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FORMS OF

ORGANISATION

PRESENTED BY,AMIT KUMAR

ROLL No. 1M.B.A. 2nd semester

FMS-BHU

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Forms of Organizations1.Sole Proprietorship

2.Partenership Firm

3.Co-operatives society

4.Joint Hindu Family Business

5.Company

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Definition : A business enterprise exclusively owned, managedand controlled by a single person with all authority, responsibility andrisk.

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Characteristics of a Sole Proprietorship

Almost no legal formalities

Single ownership

No share of profit or loss Low capital

One-man control

Unlimited liability to sole Proprietors The firm has no legal existence separate from its

owner

No Corporate taxes

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Partnership is defined as a relationbetween two or more persons who have

agreed to share the profits of a businesscarried on by all of them or any of themacting for all. The owners of apartnership business are individuallyknown as the "partners" and collectively

as a "firm".

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CONTINUED.

partnership is formed by an agreement, which may beeither written or oral. When the written agreement is dulystamped and registered, it is known as "Partnership Deed.

Ordinarily, the rights, duties and liabilities of partners arelaid down in the deed. But in the case where the deed doesnot specify the rights and obligations, the provisions of theTHE INDIAN PARTNERSHIP ACT 1932 will apply.

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The deed, generally contains the following particulars:-

Name of the firm. Nature of the business to be carried out. Names of the partners.

The town and the place where business will be carried on. The amount of capital to be contributed by each partner. Loans and advances by partners and the interest payable on

them. The amount of drawings by each partner and the rate of

interest allowed thereon. Duties and powers of each partner. Any other terms and conditions to run the business.

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Main features of Partnership firms

A partnership is easy to form as no cumbersome legalformalities are involved. Its registration is also notessential. However, if the firm is not registered, it will be

deprived of certain legal benefits. The Registrar of Firms isresponsible for registering partnership firms.

The firm has no separate legal existence of its own i.e., thefirm and the partners are one and the same in the eyes oflaw.

Ownership of property usually carries with it the right ofmanagement. Every partner, therefore, has a right to sharein the management of the business firm.

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CONTINUED.

The minimum number of partners must be two, while themaximum number can be 10 in case of banking businessand 20 in all other types of business.

Liability of the partners is unlimited. Legally, the partners

are said to be jointly and severally liable for the liabilities ofthe firm. This means that if the assets and property of thefirm is insufficient to meet the debts of the firm, thecreditors can recover their loans from the personalproperty of the individual partners.

The firm has a limited span of life i.e. legally, the firm mustbe dissolved on the retirement, bankruptcy, or death of anypartner.

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3. Co-operatives

Acooperative (also co-operative or co-op) is defined bythe International Co-operative Alliances Statement on theCo-operative Identity as an autonomous association of

persons united voluntarily to meet their commoneconomic, social, and cultural needs and aspirationsthrough a jointly-owned and democratically-controlledenterprise.

A cooperative may also be defined as a business owned andcontrolled by the people who use its services.

The main principle underlying a cooperative organizationis mutual help, i.e., each for one and all for each.

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Its main features

It is a voluntary organization as a member is free to leave the society andwithdraw his capital at any time, after giving a notice.

The minimum number of members is 10, but there is no limit to the

maximum number of members. However, the members must be residingor working in the same locality.

Registration of a co-operative enterprise is compulsory. A co-operativesociety may be registered with the Registrar of Co-operatives Societies.

After registration a co-operative enterprise becomes a body corporateindependent of its members i.e. a separate legal entity

The capital of a cooperative society is raised from its members by way ofshare capital. It can also obtain additional resources by way of loans fromthe State and Central Cooperative Banks.

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CONTINUED.

It is subject to the provisions of the Co-operative societies Act, 1912 or

State Co-operative Societies Acts. It has to submit annual reports andaccounts to the Registrar of Societies.

The shares of co-operative society cannot be transferred but can bereturned to the society in case a member wants to withdraw hismembership.

Being a separate legal entity a co-operative enjoys continuity ofexistence which is not affected by death, insolvency, retirement, etc. ofthe members.

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(4) Joint Hindu Family Business

The joint Hindu family business refers to a business whichis owned by the members of a joint Hindu family. It is alsoknown as Hindu undivided family business.

The joint Hindu family form is a form of businessorganization in which the family possesses some inherited

property. The inheritance of the property is among themale members. The share of ancestral property is inheritedby a member from his father, grandfather and greatgrandfather.

Thus, three successive generations can simultaneously

inherit the ancestral property. For purposes of running ajoint Hindu family business, only male members areentitled.

The oldest member is known as the Karta.

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The important features of the joint

Hindu family business

Membership by birth

No maximum limit

Minor members Unaffected by death

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A company is a voluntary association of persons

formed for some common purpose, with capitaldivisible into parts, known as shares and with a limitedliability. It is a creation of law and is sometimes knownas an artificial person created by law. Its owners (the

shareholders) have no financial liability in the event ofwinding up the affairs of the company,

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TYPES OF COMPANY

Public limited company

Private limited company

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(i) Public Limited Company

A public limited company is a voluntary association ofmembers which is incorporated and, therefore has aseparate legal existence and the liability of whose members

is limited.Indian Companies Act., 1956 defines it in its sec 3(i)(iv) as :

A public limited company is a company which

(i) does not restrict its right to transfer its shares.

(ii) does not limits the number of members.

(iii) invites public to subscribe for its shares and debentures.

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(ii) Private Limited Company

A private limited company is a voluntary associationof not less than two and not more than fifty members,

whose liability is limited, the transfer of whose shares is

limited to its members and who is not allowed to invite thegeneral public to subscribe to its shares or debentures.

Indian Companies Act., 1956 defines it in its sec 3(i)(iii) as :

A private limited company is a company which

(i) restricts right to transfer its shares.

(ii) limits the number of members.

(iii) prohibits any invitation to public to subscribe for sharesand debentures of the company.

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