Upload
9986212378
View
219
Download
0
Embed Size (px)
Citation preview
7/30/2019 Legal Issues for Entrepreneur.pptx Final
1/26
Module 05LEGAL ISSUES FOR the
ENTREPRENEURPRESENTED BY
Team 05Naveena N J
Vishwanath
Vippan K G
Shantesh Ayi
DivyashreeMadurasmitha
Jyothi
Veena
7/30/2019 Legal Issues for Entrepreneur.pptx Final
2/26
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 businessrequirements, size, nature or type of business.
Broadly ownership form of business can be categorized in to following two
types
Public
Private
Joint enterprises
7/30/2019 Legal Issues for Entrepreneur.pptx Final
3/26
Factors affecting the choice of ownership
i. Nature or type of business.
ii. Financial Requirement
iii. Liability
iv. Flexibility
v. Taxation
vi. Control
vii. Survival or Continuity
viii. Business secrets
ix. Government rules and regulations
7/30/2019 Legal Issues for Entrepreneur.pptx Final
4/26
Various forms of ownership ( Businessentities)
1. Sole Proprietorship
2. Partnership
3. Joint Stock Company
4. Cooperative Organizations
7/30/2019 Legal Issues for Entrepreneur.pptx Final
5/26
SOLE PROPRIETORSHIPS
It is a business that is owned and operated by one person. The
enterprise has no existence apart from its owner. 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 individual also has unl imited liabil ity, which means
his/her business and personal assets stand behind the
operation. If the company cannot meet its financial
obligations, the owner can be forced to sell the family car,
house, and whatever assets that would satisfy the creditors.
7/30/2019 Legal Issues for Entrepreneur.pptx Final
6/26
Cont
To establish a sole proprietorships a person merely
needs to obtain whatever local and state licenses are
necessary to begin operations. If the proprietor should
choose a fictitious or assumed business name. he/she
must file a certificate of assumed business name with the
country. Because of its ease of formation, the sole
proprietorship is the most widely used legal form of
organization.
7/30/2019 Legal Issues for Entrepreneur.pptx Final
7/26
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
7/30/2019 Legal Issues for Entrepreneur.pptx Final
8/26
Disadvantages ofsole propr ietorships
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
7/30/2019 Legal Issues for Entrepreneur.pptx Final
9/26
PARTNERSHIPS
A partnerships is an association of two or more persons
acting as co-owners of a business for profit .each partner
contributes money, property, labor, or skills, and each shares
in the profits (as well as the losses) of the business.
According to Indian Partnership act of 1932.
Partnership is the relationship between persons who have
agreed to share the profi ts and losses of a business carr ied
on by all or any of them acting forall
7/30/2019 Legal Issues for Entrepreneur.pptx Final
10/26
Advantages of partnerships
Easy of formation
More financial resources
Collective decision making
Sharing of risk
Complementary skills.
Growth and performance facilitated
Flexibility
Credit Worthiness
Business secrecy
7/30/2019 Legal Issues for Entrepreneur.pptx Final
11/26
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.
7/30/2019 Legal Issues for Entrepreneur.pptx Final
12/26
Joint Stock Company[CORPARATIONS]
According to L.H. 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, invisible,and existing only in contemplation of the law As such, a
corporation is a separate legal entity apart from the individuals who
own it.
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 stock in the
corporation.
7/30/2019 Legal Issues for Entrepreneur.pptx Final
13/26
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
7/30/2019 Legal Issues for Entrepreneur.pptx Final
14/26
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
7/30/2019 Legal Issues for Entrepreneur.pptx Final
15/26
Other corporation classification
Domestic and foreign corporations:
A corporation must be incorporated in a particular state.The corporation is referred to as a domestic corporation
by its home state. By contrast , a corporation operating
in any other state in the United state is known as a
foreign corporations.
Public and private corporations:
This corporations is one formed by the government to
meet some political or governmental purpose. Cities
and towns that incorporate are common examples.
7/30/2019 Legal Issues for Entrepreneur.pptx Final
16/26
Nonprof it corporations:
A familiar from of nonprofit corporation is the religious, charitable, or
educational corporation.
Professional corporations:
Most of the professional corporations are private corporations involving
practitioners of professions such as law, accounting, or medicine.
Close corporations:
The close corporation or closely held corporation, is typically one in which all
shares of stock are held either by a single shareholder or a small number ofshareholders. These shares are not available for purchase by the general
public. close-corporation shareholders manage the firm directly.
7/30/2019 Legal Issues for Entrepreneur.pptx Final
17/26
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.
According to Cooperative Society act 1912, Cooperative organizations is
a society whi ch has as its objectives the promotion of the interests of i ts
members in accordance with the principles ofCooperation
Various features of Cooperative Organization are:
Voluntary association
Democratic management
Service motive
Open membership
Governmental control
Limited liability
7/30/2019 Legal Issues for Entrepreneur.pptx Final
18/26
MERITSOF COOPERATIVE ORGANIZATION
Economy in cost
Democratic management
Service motive
Government regulations
DEMERITSOF COOPERATIVE ORGANIZATION
Limited financial resources
Political interference
Lack of personal interest
Lack of professional management
7/30/2019 Legal Issues for Entrepreneur.pptx Final
19/26
Franchising
A franchise is any Agreement in which
the owner of a trademark, trade name, or
copyright has licensed others to use it in selling goods or
services
A franchisee is generally legal independent, 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.
7/30/2019 Legal Issues for Entrepreneur.pptx Final
20/26
ADVANTAGESOF FRANCHISING
Training and Guidance
Brand-Name Appeal
A Proven Track Record
Financial Assistance
DISADVANTAGESOF FRANCHISING
Franchise fees
The control exercised by the franchisor
Unfulfilled promises by some franchisors
7/30/2019 Legal Issues for Entrepreneur.pptx Final
21/26
Legal issues (Legal consideration)
RegistrationRegistration An act of enrolling, Document certifying an act of
registration.
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
Registration of small scale industrial unit is not compulsory. However
registration with the State Directorate of Industries or District Industry Centre
facilitates obtaining of assistance from the government.
The registration of small scale industr ial unit is
done in two stages i. e.
A. Provisional registration
B. Permanent registration
7/30/2019 Legal Issues for Entrepreneur.pptx Final
22/26
Registration Certificate
Provisional Registration Certificate (PRC)
This is given for the pre operative period.
Obtain the facilities for accommodation, land, other approvals etc.
Obtain necessary NOCs and clearances from regulatory bodies such as
Pollution Control Board, Labour Regulations 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.
Price & purchase preference for goods produced.
Availability of raw material depending on existing policy.
Permanent registration of tiny units should be renewed after 5 years
7/30/2019 Legal Issues for Entrepreneur.pptx Final
23/26
Cont,
Objectives of the registration scheme
Features of the registration Scheme
Procedures for registration
Benefits of registration
De-Registration
Cancellation of registration
7/30/2019 Legal Issues for Entrepreneur.pptx Final
24/26
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
7/30/2019 Legal Issues for Entrepreneur.pptx Final
25/26
LAWS GOVERNING INTELLECTUAL PROPERTY
Patent
Copyright
Trademark
7/30/2019 Legal Issues for Entrepreneur.pptx Final
26/26