DEFINITION

Ownership is the state of exclusive rights and control over property which may be an object , land , real estate , or intellectual property. NEED FOR AN OWNERSHIP As and when an Entrepreneur wishes to raise a loan , a banker, a financial institution and even a private money lender like to know the ownership form of enterprise .

TYPES OF OWNERSHIP
Proprietorship Partnership Company Co-operative

PROPRIETORSHIP
In proprietorship the enterprise is owned and controlled by one person . It is also called as sole trade organization . MAIN FEATURES One man ownership No separation between ownership management Unlimited Liability All profits and losses to the proprietor

ADVANDAGES Simple form of organization Owners freedom to take decisions High secrecy Tax Advantage DISADVANTAGES Limited Resources Limited Ability Unlimited liability Limited life of Enterprise form

PARTNERSHIP
In Partnership more persons come together and starts business . MAIN FEATURES More persons Profit and loss sharing Contractual Relationship Unlimited liability

ADVANTAGES Easy formation More capital available Diffusion of Risk DISADVANTAGES Unlimited liability Divided authority Lack of continuity Risk of implied Authority

COMPANY
An association of many persons who contribute money or moneys worth to a common stock and employ it in some trade or business and also share the profit as case may be , arising therefrom. MAIN FEATURES Perpetual Existence Limited Liability Number of members

PRIVATE COMPANY A private company has been defined as a company which by its Articles of Association a) Restricts rights to transfer shares b) Limits of number of its members to fifty c) Prohibits any invitation to the public to subscribe for the shares PUBLIC COMPANY A Public company is one which place no restrictions by its Articles of Association on transfer of shares . Minimum number of person is seven and there is no limit to maximum number of share holder

ADVANTAGE

Perpetual Existence Professional management Diffusion of risk Expansion Potential DISADVANTAGES Lack of secrecy Legal restrictions Management Mischiefs Lack of personal interest

CO-OPERATIVE
MAIN FEATURES o Voluntary association o Service motive o Government control

ADVANTAGES o Easy formation o Limited liability o Social services DISADVANTAGES o Lack of secrecy o Corruption o Lack of mutual interest

FACTORS INFLUENCING CHOICE OF OWNERSHIP

1. 2.

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4. 5. 6. 7.

Nature of business Area of operations Degree of control Capital requirements Extend of risk and Liability Duration of Business Government Regulations

OWNERSHIP PATTERN IN SMALL SCALE INDUSTRIES IN INDIA

Proprietorship is the most popular form of ownership structure in small scale industries is indicated by its 87% shares in all Enterprises . Partnership is second largest form of ownership and establishment of company form involves complex procedures as compared to Proprietorship and Partnership.

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