legal aspects for the new entrepreneurs1

7/27/2019 Legal Aspects for the New Entrepreneurs1

1/30

Dr. Ramappa

Legal Aspects for the new

Entrepreneurs


2/30

Basic Knowledge of laws helps To be familiar with regulations

To make out of court settlements through civil actions

To take preventive measures to keep his assets

To design products, product packaging, writing

advertisements and distributing pamphlets

To obtain property rights like patents, trademarks or

copyrights for himself and build valuable assets

To achieve better bargaining power or income or

royalties for his assets

To be a better negotiator in contract finalisation

To protect one own ideas

Not to infringe on others properties


3/30

Legal Aspects

They reflect the policy framework and the mindset of the Governmental structure of that country.

They ensure that every company is functioning as

per the statutory framework of the country.

It is necessary for efficient and healthy functioning

of the organisation and helps it to know about the

rights, responsibilities as well as the challenges

that it may have to face.


4/30

Few Essential laws

The most important law which regulates allaspects relating to a company is the Companies

Act,1956.

It contains provisions relating to

Formation of a company,

Powers and responsibilities of the directors and

managers, raising of capital, holding company

meetings, maintenance and audit of company

accounts, powers of inspection and investigation ofcompany affairs, reconstruction and

Amalgamation of a company and even winding up

of a company.


5/30

Few Essential laws

The Indian Contract Act,1872, is another legislation

which regulates all the transactions of a company.

It lays down the general principles relating to the

formation and enforceability of contracts;Rules governing the provisions of an agreement and

offer;

The various types of contracts including those of

indemnity and guarantee, bailment and pledge and

agency.

It also contains provisions pertaining to breach of a

contract.


6/30

Other major laws in India

The other major legislations are:-

The Industries (Development and

Regulation) Act 1951;

Trade Unions Act;The Competition Act, 2002;

The Arbitration and Conciliation Act, 1996;

The Foreign Exchange Management Act

(FEMA),1999;

Laws relating to Intellectual Property Rights;

as well as laws relating to labour welfare.


7/30

The Industries (Development and

Regulation) Act 1951

Who Require LicenceEvery existing industrial undertaking (Not being

Central Govt.) in the private sector requirelicence.

When Registration is not Necessary

1. Small Scale Industry

2. Otherwise exempt from the license

3. Not cover in definition of Factory4. 100%EOU/SEZ


8/30

When is Licence Required

1. Licence for manufacturing of New Articles2. Licence for carrying on Business without

Registration

3. Licence of New undertaking

4. Licence for carrying on business after therevocation of certificate of registration

5. Licence for change in location

Power of IDRA

Power of Inspection

To take over the management of the Industrial

Undertaking

Give order for control the price and


9/30

Power of Central Government after

Investigation Sec-16

fix the standard of production

to control the price

to take such step for development of the

undertaking.

prohibit any practice which reduce there

production


10/30

Industrial Licence is

compulsory

Alcoholic drinks

Cigar and Cigarettes of tobacco

Defence equipment

Hazardous chemicals Drugs and pharmaceutics


11/30

Trade Unions Act; Development of modern industry in Western

countries traced back to the 18th century. In

India commenced from the middle of the

19th century.

The first organised Trade Union in India

named as the Madras Labour Union was

formed in the year 1918.

Similarly, entrepreneurs also formed theirorganisations to protect their interests. In

1926, the Trade Unions Act was passed by

the Indian Government.

The Act gave legal status to the Registered


12/30

Trade Unions Act;

These registered Trade Unions (Workers &Employers) are required to submit annual

statutory return to the Registrar regarding

their membership, General Funds, Sources of

Income and Items of Expenditure and details

of their assets and liabilities, which in turn

submit consolidated return of their state in the

prescribed proformae to Labour Bureau. The Act gives protection to registered trade

unions in certain cases against civil and

criminal action.


13/30

The Competition Act, 2002

Competition is an amalgam of factors thatstimulate economic rivalry

Is a tool to mount market pressure to penaliselaggards and to reward the enterprising

COMPETITION POLICY - GOALS

is an amalgam of factors that stimulateeconomic rivalry

efficiency in production and allocation ofgoods and services

innovation and adjustment to technologicalchange

sustained economic growth

(MONOPOLIES AND RESTRICTIVE TRADE PRACTICES


14/30

Laws relating to Arbitration &

Conciliation

Domestic ArbitrationIt is defined as an alternative dispute resolution

mechanism in which the parties get their disputes

settled through the intervention of a third person

and without having recourse to the court of law.It is a mode in which the dispute is referred to a

nominated person who decides the issue in a quasi-

judicial manner after hearing both sides.

Generally, the disputing parties refer their case toan arbitral tribunal and the decision arrived at by the

tribunal is known as an 'award.


15/30


16/30


Conciliation

Conciliation is defined as the process ofamicable settlement of disputes by the parties

with the assistance of a conciliator.

It differs from arbitration in the sense that in

arbitration the award is the decision of the third

party or the arbitral tribunal, while in the case of

conciliation the decision is of the parties which is

arrived at with the mediation of the conciliator.


17/30


Conciliation

It repealed the three statutory provisions forarbitration:-

(i) the Arbitration Act, 1940;

(ii) the Arbitration (Protocol and Convention)

Act, 1937; and

(iii) the Foreign Awards (Recognition and

Enforcement) Act, 1961.


18/30

Laws relating to Intellectual

Property Rights (IPRs)

Intellectual property(IP) is the creation of human

intellect.

It refers to the ideas, knowledge, invention,

innovation, creativity, research etc, all being theproduct of human mind and is similar to any property,

whether movable or immovable, wherein the

proprietor or the owner may exclusively use his

property at will and has the right to prevent othersfrom using it, without his permission.

The rights relating to intellectual property are known

as 'Intellectual Property Rights.


19/30

Intellectual property rights are

customarily divided into two main

areas:-1, Copyright and rights related to copyright:-

the rights of authors of literary and artistic works

(such as books and other writings, musical

compositions, paintings, sculpture, computerprograms and films) are protected by copyright.

Also, protection is granted to related or

neighbouring rights like the rights of performers

(e.g. actors, singers and musicians), producers ofphonograms (sound recordings) and broadcasting

organizations.

I ll l i h


20/30

Intellectual property rights are

customarily divided into two main

areas:-2, Industrial property,which is divided into two main areas:-

the protection of distinctive signs, in particular

trademarks(which distinguish the goods or services ofone undertaking from those of other undertakings) and

geographical indications (which identify a good as

originating in a place where a given characteristic of

the good is essentially attributable to its geographical

origin).

Other types of industrial property are protected

primarily to stimulate innovation, design and the

creation of technology. This category includes

inventions (protected by patents), industrial designs


21/30

Licensing Defined as contractual agreement between two

parties where one party has property rights oversome information, processes or know-how ortechnology agrees to give its rights for use of the

said intellectual property in return for a royalty ora fee.

The licenser is the holder of the intellectualproperty who in turn gives the rights for use ofsuch IP to a licensee against payment of royaltyor specified sum.

The licensing helps for growth of business invarious countries without actually making anyinvestment in many countries or having

experience in those overseas markets.


22/30

Product Safety

Product safety and product liability areresponsibilities of the entrepreneur for his new

venture to meet the legal requirements of the new

product being introduced.

An entrepreneur should follow procedures andtesting methods so that the product is safe and

meets statutory requirements.

The product liability generally fall in the following

categories:

I. Misrepresentation:the quality content or

manufacture of the product be represented

properly to avoid the legal cases of

misrepresentation in packing and advertising.


23/30

Product Safety

II. Warranty: if the product does not perform forwhich it was purchased. There may be warranty

issues. The customers or the consumers be

warned if there are any possible hazards in use of

the product.

III. Negligence:may occur at any stage of the

production such as raw-materials, marketing,

quality checks, falsification and the like.


24/30

Key Regulations

The most important regulation relates to theenvironment.

The environmental regulatory requirements

envisage a wide legislative framework covering

every aspect of environment protection. Broadly, it includes the emission standards for air,

noise, water, etc.

Separate set of laws for emission of hazardous

wastes have also been enacted. Every industry has to abide by these guidelines and

parameters for environmental protection.


25/30

Key Regulations

An organization for its smooth and effective

functioning, must ensure health and safety of its

employees. The major legislations relating to

Occupational Health and Safety in India are:-

the Factories Act, 1948;

the Mines Act, 1952 and the Dock Workers (Safety,

Health & Welfare) Act, 1986.

The Directorate General of Mines Safety (DGMS) and

the Directorate General of Factory Advice Service and

Labour Institutes (DGFASLI) are the two field

organisations of the Ministry of Labour and

Employment in the area of occupational safety and

health in mines, factories and ports.


26/30

Key Regulations

the Government of India has taken steps like,announcing a competition policy, enacting

Competition Act, 2002 and setting up of

Competition Commission of India,

in order to ensure a healthy and fair competition inthe market economy.

These aim to prohibit the anti-competitive business

practices, abuse of dominance by an enterprise as

well as regulate various business combinations likemergers and acquisitions.


27/30

Key Regulations

For regulation ofthe export and import ofgoods and services an entrepreneur has to

abide by the Foreign Trade (Development and

Regulation) Act, 1992 and the EXIM policy

announced by the Government from time totime.


28/30

Laws relating to Doing Business

Abroad

An entrepreneur while expanding and growinghis/her business abroad must take into account

the basic legal framework of the particular foreign

country as well.

It is necessary for him/ her to abide by such lawsand regulations in order to ensure efficient and

healthy functioning of the organisation and face

the various challenges that he/ she may

encounter abroad.


29/30


Abroad

In order to encourage capital inflows and provide safebusiness environment for all investments abroad, manycountries have entered into bilateral investment treatiesor agreements.

Bilateral Investment Promotion and ProtectionAgreement (BIPA) which is defined as an agreement between two countries

(or States) for the reciprocal encouragement, promotion andprotection of investments in each other's territories by the

companies based in either country (or State). These bilateral agreements have, by and large, standard

elements and provide a legal basis for enforcing the rights ofthe investors in the countries involved.

The GOI, so far, signed BIPAs with 82 countries out of which

72 BIPAs (as on July 2012) have already come into forceand the remainin a reements are in the rocess of bein


30/30


Abroad

The most important law which regulates allforeign exchange transactions including

investments abroad is the Foreign Exchange

Management Act (FEMA),1999.

It is an investor friendly legislation which aims tofacilitate external trade and payments as well as

promote an orderly development and maintenance

of foreign exchange market.

Under the Act, Reserve Bank of India (RBI) hasbeen authorised to frame various rules, regulations

and norms pertaining to overseas investments in

consultation with the Central Government.

legal aspects for the new entrepreneurs1

Documents