FORMS OF ORGANISATION

PRESENTED BY,
AMIT KUMAR ROLL No. 1 M.B.A. 2nd semester FMS-BHU

Forms of Organizations
1.Sole Proprietorship 2.Partenership Firm 3.Co-operatives society 4.Joint Hindu Family Business 5.Company

Definition : A business enterprise exclusively owned, managed

and controlled by a single person with all authority, responsibility and risk.

Characteristics of a Sole Proprietorship

Almost no legal formalities Single ownership No share of profit or loss Low capital One-man control Unlimited liability to sole Proprietors The firm has no legal existence separate from its owner No Corporate taxes

Partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all. The owners of a partnership business are individually known as the "partners" and collectively as a "firm".

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partnership is formed by an agreement, which may be either written or oral. When the written agreement is duly stamped and registered, it is known as "Partnership Deed. Ordinarily, the rights, duties and liabilities of partners are laid down in the deed. But in the case where the deed does not specify the rights and obligations, the provisions of the THE INDIAN PARTNERSHIP ACT 1932 will apply.

The deed, generally contains the following particulars:

Name of the firm. Nature of the business to be carried out. Names of the partners. The town and the place where business will be carried on. The amount of capital to be contributed by each partner. Loans and advances by partners and the interest payable on them. The amount of drawings by each partner and the rate of interest allowed thereon. Duties and powers of each partner. Any other terms and conditions to run the business.

Main features of Partnership firms

A partnership is easy to form as no cumbersome legal

formalities are involved. Its registration is also not essential. However, if the firm is not registered, it will be deprived of certain legal benefits. The Registrar of Firms is responsible for registering partnership firms. The firm has no separate legal existence of its own i.e., the firm and the partners are one and the same in the eyes of law. Ownership of property usually carries with it the right of management. Every partner, therefore, has a right to share in the management of the business firm.

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The minimum number of partners must be two, while the

maximum number can be 10 in case of banking business and 20 in all other types of business. Liability of the partners is unlimited. Legally, the partners are said to be jointly and severally liable for the liabilities of the firm. This means that if the assets and property of the firm is insufficient to meet the debts of the firm, the creditors can recover their loans from the personal property of the individual partners. The firm has a limited span of life i.e. legally, the firm must be dissolved on the retirement, bankruptcy, or death of any partner.

3. Co-operatives
A cooperative (also co-operative or co-op) is defined by

the International Co-operative Alliances Statement on the Co-operative Identity as an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. A cooperative may also be defined as a business owned and controlled by the people who use its services. The main principle underlying a cooperative organization is mutual help, i.e., each for one and all for each.

Its main features

It is a voluntary organization as a member is free to leave the society and

withdraw his capital at any time, after giving a notice.

The minimum number of members is 10, but there is no limit to the

maximum number of members. However, the members must be residing or working in the same locality.

Registration of a co-operative enterprise is compulsory. A co-operative

society may be registered with the Registrar of Co-operatives Societies.

After registration a co-operative enterprise becomes a body corporate

independent of its members i.e. a separate legal entity

The capital of a cooperative society is raised from its members by way of

share capital. It can also obtain additional resources by way of loans from the State and Central Cooperative Banks.

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It is subject to the provisions of the Co-operative societies Act, 1912 or

State Co-operative Societies Acts. It has to submit annual reports and accounts to the Registrar of Societies. returned to the society in case a member wants to withdraw his membership.

The shares of co-operative society cannot be transferred but can be

Being a separate legal entity a co-operative enjoys continuity of existence which is not affected by death, insolvency, retirement, etc. of the members.

(4) Joint Hindu Family Business

The joint Hindu family business refers to a business which

is owned by the members of a joint Hindu family. It is also known as Hindu undivided family business. The joint Hindu family form is a form of business organization in which the family possesses some inherited property. The inheritance of the property is among the male members. The share of ancestral property is inherited by a member from his father, grandfather and great grandfather. Thus, three successive generations can simultaneously inherit the ancestral property. For purposes of running a joint Hindu family business, only male members are entitled. The oldest member is known as the Karta.

The important features of the joint Hindu family business

Membership by birth
No maximum limit Minor members

Unaffected by death

A company is a voluntary association of persons formed for some common purpose, with capital divisible into parts, known as shares and with a limited liability. It is a creation of law and is sometimes known as an artificial person created by law. Its owners (the shareholders) have no financial liability in the event of winding up the affairs of the company,

TYPES OF COMPANY
Public limited company Private limited company

(i) Public Limited Company

A public limited company is a voluntary association of members which is incorporated and, therefore has a separate legal existence and the liability of whose members is limited. Indian Companies Act., 1956 defines it in its sec 3(i)(iv) as : A public limited company is a company which (i) does not restrict its right to transfer its shares. (ii) does not limits the number of members. (iii) invites public to subscribe for its shares and debentures.

(ii) Private Limited Company

A private limited company is a voluntary association of not less than two and not more than fifty members, whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to invite the general public to subscribe to its shares or debentures. Indian Companies Act., 1956 defines it in its sec 3(i)(iii) as : A private limited company is a company which (i) restricts right to transfer its shares. (ii) limits the number of members. (iii) prohibits any invitation to public to subscribe for shares and debentures of the company.