UCP Business Law Assignment 3: Business Organizations and Markets

This report, prepared for a Business Law course at the University of Central Punjab, examines the distinct types of business organizations, including sole proprietorships, partnerships, and corporations. It analyzes the role of innovation in business growth, highlighting its benefits such as increased productivity and market relevance. Furthermore, the report explores the concept of entrepreneurship within a market economy, emphasizing the importance of identifying market gaps and fostering innovative ventures. The report provides definitions, advantages, disadvantages, and examples to illustrate key concepts, offering a comprehensive understanding of business law and its applications.

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UNIVERSITY OF CENTRAL PUNJAB
Business law
Assignment # 3
 SUBMITTED TO: Pro. SIR SHAHEZEB KHALID
 SUBMITTED BY: USMAN FAROOQ
 ROLL NO: L1S21BSAF0005
 SECTION: (B)
January 8, 2022
1. EXPLAIN THE DISTINCT TYPES OF BUSINESS ORGANIZATIONS UNDER THE EYES OF BUSINESS
LAW
2. ANALYZE THE ROLE OF INNOVATION
3. ENTREPRENEURSHIP IN A MARKET ECONOMY

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1-THE DISTINCT TYPES OF BUSINESS ORGANIZATIONS UNDER THE
EYES OF BUSINESS LAW
Types:
1. Sole proprietorship
2. Partnership
3. Corporation
SOLE PROPRIETORSHIP:
The most straightforward and familiar shape of business ownership, a sole proprietorship, is an
enterprise owned and run by using a person for their very own gain. The enterprise’s existence
depends on the proprietor’s choices, so when the owner dies, he does the business.
In a Sole Proprietorship business in Pakistan, a person on their account consists of out the
commercial enterprise or profession. The commercial enterprise assets of the sole owner are
legally treated as his personal. No formal system or formality is needed to set up an exclusive
proprietary problem in Pakistan, nor is previous registration of it required from any authority
or branch.
Advantages of sole proprietorship:
 All earnings are subject to the owner
 There could be very little law for proprietorships
 Owners have full freedom while running the business
 Very few requirements for beginning—regularly most effective an enterprise license
Disadvantages:
 The owner is 100% chargeable for business money owed
 Equity is confined to the proprietor’s sources
 Ownership of proprietorship is tough to switch
 No distinction between non-public and business profits

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PARTNERSHIP:
(Partnership Act 1932) A Partnership in Pakistan is a commercial enterprise entered into by a
formal agreement between two or more humans or businesses carrying on an enterprise is not
unusual. The capital for a Partnership is supplied via the partners responsible for the total
debts of the firms and who percentage the profits and losses of the business concern in
keeping with the terms of the partnership agreement.
Partnerships in Pakistan (aside from banking businesses) are typically limited in length to 20
partners. The hobby of an accomplice is transferable only with the earlier consent of the
alternative accomplice(s). However, an accomplice’s proper to a share of the partnership
income may be received in agreement with any other individual.
For taxation purposes in Pakistan, partnerships are classified into:
Registered firms and unregistered firms.
The income of the registered firm is subject to super tax before distribution to the partners.
Also, the individual income of the partners is subject to income tax at the usual rates.
For unregistered firms, income tax is levied on the firm’s income, and the partners are not
liable to pay tax on the shares of profit received from the unregistered firm(s)
 AMLAW gives the undermentioned services within the subject of Partnership in Pakistan.
 Consultation on a business call for partnership
 Search availability of partnership enterprise name
 Drafting of the partnership agreement
 Registration of partnership
 Drafting of deed of dissolution of partnership
 Registration of deed of dissolution of partnership
Advantages of partnerships:
 Shared resources provides more capital for the business
 Each partner shares the total profits of the company
 Similar flexibility and simple design of a proprietorship
 Inexpensive to establish a business partnership, formal or informal
Disadvantages:
 Each partner is 100% responsible for debts and losses
 Selling the business is difficult—requires finding new partner
 Partnership ends when any partner decides to end it

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CORPORATION:
An organization is a synthetic man or woman having its entity legally break free its proprietors,
together with having capital divisible into transferable stocks, confined legal responsibility, and
unlimited lifestyles.
Public LTD Company:
In Pakistan, businesses are being enlisted under businesses mandate 1984. Securities and
Exchange Commission of Pakistan provide administrations to Public Limited organization.
 A company that has sold all or a portion itself to the public via an initial public offering
meaning shareholders have a claim to par of the company assets and profits
 Share are publicly traded
 Maximum Numbers 7
 Maximum no limits
 Share can be transferred
Example: Wapda, Ptcl, Pakistan airline
Types of Public Limited Companies in Pakistan:
 Listed Public Limited Company
 Un-listed Public Limited Company
Listed Public Limited Company: The organization registered below corporations’ ordinance
1984 as well as quoted in Stock Markets and its shares exchange in inventory markets, all and
sundry can come to be the administrators of any employer if, he/she purchases the majority of
the shares and follow for directorship underneath the SECP laws.
Un-Listed Public Limited Company: The Company registered beneath businesses
ordinance 1984 but no longer quoted in Stock Markets, and its shares don’t trade in
inventory markets.
Private limited company:
Business firm inside the non-public (personal) quarter of a financial system, controlled and operated by
way of personal individuals (and no longer with the aid of civil servants or government personnel). Used
additionally as an alternative term for non-public constrained organization. Example, Habib Bank,pvt
Ltd
 The company is owned by its founders’ management or a group of private investors
 Shares are not publicly traded
 minimum members 2
 maximum members 50 and shares cannot be tranfered

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Note: A Private Company is an enterprise which by using its articles, restricts its rights to
switch its stocks. The regulation also limits the variety of its individuals to 50 and prohibits it
from giving an invitation to the general public to subscribe to its stocks. The regulation
additionally allows single-member personal organizations that are treated otherwise than
everyday personal businesses. All the other businesses are public companies. Many provisions of
the ordinance do now not practice to private companies, and positive provisions do not follow to
personal companies until they're subsidiaries of public organizations. The proposed definition of
a “startup organization” method an organization that: (a) is in existence for no longer greater than
ten years from the date of its incorporation or such other length or intervals as may be precise;
and (b) has a turnover for any of the economic years in view that incorporation that is not more
than 5 hundred million rupees or such different amount or quantities as may be certain; and (c) is
running closer to the innovation, development or improvement of merchandise or strategies or
services or is a scalable business version with a high capability of employment era of wealth
advent or for such other functions as can be detailed; or (d) such other corporations or training of
businesses as can be notified by the Commission, supplied that a company formed by using the
splitting up or reconstruction of a present corporation shall now not be taken into consideration
as a startup company.
Moreover, non-public businesses allowed to difficulty proportion as apart from proper and apart
from cash, while all businesses allowed to difficulty employees stock option schemes and
buyback their shares [Section 83A, 86, 88]- in advance, it turned into limited to public and
public-indexed companies respectively. In addition, non-public organizations having Paid-up
Capital up to Rs1 million are exempted from filing unaudited economic statements [Section 234].
The Companies Amendment Bill 2021 has been proposed by the Securities and Exchange
Commission of Pakistan (SECP).
The proposed definition of a “startup organization” method an organization that: (a) is in
existence for no longer greater than ten years from the date of its incorporation or such other
length or intervals as may be precise; and (b) has a turnover for any of the economic years in
view that incorporation that is not more than 5 hundred million rupees or such different amount
or quantities as may be certain; and (c) is running closer to the innovation, development or
improvement of merchandise or strategies or services or is a scalable business version with a
high capability of employment era of wealth advent or for such other functions as can be
detailed; or (d) such other corporations or training of businesses as can be notified by the
Commission, supplied that a company formed by using the splitting up or reconstruction of a
present corporation shall now not be taken into consideration as a startup company.
Moreover, non-public businesses allowed to difficulty proportion as apart from proper and apart
from cash, while all businesses allowed to difficulty employees stock option schemes and
buyback their shares [Section 83A, 86, 88]- in advance, it turned into limited to public and
public-indexed companies respectively. In addition, non-public organizations having Paid-up
Capital up to Rs1 million are exempted from filing unaudited economic statements [Section 234]

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2-ANALYZE THE ROLE OF INNOVATION
Innovation is the creation of something new, and it implies fee and cleverness being brought to
some system. It may be a new product, a new approach, a brand new application of an existing
product or a set of products. The point is that know-how and creativity are used to strengthen a
hobby or concern in the attainment of progressed survival.
If the innovation improves the productivity of the business enterprise, then the fee may be reduced
to boom market proportion. If a product innovation creates demand in the market, then the revenue
and the marketplace share may be accelerated.
Example,
It’s no surprise to see Tesla leading major automakers in the deployment of artificial intelligence
(AI). The California-based car maker is arguably the most innovative company in the world.
Defining the Tesla Innovation Culture
Tesla’s organizational culture puts emphasis on innovation. An advantage of this cultural
trait is that it enables the corporation to develop high-technology products that attract its
customers.
I have looked in-depth at how Tesla:
 Adopts an alternative business model to drive innovation
 Flattens organizational structure to improve communication
 Gets in the trenches to develop products
 Works alongside early adopters to finesse design
 Thinks about the big problems facing the world
 Challenges and subverts conventional wisdom
 Commits to open source innovation to solve hard problems
Here is how innovation is beneficial for a business:
Contributes to the company's growth: The businesses that emphasise advancement keep on
developing at the same time as at the equal time final one stride in front of the competition in
view that they esteem the wonderful effect of innovation.
Maintains the relevance of a company: Our widespread surroundings are constantly
converting, and altogether on your business to stay crucial and effective, and it will, in the end,
should adjust to meet those new real factors. Established institutions want to beautify to struggle
off competition and stay huge in these evolving surroundings.
Keeps the company unique: Development is tied in with accomplishing something uniquely in
contrast to every other person working in your space. Innovation helps an association separate

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itself and its items from the opposition, which can be especially ground-breaking in an
oversaturated industry or market.
Increases Productivity: In organizations, it's far constantly desired to check new and
modern thoughts. You can be shocked by means of the mixture of minds that cooperate to
make profitability preparations that paintings on your organization.
Solves problems with ease: You need to think of innovative responses to tackle specific
problems in your enterprise. It would help if you took into consideration some sparkling
possibilities to find out an answer you've in no way concocted. In this manner, you can make
your item, shop your stock and discover an imaginative solution to improve your enterprise.

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3-ENTREPRENEURSHIP IN A MARKET ECONOMY
Today entrepreneurship is most typically viewed as venture innovation and bearing hazard.
Joseph Schumpeter, likely the most critical pioneer within the vicinity, perspectives
innovation as the critical hyperlink between entrepreneurship and financial increase
[Schumpeter (1934)]. He sees financial improvement as a continuum of a series of latest
processes, new markets, new resources, and news organizations, all of which might be made
of entrepreneurial activity.
In the Pakistan marketplace, Innovative entrepreneurs spend time studying the marketplace
and locating gaps between the products. Market gaps imply the needs of human beings for a
product that isn't always available inside the market. And it allows marketers to launch a
business efficaciously via averting war of words with the reputation-quo and big giants.
Entrepreneurship in Pakistan is hard in this state of affairs as properly.
It is unlikely to fill market gaps or create new opportunities without innovation. Consequently,
market-oriented activities of development and innovation after research help develop higher
products. Whereas those innovations additionally assist increase excellence in client-related
overall performance. The consumer-related performance areas contain perfection in pleasure,
dating, attraction, and retention of clients. Thus, innovation helps fill the market gaps leading
to a worthwhile enterprise through fostering innovation for better residing and product.
Economic Growth is vital due to the fact it's far the means by means of which we will enhance
the best of our well-known of living. It also allows us to cater for any will increase in our
populace without having to lower our standard of dwelling. An entrepreneur is a character
who units up and grows an enterprise. They combine different factors of manufacturing
(together with – land, labour and capital) to try and create a brand new worthwhile
commercial enterprise venture. New and improved products, offerings, or technology from
entrepreneurs allow new markets to be evolved and new wealth to be created. Additionally,
increased employment and better income contribute to higher national earnings in the shape of
better tax revenue and higher government spending. As corporations and employees become
extra efficient, charges fall, earnings and earnings rise, demand expands, and financial boom
and activity advent boost up.
Growth of Entrepreneurship in Pakistan Market:
The increase of Entrepreneurship in the Pakistan marketplace is steady. Few educational
establishments are offering any route or topics everywhere in Pakistan on the subject, and that
too do not broaden any abilities necessary for entrepreneurship. There are YouTubers and other
successful businessmen that sell such principles in society. However Lacks any efforts of
cohesive nature.

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How to become entrepreneur in Pakistan market:
To grow to be an entrepreneur in Pakistan, you have to be organized to deal with a lot of factors,
usually bad. The primary advice that we would love to give any entrepreneur in Pakistan could
be to do matters in a way that don't contain any Pakistani organization. There are apparent
reasons at the back of not dealing with any government workplace, and we would really like to
push you to not waste time, strength, and efforts in coping with rotten establishments. I might
additionally like to say that private institutions are pretty a great deal the same. The satisfactory
shape of entrepreneurship is handling foreign places clients and promoting something in
particular services and products that can be procured and dispatched without any nearby
involvement of subjects.
For example:, You could have a software house or an online keep. You don't need to transport
any bodily object within the case of a software program house. However, in the case of online
stores, I might ask you to examine the methods of procuring and storing your merchandise
outdoor Pakistan. Like you should purchase the product from China, and that could be shipped
on your remote places online save warehouse. Successful entrepreneurs in Pakistan are only
those who can keep away from wastage of time
and different sources. I won't call people like Malik Riaz and other successful entrepreneurs due
to the fact they're excellent instances and mere front men.