The various modes in which an enterprise can be started are as follows: 1) 2) 3) 4) 5) 6) Proprietorship Partnership (a) Private limited companies

(b) Public limited companies HUF Trusts Co-operative societies

***Company as a legal person ? can borrow, lend, enter into contracts, can sign, can sue and be sued

*** A memorandum of association a legal document that lays down the objects of a registered company and details of the regulation of the companys business dealings A memorandum of association is required to state the name of the company, the type of company (such as public limited company or private company limited by shares), the objectives of the company, its authorised share capital, and the subscribers (the original shareholders of the company). *** The articles of association of a company are the regulations governing the relationships between the shareholders and directors of the company Articles of association typically cover the issuing of shares (also called stock), the different voting and dividend rights attached to different classes of share, restrictions on the transfer of shares, the rules of board meetings and shareholder meetings, and other similar issues.

The important features of the joint Hindu family business are as follows: (i) Membership by birth: Membership of the joint Hindu family business is automatic by birth of a male child and is not created by an agreement between persons. (ii) Management: The management vests in the Karta, the eldest member of the family. However, the Karta may associate other members of the HUF to assist him. (iii) Liability: The Karta has unlimited liability, i.e., even her/his personal assets can be used for payment of business dues but every other coparcener has a limited liability up to his share in the HUF property.

(iv) There is no restriction on the number of coparceners of the HUF business. However, the membership is restricted to three successive generations. A male child at the time of birth becomes a coparcener. Thus, an HUF does not restrict membership to minors. (vi) Unaffected by death: The HUF business continues even after the death of a coparcener including the Karta. The next senior most surviving male member of the HUF becomes the Karta. However, it may come to an end if all the members notify that they are not members of the joint Hindu family.

Features of Joint stock

Legal formation: No single individual or a group of individuals can start a business and call it a joint stock company. A joint stock company can come into existence only when it has been registered after completion of all the legal formalities required by the Indian Companies Act, 1956.

Artificial person: Just like an individual takes birth, grows, enters into relationships and dies, a joint stock company takes birth, grows, enters into relationships and dies. However, it is called an artificial person as its birth, existence and death are regulated by law.

Separate legal entity: Being an artificial person, a joint stock company has its own separate existence independent of its investors. This means that a joint stock company can own property, enter into contracts and conduct any lawful business in its own name. It can sue and can be sued by others in the court of law. The shareholders are not the owners of the property owned by the company. Also, the shareholders cannot be held responsible for any of the acts of the company.

Common seal: A joint stock company has a seal, which is used while dealing with others or entering into contracts with outsiders. It is called a common seal as it can be used by any officer at any level of the organization working on behalf of the company. Any document, on which

the company's seal is put and is duly signed by any official of the company, becomes binding on the company.

For example, a purchase manager may enter into a contract for buying raw materials from a supplier. Once the contract paper is sealed and signed by the purchase manager, it becomes valid. The purchase manager may leave the company or may be removed from his job or may have taken a wrong decision, yet, the contract is valid till a new contract is made or the existing contract expires.

Perpetual existence: A joint stock company continues to exist as long as it fulfills the requirements of law. It is not affected by the death, lunacy, insolvency or retirement of any of its investors. For example, in case of a private limited company having four members, if all of them die in an accident, the company will not be closed. It will continue to exist. The shares of the company will be transferred to the legal heirs of the members.

Limited liability: In a joint stock company, the liability of a member is limited to the amount he has invested. While repaying debts, for example, if a person has invested only Rs.10,000 then only this amount that he has invested can be used for the payment of debts. That is, even if there is liquidation of the company, the personal property of the investor can not be used to pay the debts and he will lose his investment worth Rs.10,000.

Democratic management: Joint stock companies have democratic management and control. Since in joint stock companies there are thousands and thousands of investors, all of them cannot participate in the affairs of management of the company. Normally, the investors elect representatives from among themselves known as Directors to manage the affairs of the company.

Special characteristics of Private Limited Companies These companies can be formed by at least two individuals having minimum paid-up capital of not less than Rupees 1 lakh. As per the Companies Act, 1956 the total membership of these companies cannot exceed 50. The shares allotted to its members are also not freely transferable between them. These companies are not allowed to raise money from the pub-lic through open invitation. They are required to use Private Limited after their names. The examples of such companies are Combined

Marketing Services Private Limited, Indian Publishers and Distributors Private Limited etc.

Special characteristics of Public Limited Companies A minimum of seven members are required to form a public limited company. It must have minimum paid-up capital of Rs 5 lakhs.

There

is

no

restriction

on

maximum

number

of

members. The shares allotted to the members are freely

transferable. These companies can raise funds from general public through open invitations by selling its shares or accepting fixed deposits. These companies are required to write either public limited or limited after their names. Examples of such companies are Hyundai Motors India Limited, Jhandu Pharmaceuticals Limited etc.