VAE 511: Livestock Entrepreneurship (1+0)

PARTNERSHIP

• Partnership involves two or more persons who unite in the operation and management of a business venture. This type of partnership may be established for legal or tax purposes. The prospect of becoming a partner in a business can be an incentive to new employees. Most effective partnership arrangements include professional service businesses, such as accounting and law firms.
• Some aspects associated with the partnership form of business are as follows:
  • Business is subject to little government regulation.
  • Business is relatively easier to establish.
  • Formal partnership agreement is highly recommended to address possible conflicts that could arise in future.
  • Each partner is liable for all debts.
  • All profits are taxed as income to the partners according to the percentage of ownership.
  • Business name must be registered with the Registrar of Companies.
• A clearly written agreement containing the partnership terms is essential.
• Have a clear and realistic agreement that anticipates future incidents.
• Include a buy-sell agreement in which terms are provided for the departure of one or more partners from death, disability, retirement, or resignation.
• Consider carrying life insurance on each partner, so the partnership can pay the remaining partner’s estate for the value of his or her interest in the business.

Partnership
Advantages	Disadvantages
share ideas and skills among partners secure investment capital more easily tax rates lower than corporation more flexibility of ownership and income	personality conflicts and relationship strains liable for each other’s actions difficulty in obtaining financing a partner’s bankruptcy may affect the other partners can’t sell business unless all partners agree

Private Limited Company

Private limited company is a one

• Has a minimum paid-up share capital of Rs.1 Lakh or such higher capital as may be prescribed; and
• By its Articles Association:
  • Restricts the right of transfer of its share;
  • Limits the number of its members to 50 which will not include:-
  • Members who are employees of the company; and
  • Members who are ex-employees of the company and were members while in such employment and who have continued to be members after ceasing to be employees;
• Prohibits any invitation to the public to subscribe for any shares or debentures of the company; and
• Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.

Public Limited Company

• The Company defined under section 3(1)(iv) of the Companies Act, 1956 is a public company which-
  • Is not a private company;
  • Has a minimum paid-up capital of Rs. 5 lakhs or such higher capital as may be prescribed;
  • Is a private company but subsidiary of a public company.

Private Companies deemed to be Public Companies

• Certain private companies are deemed to be public companies by virtue of section 43 A, viz.-
  • When 25% or more of its paid-up share capital is held by one or more body corporate;
  • When its average annual turnover (during the last 3 years) exceeds Rs. 25 crores;
  • When it holds 25% or more of the paid-up share capital of Public Company; or
  • When it accepts or renews deposits from the public after making an invitation by an advertisement.