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LEGAL ISSUES FOR the ENTREPRENEUR

PRESENTED BYTeam 05 Naveena N J Vishwanath Vippan K G Shantesh Ayi Divyashree Madurasmitha Jyothi Veena

Forms of Organization
An entrepreneur in the pursuit of setting up his enterprise is required to take an important decision regarding the ownership. This decision has got bearing on the availability of resources, rights, duties & obligations of the stakeholder, and he has to take the decision in the light of business requirements, size, nature or type of business. Broadly ownership form of business can be categorized in to following two types • Public • Private • Joint enterprises

Survival or Continuity viii. Nature or type of business. ii. Flexibility v. Financial Requirement iii. Government rules and regulations .Factors affecting the choice of ownership i. Liability iv. Business secrets ix. Taxation vi. Control vii.

Joint Stock Company 4.Various forms of ownership ( Business entities) 1. Partnership 3. Cooperative Organizations . Sole Proprietorship 2.

house. If the company cannot meet its financial obligations. The enterprise has no existence apart from its owner. which means his/her business and personal assets stand behind the operation.SOLE PROPRIETORSHIPS It is a business that is owned and operated by one person. and whatever assets that would satisfy the creditors. . the owner can be forced to sell the family car. The individual also has unlimited liability. This individual has a right to all of the profits and bears all of the liability for the debts and obligations of the business.

the sole proprietorship is the most widely used legal form of organization. . he/she must file a certificate of assumed business name with the country. If the proprietor should choose a fictitious or assumed business name.Cont…… To establish a sole proprietorships a person merely needs to obtain whatever local and state licenses are necessary to begin operations. Because of its ease of formation.

Advantages of sole proprietorships  Easy of formation  Monopoly on profits  Decision making and control vested in one owner  Flexibility  Business secrecy  Freedom to start and freedom to end  Relative freedom from governmental control  Freedom from corporate business taxes .

Disadvantages of sole proprietorships  Unlimited liability  Lack of continuity  Lack of Specialization  Limited managerial ability  Less available capital  Relative difficulty obtaining long-term financing  Relatively limited viewpoint and experience .

labor. and each shares in the profits (as well as the losses) of the business.PARTNERSHIPS A partnerships is an association of two or more persons acting as co-owners of a business for profit . According to Indian Partnership act of 1932. “ Partnership is the relationship between persons who have agreed to share the profits and losses of a business carried on by all or any of them acting for all” . property. or skills.each partner contributes money.

• Growth and performance facilitated • Flexibility • Credit Worthiness • Business secrecy .Advantages of partnerships • Easy of formation • More financial resources • Collective decision making • Sharing of risk • Complementary skills.

Disadvantages of partnerships • Unlimited liability • Uncertain existence • Limited funds • Transfer of shares • Bound by the acts of just one partner • Difficulty of disposing of partnership interest. .

and existing only in contemplation of the law” As such. Haney “ A company is an artificial person created by law having a separate legal entity with a perpetual succession and a common seal” A Joint Stock Company [corporation] is an artificial being. a corporation is a separate legal entity apart from the individuals who own it.Joint Stock Company[CORPARATIONS] According to L. A corporation is created by the authority of state laws and is usually formed when a transfer of money or property by prospective shareholders takes place in exchange for capital corporation.H. stock in the . invisible.

Advantages of Joint Stock Company • Limited liability • Diffused risk • More financial resources • Transfer of ownership • Perpetual existence (Unlimited life) • Economies of scale • Capital formation • Increased Managerial ability and expertise .

Disadvantages of Joint Stock Company • Difficulties in formation • Lack of personal interest • Difficult to maintain secrets • Delay in decision making • Excessive regulations • Organizing expenses • Double taxation .

Cities and towns that incorporate are common examples. a corporation operating in any other state in the United state is known as a foreign corporations. The corporation is referred to as a domestic corporation by its home state. By contrast .Other corporation classification  Domestic and foreign corporations: A corporation must be incorporated in a particular state.  Public and private corporations: This corporations is one formed by the government to meet some political or governmental purpose. .

accounting. or medicine.  Professional corporations: Most of the professional corporations are private corporations involving practitioners of professions such as law. These shares are not available for purchase by the general public. . close-corporation shareholders manage the firm directly. charitable.  Close corporations: The close corporation or closely held corporation. or educational corporation. is typically one in which all shares of stock are held either by a single shareholder or a small number of shareholders. Nonprofit corporations: A familiar from of nonprofit corporation is the religious.

According to Cooperative Society act 1912. Cooperative organizations is “a society which has as its objectives the promotion of the interests of its members in accordance with the principles of Cooperation” Various features of Cooperative Organization are:  Voluntary association  Democratic management  Service motive  Open membership  Governmental control  Limited liability .Cooperative Organizations It is an voluntary association of individuals who join together on the basis of equity for the promotion of their common economic or business interest.

MERITS OF COOPERATIVE ORGANIZATION • Economy in cost • Democratic management • Service motive • Government regulations DEMERITS OF COOPERATIVE ORGANIZATION • Limited financial resources • Political interference • Lack of personal interest • Lack of professional management .

or copyright has licensed others to use it in selling goods or services” A franchisee is generally legal independent.Franchising A franchise is any “Agreement in which the owner of a trademark. trade name. . but economically dependent on the integrated business system of the franchisor. The franchisee can operate as an independent businessperson but still realize the advantages of a regional or national organization.

ADVANTAGES OF FRANCHISING • Training and Guidance • Brand-Name Appeal • A Proven Track Record • Financial Assistance DISADVANTAGES OF FRANCHISING • Franchise fees • The control exercised by the franchisor • Unfulfilled promises by some franchisors .

Permanent registration . A. The registration of small scale industrial unit is done in two stages i. However registration with the State Directorate of Industries or District Industry Centre facilitates obtaining of assistance from the government.Legal issues (Legal consideration) Registration Registration – registration. Provisional registration B. Document certifying an act of Registration of small scale industrial unit is not compulsory. MOA and AOA are the most important documents to be submitted at the time of registration of company for the purpose of incorporation of company An act of enrolling. e.

land. Labour Regulations etc. other approvals etc. Permanent Registration Certificate Enables the unit to get the following incentives/concessions  Income tax exemption & Sales tax exemption  Incentives & Concessions in power tariff etc.  Obtain necessary NOCs and clearances from regulatory bodies such as Pollution Control Board.  Permanent registration of tiny units should be renewed after 5 years .  Availability of raw material depending on existing policy.Registration Certificate Provisional Registration Certificate (PRC)  This is given for the pre operative period.  Price & purchase preference for goods produced..  Obtain the facilities for accommodation.

• Objectives of the registration scheme • Features of the registration Scheme • Procedures for registration • Benefits of registration • De-Registration • Cancellation of registration .Cont…….

Licensing • Exceptions from licensing • Memorandum with SIA • Carry on business (COB) license • Industrial entrepreneur memorandum • Integration of Small & Large industries • State regulations • Environmental Clearance • Regulating the acceptance of loan .

LAWS GOVERNING INTELLECTUAL PROPERTY • Patent • Copyright • Trademark .