Business Rules and Regulation

Introduction to Business Law

Commercial law or business law is the body of law which governs business and commerce and is often considered to be a branch of civil law and deals both with issues of private law and public law. Commercial law regulates corporate contracts, hiring practices, and the manufacture and sales of consumer goods. Many countries have adopted civil codes which contain comprehensive statements of their commercial law. In the United States, commercial law is the province of both the Congress under its power to regulate interstate commerce, and the states under their police power. fforts have been made to create a unified body of commercial law in the US! the most successful of these attempts has resulted in the general adoption of the Uniform Commercial Code. "arious regulatory schemes control how commerce is conducted, privacy laws, safety laws #i.e. $S%& in the United States' food and drug laws are some e(amples.

Business Strategy and $perations

In today)s business environment, it is crucial that managers become familiar with business law, especially for those who are responsible for ma*ing business decisions and agreements, overseeing employees, and protecting the property and rights of their organi+ations. Many managers are unaware that their actions can be legally damaging to their own company)s interests as well as to the rights of employees and customers

,his series introduces the fundamentals of business law specifically tailored to the needs and responsibilities of management, with an emphasis on practical strategies for conducting business legally and for avoiding costly litigation.

,he Seven Most -opular ,ypes of Businesses

Sole -roprietorship & sole proprietorship is one of the most popular business types, namely because it.s one of the simplest and only re/uires an individual. In a nutshell, a sole proprietorship is a business that.s owned by 0ust one person. &n important thing to note is that there isn.t a legal or financial distinction between the business and the business owner, which means that you as the business owner are fully accountable for all of the profits, liabilities and legal issues that your business may encounter. ,he nice thing about a sole proprietorship is that you don.t have to fill out any forms or go through any legal procedures to declare this type of business. Instead, 0ust by owning a business on your own, a sole proprietorship is automatically associated with your new business. 1eep in mind, however, that depending on your product or service #and your location', you may need to access a specific license or other documents. -artnership ,wo heads are better than one, right2 If that.s the philosophy behind your business structure, then a partnership might be the best choice for you. & partnership might be appropriate if your business is owned by two or more people. 1eep in mind that with this type of business, business responsibilities, including financial and legal, fall upon each business owner. 3epending on how the ownership is divided #either e/ually or not', there are different types of partnerships for you to e(plore from a legal standpoint. 4ith that being said, a partnership does re/uire that you register your business with your state and establish an official business name. &fter that, you.ll then be re/uired to obtain a business license, along with any other documentation that your state office can help you with. Beyond that, you.ll also need to register your business with the I5S for ta( purposes. &lthough this may seem li*e a complicated process, there are lots of benefits to a partnership, so if you.re loo*ing to have a co6owner, don.t be afraid to go for it. Limited -artnership & limited partnership, or L-, is an off6shoot version of a general partnership, and while it may not be as common, it.s a great bet for businesses who are loo*ing to raise capital from investors who aren.t interested in wor*ing the day to day aspects of your operations.4ith an L-, there are two sets of partners, one of which is *nown as a general

partner. ,he general partner is usually involved in the everyday business decisions, and has personal liability. $n the other hand, there.s also a limited partner #typically an investor', who are not liable for debts and don.t parta*e in regular business management of said company. 7ust li*e a general partnership, if you enter an L- agreement, you.ll need to register your business with the state, establish a business name, and inform the I5S of your new business. &gain, this option is the most common for those loo*ing for investment dollars, so *eep that in mind when e(ploring your partnership options. Corporation & corporation, is a fully independent business #when public' that.s made up of multiple shareholders who are provided with stoc* in a new business. Most common is what.s *nown as a 8C Corporation,9 which allows your business to deduct ta(es much li*e an individual : the only problem with this is that your profits will be ta(ed twice, both at the corporate level and at the personal level. 3on.t let this fact deter you however : this is e(tremely common, and if you currently wor* for a company with multiple employees, that.s li*ely the business structure they.re using. Most li*ely, if you.re starting off as a smaller business, particularly one that only operates online, declaring yourself as a corporation wouldn.t be appropriate. But if you truly are a corporation, you.ll need to file very specific documents with the state, followed by obtaining the appropriate business licenses and permits. Limited Liability Company #LLC' ;e(t on our list is a Limited Liability Company, better *nown as an LLC. &n LLC is a newer type of business that is a blend between a sole proprietorship and a corporation. Instead of shareholders, with LLCs, owners are referred to as members. ;o matter how many members a particular LLC has, there must be a managing member who ta*es care of the daily business operations. ,he main difference between an LLC and a corporation is that LLCs aren.t ta(ed as its own business entity. Instead, all profits and losses are moved from the business to the LLC members, who then, instead of having to report business finances on a corporate return, can report profits and losses on a personal federal ta( return. ,he nice thing about pursuing an LLC is that members aren.t personally liable for business decisions or actions of the company in /uestion, and there.s far less paperwor* involved in creating an LLC as compared to a corporation. ;onprofit $rgani+ation & nonprofit organi+ation is pretty self6 e(planatory, in that it.s a business organi+ation that.s intended to promote educational or charitable purposes. ,he 8non6profit9 aspect comes into play in that any money earned by the company must be *ept by the organi+ation to pay for its e(pense, programs, etc. 1eep in mind that there are several types of nonprofits available, many of which can receive 8ta( e(empt9 status. ,his process re/uires filing paperwor*, including an application, with the government for them to recogni+e you as a nonprofit organi+ation. 3epending on the parameters of your new business, they.ll be able to tell you which category you best fall under. Cooperative ,he last on our list of seven popular types of business is what.s *nown a cooperative, or a business that.s fully owned and operated for the benefit of the members of the organi+ation that use its services. In other words, whatever is earned by the cooperative is then shelled out among the members themselves, and aren.t re/uired to be paid out to any e(ternal sta*eholders, etc. Unli*e other types of businesses, which have shareholders, cooperatives sell shares to cooperative 8members,9 who then have a say in the operations and direction of the cooperative itself. ,he main difference in the process of becoming a cooperative, as opposed to the other types of businesses listed, is that your organi+ation must create bylaws, have a membership application and have a board of directors with a charter member meeting.

Business Law $b0ectives

It introduces managers to the fundamental concepts of business law. It begins by e(posing some prevalent legal misconceptions shared by management and establishes the true role that law plays in society and business. ,he relationship between business ethics and law is e(plained and how managers serve as vital role models for demonstrating ethical business practices. ,his course also presents the basis and structure of the U.S. legal system and introduces relevant areas of business regulation. It outlines management)s legal responsibilities and presents practical strategies for researching legal resources, for supporting legal counsel, and for proactively avoiding legal complications.

Contracts in Commercial ,ransactions

Contracts permeate business, whether it is a sale to a customer, the hiring of a new employee, the ac/uisition of a new company, or countless other formal and informal business practices. ,his course introduces the laws, which determine whether such agreements are legally binding and enforceable by the courts. ,o begin, this course e(plains the legal re/uirements for contracts and their different legal classifications. In order to ma*e effective business decisions, managers must clearly understand when they are forming an enforceable contract and when they are not. ,his course presents strategies for ma*ing an offer, successfully negotiating, and designing contracts that protect the rights of the organi+ation, customer, and other interested parties. <inally, this course e(plains the legal implications of breach of contract and presents strategies that proactively protect an organi+ation)s interests when entering into contractual agreements

mployment and Labor Law

Management sometimes finds itself in a sensitive position involving the treatment and rights of employees. But how does management legally handle a precarious situation with employees without the legal ramifications e(ploding in their face2 ,his course is an overview for management about the essentials of employment and labor law. It includes introductions to current federal laws regarding employee safety and health protection, e/ual opportunity, and labor management during unioni+ation. Managers will use strategies to protect the organi+ation from legal liability and protect the employee)s civil rights in the wor*place.

&merican Business <ormations in the =>st Century

&s a manager for your organi+ation, you li*ely conduct business with numerous companies from different industries and of varying si+es and comple(ity. &nd 0ust as you interact with individuals differently based upon their personalities and positions, so too, you conduct business with other companies based upon their different formations. In &merican business, there are four primary formations! Sole -roprietorships, -artnerships, <ranchises, and Corporations. ,his course e(amines the specific statutory criteria for each of these distinct business formations. %ow a business is formed dictates both the rights it has in the eyes of the law and the responsibilities it has towards individuals and other businesses. By understanding these different formations, you as a manager can build successful business relationships. ,his course presents strategies for conducting business with each *ind of business formation and for developing your business through ac/uisition, 0oint venture or minority investment. &s a manager, you will also be introduced to strategies for avoiding antitrust liability or situations where courts may ?pierce the corporate veil.? <inally, this course e(plains the bearing income ta(ation can have on commercial transactions between different business formations, as well as the impact on organi+ations when vendors or customers see* ban*ruptcy protection or voluntarily go out of business. In light of these issues, this course presents strategies that you, as a manager, can proactively use to protect your organi+ation)s financial and legal interests.

Intellectual -roperty and -roprietary 5ights

Management is often confronted with the responsibility of *eeping an organi+ation)s intellectual property, such as copyrighted brands or trade secrets, confidential, while still communicating the organi+ation)s identity or ideas to internal and e(ternal customers. But how does management perform this function effectively while *eeping the law on their side2 ,his course introduces management to the essentials of intellectual property and proprietary rights. It includes introductions to current copyright, trademar*, patent, and trade secret laws and presents methods for minimi+ing legal liabilities. By applying the information presented in this course, managers will protect their organi+ation)s intellectual property and use others) intellectual property legally.

Lawsuits and ;egotiations

,his course discusses the legal process of litigation and other out6of6court negotiations that are used to settle business disputes. In addition, this course treats the decision to sue much li*e other business decisions and offers criteria that management can use to perform a cost6benefit analysis. It begins by presenting proactive management strategies for discouraging damaging lawsuits and avoiding costly litigation. It e(amines forms of alternative dispute resolution, including negotiation, mediation, and arbitration, and the respective strengths of mediation and arbitration so that management can effectively wor* with legal counsel to determine when these are appropriate alternatives to litigation. <inally, it describes the litigation process and its impact on business and strategies for wor*ing successfully with administrative agencies.

-&5,; 5S%I- BUSI; SS L&4

Article 1 This Law is formulated for the purposes of standardizing the behavior of partnership businesses and protecting the legitimate rights and interests of those businesses and their partners and thus to safeguard the social and economic order, and promote the development of the socialist market economy. Article 2 A partnership business referred to in this Law shall be any business set up by partners within the Chinese territory according to this Law with contributions by all the partners thereof through signing up of an agreement as well as a joint sharing of all the partners of the operations, incomes, risks, and unlimited liabilities of the business. Article 3 The agreement for a business concerned shall be made in a written form according to the law upon full agreement of all partners thereof through consultations. Article 4 The principles of voluntariness, equality, fairness, sincerity and creditability shall be followed for the creation of a partnership business and formulation of the agreement thereof. Article 5 A partnership business in not permitted to use such words as "limited" or "limited liability" in its title. Article 6 A partnership business must abide by laws, administrative regulations and professional ethics in its operations.

Article 7 The property and legitimate rights and interests of a partnership business and its partners shall enjoy legal protection. Article 8 The establishment of a partnership business should be provided with the following conditions: 1) two or more partners who shall all shoulder unlimited liabilities according to the law; 2) a partnership agreement in written form; 3) capital fund contributed by all partners; 4) a name of the business concerned; 5) operating sites and conditions of the business. Article 9 A partner shall be a person who is fully capable of performing civil acts. Article 10 Any person having been banned by the laws or administrative regulations from engaging in business activities is not permitted to become a partner of a partnership business. Article 11 A partner of a partnership business may make contributions in cash, kinds, land use rights, intellectual property rights or rights of other property thereof and the said capital contributions shall be the legitimate property and rights of property of the partner concerned. When in need, the capital contributions other than cash should be evaluated by all partners through consultations or by a legal evaluation agency entrusted by all partners. With the agreement of all partners after consultations, a partner may also use labor services as capital contributions, and the method for the evaluation of the services shall be determined by all partners through consultations. Article 12 Capital contributions of partners of a partnership business shall be made in forms, amounts and terms as set in the partnership agreement. Contributions actually paid up by all partners according to the partnership agreement shall form the total capital contributions of a partnership business. Article 13 A partnership agreement shall record clearly the following items: 1) name of the partnership business and location of its major operating site; 2) purpose of partnership and business scope of the partners business; 3) names and residences of the partners;

4) form and amount of capital contributions payable by the partners and term of payment for capital contributions; 5) method for profit distribution and loss sharing; 6) actual operations of the business; 7) conditions for admission to and withdrawal from partnership; 8) disbandment and liquidation of the partnership business; and 9) liabilities for default. A partnership agreement may record clearly the term of operation of the partnership business and the methods for settling disputes among the partners. Article 14 A partnership agreement shall take effect after it is signed and sealed by all partners. The partners shall exercise their full rights and be responsible for liabilities according to the partnership agreement. Whereas all partners agree after consultations, a partnership agreement may be revised or replenished. Article 15 In application for the registration of a partnership business, the partnership agreement of the business and the identification cards of the partners should be presented to the business registration authority. Whereas an approval from relevant authority is needed for the setting up of the business concerned according to the law and administrative regulations, the document of approval should also be presented during the application for registration of the business. Article 16 The business registration authority shall make a decision on whether or not to approve the registration within thirty days after receipt of the application documents for the registration. The registration shall be approved and the business license shall be granted if the provisions of this Law are met; and the registration shall not be approved if the provisions of this Law are not met and then a reply in written form shall be given to explain the reasons. Article 17 The date on which the business license of a partnership business is issued is considered the date of the establishment of the partnership business concerned. Before the acquirement of the business license, partners of the partnership business concerned are not permitted to engage in operating activities in the name of the business. Article 18 For setting up of a subsidiary, a partnership business should apply for the registration of the subsidiary with and obtain the business license concerned from the business registration authority where the said subsidiary is located.

Article 19 During the term of operation of a partnership business, the capital contributions by its partners and all incomes obtained in the name of the partnership business shall all be property of the partnership business. Property of a partnership business should be put under the joint management and uses of all partners according to this Law. Article 20 Before the liquidation of a partnership business, partners concerned are not permitted to request for distribution of the property thereof except for cases as provided separately by this Law. Secret transference or uses of property of a partnership business by a partner before the liquidation of the business should not be made in counter to the interest of an uninformed bona fide third party. Article 21 An unanimous agreement from other partners must be obtained before a partner of a partnership business transfers to a party other than the partners of the business concerned all or part of the share thereof during the term of operation of the business. For such a transference, a notice should be given to all partners of the business. Article 22 Whenever a transference by a partner of a partnership business his/her share thereof according to the law, the other partners concerned shall enjoy the priority for assignment under the same conditions. Article 23 A new party other than all partners of a partnership business shall become a new partner of the business after acquiring a share of the said business as transferred by a partner thereof under a unanimous agreement of all partners of the business according to law and thereto upon a revision to the partnership agreement, enjoy the rights and be responsible for the liabilities of the business according to the revised partnership agreement. Article 24 The use of property share in a partnership business by a partner thereof as a pledge should acquire in advance an unanimous agreement from other partners concerned. Use of property share in a partnership business by a partner as a pledge without a unanimous agreement from other partners shall be considered invalid or as withdrawal of the partner from the partnership; and the latter shall take responsibility for the compensation if the act thereupon causes any loss to other partners according to the law. Article 25 Each partner shall enjoy equal right in the operation of a partnership business. A partnership business may be operated jointly by all partners but the operation might also be entrusted to one or several partners according to the provisions of the partnership agreement or the decision of all partners.

Partners who actively operate the partnership business should be considered as representatives of the said partnership business in terms of external affairs. Article 26 Whereas one or several partners are entrusted to operate a partnership business according to the preceding article, other partners shall be kept out of the operation of the said partnership business but still have right to supervise upon the said operation. Article 27 One or several partners entursted to operate a partnership business should, according to the agreement, report to other partners who do not join in the operation the operating conditions and financial status of the business concerned and earnings or liabilities therefrom shall be shared by all partners. Article 28 Partners of a partnership bussiness are entitled to check on the accounts of the business so as to keep in knowledge of the operating and financial conditions of the business. Decisions by the partners on matters of a partnership business according to this Law or the partnership agreement, can be based on one vote for one partner as decided by all partners except for cases provided for separately by this Law or the partnership agreement. Article 29 Whereas a partnership business is subjected to separated operations by individual partners as stipulated in the partnership agreement or upon decision of all partners, a partner may put forward an opposition to the operation of other partners. When the opposition is put forward, the operation concerned should be stopped temporarily and arguements arisen therefrom should be settled by all partners. Whereas a partner who has been entrusted to operate a business fails to act according to the partnership agreement or the decision by all partners, the entrustment may be put off upon decision of other partners. Article 30 A partner is not permitted to be involved solely or jointly into other business that is competitive with the partnership business. Except for cases as stipulated in the partner agreement or other agreements of all partners, a partner of a partnership business is not allowed to trade with the above-mentioned business. A partner of a partnership business is not permitted to engage in activities in counter to the interests of the business. Article 31 A unanimous agreement of all partners is required for the following undertakings of a partnership business: 1) handling of the real estate of the partnership business; 2) a change to the name of the partnership business;

3) transference or handling of the intellectual property rights and rights of other property of the partnership business; 4) application with the business registration authority for a change of the registration; 5) provision of guarantee for a third party in the name of the partnership business; 6) appointment of persons other than the partners as managers of the partnership business; and 7) related matters as stipulated in the partnership agreement. Article 32 Profits and losses of a partnership business shall be shared by its partners according to the proportion stipulated in the partnership agreement; the profits and losses shall be shared equally by the partners if there are no set proportions written down in the partnership agreement. Partnership agreements should not attribute whole part of the profits or losses to part of the partners. Article 33 Capital contributions can be added to a partnership business by its partners according to the partnership agreement or decision of all partners within the operation term of the business for the purposes of expanding business scale or compensating for loss. Article 34 Specific plans of a partnership business for sharing of profits and losses in a year or in a certain period can be decided upon by all partners through consultations or by the methods as stipulated in the partnership agreement. Article 35 Managers appointed by partnership businesses shall perform their duties within the scope of authorization by the partnership businesses. Whereas managers appointed by partnership businesses operate in excess of the scope that has been authorized by the businesses or cause any loss to the partnership business because of intentional or major fault, responsibility for the compensation shall be imposed according to law. Article 36 A partnership business should establish a financial and accounting system for the business according to the provisions of the law and administrative regulations. Article 37 A partnership business should pay due taxes according to law. Article 38 Restrictions of a partnership business on the operation of a partner in terms of the business or the right of a partner to represent the business in handling of external affairs should not act in counter to the interest of an uninformed bona fide third party. Article 39 A partnership business shall first of all use all of its property to repay its debts. Whereas the property of the partnership business is insufficient for repayment of its payable debts, each partner shall shoulder unlimited joint liabilities for the repayment.

Article 40 Whereas debts of a partnership business cannot be fully borne by the property of the business concerned, the insufficient part should be paid by each partner by using property other than that having been contributed to the partnership business according to the proportion set in the first paragraph of Article 32 of this Law. Whereas a partner repays an amount in excess of the respect share because of joint liabilities a reimbursement is entitled from other partners. Article 41 Debts owed by a partner in a partnership business to a third party cannot be used to offset debts owed by the said party to the business concerned. Article 42 A personal creditor of a partner to a partnership business is not permitted to subrogate the rights of the said partner in the business concerned. Article 43 Personal debts of a partner to a partnership business can only be settled with the distributable income to the partner from the said business; the creditor concerned may also file a request with the people's court for compulsory repayment of the debt concerned by the said partner's property share in the business concerned according to the law. Other partners have the preemptive rights for assignment of the property share of the said partner. Article 44 Admission to a partnership business of a new partner should be agreed upon by all partners concerned and a partnership admission agreement should be made in writing according to the law. When a partnership admission agreement is made, the original partners should inform the new partner of the original partnership business' operating conditions and financial status. Article 45 A new partner admitted to a partnership business shall enjoy the same rights and shoulder the same liabilities as the original partners. Whereas there is a separate contract in the partnership admission agreement, the said agreement shall prevail. A new partner admitted to a partnership business shall shoulder joint liabilities for the debts of the partnership business as the admission taking effect. Article 46 Whereas the term of operation of a partnership business has been set in the partnership agreement, a partner may withdraw from partnership in any of the following cases: 1) a cause for withdrawal from partnership as set in the partnership agreement appears; 2) all partners agree to the withdrawal; 3) a cause to make the said partner difficult to remain in the partnership takes place; and 4) other partners seriously go against their obligations as set in the partnership agreement.

Article 47 Whereas the term of operation of a partnership business has not been set in the partnership agreement, a partner may withdraw from the partnership on the condition that the winthdrawal would not cause adverse effect to the operation of the said partnership business. But the withdrawal must be informed to other partners thirty days in advance. Article 48 Whereas a partner withdraws from partnership in violation of the provisions of the preceding two articles, compensation must be made by the said partner for the loss caused to other partners thereof. Article 49 Whereas a partner has any of the following cases, a withdrawal of the said partner shall be effected naturally: 1) being dead or declared as being dead according to the law; 2) declared as a person without capacity for civil acts according to the law; 3) losing individual debt service capacity; and 4) compulsorily executed by the people's court of all property share in the partnership business. Withdrawal from partnership as provided for in the preceding paragraph shall take effect on the date on which it actually takes place. Article 50 Whereas a partner has any of the following cases, a resolution may be made with unanimous agreement of other partners to dismiss the said partner: 1) failing to perform the obligation for capital contributions; 2) causing loss to the partnership business for intentional or major fault; 3) having unfair behavior in executing affairs of the partnership business; and 4) other causes as set in the partnership agreement. The resolution to dismiss a partner should be sent in a notice in writing to the person who is dismissed. The dismission shall take effect on the date on which the person who is dismissed receives the dismission notice, and the person who is dismissed shall withdraw from partnership. Whereas the person who is dismissed has any opposition to the dismission resolution, legal proceedings may be instituted with be people's court within thirty days after receipt of the dismission notice. Article 51 Whereas a partner is dead and declared according to the law as being dead, the heir who enjoys the legitimate right of inheriting the said partner's property share in a partnership business shall as set in the partnership agreement or with agreement of all partners obtain the qualification for being a partner of the said partnership business as of the date of succession.

Whereas the said heir refuses to be a partner, the partnership business should reinburse to the heir the respective share of the inherited property. Whereas a legitimate heir has not become mature, a guardian may with unanimous agreement of other partners subrogate the rights of the said heir before the latter becomes mature. Article 52 Whereas a partner wihtdraws from partnership, other partners shall conduct settlement with the said partner in accordance with the property conditions of the partnership business at the time of the withdrawal, and return the property share of the withdrawing partner. Whereas some affairs of the partnership business fail to be settled at the time of the withdrawal, the property share shall be settled after the affairs are settled. Article 53 The methods of refunding the property share of a withdrawing partner in a partnership business shall be set in the partnership agreement or determined by all partners. The refunding may be in cash or in kind. Article 54 A withdrawing partner should together with other partners shoulder joint liabilities for the debts of the partnership business occurred before the said withdrawal. Article 55 Whereas the property of a partnership business is less than the debts of the said business when a partner withdraws from partnership, the withdrawing partner should share the loss according to the provisions in the first paragraph of Article 32 of this Law. Article 56 Whereas the registration matters of a partnership business change or re-registration is necessary for such reason as withdrawal from partnership, admission to partnership of revision of the partnership agreement, the said partnership business should handle relevant registration procedures with the business registration authority within fifteen days as of the date on which the decision for the change is made or the cause for the change takes place. Article 57 A partnership business shall disband in any of the following cases: 1) the term of operation as set in the partnership agreement expires and the partners are unwilling to continue the operaiton; 2) a cause for disbandment as set in the partnership agreement appears; 3) all partners decide to disband; 4) there is an insufficient number of partners as provided for by the Law; 5) the purpose for partnership as set in the partnership agreement has been finalized or is not able to be realized; 6) the business license is revoked according to the law; and

7) other reasons for disbandment of a partnership business as provided for by the law and administrative regulations appear. Article 58 A partnership business shall after disbandment conduct liquidation and inform its creditors in notice or announcement thereof. Article 59 Whereas a partnership business disbands, the liquidators shall be acted by all partners; whereas not all partners are able to act as the liquidators, one or several partners, or a third party may with agreement of more than half of the partners be designated or entrusted to act as the liquidators within fifteen days after the partnership business disbands. Whereas the liquidators are not determined within the fifteen days, the partners or other interested parties may request the people's court to designate the liquidators. Article 60 The liquidators shall execute the following affairs during the period of liquidation: 1) to sort out the property of the partnership business, and draft up the balance sheets and the property list of the said business; 2) to handle unsettled affairs of the partnership business that are related to the liquidation; 3) to pay up taxes payable; 4) to settle credits and debts; 5) to handle the remaining property after the partnership business repays its debts; and 6) to take part in civil suits on behalf of the partnership business. Article 61 After the liquidation expenses are paid, the property of the partnership business shall be distributed in the following order: 1) wages and labor insurance costs owed by the partnership business to its employees; 2) taxes payable by the partnership business; 3) debts of the partnership business; and 4) returning capital contributions to the partners. Whereas there is a surplus after the property of the partnership business is distributed in the above-mentioned order, it shall be distributed according to the proportion as provided for in the first paragraph of Article 32 of this Law. Article 62 Whereas all property of a partnership business is insufficient for paying its debts, it shall be handled according to Article 39 and Article 40 of this Law.

Article 63 After a partnership business disbands, the original partners shall still shoulder joint liabilities for the debts in the duration of existence of the partnership business. But the said liabilities shall be eliminated if the creditors fail to ask for repayment from the debtees within five years. Article 64 After the liquidation ends, a liquidation report shall be made, and it shall after the signing and sealing of all partners be sent to the business registration authority within fifteen days to register the cancellation of the partnership business. Article 65 Whereas a business registration is obtained by presenting counterfeit documents or taking other deceitful means in violation of the provisions of this Law, a correction shall be ordered to be made and a fine of less than RMB5,000 may be imposed; if the case is serious enough, the business registration shall be revoked. Article 66 Whereas the words of "limited" or "limited liability" are used in the name of a partnership business in violation of the provisions of this Law, a correction shall be ordered to be made within the prescribed time limit and a fine of less than RMB2,000 may be imposed. Article 67 Whereas an operation in the name of a partnership business without a business license in violation of the provisions of this Law, a stop of the operation shall be ordered and a fine of less than RMB5,000 may be imposed. Whereas a change of the registration matters of a partnership business without the relevant change of registration in accordance with the provisions of this Law, a registration shall be ordered within the prescribed time limit; whereas the registration is not made after the time limit, a fine of less than RMB2,000 shall be imposed. Article 68 Whereas a forcible possession of the interests attributable to a partnership business during operation or coversion of property of the partnership business by other means by a said partner(s), return of the said interests and property to the partnership business shall be ordered; if the case causes loss to the partnership business or other partners, the said partner(s) shall take responsibility for the compensation; if the case constitutes a crime, the said partner shall be prosecuted for criminal responsibilities. Article 69 Whereas any handling by a partner(s), without authorization, of affairs which can only be handled with agreement of all partners as provided for in this Law or as contracted in the partnership agreement and thereto causes loss to the partnership business or other partners, responsibility shall be assumed by the said partner(s) for compensation according to Law. Article 70 Whereas execution of affairs of a partnership business by a partner(s) without the power to execute such affairs and thereto causes loss to the partnership business or other partners, responsibility should be assumed by the said partner(s) for compensation according to the law. Article 71 Whereas an engagement of business which is competitive to a certain partnership business or a trade with the partnership business by a partner of the said partnership business in

violation of the provisions of this Law, and thereto causes loss to the said partnership business or other partners of the business, due compensation shall be responsible by the partner concerned according to the law. Article 72 Compensation arising from an illegal possession of the poverty of a partnership business or misappropriation of the funds of the partnership business by any employee of the partnership business

Industry Laws and regulation !

nvironmental 5egulations
,he U.S. nvironmental -rotection &gency # -&' and state environmental agencies regulate the impact of businesses on the environment. ,he -& develops and enforces regulations that implement environmental laws enacted by Congress. Li*ewise, state agencies enforce regulations that implement laws enacted by the state legislature. ,here are do+ens of environmental regulations that apply to small businesses. ,he -& and other agencies help small businesses understand their specific re/uirements by publishing plain6 language guides that e(plain actions business owners must ta*e to comply with federal regulations. Similarly, most state governments provide similar guidance for laws enforced by state environmental agencies. ,his guide provides a collection of resources available from the federal government that help businesses understand their responsibilities under the nation)s environmental laws.

nvironmental -ermits
Some environmental laws re/uire you to obtain an environmental permit before you can emit or discharge a pollutant into the air or water, dispose of ha+ardous waste, or engage in certain regulated activities. -ermits are also used by federal, state and local government agencies to

implement environmental laws intended to protect specific types of resources such as wetlands or endangered species. Most environmental permits are issued by state governments.

Commonly 5e/uired -ermits

,he following are permits that are often re/uired, along with e(planations of compliance re/uirements.

Clean Air Act Permits: Most large sources and some smaller sources of air pollution are re/uired to obtain operating permits re/uired by ,itle " of the Clean &ir &ct &mendments of >@@A. Most ,itle " permits are issued by state and local permitting authorities and are often called -art BA permits because the regulations that establish minimum standards for state permit programs are found in CA C<5 -art BA. <or more information on Clean &ir -ermits, read the -lain nglish Duide to the Clean &ir &ct, visit the -& 4eb -age on &ir -ermits or read the answers to<re/uently &s*ed Euestions &bout -ermits. Endangered Species: ,he ndangered Species &ct, with some e(ceptions,prohibits activities affecting threatened and endangered species unless authori+ed by a permit from the U.S. <ish and 4ildlife Service or the ;ational $ceanic and &tmospheric &dministration)s ;ational Marine <isheries Service. Some activities may also re/uire a state permit. Contact your state wildlife agency for additional information. Wetlands: If you wor* in or near wetlands, federal, state, and local governments may all have specific permit re/uirements. &t the federal level, the &rmy Corps of ngineers regulates the discharge of dredged or fill materials into U.S. waters, including wetlands, under Section CAC of the Clean 4ater &ctF and for those states without -& permit authori+ation authority, the -& issues permits for the discharge of pollutants, including waste water and storm water, from a point source pursuant to Section CA= of the Clean 4ater &ct. State environmental agenciesregulate wetlands under various laws such as those pertaining to water pollution, shoreline management and forest practices. Local governments regulate wetlands primarily through +oning and similar ordinances. RCRA Permits: 5esource Conservation and 5ecovery &ct #5C5&' -ermits are designed to help ensure the safe treatment, storage, and disposal of ha+ardous wastes. -ermits are issued by authori+ed states or by -& 5egional $ffices. <or more information, read %a+ardous 4aste -ermitting -rocess! & Citi+ens Duide, use -&)s 5C5& ,raining Module 6 ?Introduction to -ermits and Interim Status?6 or visit the -& 5C5& -ermits and -ermitting 4eb -age.

nvironmental Compliance 5esources

-& Small Business Dateway -rovides the -&)s gateway to environmental information and contacts for small businesses.

nvironment Compliance <&Es for Small Businesses Lists answers to fre/uently as*ed /uestions about complying with environmental regulations enforced by the -&. Small Business Compliance and nforcement $ffers information on Small Business Compliance with the nvironmental Statutes and the Compliance Incentives. Small Business nvironmental %ome -age %elps small businesses access environmental compliance and pollution prevention information. State6by6State 5esource Locator Dives a directory of state contacts to help industry comply with environmental regulations. Statutes and 5egulations by nvironmental ,opic -rovides information on environmental regulations as they relate to individual environmental topics.

Industry and Sector Information

Compliance &ssistance Centers Dives access to assistance centers that are sponsored by the -& to provide comprehensive, easy6to6understand environmental compliance information, tools and best practices advice targeted specifically to industry sectors. nvironmental Compliance! Industry Sector Duides Lists a directory of compliance assistance resources covering specific industry sectors. Statues and 5egulations by Business Sector -rovides information to specific business sectors on the environmental statutes and regulations that affect businesses within their field.

<inance Law
<inance laws e(ist to ensure fair competition and to protect the financial interests of companies and individual investors. ,hese resources will provide you with a starting point for learning about finance laws common to small businesses.

&ntitrust Law
Many organi+ations, both government and private, use competitive bidding processes to ma*e sure they get the best goods and services for the best prices. ,he Sherman &ct and other antitrust

laws prohibit any agreement among competitors to fi( prices, rig bids, or engage in other anti6 competitive activity. ,he <ederal ,rade Commission #<,C' and the 3epartment of 7ustice enforce the antitrust laws.

&ntitrust Compliance &ssistance for Business <ederal ,rade Commission Bureau of Competition

-rovides antitrust compliance assistance resources for businesses.

<,C)s antitrust arm, the Bureau of Competition see*s to prevent business practices that restrain competition. ,his site includes all regulatory information concerning the enforcement of antitrust laws by the <,C.

Competition in the %ealth Care Mar*etplace

<re/uently as*ed advertising /uestions, compliance guides, fact sheets, policy statements, and staff comments on various advertising issues.

Ban*ruptcy Law
Business owners who can)t afford to pay bac* their creditors often loo* to filing ban*ruptcy as a way to settle their debt and avoid costly legal action. 4hen you file for ban*ruptcy, your creditors may be prevented from collecting on debts until the process is completed. %ow much creditors can collect depends on how your business is structured. If your business is a sole proprietorship, your personal assets may be used to pay off business debts, depending on which form of ban*ruptcy is chosen. Corporations, limited liability companies, and some forms of partnerships protect personal assets from being used to pay off business debts. ;ot all ban*ruptcies are voluntary. Creditors can also petition for a business to declare ban*ruptcy. Chapter B and Chapter >G apply primarily to individuals, but affect small business owners who operate as sole proprietorships. Under Chapter B, the ban*ruptcy trustee will sell assets to satisfy outstanding debts and discharge debts that can)t be satisfied with the available assets, Under Chapter >G, the trustee sets up a three to five year repayment plan for the debtor to repay debts from current income. ,he debtor is allowed to *eep more assets under this plan. Chapter >> applies to both individuals and small businesses. Small businesses who choose this option operate under increased scrutiny but may *eep operating under a reorgani+ation plan. Chapter >= applies to family farmers and fishermen. ,he following resources provide some basic information about ban*ruptcy law!

Ban*ruptcy Basics ,he U.S. Courts provides businesses that may be considering ban*ruptcy with a basic e(planation of the different chapters under which a ban*ruptcy case may be filed and to answer some of the most commonly as*ed /uestions about the ban*ruptcy process. Chapter >> 6 ,he Small Business Case and the Small Business 3ebtor (plains rules pertaining to the small business debtor. Ban*ruptcy <orms $fficial and procedural forms used in the ban*ruptcy process.

Ban*ruptcy Information Sheet U.S. ,rustee -rogram fact sheet covering the ban*ruptcy process. Corporate Ban*ruptcy! 4hat very Investor Should 1now 3iscusses what happens when a public company files for ban*ruptcy, who protects the interests of investors, and what happens to the value of old securities. %andling Involuntary Ban*ruptcies! -art I -art I of an article that discusses considerations for various parties in interest to an involuntary ban*ruptcy. %andling Involuntary Ban*ruptcies ! -art II -art II of an article that discusses considerations for various parties in interest to an involuntary ban*ruptcy. Securities and <inancial 5eporting Laws 3etails the re/uirements for the sale of securities and financial reporting for publicly traded companies.

$nline Business Law

Setting up your business on the Internet can be a lucrative way to attract customers, e(pand your mar*et and increase sales. <or the most part, the steps to starting an online business are the same as starting any business. %owever, doing business online comes with additional legal and financial considerations, particularly in the areas of privacy, security, copyright, and ta(ation. 5ules and regulations for conducting e6commerce apply mainly to online retailers and other businesses that perform consumer transactions by collecting customer data. %owever, even if you do not sell anything online, laws covering digital rights and online advertising may still apply to you. ,he <ederal ,rade Commission #<,C' is the primary federal agency regulating e6commerce activities, including use of commercial emails, online advertising and consumer privacy. <,C)s 6Commerce Duide provides an overview of e6commerce rules and regulations. ,he following topics provide further information on how to comply with laws and regulations related to e6commerce.

-rotecting Hour Customers) -rivacy

Most businesses collect and retain sensitive personal information from their customers and employees such as names, addresses, social security numbers, credit card numbers and other account numbers. -rotecting personal information not only ma*es good business sense, it can also help you avoid legal problems. 3epending on the type of data you are collecting, and who you are collecting it from, you may be sub0ect to federal and state privacy laws. ,his guide e(plains which privacy laws apply to your business and how to comply with them.

$verview of -rivacy Laws Learn how the <ederal ,rade Commission enforces companies) privacy policies about how they collect, use and secure consumers) personal information.

Identity ,heft 6 Business $wner)s 5esponsibilities Learn how to protect your customers) personal information against identity theft, and your responsibilities when one of your customers becomes an identity theft victim.

Using Consumer Credit 5eports If your businesses uses credit reports to e(tend credit to your customers, there are rules and regulations you must follow to ensure privacy of credit information.

-rivacy 5ules for <inancial Companies <rom national ban*s to local mortgage lenders, any business that handles personal financial information must comply with the Dramm6Leach6Bliley #DLB' &ct.

Children)s $nline -rivacy Learn how the Children)s $nline -rivacy -rotection &ct re/uires businesses to follow specific rules and regulations when collecting online data from children.

Computer and Information Security <ind out how to not only protect your company)s computer systems, but the sensitive information contained in them.

>A Step ,utorial <or Starting &n $nline Business & brief tutorial for starting an online business. Selling InternationallyI (porting $ffers information to retailers participating in the global economy via the 4eb. If you are going to ship your products overseas, you need to be familiar with these basic e(porting rules and regulations.

$nline &dvertising and Mar*eting

&n old cartoon in the ;ew Hor*er showed two dogs in front of a computer, and had the caption ?$n the Internet, ;obody 1nows Hou)re a 3og.? ,he inherent anonymity of the Internet has fostered a number of shady advertising and mar*eting practices, such as unsolicited email spam. $ver the past decade, federal and state governments have passed additional advertising laws that protect consumer privacy and ensure fair and truthful advertising practices online. If you plan to advertise online 66 whether you)re buying ads on search engines or direct mar*eting through email 66 you)ll need to understand some basic rules.

3igital 5ightsICopyright
-ersonal data is not the only thing protected on the Internet. 3igital wor*s, including te(t, movies, music and art are copyrighted and protected via the 3igital Millennium Copyright &ct

#3MC&'. ,he 3MC& offers a number of protections for information published to the Internet, as well as other forms of electronic information. &mong its many provisions, the 3MC&!

Limits Internet service providers from copyright infringement liability for simply transmitting information over the Internet. %owever, service providers, are e(pected to, upon notification, remove material from their web sites that appear to constitute copyright infringement. Limits liability of nonprofit education institutions for copyright infringement by faculty members or graduate students. Ma*es it a crime to circumvent anti6piracy measures built into most commercial software. %owever, reverse engineering of copyright protection devices, is permitted to conduct encryption research, assess product interoperability, and test computer security systems. -rovides e(emptions from anti6circumvention provisions for non6profit libraries, archives, and educational institutions solely for the purpose of ma*ing a good faith determination as to whether they wish to obtain authori+ed access to the wor*. $utlaws the manufacture, sale, or distribution of devices used to illegally copy software. 5e/uires that ?webcasters? pay licensing fees to record companies.

&dvertising Law
In

many ways, the success of your business depends on your mar*eting abilities. & successful mar*eting plan includes the following components!

Mar*et 5esearch -ricing &dvertising -ac*aging and labeling 3istribution Customer service

Investing in a good mar*eting plan will generate e(cellent returns. %owever, there)s more to a winning mar*eting plan or advertising campaign than a profitable product or service. Unfair, untruthful or purposely deceptive advertising can result in costly penalties. ,he resources below provide information on how you can legally advertise your small business!

Learn how to avoid ma*ing false and misleading statements

-roduct Labeling 5e/uirements

%ow to comply with labeling laws for consumer products.

$nline &dvertising and Mar*eting &dvertising Specific -roducts ,elemar*eting and 3irect Mar*eting nvironmental Mar*eting 5egulations

Specific rules for advertising and selling products over the Internet.

Learn the rules for advertising specific productsF everything from alcohol to @AA numbers.

5ules for mar*eting and advertising over the phone.

Learn the rules for ma*ing environmental or ?green? claims in advertising.

More Information

Small Business Mar*eting and &dvertising Mar*et 5esearch Duide

,ools and resources to help you mar*et and advertise your business.

5esources to help you learn about your customers as well as competitors.

mployment J Labor Law

4hether you hire your own employees or independent contractors, you will need to have a solid understanding of federal and state labor laws covering everything from benefits and wages to discrimination and harassment. ,hese resources provide information about U.S. employment laws and regulations and how employers should comply with them.

eLaws! mployment Laws &ssistance for 4or*ers and Small Business

$ffers interactive e6tools that provide easy6to6understand information about a number of federal employment laws.

mployment Law Duide mployment and Labor Laws! Compliance &ssistance Labor Laws for ;ew and Small Businesses

Covers the statutes and regulations administered by the U.S. 3epartment of Labor #3$L'.

-rovides a gateway to resources that will help a business comply with U.S. labor laws.

Dives materials that employers can use to develop wage, benefit, safety and health, and nondiscrimination policies for their business.

Summary of the Ma0or mployment and Labor Laws

(plains the laws enforced by the 3$L, which include laws covering e/ual employment opportunity, discrimination, immigration, wage determinations, and wor*ers) compensation.

%andling Legal Concerns

It ma*es good business sense to *now how to handle legal issues that impact your business. ;ot all legal matters re/uire a lawyer, but they do re/uire understanding. Sometimes the best way to protect yourself and your business is to *now where to go for assistance.

Consumer)s Duide ,o Legal %elp $n ,he Internet Lin*s to an &merican Bar &ssociation)s #&B&' guide on legal help for the consumer. &B& Lawyer 5eferral Service Lists lawyers in your state who are prepared to help you. Hour State Bar &ssociation Lin*s to the &merican Bar &ssociation)s guide to finding bar associations in your state. <ees &nd (penses (plains the importance of negotiating legal fees when first visiting a lawyer. Hou have a right to *now how you will be charged, how much the case is li*ely to cost, and when you have to pay. &dditionally, it is important to get a fee agreement in writing. ,ypical fee arrangements include! hourly fees calculated by multiplying the amount of hours an attorney wor*s on your case by an agreed upon hourly rate, a fi(ed predetermined rate for the attorney)s wor*, and a percentage of any 0udgment amount awarded to you. &rbitration (plains arbitration, which provides a /uic*er and less e(pensive method to resolving disputes. -lain nglish Duide ,o Contracts $ffers a simple, easy e(planation about contracts. %iring & Lawyer <&Es Shares answers to commonly as*ed /uestions about hiring a lawyer. SC$5 Legal Euestions -rovides legal /uestions regarding business and answers by the SC$5 organi+ation.

Understanding <air -ractice

4hile many businesses will do almost anything to gain an edge on the competition, it is important to understand antitrust laws so that you do not ris* your business)s integrity while gaining customers. &ntitrust laws ma*e it illegal to conspire to restrain trade or commerce in any mar*etplace, regardless of si+e. 4hile small businesses often fall victim to the unfair business practices of larger companies, they can be prosecuted for unfairly dominating mar*ets locali+ed in cities, towns, neighborhoods or niche industries. &ntitrust laws address the following!

Conspiring to Fix Market Prices: 3iscussing prices with competitors, even if it affects a small mar*etplace, may be construed as a violation of antitrust laws. Price Discrimination: Using dominant industry power to secure favorable product prices from buyers, even

though such prices are unavailable to wea*er companies in the same industry, is generally a violation of antitrust laws.

Conspiring to Boycott: Conversations with other businesses regarding the potential boycott of another competitor or supplier may violate antitrust laws. Conspiring to Allocate Markets or Customers: &greements between competitors to divide up customers, territories, or mar*ets are illegal. ,his provision applies even when the competitors do not dominate the particular mar*et or industry. Monopoli ation: -reserving a monopoly position through the ac/uisition of competitors, the e(clusion of competitors to the given mar*et, or the control of mar*et prices are all in violation of antitrust laws.

More Information
,he following resources can also be helpful!

Lawyers.com offers antitrust guidance for small businesses. &ntitrust for Small Businesses -lain nglish Duide #,he <ederal ,rade Commission)s -lain nglish Duide to antitrust laws'

,en rules for Small business >. =. #$ >. =. G. C. !arget Hou are not all things to all people. 3ecide on your niche66narrow your focus and broaden your appeal. Be Di""erent If your competitors are doing it, don)t. Stand out from an overcrowded mar*etplace where so much of the advertising and products loo* the same. Build a !eam 3on)t hire an employee to fill a position. mploy a person to be part of a team to build your business. Be Fast ,ime is the most precious commodity. 4hen delivery is e(pected <riday, show up ,hursday afternoon. 5eturn calls and emails now. Say !%ank &ou & lot. ,ell your customers and employees how much you appreciate them. Better yet, do it the old fashioned way! ta*e pen to paper and write them a note. Be Consistent Ma*e sure your business has a consistent loo* and feel. & customer must get the same flavor from everyone within your organi+ation. &lways.

K.

Smile ,hrow out the reasons you thin* people buy from you li*e price, product /uality or your warranty. ,hey buy because they li*e you. L. Fanatical 'ptimism ,he glass must always be half full. &ttitude will always win out in the end and infect all of those around you. B. Sell So"t 3on)t ever hard sell. Solve problems. Satisfy wants. 3o what is truly best for your customer. M. (ea)e &our Com"ort *one ;ever accept the idea that this is the way you)ve always done it. ;ever accept that a new idea or technology could never wor* for you.
through common stoc*holders or such other factors as may be determined by the Monetary Board of the BS-.

India Mar*et ntry! India Mar*et 5esearch

India, the fourth largest economy in the world according to purchasing power parity, presents lucrative and diverse opportunities for western companies with the right products, services, and commitment. &merican e(ports to India e(ceeded N== billion in =A>=. ,his means that India bought more &merican goods and services than Israel and Italy did. India.s growing N>.M trillion economy demands &merican and uropean products and services for its consumers, industry and government. 4e can provide the following services to our clients! +ndia market researc%! in6depth mar*et understanding Market entry strategy! identification of the best distribution channels +ndia market analysis! are your products mar*etable in India.s mar*ets and what is the potential +ndia market expansion! growth and increase of mar*et share Esta,lis%ment o" sales c%annels! implementation of mar*et entry strategy &s a professional mar*et research and consulting company for India, &mritt is able to conduct high /uality customi+ed India mar*et intelligence such as industry research, product surveys, competitor studies, consumer research, studies on sales channels, due diligence and investment investigation. India.s re/uirements for e/uipment and services for ma0or sectors such as consumer goods, medical devices, energy, defense and security, environment, healthcare, high6tech, infrastructure, and transportation e(ceeds hundreds of billions of dollars in the mid6term as the Indian economy further globali+es and e(pands. -o. is t%e time "or many Western companies to enter and expand in t%e rising +ndian market$

Business laws and regulations in india

India.s laws are derived from nglish common law and seem recogni+able to &merican, Canadian, British, &ustralian and ;ew Oealand attorney and others familiar with the heritage of nglish legal practices

Many business laws in India predate its independence in >@CB. <or e(amples the Indian Contracts &ct of >@B= is still in force although specific contracts such as partnerships and the sale of goods are now covered by newer laws. Specifically business laws in India covering partnerships were passed in >@G=, and the Indian Companies &ct in >@KL, amended four times since =AAA. mployees are offered many protections by business laws in India, which is a member of the International Labor $rgani+ation. ,hese include the -ayment of 4ages &ct of >@GL, the Industrial mployment &ct of >@CL, the Industrial 3isputes &ct of >@CB, the -ayment of Bonus &ct of >@LK and the >@B= -ayment of Dratuity &ct. &nnual 8Bonuses9 of M.GG percent are re/uired and separation fees of about fifteen days for every year of employment are also re/uired as 8gratuity.9 <oreign citi+ens wor*ing in India need appropriate visas and &mritt can advise on how to obtain them. In recent years business laws in India have e(panded to include consumer protection. Consumer 3ispute 5edressal <orums at the local and national levels were mandated under the >@ML Consumer -rotection &ct. <oreign companies need to cogni+ant of the legal, financial and public relations impact of transgressing these laws. &s a founding member of the 4orld ,rade $rgani+ation in >@@K, business laws in India having to do with copyrights, patents, and trademar*s were updated to meet the re/uirements or ,5I-S, the trade related aspects of intellectual property rights. Indian companies and the government largely honor global I-s rights. Copyrights for music wor* differently in India and owners of entertainment I-, both Indian and 4estern have suffered due to digital piracy. $ther than that there are few I- related disputes outside of some celebrated pharmaceutical industry cases #such as ;ovartis being denied an e(tension to its update of cancer drug Dlivec by the India.s Supreme Court in &pril =A>G among charges of 8evergreening9'. 4hile India is often critici+ed for its comple( and arcane regulations, it is important that that in some ways it is simpler than the United States. <or e(ample, most regulations are consistent across the country and attorneys in India can practice in any state of the Union. <iling lawsuits is seldom productive in most commercial disputes since court cases can drag on for decades and collection can ta*e even longer. <or deals that are large enough, binding third6country arbitration can be the best way to resolve disputes. &mritt serves as a business advisor and can suggest when an attorney licensed in India, in the United States or elsewhere is advisable.

Costs of 3oing Business in India

,he uni/ue commercial and political history of the country and the liberali+ation of its economy since >@@> have shaped the costs of doing business in India in a way that can confuse &merican e(ecutives. In many industries the cost of doing business in India as it related to automobile and property insurance, to legal e(penses, to product liability and to wor*ers compensation can be dramatically lower. Medical insurance and health benefits don.t drain employers as they do in the United States. ,he cost of factory wor*ers and often the cost of industrial land can be remar*ably lower than in the 4est. But e(ecutives are often surprised by many high costs of doing business in India. &nnual compensation at senior and middle levels often matches developed country salaries. ;oncash benefits such as car, driver and housing allowances are not unusual. <or 0unior employees in many industries, subsidi+ed or free transportation and meals are often provided by the employer. In the cities, land is in short supply and rents for offices as well as for apartments can seem astronomical. ,op /uality housing and hotels for 4estern e(ecutives in prime locations is premium priced. Compared to most other countries the cost of ta(es and duties is higher in India. Utility costs can also be higher! India imports most of its gas and oil. lectricity costs are higher and most factories and offices re/uire bac*up power in the form of diesel6fired generators as well as battery bac*ups. 4hile road and rail transportation is improving, your relative cost of transport logistics may be higher than other countries. 3istributing products for sale in India can be much more comple( than in the 4est. Multiple channels and multiple layers are commonF while each layer may be relatively ine(pensive their cumulative effect on costs can be substantial. 4hen travelling to India, hiring a chauffeur driven car or a nice ta(i for the day won.t dent the budget of most overseas travelers. -erhaps a less immediately visible cost of doing business in India is the implied cost of uncertainty, delays and occasional corruption and fraud. In =A>=, KL percent of the foreign companies operating in India felt that business in India can be conducted without paying bribes.

&mritt.s advisors can help you be wary of improper offers while anticipating and planning for reasonable delays and avoiding paths with higher uncertainty.

,ravelling to India on business

Business travel to India as well as business travel in India re/uires some special tips and insights <irst of all, ma*e sure that you obtain the right *ind of visa prior well in advance of your trip. &mericans are re/uired to have visas and India.s mbassy has outsourced routine processing to a local company, ,ravisa. If you are going for wor*, obtain a business visa. ,ourist visas have limitations on what you can do and how soon you can return to India. If you are going to be employed there, you need a wor* visa. #,here are other special categories such as 0ournalist and diplomat'. -ac* at least two bottles of mos/uito repellent and always carry one on your person. Hou might find mos/uitoes in an office restroom or on a tourist bus. Second, allow enough time at the start of your trip for your body to ad0ust to the e(treme change in time +one. India is >A.K hours ahead of ;ew Hor* in winter #and @.K hours ahead in summer due to &merican daylight saving time'. 3on.t overschedule yourself while you are there. Hou will suffer sensory overload and it is also li*ely that some parts of your travel will not go e(actly as planned, &llow some cushion for une(pected business opportunities. Some of your best learning may happen outside of meetings rooms and your hotel. &llow time to absorb what ma*es India uni/ue. If you have travelled there recently, watch and listen for nuances that you missed on your prior trips. India is a tropical country with lots of germs. Unless you are planning to build up immunity over a number of months, eat only hot coo*ed foods and drin* only bottled water from sealed bottles. ;o ice. Hou will avoid 3elhi Belly. If your budget allows it, use a car and driver for the day or wee*. nglish spea*ing chauffer driven cars are affordable in most cities If your budget permits it, fly business class and stay in upscale hotels. ,hey can serve as refuges of calm during otherwise frenetic times. Most three6star and better hotels have clean comfortable beds, full bac*up power, =C6hour air6 conditioning #although your room lights and aIc may automatically turn off when you leave the room', and 4estern6style toilets, where you don.t have to s/uat. Indians have a much more rela(ed attitude toward punctuality. If you are >K minutes late for a business appointment, people may scarcely notice. If you show up on time for a social engagement, you might be the first to arriveF even the host may appear at least half an hour late. Buildings in India are not generally designed to be wheelchair6friendlyF neither are toilets. Sidewal*s may be uneven, and crosswal*s generally don.t have ramps. Hou might consider hiring a helper when you travel in India if you have a physical disability. 4hen you are a pedestrian, remember that might is right in India, and the pedestrian is at the bottom of the pec*ing order. Cross streets carefully, watching not only for cars and truc*s but also for bicycles, three6wheelers, and in some cities the occasional horse6drawn cart or stray cow. &nd watch for traffic to appear from the wrong direction, even from the sidewal*P Brea*fast meetings are rare in India, and dinner is often eaten very late in the evening. &t an Indian party, most sociali+ing happens before dinner, and guests often leave immediately after dessert, which could be served as late as midnight. Buy a copy of the Lonely -lanet Duide to India. Much of its advice is for tourists but there is plenty of information that business travelers will find helpful

Business ,a(es in India

$verview of ta(es for operating in India ven as India has liberali+ed since >@@>, its ta( structure remains among the most comple( and the ta(man is /uite pervasive. Laws, rules and practices can be confusingF foreign companies who don.t see* speciali+ed help may overpay some ta(es and

underpay others. Information below is only a rough guide, as* your India business consultants to recommend a competent local accountant. Corporate ta( for foreign companies is C= percent an there is a =.K percent surcharge plus an 8education cess9 of = percent of the ta( payable. 3ividends are ta(ed as are capital gains. Much foreign direct investment into India flows through the Indian $cean island of Mauritius due to a favorable capital gains treaty. Doods produced in India are sub0ect to a federal e(cise ta( of about >L percent. <ederal and state sales ta(es are being replaced with a valued added ta(. Most services are also ta(ed. -rior to liberali+ation, customs duties for imports into India often e(ceeded >AA percent. ,oday the basic duty is >=.K percent on most items. But in most cases importers pay an additional countervailing duty to match the amount of e(cise ta( that an Indian producer might pay. 8&dditional duty9 and education cess also apply to customs. -ersonal income ta( ma*es up a small portion of the Indian government.s overall collection. ,he ma(imum rate is about GC percent. Much of the Indian population pays no personal income ta( either because their income is not documented or because their income is below the threshold for ta(ation. ,here is on state level income ta(, but some states do have a profession ta( on salaried employees. Corporate e(penses are ta(ed via the 8fringe benefits ta(.9 If you have employees in India, there are number of payroll deductions and additional payments that are re/uired by law. -rovident fund is li*e a retirement plan. 8Dratuity9 and 8bonus9 are re/uired payments. %istorically, managers and e(ecutives receive several company6paid benefits such as car and driver allowances, subsidi+ed loans, rent payments, furnished housing, household help, phone lines etcF most of these are now ta(ed.

India Mergers J &c/uisitions

In the wa*e of economic reforms, Indian industries have started restructuring their operations around their core business activities through ac/uisition and ta*eovers because of their increasing e(posure to competition both domestically and internationally. Mergers or Amalgamations Laws in India use the term Qamalgamation. for merger. ,he Income ,a( &ct,>@L> RSection =#>&'S defines amalgamation as the merger of one or more companies with another or the merger of two or more companies to form a new company, in such a way that all assets and liabilities of the amalgamating companies become assets and liabilities of the amalgamated company and shareholders not less than nine6tenths in value of the shares in the amalgamating company or companies become shareholders of the amalgamated company. ,hus, mergers or amalgamations may ta*e two forms!6 - Merger through Absorption: &n absorption is a combination of two or more companies into an Qe(isting company.. &ll companies e(cept one lose their identity in such a merger. <or e(ample, absorption of ,ata <ertilisers Ltd #,<L' by ,ata Chemicals Ltd. #,CL'. ,CL, an ac/uiring company #a buyer', survived after merger while ,<L, an ac/uired company #a seller', ceased to e(ist. ,<L transferred its assets, liabilities and shares to ,CL. - Merger through Consolidation: & consolidation is a combination of two or more companies into a Qnew company.. In this form of merger, all companies are legally dissolved and a new entity is created. %ere, the ac/uired company transfers its assets, liabilities and shares to the ac/uiring company for cash or e(change of shares. <or e(ample, merger of %industan Computers Ltd, %industan Instruments Ltd, Indian Software Company Ltd and Indian 5eprographics Ltd into an entirely new company called %CL Ltd. Ac/uisitions and !akeo)ers Under the Monopolies and 5estrictive -ractices &ct, ta*eover meant ac/uisition of not less than =K percent of the voting power in a company. 4hile in the Companies &ct #Section GB=', a company.s investment in the shares of another company in e(cess of >A percent of the subscribed capital can result in ta*eovers. &n ac/uisition or ta*eover does not necessarily entail full legal control. & company can also have effective control over another company by holding a minority ownership. Regulations "or Mergers 0 Ac/uisitions Mergers and ac/uisitions are regulated under various laws in India. ,he ob0ective of the laws is to ma*e these deals transparent and protect the interest of all shareholders. ,hey are regulated through the provisions of !6

,he Companies &ct >@KL ,he Competition &ct =AA= 'ur Ser)ices &mritt has the e(pertise and resources to advise and support you through these transactions. In addition to strategic insight into values and options, we can help identify, negotiate, structure and close transactions. In an Economist +ntelligence 1nit =AAB Survey, LGT of US and uropean respondents said they were interested in MJ& targets from India. Specifically we can &ssist in development of an ac/uisition strategy Identify and vet target companies 3evelop strategic rationale for transaction %elp with regulatory advice %elp with cross6cultural negotiations By using our bi6culturally sensitive leadership, our clients benefit from! 5eceive professional advice and /ualified third party eyes during formulation and e(ecution 5educe ris* of deal falling apart due to some miscommunication or cultural misstep Benefit from access to on6the6ground resources in India ,he vast ma0ority of merger and ac/uisition transactions with Indian companies involve either private or 8listed9 companies. Most listed #public' companies are traded on the Bombay Stoc* (change or the ;ational Stoc* (change. -rivately held companies may be family owned, employee6owned or investor owned. Some Indian companies are owned by a government #state or federal' and are often referred to as public sector underta*ings or -SUs.

Bene"its o" Doing Business in +ndia

<or companies and e(ecutives from 4estern economies there are many benefits of doing business in India when compared to other &sian or emerging country alternatives. 4ith a K,AAA year heritage of welcoming foreigners to its shores, India welcomes diversity. &merica, &mericans and &merican brands are well li*ed and popular in India while uropeans and &sians are also readily accepted. India has many religions, s*in colors and languages and you will not feel alienated if you embrace the country without being 0udgmental India is a free society and 4ebsites, movies and music from other cultures is not censored or limited, with the e(ception of pornographic or e(tremely seditious materials. Investing into India and repatriating profits or other gains is generally /uite straightforward. <oreign companies can readily raise e/uity capital in India and many foreign companies have subsidiaries traded on Indian stoc* e(changes. India.s location can ma*e it a good strategic alternative to China for manufacturing and shipping to &frica, the Middle ast, and Southeast &sia. %oneywell manufactures turbochargers in -une, and %yundai ma*es automobiles in Chennai for the &frican and uropean mar*et. India.s engineers and managers travel well globally. D , Doogle, C&, Mastercard, 5eebo* and many others have transplanted managers first hired in India into corporate head/uarters and worldwide leadership positions. India.s talent is a tremendous asset. Hou will readily find people who spea* nglish and you can buy nglish language boo*s and maga+ines in all ma0or Indian cities and airports. If you spea* a ma0or uropean language such as Spanish, Derman, or <rench, you will also find spea*ers of these languages in ma0or Indian cities, than*s to organi+ations such as Ma( Mueller Bhavan and &lliance <rancaise and also due to India.s booming global call center business. India.s young population and growing economic power promises to be a magnet for foreign companies for decades to come.

Current Business ,rends in India

<or foreign e(ecutives loo*ing at business trends in India, the following are some of the most salient! India.s patchwor* is provincial sales ta(es which were supposed to be replaced by a federally administered Doods and Services ,a( #DS,' to streamline the interstate flow of goods. Bic*ering about how such revenue would be allocated between various authorities continues to delay this important reform. Mobile phone usage in India has reached near saturation levels with M@= million telephones of which only GA million are landline. In a population of >.=> billion and a country where BAA million citi+ens earn less than N= per day, this accomplishment is truly breathta*ing. 5ural teledensity has crossed CA percent, while in the cities the number of phones e(ceeds the number of residents by CL percent, largely due to the practice of maintaining multiple SIM cards. ,he ,ata conglomerate of over @A public companies, including ,ata Motors, ,ata Steel, ,ata Consultancy Services and ,ata Chemicals is now led by a non6,ata family member for the first time in its history. CC6year6old Cyrus -allon0i Mistry and his family are the largest private investors in ,ata Sons. Mistry.s mother was Irish and he is a citi+en of the 5epublic of Ireland. ,he two richest men in India, Mu*esh and &nil &mbani have been feuding since shortly after their self6made billionaire father.s death in =AA=. In &pril =A>G, the first concrete sign of their much tal*ed about rapprochement emerged with a N=C million deal where Mu*esh will use his younger sibling.s optic fiber networ* to launch his C6D telecom venture. Indians continued to be the largest consumer of %6>B non6immigrant visas to the United States, often to enter its technology wor*force. Indians living overseas also remitted NKK billion to their relatives bac* home, the highest number of any country. #China is second with NK> billion and Me(ico third with N=> billion'. ight Indian cities are listed among 8global hotspots9 in terms of competitiveness, by the conomist Intelligence UnitF 3elhi leads and the list includes Mumbai, Bangalore, &hmedabad, -une, %yderabad, Chennai and 1ol*ata. ;ew Hor* City tops the overall list. ,he Union #Central' Dovernment is loo*ing ahead at parliamentary elections scheduled for =A>C and many policies and decisions are being colored by the upcoming polls. ,he ruling United -rogress &lliance coalition led by Sonia Dandhi.s Indian ;ational Congress is under pressure due to numerous financial scandals and other issues. ,he primary opposition party, the Bhartiya 7anata -arty or B7- continues to be somewhat divided about whom to

pro0ect as its leading candidate to rival the ruling coalition. ,he charismatic Chief Minister of Du0arat, ;arendra Modi is a favorite of corporate India, with his home state growing at M.K to >A percent annually under his leadership. But some in his party are lu*ewarm to his leadership. Business trends in India are often hard for foreign visitors to notice, due to the degree of chaos, confusion and e(citement in business life and as well as in the business press.

Dlobal -roduct Innovation Strategy

Product inno)ation is the lifeblood of western companies. ,he percentage of revenues from recently6introduced products is often a *ey competitive differentiator. So is the percentage of research and development e(penditure relative to revenue, or to gross domestic product, if comparing countries. Het, s%orter product cycles, more complex designs, and the need to create innovative products "or emerging economies have led smart companies to leverage talent in China and India for product development and research. 4estern research and development e(ecutives are forced to ma*e difficult choices between security of intellectual property, /uality of employees, education levels of new hires, and control of schedules and resources.

+ndia Business Consulting: 4hen a ;orth &merican company does business with organi+ations from India or China, its managers must /uic*ly become adept at many new s*ills such as cross6cultural communications dealing with colleagues who are M6>= time +ones away business practices that may seem odd to &merican but are routine in &sia concerns about complying with &merican laws and international practices distributed product development, distributed mar*eting, customer service uni/ue aspects of mar*eting, distribution, sales and credit assessment sourcing or outsourcing products and services from unfamiliar locations travel or relocation to a seemingly alien society.