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Small scale industries just like the medium and large scale business require
initial start up funds or capital and working capital for day to
day working. In case of a company- either private or public company-the funds are contributed by
the shareholders and the funds are owned by the corporate person, the
company and not by the shareholders.
Proprietary Concerns: In the case of a proprietary concern, the individual
proprietor brings the funds required for the business and he borrows on the
credit market. He may also borrow funds from the public, but from not more than 25
people.
Partnership Firm: The partner brings their own capital required for
the business. In a trading firm a partner has implied authority to borrow money for the
purpose
of the business on the credit of the firm.
COMPANIES
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Share Capital: The shares or other interest of any member
in a company shall be
movable property, transferable in the manner provided by the articles of the
company. Its appropriate number shall distinguish each share in a ompanyhaving a
share capital. The share capital of the industrial undertaking may
consist of
equity shares and preferences shares. Equity share capital means all
share capital, which is not preference share capital.
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Raising Finance
from Capital Market: In the past many small and medium
companies were not able to enter the capital market due to helistingrequirement
of the Securities Contract (Regulation) Act, 1956, that minimum issued
equity capital should be Rs.3 crores. On the Over The Counter (OTC)
Exchange of India,
the minimum issued capital can be a mere Rs. 30 Lakhs and the maximum value is
Rs. 25 crores. The small-scale industries can have access to this exchange.
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Eligibility
Criteria:
1.The
issued equity capital of the company should be between Rs.30 Lakhs and Rs. 25
crores;
2.The
company should make a minimum public offer of 25 per cent of its capital
or Rs. 20 Lakhs in
face value, whichever is higher;
3.The
company should not be listed on any other stock exchange in India.
INSTITUTIONAL FINANCE
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Guarantee Cover For Loans To Small Scale Industries: Commercial
banks including regional rural banks, state financial corporations and
industrial development corporations which give loans to small scale industries can
get guarantee cover from the Department Insurance and Credit for acquisition of
fixed assets/ equipment such as land, building, machinery, furniture and vehicles or
their
repairs and replacement as well as working capital advances for production and
marketing of products.
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