ICAP PRC-3 Business organizations: practice questions with answers

Answer: C. A vision is a broad statement of what the business aspires to become in the long term. A mission states the business's purpose: what it does, for whom and how. Objectives turn the mission into specific, measurable targets.

Jhelum Solar's statement describes its activity (design, installation and maintenance of rooftop systems), its customers (homes and small businesses in central Punjab) and how it serves them (reliable power, fair price, quick service). That is a mission statement. It contains no measurable target or deadline, so it is not an objective.

Answer: A. Common classification of stakeholders:

| Group | Examples | Typical main interest |
|---|---|---|
| Internal | employees, managers | pay, job security, working conditions |
| Connected | shareholders, customers, suppliers, lenders | return, value, payment, repayment of loans |
| External | government, regulators, local community, pressure groups | compliance, tax, jobs, environment |

The bank is a connected stakeholder; its main interest is that the company can pay interest and repay the loan on time.

Answer: D. The public sector consists of organisations owned or controlled by the government (federal, provincial or local), usually set up to provide public services rather than to maximise profit. The private sector consists of organisations owned by private individuals or investors: sole proprietors, partnerships and companies, including listed companies. Charities and other voluntary bodies are privately run not-for-profit organisations (sometimes called the third sector).

Only the provincial transport authority is government-owned.

Answer: C. Under the Companies Act 2017, s 2(1)(49), a private company is one which, by its articles, "limits the number of its members to fifty not including persons who are in the employment of the company"; under the proviso, joint holders are treated as a single member.

Members counted now = 52 - 7 = 45

After the issue = 45 + 4 = 49, which does not exceed 50. The company can issue the shares and remain private, provided it offers them privately: a private company may not invite the public to subscribe for its securities.

Answer: C. Under the Companies Act 2017 (s 2(1)), a public sector company is a company, whether public or private, that is controlled by the federal or a provincial government (or its agency or a statutory body), for example by holding at least 51% of its voting securities or having the power to appoint a majority of its directors.

The provincial government holds 60% > 51%, so Sindh Coastal Ferries Ltd is a public sector company, even though it is also an unlisted public company with private minority shareholders.

Answer: A. Registration of a firm under the Partnership Act 1932 is optional, but non-registration has a serious consequence (s 69): a suit to enforce a right arising from a contract cannot be filed by or on behalf of an unregistered firm against a third party, and a partner cannot sue the firm or co-partners on such rights. The contract itself remains valid, and third parties can still sue the firm. Zaman Traders should register before it can sue for the Rs 650,000.