Answer Following

• Who owns the business?

• Who raises start-up capital?
• Who controls the business?
• Who manages it?
• Who claims the profits?
• Are the owners personally liable for losses?
• Does the business need to publish (disclose,
unveil) its accounts?
• ...
 Words, words... Opposites?

• Privately-held
companies
• Limited liability
• Incorporated business
• Legal entity (legal
person)
 Opposites (key)

• Privately-held • Publicly-held
companies companies
• Limited liability • Unlimited liability
• Incorporated business • Unincorporated
• Legal entity (legal business
person) • Natural person
(physical person)
 Match the two columns:
• Set up • a profit
• Be liable • the Board
• Make • a loss
• Make • a company
• Claim • Shares
• Issue • a business
• Elect • the company’s accounts
• Disclose • for the company’s debts
• Take over • profits
 Key:
• Set up • a business
• Be liable • for debts
• Make • a profit
• Make • a loss
• Claim • the profits
• Issue • Shares
• Elect • the Board
• Disclose • Accounts
• Take over • A company
 Examples

1.Sole proprietorship
s. trader, s. owner, s. proprietor
2.Partnership: general partnership,
limited partnership
3.Private-limited company
4.Public-limited company
Answer the questions (Activity)
1.Sole proprietorship • Who owns the business?
• Who raises start-up capital?
2.Partnership • Who controls the business?
• Who manages it?
3.Private-limited company • Who claims the profits?
• Are the owners personally
4.Public-limited company liable for losses?
• Does the business need to
disclose its accounts?
Answer the questions (Activity)

1.Sole proprietorship • Ownership?

• Start-up capital?
2.Partnership • Control?
• Management?
3.Private-limited • Claim on profits?
company • Liability?
• Disclosure?
4.Public-limited company
 Describing businesses

• ...is a type of business which ...

• It is controlled by ... and managed by...
• This business is financed by ...
• Business decisions are made by ...
• ... has/have a claim on profits.
• ... is (are) /is not(are not) personally
liable for ... because this business has
limited/unlimited liability.
 Privately-held vs. publicly-held companies

• Privately-held companies are owned by the company's

founders, management or a group of private investors.

• A public company is a company that has sold a portion of

itself to the public via an initial public offering of some of
its stock. The company’s shares are listed on the stock
exchange.

• Attention! The meaning of “public”:

private sector vs. public sector
 Business
BusinessActivities
Activities

Types
Typesof
ofBusiness
BusinessEntities
Entities

Legal
Legal&Regulatory
&RegulatoryFramework
Framework

Ethical
EthicalFramework
Framework
 The Existing Regulatory/Ethical Framework

Regulatory Types Legal &Ethical

Legal Ethical
Jurisdiction of Courts (Section 7)

High Court -where the Registered Office of

the Company is situated

Civil Court -FG may empower through

Notification in the Official
Gazette Civil Court of the
territorial jurisdiction where
registered office is locate
15
 Jurisdiction of Courts (Section 7)

• (2) For the purposes of jurisdiction to wind up

companies, the expression "registered office"
means the place which has longest been the
registered office of the company during the six
months immediately preceding the presentation
of the petition for winding up.
(3) Nothing in this section shall invalidate a
proceeding by reason of its being taken in a
Court other than the High Court or a Court
empowered under subsection (1).
16
 Constitution of Company Benches
(Section 8)

One or more benches, “Company Benches”,

in High Court, to be constituted by CJ of HC
for jurisdiction u/s 7

17
 Procedure of a Court
(Section 9)

• (1) Notwithstanding anything contained in any other

law, all matters coming before the Court under this
Ordinance shall be disposed of, and the judgment
pronounced, as expeditiously as possible but not
later than ninety days from the date of presentation
of the petition or application to the Court and,
except in extraordinary circumstances and on
grounds to be recorded, the Court shall hear the
case from day-to-day.
Explanation: In this sub-section, "judgment" means
a final judgment recorded in writing.
18
 Procedure of a Court
(Section 9)

• (2) The hearing of the matters referred to in

sub-section (1) shall not be adjourned except
for sufficient cause to be recorded, or for
more than fourteen days at any one time or
for more than thirty days in all.

• (3) In the exercise of its jurisdiction as

aforesaid, the Court shall, in all matters
before it, follow the summary procedure.
19
• 10. Appeals against Court orders:

(1) Notwithstanding anything contained in any

other law, an appeal against any order,
decision or judgment of the Court under this
Ordinance shall lie to the Supreme Court
where the company ordered to be wound up
has a paid-up share capital of not less than
one million rupees; and, where the company
ordered to be wound up has paid-up capital of
less than one million rupees, or has no share
capital, such appeal shall lie only if the
Supreme Court grants leave to appeal.
20
 Adjudication & Appeals

High Court (or Civil Court by Notification)

-1st level of Adjudication
Supreme Court
-Appeal, if paid-up share capital 1mn
+
-Leave to Appeal, if paid-up share
capital less than 1 mn
21
 Adjudication & Appeals
High Court (or Civil Court by Notification)
-1st level of Adjudication
-case to be disposed of within 90 days
Supreme Court
-Appeal, if paid-up share capital 1mn +
-Leave to Appeal, if paid-up share
capital less than 1 mn
-case to be disposed of within 90 days
of the submission of the Appeal
22
• 10. Appeals against Court orders:

• (2) Save as provided in sub-section (1), an

appeal from any order made or decision given
by the Court shall lie in the same manner in
which and subject to the same conditions
under which appeals lie from any order or
decision of the Court.
• (3) An appeal preferred under sub-section (2)
shall be finally disposed of by the Court
hearing the appeal within ninety days of the
submission of the appeal.
23
 Purpose of a Business

• Make profit
• Revenue – Expenses = net income
• Non-profit making organisation, money
left over is reinvested for improving
services
• Red Cross
 Economic Responsibility and Opportunity

• Business is the engine of economic growth

and improvement in living standards.
• Business innovates and produces the goods
and services on which we depend.
• Business is the transnational agent of the
exchange of goods and services.
Social Responsibility and Opportunity

• Business provides livelihoods, education,

and healthcare for its employees and their
families.
• Business influences government and non-
government institutions and is subject to
transparent and democratic process of free
markets and corporate governance.
 Environmental Responsibility and Opportunity
• Business is the major consumer, polluter and exploiter of common
natural resources.
• Business has the innovative and economic capacity to clean, restore,
and conserve natural resources.
• The energy of commerce and creativity of capitalism can turn
sustainability into a major business opportunity and accelerate the global
path to sustainability.
• The contribution of business as the engine of economic growth does not
mitigate business’ responsibility for its impacts upon the environment
and society. Similarly, government’s role as the protector of the
environment and society do not mitigate government’s responsibility for
its impact upon the environment and economic growth.
 Business

• Today we recognize the interdependence of

all actors in the economy and - in a notable
paradigm shift - business is now recognized
as a social and environmental citizen and not
solely as an organization for the generation of
profits.
Classification of Businesses Activities
Classification of Business Activities

Manufacturing
Manufacturing

Trading
Trading

Services
Services
 Two Sectors

The economy can be divided into two

sectors:

•The Private Sector

•The Public Sector

 The Private Sector

• Private individuals/groups and firms that are

owned by private individuals
• Firms in the private sector include:
• Sole Proprietorship
• Private Limited Companies (Ltd)
• Partnerships
• Public Limited Companies
• Guarantee Limited Companies
 The Public Sector

• Made up of central government, local government,

and businesses that are owned by government
• In the last twenty years the number of government-
owned firms in the Pakistan has shrunk massively
• Now, very few examples remain: for instance, PIA,
Pak Railways, PSM
 Private Sector Firms

One of the key differences is between:

• Sole traders and partnerships
whose liability is unlimited

And

• Private Limited, Public Limited and Guarantee

Limited Companies, who have ‘limited liability’
 Other Business Types

• Co-operatives are owned by their staff,

who are ‘members’ of the firm
• Profits are shared
amongst the members
• Losses too must be shared
 Not For Profit Businesses
• Many charity-based business organisations are
run as ‘not for profit’ operations
• They typically receive donations
or funds from groups or government
• Any financial surplus is ploughed back into the
business
• The organisation does not aim to generate profits
 Different Types of Business
Sole Proprietorship
1 Member
Privates
Partnerships Limited
Companies
Privates
Guarantee Limited
Limited Types of Businesses Companies
Companies

Public Limited
Company
Non-Profit Companies Companies

Govt Owned Enterprises

 Sole Traders
• Its very easy to set up as a sole trader.
• Sole Traders contribute to sizable % of the
Pakistan’s Economy.
• High Risk is involved in owning a sole trader
business you are liable for the business.
• A sole trader is owned by and controlled by
one person. 
 Sole Traders : Personal Qualities
• You will need certain qualities to succeed as a sole proprietor.
Some of the most important are:
Organisational Skills

Persistence
Enthusiasm

Ability to work hard

Willingness to take risks

Tolerance and Patience

 Sole Traders

• A Sole Trader has to make all the

decisions about the business.
• Sole Trader has to use their own money
or borrow money from friends or banks.
• The trust, banks and the government
give start up grants to young/deserving
people setting up a business.
• Sole Traders have unlimited liability.
 Partnerships

• Partnerships are owned by at least 2 partners



• You can have up to……..

 20
people as partners.

• Sleeping partners take no active role / part in the

business.
• Responsibility is shared and different people
bring in expertise.
• Partners also have unlimited liability.
 Partnerships
• Most Partnerships write a Deed of Partnerships – a
set of rules to follow if trust between the partners
break down.

• The deed covers the sharing of profits and losses,

the financial contribution of each partner, their
responsibilities, and how to add more partners.

• 1932 Partnership Act means that without a deed

the partners will share all losses and all profits
equally.
Do’s and Don’ts of Growth
and Partnering
• Do
• Choose Partners that will
Produce “Win-Wins”
• Have Integrity
• Be Competitive

• Don’t be Afraid to Think Out of the

Box
 Choosing an Entity

• Considerations:
• Simplicity and Cost
• Liability Protection
• Tax Considerations
• Credibility
• Ability to have Shareholders: reward
employees/raise capital
 Stakeholders

• Anyone who affects or is affected by an

organisation

• Primary stakeholders - those without whom

org cannot survive
• shareholders, customers, employees
• Secondary
• community, environment, opinion formers
 Legal & Regulatory Framework for Businesses

Comp
Comp Ord,
Ord, 1984
1984
SECP
SECPAct,
Act,1997
1997 SEOrd,
SE Ord,1969
1969

Tax
TaxStatutes
Statutes
Your
Your SBP1956
SBP 1956
Company
Company

Codeof
Code ofC.Govr.
C.Govr. IFRS
IFRS
CA Ord,
CA Ord, 1961
1961
 The Stakeholder Based View
Who are my stakeholders?

Local
Govts
authorities

NGOs Media

Business
Employees
organisations

Customers Your Company Investors

Consumers Universities

Local
Suppliers Insurance communities
companies
 Your Company in a Societal Context

Impacts
Impacts Local
Local
Pollutes Economies
Economies
PollutesShared
Shared SupportsWorkers
Supports Workers
Environments
Environments andFamilies
and Families

Provides
ProvidesGoods
Goods Your
Your UsesCommunal
Uses Communal
&&Services
Services Company Resources
Resources
Company

Consumes
Consumes Provides
ProvidesHealth
Health
LimitedResources
Limited Resources Influences Care & Education
Care & Education
Influences
Government
Government
 Ethical, Legal & Regulatory Framework

Legal & Regulatory Control

Bad

. Ethical/Social Control
What is corporate responsibility?
The triple bottom line

Environment

Economic

Social
 The Global Compact

• Human Rights
• Human Rights within sphere of influence
• Complicity with rights violations - repression & conflict

• Labour
• The right to collective bargaining & freedom of association
• Eliminate forced and compulsory labour
• To effectively abolish child labour
• To end discrimination in the workplace

• Environment
• To support a precautionary approach to the environment
• Promote greater environmental responsibility
• Encourage the diffusion of environmentally friendly technology

• Anti- Corruption
• Work against all forms of corruption, including extortion and bribery
 What is corporate social responsibility?
The traditional model

Philanthropy in response to appeals for help

Social responsibility from society and social investment in projects
of long-term importance to the company

The benefits of business This is the core activity of the

•Investment company providing the goods and
•Jobs created services society wants
Business •Taxes paid
•Goods & Services
•Technology transfer
•Import substitution
•Export earnings
•Development of suppliers
•Human Resources Development
 Four-Part model of Corporate Social Responsibility

Type of Responsibility Societal

Expectation Examples

Corporate contributions.
DESIRED of
Philanthropic Programs supporting community/education.
business by
Community involvement/improvement; volunteerism
society
Avoid questionable practices.
EXPECTED of Respond to “spirit” of laws.
Ethical business by society Assume law is a floor behavior; operate above minimum
required by law.
Assert ethical leadership.

Obey all laws; adhere to regulations.

Environmental laws.
REQUIRED of
Legal Consumer laws.
business by society Laws affecting all employees.
Obey Foreign Corrupt Practices Act.
Fulfil all contractual obligations.

Be profitable.
REQUIRED of
Maximise sales revenue.
Economic business by society
Minimize costs (administrative, production, marketing, distribution).
Make wise strategic decisions.
Be attentive to dividend policy
The Three-Domain Model of Corporate Social Responsibility

(iii) Purely Ethical

(iv) Economic / (vi) Legal /

Ethical Ethical

(vii) Economic /
Legal / Ethical

(v) Economic /
(i) Purely Economic Legal (ii) Purely Legal
 Corporate Social Responsibility “Portraits”

Ethical Ethical

Economic Legal
Legal Econ

Economic Orientation (e.g., CEO of Co.) Legal Orientation (e.g, Legal Dept)

Ethical Ethical

Econ Legal
Econ Legal

Ethical Orientation (e.g., Consumers’ “Desired” Co) Balanced Orientation (e.g., Co

Businesses must be Responsible:
Social
Ethical
Legal

Just like him!