company fails to receive minimum subscription, it has to refund the entire application money received. | There is no minimum subscription to be collected as Bonus shares are issued free of cost by the company. |
| 6. Purpose of Issue | Rights issue is done by a company when it wants to raise fresh funds but wants to give a chance to their existing members to increase their shareholding. | When company has accumulated huge profits or reserves and company wants to reward its existing Equity shareholders, company issues Bonus shares. |
4. (3) Dematerialization and Rematerialization
| Points | DemateriaUzation | Rematerialization |
| 1. Meaning | Process of converting physical certificates of securities into electronic form. | It is the process of conversion of electronic form of securities into physical form. |
| 2. Conversion | Here, the paper form of securities is converted into digitally/electronically held securities. | Here, the electronic records are converted into physical/paper form securities. |
| 3. Use of Form | It uses ‘DRF’: Viz. ‘Dematerialization Request Form’ from Investor to the DP |
It uses ‘RRF’: viz Rematerialization Request Form from Investor to the DP. |
| 4. Sequence | This is an initial process. It is a primary and principal function of the depository. | This is a reverse process. It is a secondary and supporting function of depository. Already demoted securities are remated. |
| 5. Identification of Securities | Demoted securities have no distinctive numbers. They are fungible. | Remated securities will have certificate and distinctive numbers as issued by company. |
| 6. Difficulty of Process | Demat is an easy process. Also it’s not a time consuming process. | Remat is not only a time consuming but also a complex process. |
4. (4) Dividend and Interest
| Points | Dividend | Interest |
| 1. Meaning | Dividend is the return payable to the shareholders of the company for their investment in the share capital. | It is the return payable to the creditors of the company viz. Debenture holders Deposit holders for the loan given by them to the company. |
| 2. Given to whom | It is paid to the member i.e. the owners of the company. | It is paid to the creditor of the company. |
| 3. Obligation | It is to be paid only when company has made profits. Therefore, no obligation/ compulsion to pay dividend. | It is not linked to the profits of the company. Payment of interest is an obligation and is to be paid by the company compulsorily. |
| 4. When Payable | It is payable when a company earns sufficient profit in a year after fulfilling all obligations. | It is payable every year irrespective of the profits of the company. |
| 5. Rate | It is paid at a fluctuating rate to the equity shareholders since it is linked to the profits of company. | Rate of interest is fixed and predetermined at the time of issue of the security. |
| 6. Accounting Treatment / Aspect | Dividend is an appropriation of profit. | Interest is a charge on profit. |
Question 5.
Answer in brief: (Any TWO) [8]
(1) Explain Employee Stock Option Scheme.
(2) State any four terms and conditions regarding acceptance of deposits.
(3) Explain the features of Interim Dividend.
Answer:
(1) 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 pre-determined price. ESOS encourages employees as they feel proud to be owners of the company for which they are working and company also benefits as it can retain good employees.
Provisions: Following are the provisions related to ESOS:
(a) A company may offer the shares directly to the employees or through an Employee Welfare Trust.
(b) The shares are offered at a price lesser than their market price.
(c) There is a minimum vesting period of one year.
(d) Usually company will specify the lock-in period i. e. period during which employee cannot sell his shares. Lock-in period is minimum 1 year between grant of option and vesting.
(e) Shares issued under this scheme does not enjoy any dividend or voting rights till the employees buy the shares.
(f) Company has to getthe approval of shareholders through special resolution to issue ESOS.
(g) Employee cannot transfer his option to any other person nor can he pledge or mortgage the shares issued under ESOS.
(h) Company has to set up a compensation committee to administer ESOS. Company has to fulfil the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014.
(2) 1. Amount of Deposit:
(A) Private Company: A Private Company can accept deposits from its members or Directors or relatives of Dfrectors not more than 100 percent of its aggregate of paid up share capital and free reserves.
However, certain class of Private Companies as specified by the Companies Act, can accept deposits more than 100 percent of its aggregate of paid up share capital and free reserves.
(B) Public Company (other than Eligible Company): These Companies cannot accept fresh deposit from members if the amount of such deposits together with the previous deposits exceeds 25% of the aggregate of the paid up share capital and free reserves of the company.
(C) Eligible Public Company:
(i) From the Members – Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 10% of aggregate of paid up share capital and free Reserves.
(ii) From Public – Cannot accept fresh deposits if the amount of such deposits together with the previous deposits exceeds 25% of aggregate of paid up share capital and free Reserves.
2. Period / Tenure of Deposit: No deposit can be accepted or renewed which is to be repaid within a period of six months or more than thirty six months. In certain circumstances, a company may accept deposits repayable earlier than six months to meet its short term needs. Such deposits must have a tenure of minimum three months and the amount of such deposits cannot be more than 10% of aggregate of the paid up share capital and free reserves of the company. Under certain circumstances, on the request of the depositor, company makes premature repayment of deposits. Company may also renew its deposits with the same terms of issue and it will be considered as fresh deposits.
3. No demand deposit: Company cannot accept or renew deposits repayable on demand.
4. Secured or Unsecured Deposit: A company can accept secured or unsecured deposit which should be clearly mentioned in the circular or advertisement inviting deposits. If a company offers secured deposits, it has to create a charge on its tangible assets within 30 days of acceptance of deposits.
3. Features of Interim Dividend:
- The Board of Directors has the power to declare Interim Dividend.
- Interim Dividend is only a payment on account of the whole dividend for the year.
- Company should provide depreciation for the entire year and not proportionately for a part of the year before declaring Interim Dividend.
- Interim dividend cannot be paid out of any reserves.
- Articles of Association of the company must authorize the Board of Directors to declare Interim Dividend.
- The Board Meeting has to pass a resolution for declaring the Interim Dividend.
- The amountto be given as Interim Dividend mustbe credited in a separate Bank account in a scheduled bank within 5 (five) days of its declaration.
- Interim Dividend should be paid within 30 days of its declaration.
Question 6.
Justify the following statements: (Any TWO) [8]
(1) Bond holder is creditor of the company.
(2) A company has to create charge on its assets for issuing secured debentures.
(3) Capital market is-*useful for corporate sector.
(4) Stock exchange works for the growth of the Indian Economy.
Answer:
(1)
- According to Webster Dictionary, A bond is an interest bearing certificate issued by the government or business firm, promising to pay the holder a specific sum at a specified date.’
- Bonds have specific maturity date on which the principal amount is repaid.
- Bond is a debt security. It is a formal contract to repay borrowed money with interest Bond is a loan.
- The holder of bond is a lender to the institution. He gets fixed rate of interest
- Bond holders are non-owners and they are not entitled to participate in general meeting. They have no voting right and hence no participation in the management Hence, a Bond holder is the creditor of the compary.
(2)
- The debentures can be secured. The property of company may be charged as security for loan. The security may be for some particular asset (fixed charge) or it may be the asset in general (floating charge).
- Company has to create a charge on the assets of the company or its subsidiary company or holding company.
- The value of charge should be adequate to cover the entire value of debentures issued and interest to be paid on it.
- If a Government company issues secured debentures which has Central or State Government’s guarantee, then it need not create any charge on its assets. Hence, a company has to create charge on its assets for issuing secured debentures.
(3)
- Capital Market is the market that provides Loans for long-term periods. It is controlled by SEBI.
- Capital market deals in shares, debenture bonds, mutual funds.
- The corporate sector issues these securities in the market and attracts saving from investors by offering them a variety of schemes.
- Through this market, corporates, industrial organisations, financial institutions access long-term funds from both domestic as well as foreign markets.
- These savings become capital and get invested in the business.
- It is helpful to develop the corporate and industrial sectors. Thus, the capital market is useful for the corporate sector.
(4)
- A stock exchange is a place where various types of securities are purchased and sold.
- The stock exchanges help in the process of rapid economic development by speeding the process of capital formation as well as resource mobilization in India.
- It helps in raising medium-term capital as well as long-term capital for the development and expansion of the companies in the Indian economy.
- New industries and commercial enterprises can easily acquire capital funds for economic growth. It reflects a healthy financial and investment conducive atmosphere in the economy.
- It stimulates investment in the productive sector which accelerates the process of economic development of the nation.
- Thus, it is rightly said that the stock exchanges work for the growth of the Indian economy.
Question 7.
Attempt the following: (Any TWO) [10]
(1) Write a letter to the member for the payment of dividend through Dividend Warrant.
(2) Write a letter to the debenture holder regarding payment of interest electronically.
(3) Write a letter to depositor regarding renewal of his deposit.
Answer:
(1) A letter to the member for the payment of dividend through Dividend Warrant.
(2) A letter to the debenture holder regarding payment of interest electronically.
(3) A letter to depositor regarding renewal of his deposit.
Question 8.
Answer the following questions: (Any ONE) [8]
(1) What are Preference Shares? Explain its types in detail.
(2) Explain the provisions of Companies Act, 2013 for issue of debentures.
Answer:
(1) Preference shares have certain preferential rights distinct from those attached to equity shares.
The shares which carry following preferential rights are termed as preference shares:
(a) A preferential right as to payment of dividend during the life time of company.
(b) A preferential right as to the return of capital in the event of winding up of company.
The holder of preference share has a prior right to receive fixed rate of dividend before any dividend is paid to equity shares. The rate of dividend is prescribed at the time of issue. The preference shareholders are co-owners of the company but not controllers. These shares are purchased by cautious investors who are interested in safety of investment and who want steady returns on investments,
Types of Preference Shares:
1. Cumulative Preference Shares:
Cumulative Preference Shares are those shares on which dividend goes on accumulating until it is fully paid. This means, ifthe dividend is not paid in one or more years due to inadequate profits, then this unpaid dividend gets accumulated. This accumulated dividend is paid when company performs well. The arrears of dividend are paid before making payment to equity shareholders. The preference shares are always cumulative unless otherwise stated in the Articles of Association. It means that if dividend is not paid any year, the unpaid amount is carried forward to the next year and so on, until all arrears have been paid.
2. Non-cumulative Preference Shares:
Dividend on these shares does not get accumulated. This means, the dividend on shares can be paid only out of profits of that year. The right to claim dividend will lapse, if company does not make profit in that particular year. If dividend is not paid in any year, it is lost forever.
3. Participating Preference Shares:
The holders of these shares are entitled to participate in surplus profit besides preferential dividend. The surplus profit which remains after the dividend has been paid to equity shareholders, up to certain limit, is distributed to preference shareholders.
4. Non-participating Preference Shares:
The preference shares are deemed to be non-participating, if there is no clear provision in the Articles of Association. These shareholders are entitled to fixed rate of divided, prescribed at the time of issue.
5. Convertible Preference Shares:
The holders of these shares have a right to convert their preference shares into equity shares* The conversion takes place within a certain fixed period.
6. Non-convertible Preference Shares:
These shares cannot be converted into equity shares.
7. Redeemable Preference Shares:
Shares which can be redeemed after certain fixed period of time are called redeemable preference shares. A company limited by shares, if authorised by Articles of Association, issues redeemable preference shares. Such shares must be fully paid. These shares are redeemed out of divisible profit only or out of fresh issue of shares made for this purpose.
8. Irredeemable Preference Shares:
Shares which are not redeemable i.e. payable only on winding up of the company are called irredeemable preference shares. As per Section 55(1) of the Companies Act 2013, a company cannot issue irredeemable preference shares.
(2) Following are some of the provisions of the Companies Act 2013 which a company has to comply while issuing debentures:
(1) No voting rights:
A company cannot issue debentures with voting rights. Debenture holders are creditors of the company and so they do not have any voting rights except in matters affecting them.
(2) Types of Debentures:
A company can issue secured or unsecured debentures and fully or partly convertible debentures or non-convertible debentures. To issue convertible debentures, a Special Resolution has to be passed in the General Meeting. All debentures are redeemable in nature.
(3) Payment of interest and redemption:
A company shall redeem the debentures and pay interest as per the terms and conditions of their issue.
(4) Debenture Certificate:
Company has to issue Debenture certificate to the debenture holders within 6 months of allotment of Debentures.
(5) Create Debenture Redemption Reserve:
Company has to create a Debenture Redemption Reserve account out of profits of the company available for payment of dividend. This money can be used only for redemption of debentures. As per Companies (Share Capital and Debentures) Amendment Rules 2019, MCA has removed Debenture Redemption Reserve requirement for Listed companies, NBFCS and Housing Finance Companies.
(6) Appoint of Debenture Trustees:
If the company issues prospectus or invites more than 500 people, (either to Public or its Member) company has to appoint one or more Debenture Trustees. Debenture trustees protect the interest of the debenture holders. Company has to appoint trustees by entering into a contract with them known as Debenture Trust Deed.
(7) Impose restrictions:
When the Debenture Trustee is of the opinion that the assets of the company are insufficient or likely to become insufficient to redeem the principal amount of debentures, it may approach the NCLT. NCLT can order a company to restrict incurring further liabilities so as to protect the interest of the debenture holders.
(8) Punishment for contravention of provisions of the Companies Act:
If the company fails to comply with any provisions of the Act, then the company and its officers shall be liable to pay fine or imprisonment or both as prescribed in the Act.