HUM 4201

Industrial Management and Accountancy

Chapter 1
K M Sharf Uddin
Associate Professor
Department of Management
Human Activities
Types of Industry
Types of Industry (Alternative View)
Types of Business
• Sole Proprietorship
• Partnership
• Joint Stock Company
• Cooperative firm
• Hindu Undivided Family (HUF)
Sole Proprietorship
Sole Proprietorship
• Owned by one person
• The proprietor own all the assets of the business and profits
generated by it.
• Assume complete responsibility for any of its liabilities or debts.
• In the eyes of the law and the public, you are one in the same with
the business.
• It is the oldest form of business. Most organization around us falls
under this category.
Sole Proprietorship - Advantages
• Easy to form.
• Least expensive form of ownership.
• Complete control of the owner.
• Take decisions quickly and according to own choice. (Law!!!)
• Profits from the business flow-through directly to the owner’s
personal tax return.
• The business is easy to dissolve, if desired.
Sole Proprietorship - Disadvantages
• Sole proprietors have unlimited liability and are legally responsible for
all debts against the business. Their business and personal assets are
at risk.
• Face difficulty in raising funds and are often limited to using funds
from personal savings or consumer loans. (often from relatives)
• May have a hard time attracting high-caliber employees, or those that
are motivated by the opportunity to own a part of the business.
Partnership
Partnership
• A partnership is a kind of business where a formal agreement
between two or more people is made and agreed to be the co-
owners, distribute responsibilities for running an organization and
share the income or losses that the business generates.

• Partnership Act 1932’. This specific law explains that partnership is an

association between two or more individuals or parties who have
accepted to share the profits generated from the business under the
supervision of all the members or behalf of other members.
Features of Partnership-1
1. Agreement between Partners: It is an association of two or more individuals, and a
partnership arises from an agreement or a contract. The agreement (accord) becomes
the basis of the association between the partners. Such an agreement is in the written
form. An oral agreement is even-handedly legitimate. In order to avoid controversies, it
is always good, if the partners have a copy of the written agreement.
2. Two or More Persons: In order to manifest a partnership, there should be at least two
(2) persons possessing a common goal. To put it in other words, the minimal number of
partners in an enterprise can be two (2). However, there is a constraint on their
maximum number of people.
3. Sharing of Profit: Another significant component of the partnership is, the accord
between partners has to share gains and losses of a trading concern. However, the
definition held in the Partnership Act elucidates – partnership as an association
between people who have consented to share the gains of a business, the sharing of
loss is implicit. Hence, sharing of gains and losses is vital.
Features of Partnership -2
4. Business Motive: It is important for a firm to carry some kind of
business and should have a profit gaining motive.
5. Mutual Business: The partners are the owners as well as the agent of
their firm. Any act performed by one partner can affect other partners
and the firm. It can be concluded that this point act as a test of
partnership for all the partners.
6. Unlimited Liability: Every partner in a partnership has unlimited
liability.
Partnership - Adv
• Partnerships are relatively easy to establish; however time should be
invested in developing the partnership agreement.
• With more than one owner, the ability to raise funds may be
increased.
• The profits from the business flow directly through to the partners’
personal tax return.
• Prospective employees may be attracted to the business if given the
incentive to become a partner.
• The business usually will benefit from partners who have
complementary skills.
Partnership – Disadv.
• Partners are jointly and individually liable for the actions of the other
partners.
• Profits must be shared with others.
• Since decisions are shared, disagreements (also deadlock) can occur.
• Some employee benefits are not deductible from business income on
tax returns.
• The partnership may have a limited life; it may end upon the
withdrawal or death of a partner
 Private Company
• A private company means a company which by its articles of association:
(i) Restricts the right to transfer its shares;
(ii) Limits the number of its members to fifty (excluding members who are or
were in the employment of the company) and
(iii) Prohibits any invitation to the public to subscribe for any shares or
debentures of the company.
(iv) Where two or more persons hold one or more shares in a company jointly,
they are treated as a single member. There should be at least two persons to
form a private company and the maximum number of members in a private
company cannot exceed 50.
A private limited company is required to add the words “Private Ltd” at the end
of its name. Ex: ABC Private Limited/ABC PVT. Limited/ABC (P) Limited
Public company:

Public company means a company which is not a private company.

• There must be at least seven persons to form a public company.
• It is of the essence of a public company that its articles do not contain
provisions restricting the number of its members or excluding generally the
transfer of its shares to the public or prohibiting any invitation to the public to
subscribe for its shares or debentures.
• Only the shares of a public company are capable of being dealt in on a stock
exchange.

• Ex: Reliance Industries Limited/Tata Consultancy Services Limited

• Any Example from Bangladesh???
List of Public Companies in Bangladesh
Private Companies
• https://sec.gov.bd/home/prioffers
Co-operatives
• A cooperative society is not a new concept.
• It prevails in all the countries, this is almost a universal concept.
• The cooperative society is active in all countries worldwide and is
represented in all the sectors including agriculture, food, finance,
healthcare, etc. To protect the interest of weaker sections, the co-
operative society is formed. It is a voluntary association of persons,
whose motive is the welfare of the members.
• Examples: Amul, Milk Vita
• বাংলাদেশ দুগ্ধ উৎপাদনকারী সমবায় ইউনিয়ন লিমিটেড
 Features of Cooperative
• As it is a voluntary association, the membership is also voluntary. A person is free to join
a cooperative society, and can also leave anytime as per his desire.
• Irrespective of their religion, gender & caste, membership is open to all.
• It is compulsory for the co-operative society to get registration. The co-operative society
is a separate legal identity to the society.
• It does not get affected by the entry or exit of its members.
• There is limited liability of the members of co-operative society. Liability is limited to the
extent of the amount contributed by members as capital.
• An elected managing committee has the powers to take decisions. Members have the
right to vote, by which they elect the members who will constitute the managing
committee.
• The cooperative society works on the principle of mutual help & welfare. Hence, the
principal of service dominates it’s working. If any surplus is generated, it is distributed
amongst the members as a dividend in conformity with the bye-laws of the society.
• In Bangladesh, you can register a cooperative society with the
Department of Cooperatives (DoC), which operates under the
Ministry of LGRD & Cooperatives (Local Government, Rural
Development & Cooperatives). Here's a general outline of the
registration process for a cooperative society in Bangladesh:
Types of Cooperative Society

1) Producer Cooperative
2) Consumer Cooperative
3) Credit Unions
4) Marketing Cooperative Society
5) Housing Cooperative Society
That’s All for today
• Do you have any QUESTION??

• Next day we will try to learn MANAGEMENT