Forms of Business Organisation in India and The Legislations Regulating Them

Forms of business
organisation in india
and the legislations
regulating them
• MEMBERS :-
• Shivani sharma – GM18220
• Tanuja bharti- GM18250
• Swati kansal – GM18
• Vineet tomar- GM18267
• Thomas taki- GM18252
• Yogesh saraswat-GM18272
• Nischay- GM18
SOLE PROPRIETORSHIP
• The word ‘SOLE’ which means single and the
word ‘PROPRIETORSHIP’ which means
ownership. The legal business activities
which is owned and control by an individual is
called sole proprietorship.
• “SOLE PROPRIETORSHIP” is a type of
business unit where one person is solely
responsible for providing the capital, for
bearing the risk of the enterprise and for the
management of the business” –J.L HANSON
FEATURES OF SOLE PROPRIETORSHIP
• SINGLE OWNERSHIP- Only one the will be

the owner of the business. No other person
will not be involved as an owner.
• EASY OF FORMATION- The formation of
sole enterprises is very easy. There are few
documents sometimes no documents to be
needed for forming single enterprise.
• DIRECT RELATION- Owner always involve
with the activities single ownership business.
that is why owner has direct relation with
business.
• INVESTMENT OF LOW CAPITAL- Only
owner can invest capital or borrowed.
• SELF MANAGEMENT- Each and every
task will be conducted by the owner.
• PERSONAL RISK- The personal property
of owner will be liable for sole
proprietorship.
• PROFIT AND LOSS- Full amount of profit
and loss will be entitled by the owner only.
Joint Hindu
Family
ACT 1956
 When two or more families agree to live.
 Work together.
 Share their profit/loss together.
 Throw their resources together.
.

Kamalammal
DAYABHAGA MITAKSHARA vs.Venkatalakshmi
Bengal & Rest

Assam
CHARACTERISTIC
 Management.
Membership by Birth.
Liability.
Minor also partner.( krishan v.
Rengachri)
Dissolution.
 Permanent Existence:
Rules & Provision.
 HUF doesn’t arise from a contract.
 Sons and daughters and the father.
 The Karta can give his share in the co-parcenary property to his wife.
 If partition of HUF is made by Courts.
 As per section 47 of the Income-tax Act, no capital gains shall arise to the HUF on
distribution of assets on partition of HUF.
 However, mother is not a co-parcener .
• The provisions of computing income of HUF are the same for a normal assessee.
• Partition has to be a total partition. Partial partition is not recognized under the income-tax
Act and Wealth-tax Act.
Partnership-Form of Business Organisation
A type of business organization in which two or more individuals pool money, skills, and other resources,
and share profit and loss in accordance with terms of the partnership agreement.
KEY FEATURES :
Contractual relationship
Restrictions on transfer of share
Unlimited liability
More than 2 persons
Profit and Loss sharing
Three types of partnership
•
• General partnerships
The partners equally divide management responsibilities, as well as profits.

• Joint ventures
Joint ventures are the same as general partnerships except that the partnership only exists for a
specified period of time or for a specific project.
• Limited partnership
Limited partnerships consist of partners who maintain an active role in the management of the
business, and those who just invest money and have a very limited role in management. These
limited partners are essentially passive investors whose liability is limited to their initial
investment.
Indian Partnership Act 1932
include:
• Rights of Partners
• Registration of Firm
• Dissolution of the firm

Rights of Partners
• Right to take part in the conduct of the business.

• Right to access the books of entry.
• Right to share the profits.
• Right to indemnity.
• Right to interest on capital invested.
Registration of the firm
Under the act, registration is not compulsory for every partnership firm. But an unregistered firm
suffers from a number of disabilities.
An application in the prescribed format along with the prescribed fees has to be submitted to
the Registrar of firms of the State in which the place of business of the firm is situated.
The application must be signed by all the partners and must contain the following
particulars:
a.) The name of the firm.
b.) The place of business of the firm.
c.) The names of any other places where the business of the firm is carried on.
d.) The date when each partner joined the firm.
e.) The names in full and permanent addresses of the partners.
Dissolution of the firm
Section. 39 provides that the dissolution of partnership between all the partners of a
firm is called ‘dissolution of the firm.’
Modes of dissolution
A firm may be dissolved in any one of the following ways:
• By Agreement
• By Notice
• On the happening of certain contingencies
• Compulsory Dissolution
• Dissolution by the Court
CO-OPERATIVE SOCIETY
Any ten persons can form a co-operative society . It functions
under the cooperative societies Act ,1912 and other state co-
operative societies Acts. The main objective of co-operative
society are :
 rendering service rather than earning profit,

 mutual help instead of competition , and
 self help in place of dependence .
Classification of co-operatives
On the basis of objective , various types of co-operative are

formed:
 Consumer co-operative
 Producer co-operative
 Marketing co-operative
 Housing co-operative
Characteristics of CooS
 Voluntary association
 Membership: min 10 –max unlimited.
 Service motive
 Democratic set up
 Sources of finances
 Return on capital
Suitability of CooS
Generally it seems that a co-operative society is suitable for

small and medium size operations .
However , the large sized “ IFFCO” Indian farmers and
fertilisers cooperative and the KAIRA co-operative
processing milk under the brand name “ AMUL” are the
illustrious exceptions.
PUBLIC LIMITED COMPANY
Has limited liability and can sell shares to the

general public to raise finance.
 ADVANTAGES
• Limited liabilities
• Separate legal unit
• large capital
• No restriction of shares
• High status
 DISADVANTAGES
• Complicated legal formalities
• More regulations and controls
• Difficult to control
• Selling shares to public is expensive
• Lose control
SOME EXAMPLE FOR PUBLIC
LIMITED COMPANIES
• Indian oil corporation limited
• Reliance industries limited
• Steel authority of India limited
• Tata motors limited
• Tata steel limited
Private Limited Company
Introduction:-
A private limited company is one of the most
common forms of business organization.
A private limited company stands between
partnership and widely owned public company.
There are several identifying marks of a
private limited company. The list includes a
name, a number of members, shares,
formation, management, directors, and
meetings, etc.
Pvt Ltd Company: Companies Act,
2013
 Companies Act 2013 passed by the Parliament in August
2013 consolidates and amends the law related to
corporate affairs or simply companies.
 A Pvt Ltd Company must have a minimum of two
directors and a maximum of fifteen directors.
 Private Limited Company provides certain benefits
including stability however it has its own disadvantages too
like selling of shares which must first be offered to the
members of the company itself.
According to Section 2, Clause 68 of
Companies Act 2013
“Private Company” means a company having a
minimum paid-up share capital of one lakh rupees or
such higher paid-up share capital as may be prescribed,
and which by its articles,—
• Restricts the right to transfer its shares;
• Except in a case of One Person Company, limits the
number of its members to two hundred: Provided that
where two or more persons hold one or more shares in a
company jointly, they shall, for the purposes of this
clause, be treated as a single member: Provided further
that—
• (A) persons who are in the employment of the company; and (B)
persons who, having been formerly in the employment of the
company, were members of the company while in that employment
and have continued to be members after the employment ceased,
shall not be included in the number of members; and (iii) prohibits
any invitation to the public to subscribe for any securities of the
company.”
• (B) persons who, having been formerly in the employment of the
company, were members of the company while in that employment
and have continued to be members after the employment ceased,
shall not be included in the number of members;
• Prohibits any invitation to the public to subscribe for any securities of
the company.”
• This definition clearly states that a maximum number of members
that Private Limited Company can accommodate is two hundred
which previously was just fifty. Also, the same Act mentions that
financial year for balance sheet will be Thirty-first of March for all the
companies.
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Forms of business

• SINGLE OWNERSHIP- Only one the will be

Bengal & Rest

The partners equally divide management responsibilities, as well as profits.

• Dissolution of the firm

• Right to take part in the conduct of the business.

 rendering service rather than earning profit,

On the basis of objective , various types of co-operative are

Generally it seems that a co-operative society is suitable for

Has limited liability and can sell shares to the

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