This document discusses different forms of business organization including sole proprietorships, partnerships, companies, and trusts. It outlines the key characteristics, advantages, disadvantages, and registration processes for each type. Sole proprietorships are owned and managed by one person who has unlimited liability. Partnerships involve two or more owners who share profits and losses and have unlimited liability. Companies provide limited liability for owners and can exist indefinitely. Trusts involve property held by a trustee for the benefit of beneficiaries. The document also covers intellectual property laws and types of intellectual property like patents, trademarks, copyright, and trade secrets.

1. LEGAL ISSUES AND ENVIRONMENT
FOR THE ENTREPRENEURSHIP
DEVELOPMENT
Chapter 3

2. Sole Proprietorship
Sole proprietorship is established by a single
person investing his/her own capital, taking
risk of management, control, loss, liability and
sharing all profits.

3. Characteristics of Sole Proprietorship
1. Sole ownership
2.Unlimited liability
3.Sole management and control
4.Undivided risk and responsibility
5.Lack of legal existence
6.Secrecy
7.No sharing of profit or loss
8.Independent for decision
9.Limited area of operation

4. Advantages of sole proprietorship
1.Easy to form
2.Adequate secrecy
3.Prompt decision
4.Sole ownership on profit
5.Control in operation
6.Direct supervision
7.Easy to dissolve
8.Few regulations

5. Disadvantages of sole proprietorship
1.Limited resources
2.Unlimited liability
3.Uncertain existence
4.Limited public relation
5.Chances of ineffective decision
6.Difficult to obtain loan
7. High tax
8.Limited opportunity to staff

6. Sole Proprietorship Registration
1. Apply for registration
2. Deposit registration fee
3. Receive the certificate of registration

7. Partnership
Partnership is a relationship that exists between people
carrying on a business in common with a view to
making a profit.
Characteristics of partnership
1. Formation
2. Mutual agreement
3. Transfer of shares
4. Sharing profit and loss
5. Unlimited liability
6. Lack of separate existence
7. Joint management

8. Advantages of partnership
1. Ease of formation
2. Combined resources
3. Direct reward
4. Secrecy
5. Effective management
6. Facility of loan
7. Flexibility
8. Easy to dissolve

9. Disadvantages of partnership
1. Unlimited liability
2. Limited capital
3. Difficulty in ownership transfer
4. Problem of disputes
5. Uncertain existence
6. Lack of prompt decision

10. Partnership Firm Registration
1. Apply for registration.
2. Deposit registration fee
3. Receive the certificate of registration

11. Company
Concept
A company is a voluntary association of persons having common economic interest
of earning profit and wealth.
Characteristics
The essential features/characteristics of company are as follows.
1. Legal entity
2. Perpetual succession
3. Limited liability
4. Formation
5. Management by representatives
6. Transferability of shares
7. Common seal
8. Publication of financial statement
9. Collection of capital

12. Company
Entrepreneurship is the process of starting, organizing, and managing a new business
venture with the goal of making a profit or solving the problem of society, country .
There are countless companies that have been founded by entrepreneurs, ranging
from small start-ups to multinational corporations.
Concept
A company is a voluntary association of persons having common economic
interest of earning profit and wealth.

13. In entrepreneurship, a company is an organization that is formed to pursue a particular
business opportunity. It is typically structured as a legal entity, such as a corporation or
a limited liability company, and has a defined set of objectives, a management team,
and a system of governance.
The concept of a company in entrepreneurship is closely tied to the idea of starting a
business. When an entrepreneur identifies a market need or a business opportunity,
they may decide to form a company to pursue that opportunity. The company can then
develop a product or service, market it to potential customers, and generate revenue.
Entrepreneurs often start companies with the goal of creating something new or
disruptive. They may have a vision for a better way of doing things or a desire to solve
a particular problem. By forming a company, they can bring their vision to life and
turn their idea into a sustainable business.
A key aspect of building a successful company in entrepreneurship is the ability to
attract and retain talented employees. As the company grows, it will need to hire
people with a variety of skills and expertise to help it achieve its objectives. The
company may also need to raise capital from investors to fund its operations and fuel
its growth.
Overall, the concept of a company in entrepreneurship is central to the process of
starting and building a successful business. It provides a structure and framework for
pursuing business opportunities, and it allows entrepreneurs to bring their ideas to life
and create something of value

14. The characteristics of a company can vary depending on its size, industry, and legal
structure, but there are some general characteristics that are commonly associated with
companies. Here are some of the key characteristics of a company:
Legal entity: A company is a legal entity that is separate from its owners. It has the
ability to enter into contracts, sue and be sued, and own assets.
Limited liability: In most cases, the liability of the owners or shareholders of a
company is limited to the amount of their investment in the company. This means that
they are not personally liable for the company's debts and obligations.
Ownership structure: A company is typically owned by one or more shareholders,
who have a proportionate ownership stake in the company based on the number of
shares they hold.
Management: A company is managed by a board of directors or a management team,
who are responsible for making strategic decisions and overseeing the day-to-day
operations of the company.

15. Perpetual existence: A company has perpetual existence, meaning that it can continue
to exist even if its owners or shareholders change.
Transferability of ownership: The ownership of a company is typically represented
by shares of stock, which can be bought and sold on the stock market or through
private transactions.
Profit motive: A company is generally established with the intention of generating
profits for its owners or shareholders.
Corporate governance: A company has a system of corporate governance, which
outlines the rules and procedures for making decisions, managing conflicts of interest,
and ensuring accountability.
Overall, these characteristics help to define what a company is and how it operates.
They provide a framework for the company's legal and organizational structure, and
help to ensure that it can function effectively and efficiently

16. Advantages of Company
Some of the basic advantages of a company may
be studied under the following headings:
1. Limited liability
2. Adequate capital
3. Perpetual existence
4. Transferability of shares
5. Effective management
6. Easy to obtain loan
7. Public trust

17. Disadvantages of Company
Some of the major disadvantages of company are
discussed below.
1. Complexity in formation
2. Lack of prompt decision
3. Lack of secrecy
4. Difficulty in management
5. Exploitation of shareholders
6. Groupism for power

18. Company Registration
Companies in Nepal are registered according to Nepal
Company Act, 2063. Foreigners are allowed to invest in
company.
Procedures of Registration
1. Verify the uniqueness of the proposed company name in the
Office of the Company Registrar
2. Verification and certification of the memorandum and
articles of association
3. Buy a stamp to be attached to registration form
4. Register at the Office of the Company Registrar,
Department of Industry
5. Make a company stamp
6. Register for VAT and income Tax at the Inland Revenue
Office, Ministry of Finance
7. Enroll the employees in the Provident Fund

19. Trusts
• A trust exists when a person (the trustee) holds
property for others (beneficiaries) who are
intended to benefit from that property or from
the income of that property.

20. Advantages of Trust
The following are some of the notable
advantages of trust.
a. Income splitting
b. Capital gain tax
c. Control
d. Asset protection
e. Stability
f. Confidentiality

21. Disadvantages
The following are the disadvantages of having
a family trust.
a. Loss of ownership of assets
b. Additional administration
c. Cost of formation
d. Change in law

22. Intellectual Property
Intellectual property (IP) refers to creations of the mind, such as inventions; literary and
artistic works; designs; and symbols, names and images used in commerce.
Patents
A patent is an exclusive right granted by the government for an invention. It provides the
patent owner with the right to decide when and how the invention can be used by others.
The owner of the patent is granted a legal monopoly for a limited period of time.
There are three types of patents.
1. Utility patents
2. Design patent
3. Plant patents
Trademarks
A trademark is a word, name, symbol, or device that distinguishes the goods or services
of one enterprise from others. Trademark enhances the visibility of products and
services. Trademarks also provide consumers with useful information.

23. • Industrial Design
Design may be defined as the way that
something is made so that it works in a certain
way or has a certain appearance. It constitutes
the ornamental or aesthetic aspect of an article.
A design may consist of three-dimensional
features, such as the shape or surface of an
article, or of two-dimensional features, such as
patterns, lines or colour.

24. • Copyright
Copyright is the rights that creators have over their literary and artistic
works. The works are in tangible forms such as books, music,
paintings, sculpture and films, computer programs, databases,
advertisements, maps and technical drawings.
• Trade Secrets
A trade secret is any formula, pattern, physical device, idea, process, or
other information that are the sources of competitive advantage in
the marketplace. Trade secrets include marketing plans, product
formulas, financial forecasts, employee rosters, logs of sales calls,
and laboratory notebooks.

25. Laws related to IP in Nepal
The Patent Design and Trademark Act, 1965
The Patent Design and Trademark Act 1965
highlights the legal provisions related to patents,
designs and trade-marks for the convenience and
economic benefits of the general public.
Copyright Act, 2002
The copyright act, 2002 provides the legal
provision related to copyright in Nepal.

26. Other Legal Issues
License
A license is an official permission to do, use, or own something. It can be granted
by a party to another party as an element of an agreement between them. Hence,
license is an authorization to use licensed material.
Trade Practices
Trade practices are acceptable business conducts. To promote trade practices
countries have competition laws which prohibit practices such as misleading
customers or suppliers, price fixation, and formation of cartels.
Taxation
Taxation is probably the most important regulation that a business has to comply
with. Taxes include income tax, sales tax, value added tax (VAT), Employees
payroll deductions, provincial and local taxes.

27. Product Safety and Liability
Product safety refers to the requirements and specifications to be complied
regarding the use of products. They are normally prescribed by consumer
protection act.
Insurance
An entrepreneur has to face several contingencies and risks that arise from
internal as well as external conditions. To face such situations, businesses
need to be aware of the numerous options for insurance and choose the best
one for them.
Contracts
A contract is a legally enforceable agreement between two or more parties
subject to certain conditions. A business is involved in a number of
negotiations and contracts.

28. Entrepreneurial Environment
Entrepreneurs must be aware of and fully
understand the different segments of
environment to deal with uncertainty and
achieve strategic competitiveness. They
understand the external environment by
acquiring information about competitors,
customers, stakeholders as well as other
general conditions.

29. Entreprenuel Environments=Basically means anything that’s surround and impacts in a
positive or negative way in your Business.
Business environment is the sum total of all external and internal factors/environment that
influence a business
Internal Environment: It includes 5 M+ I+L i.e. man, material, money, machinery and management,
+ information + land and building, usually within the control of business. Business can make changes
in these factors according to environment: factors within the business unit itself.
• Company can have full control
• Can change in a better way
External Environment: Those factors which are beyond the control of business enterprise are
included in external environment. These factors are: Government and Legal factors, Geo- Physical
Factors, Political Factors, Socio-Cultural Factors, Demo-Graphical factors etc.
1. Micro/ Task / Market Environment
2. Macro General Environment
Business

30. Process of Environmental Analysis
1.Scanning: It involves information gathering for assessing the nature of the environment in terms of
uncertainty, complexity, and dynamics. It includes:
Identifies early signs of future environmental changes. They are indicated by trends and events.
Detects changes already underway. They are happening
2.Monitoring: It involves tracking environmental trends and events. It is the auditing of the environment.
The likely impact of environmental influences on business performance is identified.
3.Forecasting: This step forecast what is likely to happen. Its layout of the path to anticipate changes. This
step provides:
Key forces at work in the environment. They can be political-legal, economic, social, cultural, and
technological.
Understanding of the nature of key influences and drivers of change.
Projection of future alternative paths available.
3.Assessment: This step identifies key opportunities and threats. The competitive position of a business
is analysed in terms of how the organization stands in relation to other organizations competing for some
resources of customers.
Opportunities are a favourable condition that creates risks and weakens the competitive position.
The threat is an unfavourable condition that strengthens, the organization’s competitive position of the
organization.

31. Environment Analysis for
Developing Entrepreneurship
Environmental analysis is a process by which
entrepreneurs monitor the environment to
determine opportunities for and threats to their
firm. The main objective of external
environment analysis is to assess the likely
opportunities and threats arising. It involves
scanning, monitoring, forecasting and
assessing the environment to determine the
opportunity or threat arising.

32. Process of Environmental Analysis
Environmental analysis is an ongoing process.
It has a certain process as discussed below.
• Scanning
• Monitoring
• Forecasting
• Assessing

33. Components of Entrepreneurial
Environment
• Political Environment
• Economic Environment
• Socio-Cultural Environment
• Technological Environment
• Legal Environment
• The Physical Environment
• Global Environment

34. Organizational Resources
Media
Pressure Groups
Creditors
(Global
market, Int.
Political
events)
(Level of Tech.,
Pace of change,
Tech. transfer, R
&D)

35. Eco-efficiency
Eco-efficiency as a management strategy that
focuses on the delivery of competitively priced
goods and services which satisfy consumer
needs while progressively reducing ecological
impact throughout the product life cycle. This
is an approach of promoting both
environmental and economic performance.

36. Ecopreneurship
Environmental problems are created due to
disconnect between economic concerns,
environmental consciousness and concern for
societal well-being. Ecopreneurship seeks to
support and promote businesses that are
designed with environmental consciousness. It
urges that entrepreneurs should make profits
by being environmental conscious.

37. Risks Associated with Entrepreneurship
Development
1.Financial risk
2.Career risk
3.Social risk
4.Health risk
5.Employees trusting risk

38. Entrepreneurship development has its fair share of risks, and aspiring entrepreneurs must
be aware of these risks before embarking on their entrepreneurial journey. Some of the
common risks associated with entrepreneurship development include:
Financial risk: Starting a new business involves a significant financial risk, including
investing personal savings, securing loans or other financing, and the possibility of losing
money if the business fails to generate enough revenue.
Market risk: Entrepreneurship development also involves the risk of market uncertainty,
including the possibility of a shift in customer preferences, increased competition, or
changes in the economic climate.
Legal risk: Starting a new business involves navigating various legal and regulatory
requirements, such as licensing, permits, taxes, and intellectual property protection.
Failure to comply with these regulations could result in legal consequences.

39. Operational risk: Running a business also involves operational risks such as
supply chain disruptions, product defects, and human resource management.
Reputational risk: A single negative event or public relations crisis can quickly
damage a business's reputation, leading to lost revenue and decreased customer
trust.
Personal risk: Entrepreneurship development often requires significant personal
sacrifices, including long work hours, financial insecurity, and personal stress.
Failure risk: Finally, entrepreneurship development involves the risk of business
failure, which can result in financial ruin, damaged self-esteem, and personal
setbacks.
Entrepreneurship development can be a rewarding journey, but it's essential to be
aware of these risks and have a plan in place to mitigate them.