Module 5-Hours)

Process of Company Incorporation; the process of registration of a private limited

company, a public limited company, or a partnership; Characteristics of a limited
liability partnership; Four stages of start-up, Intellectual property protection and
Ethics: Patents, Copyright - Trademark- Geographical indications, Ethical and social
responsibility and challenges.

Company?

A company is a legal entity formed by a group of individuals, known as shareholders or members, to

engage in business activities with the aim of generating profit.
It is an artificial person created by law, distinct from its shareholders, with its own rights, obligations,
and liabilities. Companies can vary in size, structure, and ownership, ranging from small startups to
large multinational corporations.
Incorporation?
Incorporation refers to the process of legally forming a company and obtaining recognition as a separate
legal entity under the law. It involves registering the company with the appropriate government
authorities and complying with statutory requirements and regulations.

Here's an example to illustrate company incorporation:

Example: ABC Pvt. Ltd.

Steps in Incorporation of a Company

The process of company formation begins with the selection of a suitable business
structure, such as a private limited company, public limited company, or limited
liability partnership (LLP), based on the nature and scale of the business.

The subsequent steps are concerned with the incorporation of a corporation.

1. Choose your business structure: The first step is to decide on the most suitable
business structure for your company. This will depend on various factors such as the
number of founders, liability protection, and the need for raising capital. Some of the
common types of business structures in India include:

 Private Limited Company (PLC): This is the most popular choice for startups and
small businesses. It offers limited liability protection to its shareholders and requires a
minimum of two directors and two shareholders.
 One Person Company (OPC): This is a simplified form of a PLC designed for single
entrepreneurs. It requires only one director and one shareholder but can convert to a
PLC later if needed.

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Assistant Professor
MBA
  Limited Liability Partnership (LLP): This structure is similar to a PLC but offers
more flexibility in internal management. It's suitable for businesses where partners
share profits and losses based on pre-determined agreements.
 Public Limited Company: This is a larger company that can raise funds by selling
shares to the public. It has stricter compliance requirements compared to other
structures.

2. Obtain Director Identification Number (DIN): Each director of the company needs
a DIN, which is a unique identification number issued by the Ministry of Corporate
Affairs (MCA). You can apply for DIN online through the MCA portal.
3. Digital Signature Certificate (DSC): A DSC is a digital signature that acts as proof
of identity for online filings. Each director who will be signing the company's e-forms
needs to obtain a DSC.
4. Company Name Approval: Choose a unique and available name for your company.
You can check for name availability and apply for name approval online through the
MCA portal.
5. Prepare Memorandum of Association (MoA) and Articles of Association (AoA):
The MoA is a document that outlines the company's objectives and the AoA defines the
internal rules and regulations of the company.
6. Company Incorporation: Once you have all the required documents, you can file for
company incorporation online through the MCA portal using the SPICe+ form. This
form incorporates several functionalities like DIN application, name reservation, and
company incorporation.
7. Verification and Approval: The ROC verifies the documents submitted for
incorporation and conducts due diligence to ensure compliance with legal requirements.
Upon satisfaction, the ROC issues a Certificate of Incorporation, confirming the
formation of the company.
8. Obtain Permanent Account Number (PAN) and Tax Account Number (TAN):
After successful incorporation, you'll need to apply for a PAN (issued by the Income
Tax Department) and TAN (issued by the Tax Information Network) for your company.
These are essential for filing tax returns.
9. Commencement of Business: After obtaining the Certificate of Incorporation, the
company can commence its business activities. In the case of a public company, it must
also obtain a separate Certificate of Commencement of Business before initiating
business operations.
10. Statutory Compliance: Once incorporated, the company must comply with various
statutory requirements under the Companies Act, such as maintaining statutory
registers, filing annual returns, conducting board meetings, and complying with
accounting and auditing standards.
11. Ongoing Compliance: The company must adhere to ongoing compliance obligations,
such as filing annual financial statements, holding annual general meetings (AGMs),
appointing auditors, and complying with tax laws, regulatory requirements, and
corporate governance norms.

Company incorporation under the Companies Act of India involves a structured legal process to
establish a corporate entity, define its legal framework, and commence business operations in
compliance with applicable laws and regulations.

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Assistant Professor
MBA
 Private Limited Company

A private limited company is a type of business structure where the liability of its members
(shareholders) is limited to the amount of capital they have invested in the company. It is a separate
legal entity distinct from its shareholders, which means the company can own assets, incur liabilities,
enter into contracts, and sue or be sued in its own name.
Characteristics of PLC

 Membership:
o Requires a minimum of two shareholders to start.
o Limits the number of members to 200.
o Requires two directors to run the company.
 Limited Liability Structure:
o Shareholders’ liability is limited.
o Personal assets of shareholders are not at risk.
 Separate Legal Entity:
o Exists as a separate legal entity.
o Continues in perpetual succession even if members change.
 Raising Capital:
o Allows entrepreneurs to raise funds through equity.
o Balances expansion and liability.
 Trustworthiness:
o Registered with the Registrar of Companies (ROC).
o Provides transparency and builds trust.
 Continued Existence:
o Enjoys uninterrupted existence until legally dissolved.

Here's the detailed process of registration for a private limited company:

 Choose Your Business Structure: A private limited company is a popular choice for
startups and small businesses because it offers limited liability protection to its
shareholders. It requires a minimum of two directors and two shareholders.
 Obtain Director Identification Number (DIN): Each director of the company needs a
DIN, which is a unique identification number issued by the Ministry of Corporate Affairs
(MCA). You can apply for DIN online through the MCA portal.
 Digital Signature Certificate (DSC): A DSC is a digital signature that acts as proof of
identity for online filings. Each director who will be signing the company's e-forms needs
to obtain a DSC.
 Company Name Approval: Choose a unique and available name for your company. You
can check for name availability and apply for name approval online through the MCA
portal.

 Preparation of Incorporation Documents: After finalizing the MOA and AOA, the
following documents need to be prepared:
 Consent of shareholders and directors to act as such.

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Assistant Professor
MBA
  Declaration of compliance with the requirements of the Companies Act, 2013.
 Details of directors, shareholders, and their proof of identity and address.
 Filing of Incorporation Application: Once the necessary documents are prepared, an
application for incorporation of the company is filed with the ROC. The application should
include:
 Form SPICe (Simplified Proforma for Incorporating Company Electronically) -
This form integrates the process for obtaining Director Identification Number
(DIN), Name Approval, and Incorporation application into a single form.
 MOA and AOA.
 Declaration by a professional (Chartered Accountant, Company Secretary, or Cost
Accountant) certifying compliance with the requirements of the Companies Act.
 Verification and Approval: The ROC verifies the application and documents submitted
for compliance with legal requirements. If satisfied, the ROC issues a Certificate of
Incorporation, confirming the formation of the private limited company. The Certificate of
Incorporation contains the company's Corporate Identification Number (CIN) and is proof
of its legal existence.
 Post-Incorporation Formalities: After incorporation, the company must undertake
certain post-registration formalities, including:
 Opening a bank account in the company's name.
 Obtaining necessary registrations, such as Goods and Services Tax (GST)
registration, Permanent Account Number (PAN), and Tax Deduction and
Collection Account Number (TAN).
 Printing of the company's name, address, and CIN on business documents,
letterheads, and other stationery.
 Commencement of Business: Once the Certificate of Incorporation is obtained, the
company can commence its business activities and operations. However, if the company
intends to commence business immediately after incorporation, it must file a declaration of
commencement of business with the ROC within 180 days of incorporation.
By following these steps, a private limited company can be successfully registered and legally
established to conduct business operations.

Benefits of Registering a Public Limited Company

1. Limited Liability of the shareholders: In Public Company registration, the

liability of the shareholder and Directors is limited to the extent of the shares
they hold in the company. For example, if the company suffers from any
financial contingencies because of primary business activity, then in such case
personal assets of shareholders and Directors will not be snatched by the Banks,
creditors, and government.

2. Raising the capital through Public Issue In the case of Public Company
Registration, the proposed company can raise funds through the Public.

3. Separate Legal Entity Shareholders and Directors may come and go, but the
existence of the company continues to exist. i.e., the absence of movement of
any shareholder in the company will not affect the existence of the company.

4. Unlimited source of raising funds The company has an unlimited source of

raising funds through the Public which results in the pursuance of new projects
and for capturing the new market.

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Assistant Professor
MBA
 5. Easy Transferability The shares of a public limited company are easily
transferable. Shares of the company are listed on a stock exchange; the
shareholders find it is easy to transfer the share in the company. In the case of
Public Company Registration, shareholders are less bound to remain with the
company, which results in making people more willing to invest.

6. Maintains Transparency Because of Public involvement, the company

publishes its statutory details and reports to maintain greater transparency and
also to provide accurate information of its current financial position.

7. Maintains the Brand Position Being registered as a Public Company improves

the brand position of the Company. Listing the shares of the company in the stock
exchange enhances the brand position and reputation of the company.

Process of Incorporation of Partnership Company

A partnership firm is one of the most important forms of a business organization. It is

a popular form of business structure in India. A minimum of two persons are required
to establish a partnership firm.

A partnership firm is where two or more persons come together to establish a business
and divide its profits amongst themselves in the agreed ratio. The partnership business
includes any kind of trade, occupation and profession.

The Indian Partnership Act, 1932 governs and regulates partnership firms in India. The
persons who come together to form the partnership firm are knowns as partners. The
partnership firm is constituted under a contract between the partners. The contract
between the partners is known as a partnership deed which regulates the relationship
among the partners and also between the partners and the partnership firm.

The registration of a partnership firm is optional and not compulsory under the Indian
Partnership Act. It is at the discretion of the partners and voluntary. The firm’s
registration can be done at the time of its formation or incorporation or during the
continuance of the partnership business.
However, it is always advisable to register the partnership firm as a registered
partnership firm enjoys certain special rights and benefits as compared to the
unregistered firms. The benefits that a partnership firm enjoys are:

A partner can sue against any partner or the partnership firm for enforcing his rights
arising from a contract against the partner or the firm. In the case of an unregistered
partnership firm, partners cannot sue against the firm or other partners to enforce his
right.

The registered firm can file a suit against any third party for enforcing a right from a
contract. In the case of an unregistered firm, it cannot file a suit against any third party
to enforce a right. However, any third party can file a suit against the unregistered firm.

The registered firm can claim set-off or other proceedings to enforce a right arising from

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Assistant Professor
MBA
 a contract. The unregistered firm cannot claim set off in any proceedings against it.

The procedure to register a partnership firm in India involves the following

steps:

 Selection of Name: Select a unique name for the partnership firm that is not identical or similar
to any existing business or trademark. Ensure that the chosen name complies with the guidelines
provided by the Registrar of Firms.
 Draft a Partnership Deed: Prepare a partnership deed, which is a written agreement between
the partners defining the terms and conditions of the partnership. The partnership deed should
include details such as the name and address of the firm, names and addresses of partners, their
contributions, profit-sharing ratio, rights, and responsibilities of each partner, etc.
 Execution of Partnership Deed: All partners must sign the partnership deed in the presence
of witnesses. Each partner should retain a copy of the executed partnership deed for their
records.
 Obtain PAN and TAN: Apply for a Permanent Account Number (PAN) and Tax Deduction
and Collection Account Number (TAN) for the partnership firm from the Income Tax
Department. PAN is essential for opening a bank account and filing income tax returns, while
TAN is required for deducting and remitting taxes.
 Registration of Partnership Deed: Though registration of a partnership firm is optional, it is
advisable to register it to avail certain benefits. To register the partnership deed, submit the
partnership deed along with the prescribed registration form to the Registrar of Firms in the
jurisdiction where the firm's principal place of business is located.
 Payment of Registration Fee: Pay the prescribed registration fee to the Registrar of Firms.
The registration fee varies depending on the capital contribution and the state in which the firm
is registered.
 Verification and Approval: The Registrar of Firms verifies the documents submitted for
registration. If satisfied, the Registrar registers the partnership firm and issues a Certificate of
Registration. The partnership firm is considered legally established from the date of registration
mentioned in the certificate.
 Publication in Official Gazette (Optional): Some states may require the partnership firm to
publish a notice in the official gazette and local newspapers to announce its formation. This
step may be necessary to complete the registration process in certain states.
 Open Bank Account: After obtaining the Certificate of Registration, the partners should open
a bank account in the name of the partnership firm and deposit the initial capital contributed by
each partner.
 Compliance with Tax and Regulatory Requirements: Ensure compliance with all tax and
regulatory requirements applicable to partnership firms, including GST registration, if
applicable.
By following these steps, a partnership firm can be successfully registered in India, enabling it to
conduct business legally and avail various benefits provided under the law.

Characteristics of a limited liability partnership

A Limited Liability Partnership (LLP) is a unique form of business organization that combines features
of both a partnership and a corporation. In an LLP, partners have limited liability, meaning they are not

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Assistant Professor
MBA
personally liable for the debts and obligations of the firm. LLPs are governed by the Limited Liability
Partnership Act, 2008 in India.

 Limited Liability: One of the key characteristics of an LLP is that partners have limited
liability. This means that the personal assets of partners are protected, and their liability is
limited to their contribution to the LLP. Partners are not personally liable for the debts, losses,
or liabilities of the LLP beyond the amount they have invested.
 Separate Legal Entity: An LLP is a separate legal entity distinct from its partners. It can enter
into contracts, own property, sue or be sued in its own name. The LLP, as a legal entity, is
responsible for its own debts and obligations.
 Flexible Structure: LLPs offer flexibility in terms of management and ownership structure.
There are no restrictions on the maximum number of partners in an LLP, and partners can be
individuals, corporations, or other LLPs. LLPs have the freedom to decide their internal
management structure, profit-sharing arrangements, and decision-making processes.
 Perpetual Succession: An LLP has perpetual succession, meaning its existence is not affected
by changes in the composition of its partners. The death, retirement, or insolvency of a partner
does not affect the continuity of the LLP. The LLP continues to exist until it is wound up or
dissolved as per the provisions of the LLP agreement or the law.
 Limited Regulatory Compliance: LLPs have fewer regulatory compliance requirements
compared to companies. They are not required to hold annual general meetings, maintain
statutory registers, or comply with certain provisions of the Companies Act. However, LLPs
are required to file annual returns and financial statements with the Registrar of Companies.
 Audit Requirement: LLPs are subject to audit requirements based on their turnover and
contribution. LLPs with a turnover exceeding a specified threshold or whose contribution
exceeds a prescribed limit are required to undergo a statutory audit by a qualified auditor.
 Taxation: LLPs are taxed as a partnership, wherein the income of the LLP is taxed in the hands
of the partners. LLPs are not subject to dividend distribution tax, and partners are taxed based
on their share of profits in the LLP.
 Number of Partners: There is a requirement for a minimum of two partners, but there is no
maximum limit, allowing for scalability1.
 Filing Requirements: LLPs are required to maintain annual accounts and file a statement of
accounts and solvency with the Registrar of Companies (ROC) every year

LLP offers the benefits of limited liability along with flexibility in management and ownership, making
it an attractive business structure for professionals, small businesses, and startups.

What is a Startup?
A startup is a new business typically run by one or more entrepreneurs intending to introduce a unique
product or service into a market.
They differ from more traditional business models due to their innovative, risk-taking approach and
goal of achieving sustainable growth before running out of cash.

Common mistakes of Start-Ups/Why do the start-ups fail?

Starting a business can be challenging, and entrepreneurs often encounter various obstacles along the
way. Here are some common mistakes that startups in India, like those elsewhere, may make:

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Assistant Professor
MBA
  Lack of Market Research: Failing to conduct thorough market research to understand
customer needs, market demand, and competition can lead to launching products or services
that don't resonate with the target audience.
 Inadequate Business Planning: Not having a comprehensive business plan covering aspects
such as market analysis, financial projections, marketing strategy, and operational logistics can
result in a lack of direction and clarity in the early stages of the business.
 Poor Financial Management: Mismanaging finances, including underestimating expenses,
overestimating revenue, or failing to secure adequate funding, can lead to cash flow problems
and financial instability.
 Ignoring Legal and Regulatory Compliance: Neglecting to comply with legal and regulatory
requirements, such as business registration, licenses, permits, taxation, and intellectual property
protection, can result in legal issues and penalties.
 Overlooking Marketing and Branding: Underestimating the importance of marketing,
branding, and customer acquisition strategies can hinder visibility, customer engagement, and
growth opportunities for the startup.
 Lack of Scalability: Focusing solely on short-term goals without considering long-term
scalability and growth potential can limit the startup's ability to expand and adapt to changing
market dynamics.
 Hiring the Wrong Team: Recruiting employees or partners who lack the necessary skills,
experience, or alignment with the company's values and vision can impede productivity,
innovation, and overall success.
 Failure to Adapt and Iterate: Being resistant to feedback, market changes, or new
opportunities and sticking rigidly to initial plans or ideas can prevent startups from evolving,
pivoting, or seizing emerging trends.
 Poor Customer Focus: Neglecting to prioritize customer feedback, satisfaction, and retention
can result in losing customers to competitors and hinder building a loyal customer base.
 Unrealistic Expectations: Setting unrealistic expectations for growth, revenue, or success
without considering the inherent challenges and uncertainties of entrepreneurship can lead to
disappointment and disillusionment.

By recognizing these common pitfalls, startups in India can take proactive steps to mitigate risks, learn
from mistakes, and increase their chances of long-term viability and success.

Four Stages of Start-Up

1. Idea and seed stage. In this first stage, a specific idea or passion is solidified into an
executable plan. Typically, this is done by one or more entrepreneurs with personal or

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MBA
 family resources — with no business entity yet formed — so they would not yet be
considered business owners. Market research and a business plan should be the focus
at this stage.

2. Launch and development stage. The development stage normally begins with
designing and prototyping a product or service, and creating the company legal entity.
While legally the entrepreneur has created a business entity, there is nothing of value
yet to own since the company has no solution to offer, no customers and no revenue.

3. Growth and scaling stage. This is the stage where most entrepreneurs exit, get
pushed out, or learn to operate as full-time business owners. Business owners know
that growth, as a business, versus a startup requires replicable and documented
processes, a focus on marketing and sales, personnel management skills and detailed
planning. Another way of determining when an entrepreneur becomes a business owner
is to look for the mindset change required to build and maintain a successful business.
Every entrepreneur needs to compare his strengths and aspirations to this business
mindset:

4. Maturity Stage:-The last stage of the business lifecycle is Maturity. This is when you
should be looking for new opportunities to expand. This might entail building more localized
teams to adapt the product experience to each unique region, looking for acquisition
opportunities that align with your product or mission, and, lastly, investing in your team and
hunting for new growth channels.

Just because the company has reached this stage does not mean that the risks and challenges no longer
pose a threat. Continuing to focus on core competencies while keeping an eye on the market will help
a business continue to operate successfully.

Intellectual property protection and Ethics: Patents, Copyright - Trademark-

Geographical indications, Ethical and social responsibility and challenges.

What is Intellectual Property?

Intellectual Property (IP): Intellectual property refers to creations of the mind, such as inventions,
literary and artistic works, designs, symbols.

What is IPR?
Intellectual Property Rights (IPR): These are legal rights granted to the creators of intellectual property
(IP) to protect their inventions, literary and artistic works, designs, symbols, names, and images used in
commerce. IPR allows the creators or owners to benefit from their own work or investment in a creation.

Examples of intellectual property rights include:

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MBA
 • Patents
• Domain names
• Industrial design
• Confidential information
• Inventions
• Moral rights
• Database rights
• Works of authorship
• Service marks
• Logos
• Trademarks
• Design rights
• Business or trade names
• Commercial secrets
• Computer software

Types of Intellectual Property

There are five main types of intellectual property rights, including patents,
trademarks, copyrights, Geographical Indications and Trade Secrets. Owners of
intellectual property frequently use more than one of these types of intellectual property
law to protect the same intangible assets. For instance, trademark law protects a
product’s name, whereas copyright law covers its tagline.

1. Patent
2. Copyrights
3. Trademarks
4. Geographical Indications (GI)
5. trade secrets

What is a Patent?
A patent is an exclusive legal right granted to an inventor for a limited period, providing the patent
holder with the right to exclude others from making, using, selling, or importing the patented
invention without permission. In return, the inventor must publicly disclose the details of the
invention.
Definition: A patent is an exclusive right granted for an invention, which is a product or a process that
provides a new way of doing something or offers a new technical solution to a problem.
Examples:
Pharmaceutical drugs like Aspirin.
Technological inventions such as the iPhone.

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Assistant Professor
MBA
Types of Patents

 Utility Patents:
o Granted for new and useful inventions or discoveries.
o Covers processes, machines, manufactured items, or compositions of matter.
o Example: A new type of engine.
 Design Patents:
o Granted for new, original, and ornamental designs for an article of manufacture.
o Protects the appearance of an item rather than its utility.
o Example: The unique shape of a smartphone.
 Plant Patents:
o Granted for new and distinct, invented or discovered asexually reproduced plants.
o Example: A new variety of rose.

Advantages of Patents

 Exclusive Rights: The patent holder has the exclusive right to exploit the invention for a set
period.
 Competitive Advantage: Provides a competitive edge by preventing others from using the
patented invention.
 Monetary Benefits: Potential to earn royalties through licensing or selling the patent.
 Recognition: Public disclosure of the invention provides recognition and can enhance the
inventor's reputation.
 Encourages Innovation: Encourages further research and development by providing a time-
limited monopoly.

Disadvantages of Patents
 Costly: High costs involved in obtaining and maintaining patents.
 Time-Consuming: The patent application process can be lengthy and complex.
 Public Disclosure: Requires full public disclosure of the invention, which can be exploited
after the patent expires.
 Limited Duration: Patent protection is time-limited (generally 20 years for utility patents).

2. Copyrights
What is Copyright?
Copyright is the exclusive and assignable legal right, given to the originator for a fixed number of
years, to print, publish, perform, film, or record literary, artistic, or musical material. It protects the
originality of the work and provides exclusive rights to its owner, which include reproduction rights,
adaptation or translation of the work, or publishing in public.

Definition: Copyright is a legal term used to describe the rights that creators have over their literary
and artistic works. It includes books, music, paintings, sculpture, films, computer programs,
databases, advertisements, maps, and technical drawings.
Examples:
Books like "Harry Potter" series by J.K. Rowling.

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MBA
Music albums such as "Thriller" by Michael Jackson.
Films like "The Godfather."

Advantages of Copyright:

 Legal Evidence of Ownership: It serves as legal proof of your ownership as the original
creator.
 Public Record of Ownership: By registering your work, you create a public record of
ownership.
 Eligibility to Sue for Infringement: It grants you the right to sue in federal court.
 Potential for Statutory Damages and Attorney Fees: Having a registered copyright entitles
you to statutory damages and attorney fees.

Disadvantages of Copyright:

 Legal Complexities: It can involve complex legal processes to enforce.

 Limitations on Creative Freedom: There can be potential limitations on how others can
creatively build upon your work.
 Compliance and Risks: Businesses need to navigate compliance and risks associated with
copyright laws

3. Trademarks
What is a trademark?
Trademarks are distinctive signs or symbols used by individuals or businesses to identify and
distinguish their products or services from those of others. They serve as a form of intellectual property
and are protected by law.
Definition: A trademark is a sign capable of distinguishing the goods or services of one enterprise from
those of other enterprises. Trademarks are protected by intellectual property rights.

Examples of Trademarks in India:

 Service Marks: “FedEx” is a registered courier delivery service provider.

 Logos and Symbols: Apple’s registered logo used on their products.
 The Nike logo.
 The brand name is "Coca-Cola."
 The tagline "Just Do It."

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Assistant Professor
MBA
Advantages of Trademarks:

 Legal Protection: Trademarks provide legal protection against infringement, preventing

others from using a similar mark.
 Brand Identity: They help in building and maintaining brand recognition.
 Exclusive Rights: The owner has exclusive rights to use the trademark and can take legal
action against unauthorized use.
 Indefinite Lifespan: Trademarks can last indefinitely as long as they are in use and properly
maintained.
Disadvantages of Trademarks:
 Cost: Registering and maintaining a trademark involves costs.
 Geographical Limitation: Protection is typically limited to the country or region where it is
registered.
 Time Investment: The process of registration can be time-consuming.
 Litigation: There may be a need to engage in legal proceedings to enforce trademark rights

4.Geographical Indications (GIs)

What is GI?
Geographical Indications (GIs) are signs used on products that have a specific geographical origin and
possess qualities or a reputation that are due to that origin. The protection of a GI is available for
products that are agricultural, natural, or manufactured. goods.

Definition: A geographical indication is a sign used on products that have a specific geographical origin
and possess qualities or a reputation that are due to that origin.

Examples of Geographical Indications:

 Darjeeling Tea: The first product to receive a GI tag in India, known for its unique flavor.
 Kanchipuram Silk: Renowned for its quality and craftsmanship in silk weaving.
 Alphonso Mango: Famous for its sweetness and richness in flavor, originating from
Maharashtra.
 Channapatna Toys: Known for their traditional and intricate wooden toys from Karnataka

Advantages of Geographical Indications:

 Protection of Unique Products: GIs help in protecting the uniqueness of the product
associated with a particular territory.
 Economic Growth: They can aid in the economic growth of the region by promoting the
unique products of the area.
 Consumer Trust: GIs assure consumers about the authenticity and quality of the product.
Disadvantages of Geographical Indications:

 Limited Scope: The protection is geographically limited to the country of registration.

 Cost: The process of registering a GI can be costly and time-consuming.

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Assistant Professor
MBA
5. Trade Secrets
What are Trade secrets?
TSs are a type of intellectual property that comprises formulas, practices, processes, designs,
instruments, patterns, or compilations of information that are not generally known or reasonably
ascertainable. They provide a business with a competitive edge over competitors who do not know or
use the trade secret.
Examples of Trade Secrets in India:
 Business Strategies: Confidential business strategies of Indian corporations.
 Manufacturing Processes: Unique manufacturing processes that give an Indian company a
competitive advantage.
 Customer Lists: Lists of customers and clients that are maintained as confidential by
businesses.
 Formulas: Secret formulas for products developed by Indian companies.

Ethical and social responsibility and challenges

Ethical and social responsibility in entrepreneurship involves a commitment to conduct business in a

manner that is not only legally compliant but also morally sound and beneficial to society. Entrepreneurs
are increasingly recognizing the importance of these responsibilities as they can significantly impact
their reputation, customer loyalty, and overall success.

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Assistant Professor
MBA
Ethical Responsibility in Entrepreneurship:
Ethical responsibility refers to the moral obligations that entrepreneurs have towards their stakeholders,
including employees, customers, suppliers, and the community. This includes:

 Integrity: Maintaining honesty and transparency in all business dealings.

 Fairness: Ensuring equitable treatment for all parties involved with the business.
 Accountability: Taking responsibility for the outcomes of business decisions and actions.
 Respect: Valuing the dignity and rights of individuals and communities affected by the
business operations.

Social Responsibility in Entrepreneurship:

Social responsibility is about the entrepreneur’s duty to act in the best interests of society. It includes:

 Sustainable Practices: Implementing eco-friendly and sustainable business methods.

 Community Engagement: Contributing to community development through philanthropy or
volunteer work.
 Ethical Labor Practices: Providing fair wages and safe working conditions.
 Product Responsibility: Ensuring products are safe and do not harm consumers or the
environment.

Challenges in Entrepreneurship Development:

Entrepreneurs face various challenges that can hinder the development and growth of their ventures.
Some of these challenges include:

 Access to Capital: Securing funding to start and grow the business.

 Market Competition: Standing out in a crowded market with intense competition.
 Regulatory Compliance: Navigating complex legal requirements and regulations.
 Talent Acquisition: Hiring and retaining skilled employees.
 Technological Advancements: Keeping up with rapid technological changes and innovations.
 Customer Expectations: Meeting the ever-evolving demands and expectations of customers.

To overcome these challenges, entrepreneurs must be proactive in their approach, continuously

innovate, and adapt to changing market conditions. They should also build strong networks, seek
mentorship, and leverage resources such as business incubators and accelerators.
Ethical and social responsibilities, along with the ability to navigate the challenges of entrepreneurship,
are crucial for the sustainable growth and long-term success of any entrepreneurial venture. By
prioritizing these aspects, entrepreneurs can build a strong foundation for their businesses and contribute
positively to society and the economy.

Najassim Pasha
Assistant Professor
MBA
Najassim Pasha
Assistant Professor
MBA