Theme 3. Legal support of entrepreneurship. Organizational and legal forms of entrepreneurship

Questions:

1. Organizational and legal forms of entrepreneurship and their features

2. Individual entrepreneurship. Entrepreneurial Code of the Republic of Kazakhstan

1. Organizational and legal forms of entrepreneurship and their features

In Kazakhstan, entrepreneurship can be organized in various organizational and legal forms, each of which has its own peculiarities, advantages, and limitations. Here are some of the most common organizational and legal forms of entrepreneurship in Kazakhstan:

Individual Entrepreneur (IE): An IE is the most common form of entrepreneurship in Kazakhstan. An individual can register their business as an IE and conduct entrepreneurial activities on their own account and at their own risk. The liability of an IE is limited to their personal property, which means they are personally liable for their debts with all their assets. This distinguishes IE from legal entities where liability may be limited.

Limited Liability Partnership (LLP): An LLP is a form of partnership where the liability of each partner is limited to their contribution to the partnership. Partners can be both individuals and legal entities. LLPs are commonly used for joint ventures and professional services firms. They offer the advantage of limited liability for partners while providing flexibility in management and taxation.

Limited Liability Company (LLC): An LLC is a legal entity with a separate legal personality from its owners. The liability of the owners (members) is limited to their contributions to the company. LLCs are widely used by small and medium-sized businesses due to their simplicity in management and favorable tax treatment.

Joint Stock Company (JSC): A JSC is a company whose capital is divided into shares, and its owners are shareholders. JSCs are commonly used for larger-scale businesses and are subject to more extensive regulation. The liability of shareholders is limited to the value of their shares.

Representative Office: A foreign company can establish a representative office in Kazakhstan to promote its business interests in the country. However, a representative office is not considered a separate legal entity, and its activities are limited to non-commercial and non-profit activities.

Branch Office: A foreign company can also open a branch office in Kazakhstan, which is considered an extension of the foreign company and conducts commercial activities on its behalf. A branch office is not a separate legal entity but is subject to registration and taxation in Kazakhstan.

Each organizational and legal form has its advantages and disadvantages, and the choice of the most suitable form depends on the specific needs, scale, and nature of the business. Entrepreneurs in Kazakhstan must carefully consider the legal and regulatory requirements of each form before establishing their business to ensure compliance with the local laws and regulations.

2. Individual entrepreneurship. Entrepreneurial Code of the Republic of Kazakhstan

Individual Entrepreneurship (IE) is one of the most common forms of entrepreneurial activity that allows an individual to conduct commercial activities at their own account and risk. This form of entrepreneurship offers numerous advantages and has its own characteristics that attract many entrepreneurs.

Characteristics of Individual Entrepreneurship:

1. Personal Liability: An IE does not possess legal personality, hence the entrepreneur bears personal liability for all obligations. This means that the personal assets of the entrepreneur can be held responsible for the debts of their business.

2. Simple Registration Procedure: Registering an Individual Entrepreneurship (IE) in most countries, including Kazakhstan, is a relatively straightforward and fast process. This makes this form of entrepreneurship accessible to many individuals aspiring to start their own businesses.

3. No Minimum Authorized Capital Requirement: There is no need for the IE to establish a minimum authorized capital for registration, making this form of entrepreneurship economically accessible.

4. Independence in Decision-Making: An IE exercises complete control over their business and makes all decisions independently. This enables entrepreneurs to swiftly adapt to changing market conditions and make prompt operational decisions.

Advantages of Individual Entrepreneurship:

1. Flexibility: Individual Entrepreneurship (IE) exhibits a flexible nature, enabling entrepreneurs to quickly respond to changes in the economic landscape, alter the business direction, or modify its structure without complex formalities.

2. Reduced Tax Obligations: In many countries, IEs enjoy more favorable tax rates compared to corporate enterprises. This can significantly lower the tax burden for the entrepreneur.

3. Rapid Decision-Making: IEs can make swift decisions without the need for consensus with other stakeholders, allowing for more agile business management.

4. Easy Business Exit: Closing an Individual Entrepreneurship (IE) is usually a simpler procedure compared to other organizational forms of entrepreneurship. If an entrepreneur decides to terminate their activities, they can promptly close the IE and cease obligations related to taxes and other payments.

5. Lower Administrative Expenses: IEs have fewer administrative obligations compared to, for example, joint-stock companies, allowing entrepreneurs to focus on more critical aspects of the business.

However, it is worth noting that IEs also have their drawbacks, such as limited opportunities to attract investments and risks associated with the personal liability of the entrepreneur. Therefore, the choice of organizational and legal form of entrepreneurship depends on the specific goals, requirements, and risks of the entrepreneur.

Еhe Entrepreneurial Code of the Republic of Kazakhstan is one of the primary regulatory acts governing entrepreneurial activities in the country. It was adopted with the aim of promoting entrepreneurship, creating a favorable investment climate, and stimulating economic growth.

The Entrepreneurial Code of the Republic of Kazakhstan was adopted on October 29, 2015, and came into effect on January 1, 2016. It replaced several previous legislative acts regulating entrepreneurship and became a comprehensive law covering a wide range of issues related to conducting entrepreneurial activities in Kazakhstan.

The Entrepreneurial Code of the Republic of Kazakhstan is based on several fundamental principles, including:

1. Freedom of entrepreneurship: The Code recognizes the right of every citizen and legal entity to engage in entrepreneurial activities without prior permission. It provides for a minimum number of permits and restrictions, promoting the development of entrepreneurship in the country.

2. Equality of participants in entrepreneurship: The Code guarantees equal rights and conditions for all market participants, regardless of ownership form and citizenship. Discrimination based on nationality, type of activity, or other characteristics is prohibited.

3. Protection of the rights and interests of entrepreneurs: The Code provides mechanisms for protecting the rights and legitimate interests of entrepreneurs. In the event of disputes between entrepreneurs or with government bodies, an arbitration procedure is envisaged.

4. Transparency and predictability: The Code establishes transparent rules for conducting entrepreneurial activities and ensures predictability in legislation. This reduces risks and creates a stable business environment.

Tasks: Select one specific case study of a successful business that operates under each organizational form. Analyze and discuss how the chosen form has contributed to the success of each business.

Discussion Questions for the Classroom:

1. What are the main organizational forms that entrepreneurs can choose from when establishing their businesses, and how do they differ in terms of liability and taxation?

2. How does the legal form of a business impact decision-making processes and flexibility in operations?

3. What are the key legal requirements and procedures entrepreneurs need to consider when starting a business in your country or state?

4. How does intellectual property protection play a significant role in supporting entrepreneurship, and what are the different forms of intellectual property that entrepreneurs should be aware of?

5. What are the legal responsibilities and regulations related to employment practices that entrepreneurs must adhere to when hiring and managing their workforce?