The document discusses different forms of business organizations in India. It describes sole proprietorship, joint hindu family business, partnerships (limited and general), cooperative societies, and joint stock companies. For each type of business, it covers defining characteristics, merits, and demerits. It provides details on the key aspects of setting up and running each organizational structure.

1. Mrs. R. H. Mishal
Incharge HoD
GES’s Sir Dr. M. S. Gosavi College of
Pharmaceutical Education &
Research, Nashik.

2. Ø Have you ever thought who
brings the required capital in a
business?
Ø Who takes the responsibility of
arranging other resources, puts
them into action, and coordinates
and controls the activities to earn
the desired profits?
Ø An arrangement of ownership
and management is termed as a
form of business organisation.

3. A business organisation usually takes
the following forms in India
Ø Sole Proprietorship
Ø Joint Hindu Family Business
Ø Partnerships (Limited/Gen)
Ø Co/ operative Societies
Ø Joint Stock Company

5. J.L. Hanson has defined Sole
proprietorship as “A type of
business unit where one
person is solely responsible
for providing the capital and
bearing the risk of the
enterprise, and for the
management of the business.”

6. Characteristics:
Ø Single ownership
Ø Less legal formalities
Ø No separate entity
Ø No sharing of profit & loss
Ø One man control
Ø Unlimited Liability

7. Merits:
Ø Easy to Form and Wind Up
Ø Quick Decision and Prompt
Action
Ø Direct Motivation
Ø Flexibility in Operation
Ø Maintenance of Business
Secrets
Ø Personal Touch

8. Demerits:
Ø Limited Resources
Ø Lack of Continuity
Ø Unlimited Liability
Ø Not Suitable for Large Scale
Operations
Ø Limited Managerial Expertise

10. Ø Unique form of business
organization that prevails only in
India, that too among hindus.
Ø A form of business organization run
by Hindu undivided family.
Ø Family members of three successive
generations own the business
jointly.
Ø The head of the family known as
Karta manages the business.
Ø The other members are called co/
parceners and all of them have
equal ownership right over the
properties of the business.

11. Ø The membership of the JHF is
acquired by virtue of birth in the
same family.
Ø There is no restriction for minors
to become the members of the
business.
Ø As per Dayabhaga system of
Hindu Law, both male and female
members are the joint owners.
Ø Mitakashara system of Hindu Law
says only male members of the
family can become the

12. Characteristics:
Ø The business is managed by the senior
most member of the family known as
Karta.
Ø Other members do not have the right to
participate in the management.
Ø The Karta has the authority to manage
the business as per his own will and his
ways of managing cannot be
questioned.
Ø If the coparceners are not satisfied, the
only remedy is to get the HUF status of

13. Merits:
Ø Assured Shares in Profits
Ø Quick Decision
Ø Sharing of Knowledge and
Experience
Ø Limited Liability of Members
Ø Unlimited Liability of the Karta
Ø Continued Existence

14. Demerits:
Ø Limited Resources
Ø Lack of Motivation
Ø Scope for Misuse of Power
Ø Instability

16. Ø ‘Partnership’ is an association of
two or more persons who pool
their financial and managerial
resources and agree to carry on a
business, and share its profit.
Ø The persons who form a
partnership are individually
known as partners and
collectively a firm or partnership
firm.

17. Two major types of partnerships:
Ø General Partnership: (most common
type) all partners are responsible for
management and the financial
responsibilities of the partnership.
Ø Limited Partnership: at least one
partner is not active in the day to day
running of the business. They have
limited liability.

18. Articles of Partnership: contract
between partners spelling out the
rules of partnership.
Ø Dividing profit
Ø Dividing responsibility
Ø Admitting new partners
Ø Buying out partners

19. Merits:
Ø Easy to Form
Ø Availability of Larger
Resources
Ø Better Decisions
Ø Flexibility
Ø Sharing of Risks
Ø Benefits of Specialisation
Ø Secrecy

20. Demerits:
Ø Unlimited Liability
Ø Instability
Ø Non/ transferability of share
Ø Possibility of Conflicts

21. Types of Partners:
Ø Based on extent of participation
1. Active Partners 2. Sleeping Partners
Ø Partners Based on sharing of profit
1. Nominal Partners 2. Partners in Profits
Ø Based on liability
1. Limited Partners 2. General Partners
Ø Based on nature of behaviour
1. Partners by Estoppel 2. Partners by
Holding Out

23. Ø There are certain organisations which
undertake business activities with the
prime objective of providing service to
the members.
Ø Although they also earn some amount
of profit, but their main intention is to
look after some common interest of its
members.
Ø They pool available resources from the
members, utilise the same in the best
possible manner and share the benefits.
Ø These organisations are known as

24. Characteristics
Ø Voluntary Association: Members join
the cooperative society voluntarily i.e.,
by their own choice
Ø Open Membership: The membership is
open to all those having a common
economic interest. Any person can
become a member irrespective of
his/her caste, creed, religion, colour,
sex etc.
Ø Number of Members: A minimum of 10
members are required to form a

25. Characteristics
Ø Registration of the Society: In India,
cooperative societies are registered
under the Cooperative Societies Act
1912 or under the State Cooperative
Societies Act.
Ø The Multi/ state Cooperative Societies
are registered under the Multi/ state
Cooperative Societies Act 2002.

26. Merits
Ø Easy to Form
Ø Limited Liability
Ø Open Membership
Ø State Assistance
Ø Democratic Management

27. Demerits
Ø Limited Capital
Ø Lack of Managerial Expertise
Ø Less Motivation
Ø Lack of Interest
Ø Corruption

29. Ø A voluntary association of persons
to carry on business.
Ø Members are known as
shareholders & the capital is
known as share capital.
Ø Companies are governed by the
Indian Companies Act, 1956.
Eg. Tata Iron & Steel co., Reliance
Industries Ltd., Hindustan Lever
Ltd. Etc.

30. Characteristics:
Ø Artificial person.
Ø Separate legal entity
Ø Common seal
Ø Transferability of shares
Ø Limited liability
Ø Membership: Pvt. Ltd/ Minimum 2 &
Maximum 50.
Ø Public Ltd: Minimum Several &
Maximum unlimited.

31. Merits:
Ø Limited liability
Ø Continuity of Existence
Ø Benefits of large scale operation.
Ø Professional management
Ø Social benefit.

32. Demerits:
Ø Formation is not easy
Control by a group
Ø Excessive government control
Ø Delay in policy decisions.