The legal form of organization of companies

The legal form of organization of companies

Legal and regulatory frameworks establish and establish the ‘rules of the game’ in society and govern how government, enterprise, and civil society interact. These rules influence investment decisions, opportunities, and usable economic actors. Governments establish these rules to collect tax revenues, invest in public goods, protect the law, safety, and maintain consumers’ health and safety and the environment. Agreeing to the rules is one of the costs of doing business. A more ‘friendly’ legal environment for ‘companies’ would include:

1. Recognition of property rights;
2. Easy enforce ability of contracts;
3. A simple, transparent, and low-cost taxation system which is operational and perceived as fair;
4. Businesses can register with the authorities with a simple and inexpensive method, remotely or even via the Internet;
5. Business licensing requirements are minimal. When they are implemented, the objective is to maintain the health and safety of consumers and work rather than be used as a source of revenue for central or local government.
6. Labor regulations are balanced and flexible, protecting labor rights and equality of firms;
7. Whether exporting or importing, companies interact with the central administration efficiently, simply, and transparently.
8. Financial sector regulations (banks, insurance, leasing) recognize companies’ difficulties and have their own legal and regulatory instruments to put their assets at companies’ service.
9. Public administrations at the local level value entrepreneurs as contributors to economic growth, treat them fairly and keep corruption to a minimum.
10. Legislation and regulations are sensitive to women and have laws and rules that enable equal opportunities.
11. Companies can quickly establish and be members of joint organizations;
12. Bankruptcy legislation does not have high penalties for SME entrepreneurs.

The government, on the other hand, needs to have a high-level commitment to change the way bureaucracy works: for example, clearly identifying regulatory objectives, assessing the costs of new companies’ regulations, regularly communicating proposed changes, and consulting with companies, and clear instructions on how to comply with these regulations and mastering their capacity to administer rules. On the other hand, companies should take the initiative to become informed and qualified to discuss with the civil service through their membership in organizations, making honest efforts to understand its implementation, once approved throughout a consultative process.

According to the form of organization in the Republic of Albania, business firms can be established in the way of:
1. Individual business (sole proprietor);
2. Limited liability company;
3. Limited partnership (Limited co-ownership);
4. General partnership (General co-ownership);
5. Joint Stock Company (Corporation); and
6. Non-resident (foreign) enterprise.

Liabilities of a venture

Numerous studies show different variables that affect companies’ success or failure, but most of these studies focus on the liabilities of a venture.

As I mentioned in the previous chapters, the Albanian company law is closely related to the previous NRC law. This law of 2007 determines the mandatory data for companies’ registration, provided in article 32 of law no. 9723/2007, which are as follows:
– Name
– Form
– Date of establishment
– headquarters
– Object, if defined
– Duration, if specified
Identification of persons responsible for the administration and representation of the company about third parties, the powers of expression, and the terms of appointment of them.
– Specimens of signatures (signatures) of persons representing the company before third parties.
Growing a business means increasing sales, purchases, employees, profitability, and the firm’s average growth or company. Developing an enterprise from the inside means increasing management problems in all spheres and increasing external competition.

The firm’s competition is not as simple as in the past and requires superior analysis and attention. During its growth phase, a firm usually faces:
– More competition;
– Increased productivity and efficiency as a result of the accumulation of knowledge and skills;
– Problems with production volume as well as with efficiency and quality
– Establishment of a formal internal structural organization
– Continuous increase in sales and profits
– Sophisticated customer requirements
– Increase of entry barriers
– Consumers gradually become acquainted with the services and products of the enterprise
– Increased demand.

But, researchers point out, it is essential to note that not all companies will go through this cycle. Many companies fail to survive during the first year.

According to Di-Masi (1993), the entrepreneur is the individual who perceives the opportunities offered by the market and has the right motivation and ability to mobilize resources to capture them. He lists the most important characteristics of entrepreneurs’ self-confidence, willingness to take risks, difficulties despite unfavorable circumstances, orientation, tirelessness, and determination. An entrepreneur’s personality is shaped during childhood, and nations with a well-developed market economy adore their businessmen and use them as role models.

The main problem that businesses are facing today is an unstable and unpredictable environment. Laws governing corporate governance are often very complex and challenging to understand. The high level of regulations brings delays and costs to businesses. On the other hand, entrepreneurial firms in transition economies need to be more proactive and willing to overcome difficulties by bringing entrepreneurs even more prepared than entrepreneurs in the west. However, the entrepreneur continues to be widely recognized as the only one responsible for the stability of his company, and his behavior is called a determinant, especially in companies.
– Psychological traits and personality of entrepreneurs;
– Managerial skills and training of entrepreneurs and
– The external environment.

Among the psychological attributes highlighted are those traits related to independence, innovation orientation, risk attitude, and competitive nature, which according to researchers, are related to success and essential factors in challenging business environments. Rauch & Free (1998) agree that psychological traits significantly contribute to companies’ success and point out that other characteristics such as experience and training, special managerial skills, and the business environment can develop quickly, and state policymakers can help.

Organizational skills may include managing staff and maintaining accounts accurately, while environmental conditions relate to government support, access to capital, and family and friends’ support. In addition to these three factors, it is thought that social media or various social networks significantly impact success, especially in opening new businesses or start-ups, which is best verified in our time. In this way, talented individuals are more likely to grow and develop business ventures. But talent is not the only requirement. Risk avoidance is another skill that successful entrepreneurs must-have. By the 1930s, researcher Marshall had concluded that risk-averse young people were more willing to start a business than others.

The main risks that affect the failure of a business today have more to do with the global economic environment and international pressure. To succeed in the short term, some companies may tend to commit corruption. Also, cost increases due to rising wages, land, raw materials, exchange rates, and lack of cash flow create a hostile business environment. Companies have to face the challenges of managing legal, regulatory, and cultural differences in different markets, which bring difficulties for their well-being.

Meanwhile, no change in business success has been observed in terms of gender. Changes in performance by gender have been studied for many years but not as intensively as in the last two decades. Some researchers claim that there are no differences by gender.

Others believe that discrimination against women continues in the public and private sectors. Gender differences are attributed to human factors that bring education to owners and firms’ characteristics, such as business type. Other studies show differences between men’s and women’s personalities, while other studies have revealed different managerial practices.