Promotion of a venture
Promotion of a venture” means initiating all necessary efforts required to form a business or any other
enterprise. Promotion starts from the stage of ‘conceiving an idea of forming an enterprise and ends
with its actually being established, and if necessary or desirable then being registered as per
law.’Promotion of a venture” means initiating all necessary efforts required to form a business or any
other enterprise. Promotion starts from the stage of ‘conceiving an idea of forming an enterprise and
ends with its actually being established, and if necessary or desirable then being registered as per law.’
Opportunities analysis
Opportunity is a positive trend in external environment. It is an
attractive project idea whicn an entrepreneur accepts as a basis for
his investment decision.
(i) To evaluate the possibilities of utilising physical resources of a
particular region from the technical angle.
(ii) To identify those industries which are not based on local resources
(iii) To identify the industrial potentialities in particular region and
country as a whole.
(iv) To estimate the capital, labour, transport, power, fuel, raw
material for feasible industries.
(v) To estimate the capital, labour, transport, power, fuel, raw
material for feasible industries.
(vi) To explore the development possibilities of the region with regard
to agriculture, minerals, labour, irrigation etc.
(vii) To identify those areas and directions which are necessary for the
balanced growth of region.
(viii) To evaluate the impact of financial resources, production,
employment in industrial development process.
MEANING OF OPPORTUNITY ANALYSIS
Before taking a decision to implement new ideas, it is necessary to
study in depth their profitability and viability so that the venture may
be successful and there may be reasonable return on investment.
Such studies are called opportunity analysis and is done in various
ways.
FACTORS OF OPPORTUNITY ANALYSIS OR SOURCES OF
OPPORTUNITIES ANALYSIS
Following factors or sources are included in the opportunities analysis
:
(1) Market and Demand Analysis : Success of an business unit not
depends on the amount of production but mainly on the fact that
what amount of goods it can be sold in the market. Therefore, market
and demand analysis is considered origin of opportunity analysis. Size
of a business unit and technology used in it depends to a great extent
on its market size and demand of customers. Hence, it is very
essential that demand estimates are properly made and all the
relevant factors must be taken into consideration like population,
GDP growth, per capita consumption, competition with substitutes
and imports, technical norms of consumption in case of intermediate
goods and growth in the consuming industry. If anyone of these factor
is not assessed correctly it is most likely that estimates may not be
correct.
(2) Resource Analysis : entrepreneur has to see whether adequate
amount of resourcs such as land, raw-material, machines, technology,
financial sources, man-power etc. are available or not. If the adequate
amount of these resources are not available then project will be
assumed as come to an end. On the contrary, if resources are
available then an entrepreneur has to see the sources and method of
acquiring these resources.
(3) Technical Analysis : Technical possibilities for establishing a project
is analysed in the technical analysis. If it is found that from the
technical point of view project establishment is not feasible then no
question arises to consider other factors. Scientific and Industrial
Research have developed several new processes and technologies
which offer opportunities for commercial exploitation But before
applying new technology, it is necessary to get opinion Of
experts and study all related facts properly to assess the effects Of
changing.
(4) Business Environment Analysis environment analysis is necessary
before establishment of a new enterprise. An important aspect of the
business environment affecting investment opportunities is the
government’s policy framework. Main factors affecting the business
environment are as follows :
(i) Industrial policy, (ii) Licensing policy, (iii) Industrial Development
and Regulation Act, (iv) Price Control Policy, (v) Distribution System,
(vi) Incentives for industries in backward region, (vii) Incentives for
small scale units, (viii) Incentives for export-oriented units, (ix)
Recrulation of Foreign Exchange, (x) Assessment of profitability and
position of existing industr.es etc.
(5) Financial Analysis : Financial analysis is a broad under which
availability of financial resources and profitability of a project is
analysed. Various factors such as cost of project, cost of raw-material,
technical cost, marketing cost, operating cost etc. are considered in
the financial analysis. Generally, financial analysis study the following
aspects :
(i) Total Cost of ‘a project including cost of land, building, machines,
raw material, cash flow etc.
(ii) Sources and requirements of fixed and working capital.
(iii) Expected sales, terms of credit, income, profit, interest, return on
investment etc.
(iv) Assistance and financial concessions from the government.
(v) Social profit analysis in case of public enterprises.
(vi) Return on capital investment.
(6) Risk Analysis : Various types of risks are found in a particular
business in which economic risk, social risk, environmental risk,.
technical risk etc. are the main risks. With the change of business
environment, nature and extent of risk also get changed. An
entrepreneur has to decide in the identification of opportunity
analysis that what amount of risk is involved in availing opportunity
and upto what extent risk acceptånce will prove profitable to him.
(7) Plant Location and Layout Situation : The main object Of plant
location analysis is to find out the place where plant is to be
established. The decision of plant location depends upon various
factors such as, availability of raw material, labour, power supply,
transportation facilities, communication and bank facilities, social
amenities, service facilities, market etc. The government also allows
Certain incentives and concessions for industries development in
backward areas such as, concessions in taxes, facilities of training,
light and land at cheaper rates, financial subsidies, facilities for import
of raw-material etc. An entrepreneur should take into consideration
all these factors while deciding the plant location. An entrepreneur
should also prepare best layout so that he can produce maximum
production at lower cost.
(8) Evaluation Analysis : It is the last stage of opportunities analysis.
Following are included in the evaluation analysis :
(i) Evaluation of various aspects of project.
(ii) Evaluation of economic profitability.
(iii) Evaluation of Social profitability.
(iv) Evaluation of cost of project.
(v) Evaluation of availability of essential resources.
(vi) Evaluation of existing competition.
(vii) Evaluation of competition in global market.
(viii) Evaluation of effects of there external factors.
External environmental analysis
External Environmental Analysis: Meaning,
Features, Need & Importance
Updated on: March 14, 2019 Leave a
Comment
Meaning of External Environmental Analysis,
The word “External Environment Analysis”
has been made up of two words ‘External
Environment’ and ‘Analysis’. The first word
‘External Environment’ Means elements or
factors outside the institution of the
entrepreneur, like – economic, social,
cultural, political, physical, educational,
technical, religious, ethical and
international, etc. which affect his business.
External Environmental Analysis Meaning
Features Need & Importance
External Environmental Analysis
The other word, ‘Analysis’ means reactions
towards those factors or elements or issues,
neglect thereof or taking of decisions by
predicting the opportunities.
Hence, in composite form, external
environment analysis means such process
through which decision is taken, by assessing
economic, socio-cultural, political, physical,
educational, technical, religious, ethical and
international environment or factors or
element, or issues. and also opportunities.
External environmental analysis or
evaluation is a process through which
strategic planner (entrepreneur) evaluates
economic, social, official, supply,
technological and market conditions to
determine the opportunities and challenges
for their enterprise and according to which
he adjusts his strategy and objectives.
Features of External Environmental Analysis
Following Characteristics of external
environment analysis may be observed by
studying and analyzing its meaning.
1. Continuous Process
External Environmental Analysis: Meaning,
Features, Need & Importance
Updated on: March 14, 2019 Leave a
Comment
Meaning of External Environmental Analysis,
The word “External Environment Analysis”
has been made up of two words ‘External
Environment’ and ‘Analysis’. The first word
‘External Environment’ Means elements or
factors outside the institution of the
entrepreneur, like – economic, social,
cultural, political, physical, educational,
technical, religious, ethical and
international, etc. which affect his business.
External Environmental Analysis Meaning
Features Need & Importance
External Environmental Analysis
The other word, ‘Analysis’ means reactions
towards those factors or elements or issues,
neglect thereof or taking of decisions by
predicting the opportunities.
Hence, in composite form, external
environment analysis means such process
through which decision is taken, by assessing
economic, socio-cultural, political, physical,
educational, technical, religious, ethical and
international environment or factors or
element, or issues. and also opportunities.
External environmental analysis or
evaluation is a process through which
strategic planner (entrepreneur) evaluates
economic, social, official, supply,
technological and market conditions to
determine the opportunities and challenges
for their enterprise and according to which
he adjusts his strategy and objectives.
Thus, external environment analysis is that
process through which the entrepreneur
determines opportunities, threats, reactions,
neglects and challenges by evaluation of
those factors and in consonance whereof,
adjusts his strategies and objectives.
Related: 6 Main Aspects of External
Environmental Analysis (Explained).
Features of External Environmental Analysis
Following Characteristics of external
environment analysis may be observed by
studying and analyzing its meaning.
1. Continuous Process
External environment analysis is a
continuing process because till an
entrepreneur will not keep the continuous
watch on the changes happening in the
environment, he will not be able to have
knowledge about the threats and challenges.
2. Determination of Opportunities and
Challenges
By external environment analysis, the
entrepreneur evaluates all factors and
parties to determine the opportunities and
challenges for his enterprise, so that he may
face the challenges of some factors and their
tendencies.
3. Adjustment of Strategies and Objectives
In the external environmental analysis, the
entrepreneur evaluates those factors to
determine opportunities, threats, reactions
and challenges for his enterprise.
Thereafter, he adjusts his strategies and
objectives in accordance with those factors.
4. Inner Knowledge Process
External environmental analysis is a process
through which environmental conditions are
known on the one side, knowledge is also
gained about future possibilities and hidden
opportunities.
As a result, the decision making and making
adjustments of strategies and objectives, by
the entrepreneur become easy.
5. Opportunities and Threats
External environmental analysis is the
opportunity and threat analysis, ‘meaning
thereby that the external environmental
analysis provides the opportunity to the
entrepreneur that presently the
circumstances are favorable and hence
decision may be taken quickly and may be
implemented also, so that profit may be
earned.
External Environmental Analysis: Meaning,
Features, Need & Importance
Updated on: March 14, 2019 Leave a
Comment
Meaning of External Environmental Analysis,
The word “External Environment Analysis”
has been made up of two words ‘External
Environment’ and ‘Analysis’. The first word
‘External Environment’ Means elements or
factors outside the institution of the
entrepreneur, like – economic, social,
cultural, political, physical, educational,
technical, religious, ethical and
international, etc. which affect his business.
External Environmental Analysis Meaning
Features Need & Importance
External Environmental Analysis
The other word, ‘Analysis’ means reactions
towards those factors or elements or issues,
neglect thereof or taking of decisions by
predicting the opportunities.
Hence, in composite form, external
environment analysis means such process
through which decision is taken, by assessing
economic, socio-cultural, political, physical,
educational, technical, religious, ethical and
international environment or factors or
element, or issues. and also opportunities.
External environmental analysis or
evaluation is a process through which
strategic planner (entrepreneur) evaluates
economic, social, official, supply,
technological and market conditions to
determine the opportunities and challenges
for their enterprise and according to which
he adjusts his strategy and objectives.
Thus, external environment analysis is that
process through which the entrepreneur
determines opportunities, threats, reactions,
neglects and challenges by evaluation of
those factors and in consonance whereof,
adjusts his strategies and objectives.
Related: 6 Main Aspects of External
Environmental Analysis (Explained).
Features of External Environmental Analysis
Following Characteristics of external
environment analysis may be observed by
studying and analyzing its meaning.
1. Continuous Process
External environment analysis is a
continuing process because till an
entrepreneur will not keep the continuous
watch on the changes happening in the
environment, he will not be able to have
knowledge about the threats and challenges.
2. Determination of Opportunities and
Challenges
By external environment analysis, the
entrepreneur evaluates all factors and
parties to determine the opportunities and
challenges for his enterprise, so that he may
face the challenges of some factors and their
tendencies.
Related: 31 Contents & Subject Matter of
Project Report (Step by Step).
3. Adjustment of Strategies and Objectives
In the external environmental analysis, the
entrepreneur evaluates those factors to
determine opportunities, threats, reactions
and challenges for his enterprise.
Thereafter, he adjusts his strategies and
objectives in accordance with those factors.
4. Inner Knowledge Process
External environmental analysis is a process
through which environmental conditions are
known on the one side, knowledge is also
gained about future possibilities and hidden
opportunities.
As a result, the decision making and making
adjustments of strategies and objectives, by
the entrepreneur become easy.
Related: 25 Aspects and Coverage for
Appraisal of Project Proposals.
5. Opportunities and Threats
External environmental analysis is the
opportunity and threat analysis, ‘meaning
thereby that the external environmental
analysis provides the opportunity to the
entrepreneur that presently the
circumstances are favorable and hence
decision may be taken quickly and may be
implemented also, so that profit may be
earned.
On the contrary, the external environmental
analysis may also pose the threat that the
circumstances are not favorable and hence
caution and care be exercised, otherwise,
losses may occur.
6. Goal Orientations
Through external environmental analysis,
the entrepreneur makes efforts to know the
future possibilities and their real effects or
makes efforts to achieve his goal by
searching business opportunity with the
help of external environmental analysis.
Need and Importance of External
Environmental Analysis
1. Success of Entrepreneurship
External Environmental Analysis: Meaning,
Features, Need & Importance
Updated on: March 14, 2019 Leave a
Comment
Meaning of External Environmental Analysis,
The word “External Environment Analysis”
has been made up of two words ‘External
Environment’ and ‘Analysis’. The first word
‘External Environment’ Means elements or
factors outside the institution of the
entrepreneur, like – economic, social,
cultural, political, physical, educational,
technical, religious, ethical and
international, etc. which affect his business.
External Environmental Analysis Meaning
Features Need & Importance
External Environmental Analysis
The other word, ‘Analysis’ means reactions
towards those factors or elements or issues,
neglect thereof or taking of decisions by
predicting the opportunities.
Hence, in composite form, external
environment analysis means such process
through which decision is taken, by assessing
economic, socio-cultural, political, physical,
educational, technical, religious, ethical and
international environment or factors or
element, or issues. and also opportunities.
External environmental analysis or
evaluation is a process through which
strategic planner (entrepreneur) evaluates
economic, social, official, supply,
technological and market conditions to
determine the opportunities and challenges
for their enterprise and according to which
he adjusts his strategy and objectives.
Thus, external environment analysis is that
process through which the entrepreneur
determines opportunities, threats, reactions,
neglects and challenges by evaluation of
those factors and in consonance whereof,
adjusts his strategies and objectives.
Related: 6 Main Aspects of External
Environmental Analysis (Explained).
Features of External Environmental Analysis
Following Characteristics of external
environment analysis may be observed by
studying and analyzing its meaning.
1. Continuous Process
External environment analysis is a
continuing process because till an
entrepreneur will not keep the continuous
watch on the changes happening in the
environment, he will not be able to have
knowledge about the threats and challenges.
2. Determination of Opportunities and
Challenges
By external environment analysis, the
entrepreneur evaluates all factors and
parties to determine the opportunities and
challenges for his enterprise, so that he may
face the challenges of some factors and their
tendencies.
Related: 31 Contents & Subject Matter of
Project Report (Step by Step).
3. Adjustment of Strategies and Objectives
In the external environmental analysis, the
entrepreneur evaluates those factors to
determine opportunities, threats, reactions
and challenges for his enterprise.
Thereafter, he adjusts his strategies and
objectives in accordance with those factors.
4. Inner Knowledge Process
External environmental analysis is a process
through which environmental conditions are
known on the one side, knowledge is also
gained about future possibilities and hidden
opportunities.
As a result, the decision making and making
adjustments of strategies and objectives, by
the entrepreneur become easy.
Related: 25 Aspects and Coverage for
Appraisal of Project Proposals.
5. Opportunities and Threats
External environmental analysis is the
opportunity and threat analysis, ‘meaning
thereby that the external environmental
analysis provides the opportunity to the
entrepreneur that presently the
circumstances are favorable and hence
decision may be taken quickly and may be
implemented also, so that profit may be
earned.
On the contrary, the external environmental
analysis may also pose the threat that the
circumstances are not favorable and hence
caution and care be exercised, otherwise,
losses may occur.
6. Goal Orientations
Through external environmental analysis,
the entrepreneur makes efforts to know the
future possibilities and their real effects or
makes efforts to achieve his goal by
searching business opportunity with the
help of external environmental analysis.
Related: Top 10 Characteristics of Good and
Ideal Project Planning.
Need and Importance of External
Environmental Analysis
For an entrepreneur, continuous study and
evaluation of external environmental
analysis are essential.
External Environmental Analysis Meaning
Features Need & Importance
External Environmental Analysis
For the entrepreneur analysis of external
environment is necessary, so that he may
know.
Which of the environmental factors are
posing threats to the present strategy and
obtainable objectives of the entrepreneur?
Which of the environmental factors are
presenting opportunities, which may be
availed by making necessary adjustments in
the present strategy?
Importance and necessity of external
environmental analysis may be easily
understood with the help of following
points.
1. Success of Entrepreneurship
2. Formulation of Viable Plans
External Environmental Analysis: Meaning,
Features, Need & Importance
Updated on: March 14, 2019 Leave a
Comment
Meaning of External Environmental Analysis,
The word “External Environment Analysis”
has been made up of two words ‘External
Environment’ and ‘Analysis’. The first word
‘External Environment’ Means elements or
factors outside the institution of the
entrepreneur, like – economic, social,
cultural, political, physical, educational,
technical, religious, ethical and
international, etc. which affect his business.
External Environmental Analysis Meaning
Features Need & Importance
External Environmental Analysis
The other word, ‘Analysis’ means reactions
towards those factors or elements or issues,
neglect thereof or taking of decisions by
predicting the opportunities.
Hence, in composite form, external
environment analysis means such process
through which decision is taken, by assessing
economic, socio-cultural, political, physical,
educational, technical, religious, ethical and
international environment or factors or
element, or issues. and also opportunities.
External environmental analysis or
evaluation is a process through which
strategic planner (entrepreneur) evaluates
economic, social, official, supply,
technological and market conditions to
determine the opportunities and challenges
for their enterprise and according to which
he adjusts his strategy and objectives.
Thus, external environment analysis is that
process through which the entrepreneur
determines opportunities, threats, reactions,
neglects and challenges by evaluation of
those factors and in consonance whereof,
adjusts his strategies and objectives.
Related: 6 Main Aspects of External
Environmental Analysis (Explained).
Features of External Environmental Analysis
Following Characteristics of external
environment analysis may be observed by
studying and analyzing its meaning.
1. Continuous Process
External environment analysis is a
continuing process because till an
entrepreneur will not keep the continuous
watch on the changes happening in the
environment, he will not be able to have
knowledge about the threats and challenges.
2. Determination of Opportunities and
Challenges
By external environment analysis, the
entrepreneur evaluates all factors and
parties to determine the opportunities and
challenges for his enterprise, so that he may
face the challenges of some factors and their
tendencies.
Related: 31 Contents & Subject Matter of
Project Report (Step by Step).
3. Adjustment of Strategies and Objectives
In the external environmental analysis, the
entrepreneur evaluates those factors to
determine opportunities, threats, reactions
and challenges for his enterprise.
Thereafter, he adjusts his strategies and
objectives in accordance with those factors.
4. Inner Knowledge Process
External environmental analysis is a process
through which environmental conditions are
known on the one side, knowledge is also
gained about future possibilities and hidden
opportunities.
As a result, the decision making and making
adjustments of strategies and objectives, by
the entrepreneur become easy.
Related: 25 Aspects and Coverage for
Appraisal of Project Proposals.
5. Opportunities and Threats
External environmental analysis is the
opportunity and threat analysis, ‘meaning
thereby that the external environmental
analysis provides the opportunity to the
entrepreneur that presently the
circumstances are favorable and hence
decision may be taken quickly and may be
implemented also, so that profit may be
earned.
On the contrary, the external environmental
analysis may also pose the threat that the
circumstances are not favorable and hence
caution and care be exercised, otherwise,
losses may occur.
6. Goal Orientations
Through external environmental analysis,
the entrepreneur makes efforts to know the
future possibilities and their real effects or
makes efforts to achieve his goal by
searching business opportunity with the
help of external environmental analysis.
Related: Top 10 Characteristics of Good and
Ideal Project Planning.
Need and Importance of External
Environmental Analysis
For an entrepreneur, continuous study and
evaluation of external environmental
analysis are essential.
External Environmental Analysis Meaning
Features Need & Importance
External Environmental Analysis
For the entrepreneur analysis of external environment is necessary, so
that he may know.
Which of the environmental factors are posing threats to the present
strategy and obtainable objectives of the entrepreneur?
Which of the environmental factors are presenting opportunities,
which may be availed by making necessary adjustments in the present
strategy?
Importance and necessity of external environmental analysis may be
easily understood with the help of following points.
1. Success of Entrepreneurship
For the success of an enterprise, advance evaluation of the far-
reaching favorable effects and ill effects of the external environment
and its factors is necessary.
If such advance evaluation provides some specific knowledge, the
entrepreneur gets alert about them and tries to adjust his decisions,
accordingly.
Related: 14 Nature of Business Environment (Explained).
2. Formulation of Viable Plans
3. To Create Measures for Competitive Environment
Legal requirements for establishment of
a new unit and raising fund
Legal Requirements for Establishment of a New Unit Notes of
Entrepreneurship :- Hello friends in this post we are provided the materials of the b.com
second part its name is fundamental of Business Entrepreneurship notes and its the first
chapter of this subject and in this article you learn many more knowledge of
Entrepreneurship like as Incorporation of a company, capital subscription,
commencement of business, memorandum of association, articles of association,
import license, foreign exchange regulation act, registration of trademark, registration
under the sales tax authority, small unit registration certificate
Legal Requirements for Establishment of a New Unit
Establishing a new business unit is a complex and risky task. Entrepreneurs have to
fulfil various legal formalities for establishment of a new unit. Hence, the entrepreneur
needs to be aware of any regulation that may affect the establishment of his new unit.
Legal formations may be necessary at different stages of the start up. These formalities
differ in relation to the form of enterprise adopted by the entrepreneur, such as sole
proprietorship, partnership firm and company. The legal requirements also differ in
reference to the size of the business unit, such as small scale, medium scale, or large
scale enterprise. Moreover, consumer product enterprise and industrial product
enterprise may attract different legal formalities. Following legal requirements are
fulfilled for the establishment of a new business unit :
(1) Incorporation and Registration : There found various forms of business
proprietorship in the private sector such as sole-trader, partnership, Joint Hindu family
and company etc. In case of sole-proprietorship, partnership and Joint Hindu
family, registration is not compulsory, while in case of company, incorporation and
registration is essential.
INCORPORATION OF A COMPANY
Company is established through legal procedure and have a separate legal entity from
its owners. Legal procedure of establishment a company is termed as incorporation.
For this purpose, registration of company has to be made with the Registrar of
companies. An entrepreneur is required to submit an application for registration
following documents :
(i) Application form duly filled in and signed by an authorised person.
(ii) Memorandum of Association : The Memorandum of Association, is the charter of
the company. This includes its objectives, its name, the address of its registered office,
the capital which the company is authorised to raise, the nature of liability of members
as well as the names, addresses and agreement of people who agree to form
a company.
(iii) Articles of Association : The other important document is the articles of
association which contains the rules and regulations relating to the internal
management of the company. However, it is not necessary for a public
company limited by shares to file the articles of association. If such public company
does not file Articles of Association, it is deemed to have adopted ‘Table A’ of schedule I
of the Act.
(iv) Written consent of the directors : Written consent of the directors who are
agreed to act in that capacity, duly signed by each director, along gith a written
undertaking by them to take the necessary qualification shares, if any, as provided in
the articles.
(v) A copy of agreement with any individual for appointment as a managing director, or
a whole-time director or manager.
(vi) A statutory declaration stating that all the legal requirements of the Act precedent
to incorporation have been complied.
(vii) A letter of intent under Industries (Development and Regulation) Act, 1951, if the
company s business comes with the purview of this Act.
(viii) Address of registered office of the company. However a company may file
registered address within 30 days of its registration.
(ix) At the time of registration, the prescribed registration fees and filing fee for each
document filed for registration are to be paid to the Registrar’s office. After receiving
these documents, Registrar scrutinise these documents and if he is satisfied that all the
documents are in order, he shall enter the name of the company in the register of
companies and issue a certificate of incorporation.
CAPITAL SUBSCRIPTION
Next step in the registration of a company is to raise capital for the proposed company.
Company obtain the ecessary capital by selling shares to the public. Following
procedure is adopted for this purpose :
(i) Permission of public issue from ‘The Securities and Exchange Board of India.
(ii) Agreements with tho underwriters, brokers and share issue managers.
(iii) Filing a copy of prospectus with the Registrar.
(iv) Invite the public to purchase the shares of the company by putting the prospectus
in circulation.
(v) Receiving applications for shares through the company sbanker.
(vi) Formal resolution of allotment, if the subscribed capital is at least equal to
minimum subscription of 90% of capital issue.
(vii) In case, minimum subscription is not received, the entire amount with application
would have to be refunded at the end of 120 days from the circulation of prospectus.
(viii )Issue of allotment letters and share certificates.
(ix) In case a company having a share capital, but not issuing a ‘prospectus’, filing a
‘Statement in lieu of Prospectus’ with the Registrar at least three days before the first
allotment resolution.
COMMENCEMENT OF BUSINESS
A public company cannot commence business immediately after incorporation unless
it has obtained a certificate of commencement of business from the Registrar.
Following documents have to be filed for this purpose :
(i) Shares payable in cash have been allotted to the extent of the minimum
subscription;
(ii) Every director has paid in cash the application and allotment money on the shares
taken by him;
(iii) No money is liable to be refundable to the applicants for failure to apply or obtain
permission for the shares or debentures to be dealt in on any recognised stock
exchange.
(iv) A statutory declaration duly verified by one of tho directors or the secretary in the
proscribed form that tho above conditions have been complied with has been filed
with the Registrar.
The Registrar will scrutinize those documents and if ho is satisfied, he shall issue a
“certificate of commencement of Business, This certificate is conclusive evidence that
the company can commence its business and use its borrowing powers
(2) Small Unit Registration Certificate : The entrepreneur of a small scale unit should
seek registration of his selected project unit with the Directorate of industries. This will
make the entrepreneur and his unit eligible for availing Government assistance. A unit
is normally registered provisionally first and accorded permanent registration later.
(3) Registration under the Factories Act : An entrepreneur must registered his
enterprise under the ‘Factories Act, 1948’, before starting the manufacturing
unit. Factories Act contains provisions regarding licencing and registration of factories,
working hours, health, safety and welfare measures, employment of women and young
persons, annual leaves, dangerous operations etc. The Act fixes the minimum age of
persons who can enter a factory for work at 14 years. The Act, lays down the provisions
regarding cleanliness, ventilation, overcrowding, lichting, explosive gases, dust, fume,
fencing of machinery etc.
(4) Import License : If imported raw-material and other equipments are necessary for
the new business enterprise, then he should obtain the import licence from the export-
import controller.
(5) Permission of Finance Ministry : For the agreement Of foreign collaboration, an
entrepreneur must obtain the permission of finance ministry.
(6) No Objection Certificate (NOC) : The unit must obtained all necessary clearances.
For example, NOC from Pollution Control Board is obtained if required.
(7) Industries (Development and Regulation) Act, 1951 : The licencing policy for
industries is determined under this Act. The Act states that the Central Government
may specify the requirements which shall be complied by small scale
industrial undertakings to be regarded as a small scale or an ancillary industry. This
may be done by the Central Government with a view ascertaining which small scale or
ancillary industrial undertaking needs supportive measures, exemptions or
other favourable treatment under this Act to enable them to maintain their viability
and strength.
(8) Foreign Exchange Regulation Act : All foreign collaborations required the approval
of the government and are subject to the regulations under the Foreign Exchange
Regulation Act. All investment by foreign companies in India is permitted only with the
approval of the Reserve Bank of India. The Reserve Bank of India’s approval is again
based on the approval of the investment proposal by the government.
(9) Registration of Trademark : According to Trade and Merchandise Marks Act, 1958
(India) the mark’ “includes a device, brand, heading, label ticket, name signature, word,
letter or numeral or any combination thereof.” The purpose of registration
of trademark is that the consumer may distinguish the product
of manufacturer/service provider from others and therefore ‘decepti.vely similar’
trademarks are not allowed to be used because they can cause confusion to users.
Once a trademark is registered as per provisions of Trade and Merchandise Marks Act,
1958 and Trademarks Act, 1999 no one else can use similar trademark on any of its
packing. The trademarks are registered for unlimited period and helps in the
promotion of sales.
(10) Registration under the Sales-tax Authority : An entrepreneur should get
registered his enterprise in the sales-tax department of the state government and
obtain certificate for this purpose. Besides above mentioned legal formalities, an
entrepreneur have to fulfil some other formalities also depending on the nature
of product produced by the new business unit. For example he has to get registered his
unit under the Service Tax Act, Food and Drugs Control Act etc.
