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CHAPTER 6 Resource requirements and legal aspects H. Jacobs Van Schaik Publishers
LEARNING OUTCOMES <ul><li>Determine the various resources you will need to start an own small business and indicate how yo...
LEARNING OUTCOMES <ul><li>Indicate the taxation requirements that apply to each type of business </li></ul><ul><li>Describ...
LEARNING OUTCOMES <ul><li>Explore the major labour legislation governing employment in South Africa </li></ul><ul><li>Expl...
RESOURCE REQUIREMENTS  IN ESTABLISHING A NEW BUSINESS VENTURE <ul><li>Financial resources </li></ul><ul><ul><li>Equity fin...
RESOURCE REQUIREMENTS IN ESTABLISHING A NEW BUSINESS VENTURE <ul><li>Physical resources </li></ul><ul><ul><li>Fixed assets...
LEGAL FORMS <ul><li>Sole proprietorship </li></ul><ul><li>Partnership </li></ul><ul><li>Close corporation </li></ul><ul><l...
SOLE PROPRIETORSHIP <ul><li>One owner </li></ul><ul><li>Owner is legal entity (not business) </li></ul><ul><li>Limited sta...
PARTNERSHIP <ul><li>Minimum of two and maximum of 20  partners </li></ul><ul><li>No major formalities </li></ul><ul><li>Pa...
CLOSE CORPORATION <ul><li>At least one and not more than 10 members </li></ul><ul><li>Members must be natural persons </li...
COMPANY <ul><li>Companies Act (Act 61 of 1973) </li></ul><ul><li>Private company </li></ul><ul><ul><li>Shares not sold to ...
COMPANY <ul><li>Public company </li></ul><ul><ul><li>Public is invited to buy shares </li></ul></ul><ul><ul><li>Shares can...
COMPANY <ul><li>Company Limited by Guarantee (Section 21 Company) </li></ul><ul><li>A Company not for gain </li></ul><ul><...
REGISTERING A LEGAL FORM <ul><li>Sole proprietorship and partnership </li></ul><ul><ul><li>No formal procedures </li></ul>...
INTELLECTUAL PROPERTY RIGHTS <ul><li>Copyrights </li></ul><ul><li>Designs </li></ul><ul><li>Patents </li></ul><ul><li>Trad...
COPYRIGHTS <ul><li>Berne Copyright Convention </li></ul><ul><li>Copyright Act and Copyright Amendment Act </li></ul><ul><l...
DESIGNS <ul><li>Registration essential </li></ul><ul><li>Design Act grants protection for: </li></ul><ul><ul><li>Aesthetic...
PATENTS <ul><li>The registered exclusive right of an inventor to make, use or sell an invention </li></ul><ul><li>Two type...
TRADEMARKS <ul><li>Any work, phrase, symbol, design, sound, smell, colour, product configuration, group of letters or numb...
COUNTERFEIT GOODS <ul><li>The manufacturing, production or making of any goods, in SA or elsewhere, without the authority ...
TAXATION <ul><li>Receiver of Revenue </li></ul><ul><li>Pay As You Earn (PAYE) and Standard Income Tax on Employees (SITE) ...
LEGAL ASPECTS IN THE NORMAL FLOW OF BUSINESS <ul><li>Unemployment Insurance Fund (UIF) </li></ul><ul><li>Compensation Fund...
LEGAL ASPECTS IN THE NORMAL FLOW OF BUSINESS <ul><li>Concluding contracts </li></ul><ul><li>Licensing </li></ul><ul><li>La...
LEGAL ASPECTS IN THE NORMAL FLOW OF BUSINESS <ul><li>Product liability </li></ul><ul><li>Standards </li></ul><ul><li>Fair ...
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  1. 1. CHAPTER 6 Resource requirements and legal aspects H. Jacobs Van Schaik Publishers
  2. 2. LEARNING OUTCOMES <ul><li>Determine the various resources you will need to start an own small business and indicate how you would acquire it </li></ul><ul><li>Examine the different legal forms a small business can take and identify a suitable form for a new small business </li></ul><ul><li>Describe the registration process when starting a particular type of business </li></ul><ul><li>Illustrate the different ways prospective entrepreneurs can protect their intellectual property </li></ul><ul><li>Explain how the law on counterfeit goods can influence a prospective small business owner </li></ul>Van Schaik Publishers
  3. 3. LEARNING OUTCOMES <ul><li>Indicate the taxation requirements that apply to each type of business </li></ul><ul><li>Describe the process and conditions for registering with the Receiver of Revenue </li></ul><ul><li>Explain the requirements for registering with the Department of Labour when starting an own business </li></ul><ul><li>Discuss the requirements that exist for obtaining trade licenses and for having to pay regional services levies </li></ul><ul><li>Demonstrate your understanding of the importance of taking care when concluding contracts </li></ul><ul><li>Explain how entrepreneurs can use licensing to their advantage </li></ul>Van Schaik Publishers
  4. 4. LEARNING OUTCOMES <ul><li>Explore the major labour legislation governing employment in South Africa </li></ul><ul><li>Explain how entrepreneurs should handle product liability </li></ul><ul><li>Appreciate the regulations pertaining to standards when starting a small business </li></ul><ul><li>Understand how competition policies can influence the establishment of a small business </li></ul><ul><li>Appreciate and explain the environmental regulations in starting an own business </li></ul><ul><li>Give your opinion on the Promotion of Access to Information Act </li></ul><ul><li>Explain the purpose of the Usury Act </li></ul>Van Schaik Publishers
  5. 5. RESOURCE REQUIREMENTS IN ESTABLISHING A NEW BUSINESS VENTURE <ul><li>Financial resources </li></ul><ul><ul><li>Equity finance </li></ul></ul><ul><ul><li>Debt finance </li></ul></ul><ul><ul><li>Revenue </li></ul></ul><ul><ul><li>Other </li></ul></ul><ul><li>Human resources </li></ul><ul><ul><li>Forecasting human resource need </li></ul></ul><ul><ul><li>Recruiting candidates and select best person </li></ul></ul>Van Schaik Publishers
  6. 6. RESOURCE REQUIREMENTS IN ESTABLISHING A NEW BUSINESS VENTURE <ul><li>Physical resources </li></ul><ul><ul><li>Fixed assets </li></ul></ul><ul><ul><li>Raw materials </li></ul></ul><ul><ul><li>General supplies </li></ul></ul><ul><li>Information resources </li></ul><ul><ul><li>External environment </li></ul></ul><ul><ul><li>Internal working of business </li></ul></ul>Van Schaik Publishers
  7. 7. LEGAL FORMS <ul><li>Sole proprietorship </li></ul><ul><li>Partnership </li></ul><ul><li>Close corporation </li></ul><ul><li>Company </li></ul><ul><ul><li>Private </li></ul></ul><ul><ul><li>Public </li></ul></ul><ul><ul><li>Company limited by Guarantee </li></ul></ul>Van Schaik Publishers
  8. 8. SOLE PROPRIETORSHIP <ul><li>One owner </li></ul><ul><li>Owner is legal entity (not business) </li></ul><ul><li>Limited statutory requirements </li></ul><ul><ul><li>Tax </li></ul></ul><ul><ul><li>Regional services levies </li></ul></ul><ul><ul><li>Licenses </li></ul></ul><ul><ul><li>Compensation fund </li></ul></ul><ul><ul><li>Unemployment and Insurance Fund (UIF) </li></ul></ul><ul><li>Easy to start </li></ul>Van Schaik Publishers
  9. 9. PARTNERSHIP <ul><li>Minimum of two and maximum of 20 partners </li></ul><ul><li>No major formalities </li></ul><ul><li>Partnership agreement </li></ul><ul><li>No protection of limited liability </li></ul><ul><li>Act on Business Names </li></ul>Van Schaik Publishers
  10. 10. CLOSE CORPORATION <ul><li>At least one and not more than 10 members </li></ul><ul><li>Members must be natural persons </li></ul><ul><li>A legal entity </li></ul><ul><li>Registrar of Close Corporations </li></ul><ul><li>Act on Close Corporations (Act 69 of 1984) </li></ul><ul><li>Name of business with abbreviation CC </li></ul><ul><li>Association Agreement </li></ul><ul><li>Minimum formation and administrative requirements </li></ul><ul><li>Minimum punishable offences </li></ul><ul><li>Perpetual succession </li></ul>Van Schaik Publishers
  11. 11. COMPANY <ul><li>Companies Act (Act 61 of 1973) </li></ul><ul><li>Private company </li></ul><ul><ul><li>Shares not sold to general public </li></ul></ul><ul><ul><li>Registrar of Companies </li></ul></ul><ul><ul><li>(Proprietary) Limited or (Pty) Ltd </li></ul></ul><ul><ul><li>Minimum of 1 shareholder and 1 director and a maximum of 50 shareholders </li></ul></ul><ul><ul><li>Registration process more complex and expensive: Certificate of Incorporation and Certificate to commence business </li></ul></ul><ul><ul><li>A legal entity </li></ul></ul><ul><ul><li>Private companies with limited liability – “Incorporated” </li></ul></ul>Van Schaik Publishers
  12. 12. COMPANY <ul><li>Public company </li></ul><ul><ul><li>Public is invited to buy shares </li></ul></ul><ul><ul><li>Shares can be listed on JSE Securities Exchange South Africa </li></ul></ul><ul><ul><li>At least seven shareholders and two directors </li></ul></ul><ul><ul><li>A separate entity from shareholders </li></ul></ul><ul><ul><li>Share buy back </li></ul></ul>Van Schaik Publishers
  13. 13. COMPANY <ul><li>Company Limited by Guarantee (Section 21 Company) </li></ul><ul><li>A Company not for gain </li></ul><ul><li>Minimum of 7 members and at least 2 directors </li></ul><ul><li>Name must end with “Limited (Limited by Guarantee)” </li></ul>Van Schaik Publishers
  14. 14. REGISTERING A LEGAL FORM <ul><li>Sole proprietorship and partnership </li></ul><ul><ul><li>No formal procedures </li></ul></ul><ul><li>Close corporation </li></ul><ul><ul><li>Registrar of close corporations at CIPRO </li></ul></ul><ul><li>Companies </li></ul><ul><ul><li>Registrar of Companies at CIPRO </li></ul></ul><ul><ul><ul><li>Reserve a name </li></ul></ul></ul><ul><ul><ul><li>Filing the memorandum and articles of association </li></ul></ul></ul><ul><ul><ul><li>Filing the written consent of auditors to act for company </li></ul></ul></ul>Van Schaik Publishers
  15. 15. INTELLECTUAL PROPERTY RIGHTS <ul><li>Copyrights </li></ul><ul><li>Designs </li></ul><ul><li>Patents </li></ul><ul><li>Trademarks </li></ul><ul><li>Counterfeit goods </li></ul>Van Schaik Publishers
  16. 16. COPYRIGHTS <ul><li>Berne Copyright Convention </li></ul><ul><li>Copyright Act and Copyright Amendment Act </li></ul><ul><li>Copyright protects the author of original works from others making a reproduction of the copyright work </li></ul><ul><li>Works that qualify: </li></ul><ul><ul><li>Literary works; Musical works; Artistic works; Cinematograph films; Sound recordings; Broadcasts; Programme-carrying signals; Published editions; Computer programs </li></ul></ul><ul><li>Automatically obtained </li></ul><ul><li>Registration with CIPRO </li></ul><ul><li>Endures for lifetime of author </li></ul>Van Schaik Publishers
  17. 17. DESIGNS <ul><li>Registration essential </li></ul><ul><li>Design Act grants protection for: </li></ul><ul><ul><li>Aesthetic designs </li></ul></ul><ul><ul><ul><li>Features of appearance of articles </li></ul></ul></ul><ul><ul><li>Functional designs </li></ul></ul><ul><ul><ul><li>Features of an article which are necessitated by the function the article has to perform </li></ul></ul></ul><ul><li>Registrar of Designs at CIPRO </li></ul><ul><li>Design registration gives the owner the right to prevent others from making, importing, using or disposing of the article in South Africa </li></ul><ul><li>Application need to filed for protection in other countries </li></ul>Van Schaik Publishers
  18. 18. PATENTS <ul><li>The registered exclusive right of an inventor to make, use or sell an invention </li></ul><ul><li>Two types of patents </li></ul><ul><ul><li>Design patent: the appearance of a product </li></ul></ul><ul><ul><li>Utility patent: a new process or function of a product </li></ul></ul><ul><li>Registrar of Patents (CIPRO) </li></ul><ul><li>20 years protection </li></ul><ul><li>Patents Act </li></ul><ul><li>Patent Corporation Treaty </li></ul><ul><li>Inventions marked with “Patent Applied For” or “Patent” </li></ul>Van Schaik Publishers
  19. 19. TRADEMARKS <ul><li>Any work, phrase, symbol, design, sound, smell, colour, product configuration, group of letters or numbers, or combination of these, adapted and used by a business to identify its products or service and distinguish them from others </li></ul><ul><li>Primary purpose: to prevent consumers form becoming confused about the source or origin or a product or service </li></ul><ul><li>Registration at CIPRO </li></ul><ul><li>Registration applies for 10 years </li></ul>Van Schaik Publishers
  20. 20. COUNTERFEIT GOODS <ul><li>The manufacturing, production or making of any goods, in SA or elsewhere, without the authority of owner of the intellectual property rights </li></ul><ul><li>Counterfeit Goods Act </li></ul><ul><li>Examples: Designer labelled clothing, hit music on video tapes, artistic works, computer software </li></ul>Van Schaik Publishers
  21. 21. TAXATION <ul><li>Receiver of Revenue </li></ul><ul><li>Pay As You Earn (PAYE) and Standard Income Tax on Employees (SITE) </li></ul><ul><li>Value Added Tax (VAT) </li></ul>Van Schaik Publishers
  22. 22. LEGAL ASPECTS IN THE NORMAL FLOW OF BUSINESS <ul><li>Unemployment Insurance Fund (UIF) </li></ul><ul><li>Compensation Fund </li></ul><ul><li>Trade licenses </li></ul><ul><li>Regional Services levies </li></ul>Van Schaik Publishers
  23. 23. LEGAL ASPECTS IN THE NORMAL FLOW OF BUSINESS <ul><li>Concluding contracts </li></ul><ul><li>Licensing </li></ul><ul><li>Labour legislation governing employment in SA </li></ul><ul><ul><li>Labour Relations Act </li></ul></ul><ul><ul><li>Basic Conditions of Employment Act </li></ul></ul><ul><ul><li>Occupational Health and Safety Act </li></ul></ul><ul><ul><li>Skills Development Act </li></ul></ul><ul><ul><li>Skills Development Levies Act </li></ul></ul><ul><ul><li>Employment Equity Act </li></ul></ul>Van Schaik Publishers
  24. 24. LEGAL ASPECTS IN THE NORMAL FLOW OF BUSINESS <ul><li>Product liability </li></ul><ul><li>Standards </li></ul><ul><li>Fair trade, competition and consumer protection </li></ul><ul><li>Environmental legislation </li></ul><ul><li>Promotion of Access to Information Act </li></ul><ul><li>Usury Act </li></ul>Van Schaik Publishers

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