Professional Documents
Culture Documents
LECTURE - 4
Statutory Corporation
Statutory Board or Commission
PRIVATE ENTERPRISE Private enterprise is concerned with the private business which depends on the economic system and indeed rooted in political philosophy. The system relates to capitalism as an individual believes in private ownership of all agents of production in private sharing of distribution process that determines the functional rewards of each participant and in individual expression of consumers choice through a free market place.
Private business falls in the range between extreme individualism and no government and the acceptance of some state sanctions.
SOLE TRADERA sole trader is a person who carries on business exclusively by himself. The important idea of the concern is that the individual assumes full responsibility for all the risks connected with the conduct of business, he is not only the owner of capital of the undertaking but usually the organizer and manager and takes all the profits or responsibility for losses.
PARTNERSHIP FIRMPartnership results from the desire of businessmen to take advantage of complementary abilities and to rise more capital. Partnership is an association of two or more persons to carry on; as co-owners, a business for profit.
The general partnership is the oldest form of business ownership, it has grown up a body of common laws as well as statutory law. The general partnership was known to the ancient Egyptians, Phoenicians, Grecians and Romans.
COMPANY ORGANIZATION
The word company means a group of persons associated for any common objective as business charity, sports and research etc. Almost every partnership firm having two or more partners may style itself a company e.g. Ram Dass Kalyan Dass & Company. But this company is not a company in the legal sense for the word.
The words & Company simply indicate that there are other persons in their association besides Ram Dass & Kalyan Dass. We use the word company strictly in legal sense i.e. a company incorporated or registered under the companies act, usually have the word limited as part of its name e.g. Cement Corporation of India Ltd., Kolkata, Industrial Finance Corporation of India Ltd., New Delhi etc.
A Company is a body which generally consists of one or more natural or artificial persons established by law usually for some specific purpose or purposes and continued by a succession of members. A company is an artificial person created or authorized by legal statute for some specific purpose.
(A)PRIVATE COMPANY
This company is a compromise between partnership firm and public company because it combines features of both. Like a partnership business, private company can be started with two members. It can take quick decisions and can maintain business secrecy as in case of partnership. The owners of private company can retain direct control and can provide personal motivation to work hard and improve profits.
Like the public company a private company has separate legal entity, united liability, perpetual existence and the capacity to raise larger financial resources. Private company appears to be an ideal form of organization for carrying business on the medium scale and for exercising close control over the affairs of business.
(B)PUBLIC
COMPANY
means a company which is not a private company and must have the minimum prescribed paid up capital of Rs. Five lakes or higher paid up capital. A public company includes a private company which is a subsidiary of a company which is not a private company i.e. a private company which is a subsidiary of public company becomes deemed as public company.
A company is identified as public company which does not have any restriction on the transfer of shares, it does not limit the maximum number of members and can invite public for the subscription of its shares and debentures.
Basically, the root of the co-operative idea relates to the relation between business and ethics which indicate the necessary commercial honesty of present industrial system.
Co-operation is something more than a system. It is a spirit which appeals to the heart and mind. It is basically a religion applied to business. So this concept is a gospel of self-sufficiency and service.
(A)CO-OPERATIVE SOCIETY Co-operative society is purely a voluntary association of persons organized to look after their common ends, through mutual co-operation.
This concept is based on the principle one for all and all for one.
CO-OPERATIVE STOREConsumer co-operative store means the cooperative institutions established by general public in order to provide facilities to local society to purchase restive convenience goods on fair prices. Consumers cooperative store may be of both types - wholesale and retail. The purpose of these stores is to eliminate the unreasonable profit earned by middlemen or traders.
These institutions are helpful to the society by protecting the increase in prices of the commodities.
(A)GOVERNMENT DEPARTMENT
Under this kind of arrangement the establishment is run by some ministry, establishment functions as a government department. Its liabilities are fixed by the concern ministry and also its managerial officials are usually appointed by the ministry.
(B)GOVERNMENT COMPANYmeans any company in which at least 51 percent of paid up share capital is held by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Government and includes a company which is a subsidiary of a Government company.
Statutory Corporation
This is the most prevailing method to function as a government enterprise. In this regard a special act is constituted by the parliament to convert a private establishment into public corporation for the purpose to do some special activities in the interest of the society. This arrangement is known as public corporation.
The corporation is responsible to prepare the annual budget and its officials are appointed under the provisions of the act.
Public Enterprises
1.Sole Proprietorship Private Company 2.Undivided -Joint Family Business 3. Partnership Co-operativeSociety Public Company
Organization
--Corporation
-- Company
One can open a bank account in the name of sole proprietorship concern. In case, one wishes to have a trade mark, one can design and use it as a trade mark and may even register a trade mark with the proper authorities.
2.No sharing of profits or loses The proprietor realizes all the profits , bears all the losses and incurs all the liabilities of the business.
3.Freedom in selection of businessAs a sole proprietor one doesnt have do make any legal documents to begin the business except to get permission and compliance of law, which are necessary for the type of business one carries on. For e.g. if a person is a doctor he needs a license to practice etc.
4. No Sharing of risk
The important feature of the business is risk bearing factor, risk is always involved in the business for taking decision regarding change of business, expansion of business, hasty decision related to business, business environment and even investment of funds /capital towards modification of objective of the business.
In this regard the person himself manages all the affairs of business and controls over its different activities for the purpose of well utilization of resources in the interest of the society.
8. Unlimited Liability
In case of sale proprietorship business organization the proprietor enjoys all the profit of the business. But in case of losses, which occurs in business the person is only liable to face losses up the end point.
1.Facility of formation
This type of business do not required any formality for established of business, it means any person can start business at any time without preparation of legal documents and obtaining the registration under any specific act.
3. Personal Element
In this business the proprietor is free to contact and engage any person or any party from inside the organization or from outside the organization, for the smooth progress of business activities, without any hesitation.
4. Secrecy
In case of large business like company organization all types of information and documents are open for public. In partnership business, information may also be diverted by any member of partnership to inside and outside persons related to business activities. But in sole proprietorship business organization proprietorship secrets all types of information and documents.
5.Initiative
In this business the proprietor is fee to take any action or any change in business activities at any time on the basis of environmental forces, related to modification in business or even change in business.
6.Flexibility
During the course of business activities the decisions of proprietor are flexible i.e. at one time he can take decision for adding new activities in the existing business and the next time if the person is not in position to carry the activities then he can change his decision accordingly.
8.Social Significance
The advantage of social significance provides two types of benefits in the society (a) Self Employment- i.e. any person can start some business activity for his livelihood. (b) Diffusion of Labor- means on the basis of experience in business the person can take decision for the expansion of business within the limit.
1.Limited CapitalIn case at the time of establishment of business and carrying its activities smoothly the owner of business contributes adequate finance (from own and some %age from the market) but in case expansion, modification and even adding new units in the existing business the person is unable to provide additional finance for the purpose.
3. Unlimited liability
Proprietor of the business is only concern with the business resultsIncase profit is earned by business, the person does not share with any other person but in case of loss in the business, the person is only liable to pay to the extend to the end point.
LEGAL FORMALTIES
1. If proprietorship is a manufacturing unit, the firm should be registered with Directorate of Industry and Commerce. 2. If proprietorship is a drug shop, the firm should be registered with the drug controller. 3. If the proprietorship is a liquor shop, the firm should be registered with the State Excise.
4. If proprietorship is a fair-price shop the firm should be registered with the department of food and civil supplies.
SUITABILITY OF BUSINESS
On the basis of different facts, the sole proprietor is advised to maintain small business and focus on Local market Personal control Speculative business