THE USA JOURNALS
THE AMERICAN JOURNAL OF MANAGEMENT AND ECONOMICS INNOVATIONS (ISSN- 2693-0811)
VOLUME 06 ISSUE11
23
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PUBLISHED DATE: - 15-11-2024
DOI: -
https://doi.org/10.37547/tajmei/Volume06Issue11-04
CONCEPT AND CLASSIFICATION OF
ENTREPRENEURSHIP ENTITIES
Ekkubaeva Iroda Yakubzhanova
Student (Master's Degree) At The Higher School Of Business And Entrepreneurship Under The
Cabinet Of Ministers Of The Republic Of Uzbekistan
INTRODUCTION
The entire history of human societal development
traces back to ancient times, where activities like
production, exchange, and service provision were
limited to satisfying primary needs. With the
advent of conscious labor and the advancement of
human thought, these fields evolved into sectors
and industries, sparking diverse perspectives
grounded
in
scientific
frameworks.
The
significance of entrepreneurship throughout its
stages of development is closely tied to concepts
such as "entrepreneur," "entrepreneurship," and
"entrepreneurial entity." Without clearly defining
these concepts, it is impossible to improve the
management of entrepreneurial activities.
To define the concept and status of
entrepreneurship entities, it is essential to
understand the essence of the terms “legal subject”
and “subject of civil law.” A legal subject is a broad
legal category that includes all participants in
social relations who hold rights and obligations
under current legislation. As each branch of law has
its subjects, entrepreneurship law also has distinct
subjects.
All subjects of civil law are generally referred to as
“persons,” divided into three groups:
1. Individuals (natural persons), encompassing
citizens of the Republic of Uzbekistan, foreign
nationals, and stateless persons;
2. Legal entities, which include organizations
aiming
to
generate
profit
(commercial
organizations) and those that do not (non-
commercial organizations). These may take the
form of domestic, foreign, or joint ventures within
the Republic of Uzbekistan;
3. The state, which acts as an independent subject
either directly or through administrative-
territorial units or government agencies on its
RESEARCH ARTICLE
Open Access
Abstract
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behalf.
The term "entrepreneur" was first introduced by
French economist Richard Cantillon in the 1720s.
According to Cantillon, an entrepreneur is
someone who buys goods at a known price and
sells them at an uncertain price . Adam Smith later
expanded on this concept, describing the
entrepreneur as a proprietor who undertakes
business ventures to earn profit by taking
calculated
risks.
Entrepreneurship
entails
assessing market opportunities, utilizing them, and
implementing innovative ideas .
In the words of Amir Timur, "A diligent,
courageous, and determined entrepreneur is far
more valuable than countless indifferent people."
Thus, entrepreneurship is viewed as a multi-
faceted activity involving the art of management,
creativity, free expression of initiative, innovation,
and readiness for risk. To engage in
entrepreneurship, one must possess skill,
intelligence, and alertness, which are essential
qualities .
The legislature defines entrepreneurship as an
independent, initiative-driven activity conducted
by entrepreneurship entities in accordance with
legislation, involving risk and personal property
responsibility to generate income (profit) .
Subjects of entrepreneurship law are those
individuals or entities authorized to engage in
entrepreneurial activities.
Both natural and legal persons can participate in
civil legal relations as entrepreneurs or without
obtaining such a status. The difference is that
within entrepreneurial legal relations, the subject
always operates at risk, assuming responsibility
and aiming to earn profit.
Since gaining independence, Uzbekistan has made
significant efforts to enable small businesses and
private entrepreneurship to play a crucial role in
increasing GDP, improving welfare, addressing
unemployment, and fostering economic growth.
Legislative reforms have opened pathways for
private
sector
development,
expanding
entrepreneurship and leading to broader
recognition
of
citizens
as
subjects
of
entrepreneurship-related legal relations.
Only when activities are specialized and aimed at
generating profit through the production of goods
(or providing services) with risk, can the
participants be classified as entrepreneurs. In cases
where individuals engage in occasional sales of
surplus products or unneeded items without the
aim of profit, such activities are not considered
entrepreneurial. For example, a citizen who sells
surplus agricultural products or accepts
remuneration for occasional services would not be
classified as engaging in entrepreneurship since
these actions fall under civil law regulations.
The legislature defines key characteristics of
entrepreneurship law subjects, which include:
-
Registration with the state;
-
Possession of a permit (license) for certain
types of activities;
-
Ownership of property;
-
Possession of entrepreneurship rights and
obligations as determined by Uzbekistan’s laws
and foundational documents of the respective
entrepreneurship entities;
-
Independent liability within the scope of their
own property;
-
The right to protect their rights and legitimate
interests through judicial means.
According to Article 4 of the Law on Guarantees of
Freedom of Entrepreneurial Activity (revised),
entrepreneurship
entities
(entrepreneurship
subjects) are legal and natural persons registered
with the state and conducting entrepreneurial
activities. Furthermore, government bodies,
officials, and individuals prohibited by law from
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engaging in entrepreneurial activities cannot be
recognized as entrepreneurship subjects .
The Resolution No. 103 issued by the Cabinet of
Ministers of the Republic of Uzbekistan on March 6,
1992, specifies a list of officials prohibited from
engaging in entrepreneurial activities. This list
includes employees of state administration and law
enforcement bodies, heads of state banks and their
deputies, executives of state enterprises with
authority over financial documents, and officials
tasked with supervising entrepreneurial activities.
Based on regulatory acts, entrepreneurship law
subjects can be classified by various criteria,
including:
- Ownership structure (e.g., private, communal, or
state property),
- Authority (such as direct entrepreneurial
operations or management entities),
- Subject type (natural or legal persons),
- Type of activity (commercial and non-commercial
organizations).
Entrepreneurship entities are classified as follows:
- Commercial organizations, which aim to generate
profit as their primary goal (e.g., private
companies, joint-stock companies), with legal
status defined by the Civil Code and other
legislation of the Republic of Uzbekistan.
- Non-commercial entrepreneurship entities,
which operate to achieve specific objectives
without the goal of profit. These entities include
public associations, social funds, and institutions
funded by owners .
Further classification criteria for entrepreneurship
entities include size (small, medium, large
businesses), type of activity (production, trade,
services), ownership form (state, private, joint),
and legal status (sole proprietor, LLC, JSC, etc.).
According to Article 65 of the Constitution of
Uzbekistan, the state promotes the development of
market relations, fair competition, and guarantees
freedom of economic activity, entrepreneurship,
and labor, taking into account consumer rights .
Under Article 24 of the Civil Code, a citizen may
engage in entrepreneurial activities as an
individual entrepreneur from the moment of state
registration. This article equates the legal capacity
of individual entrepreneurs to that of legal entities
.
Types of entrepreneurship subjects include:
- Sole proprietors, who operate without forming a
legal entity;
- Small and medium-sized businesses, which
contribute to job creation and local market
development;
- Large enterprises, which have extensive turnover
and workforce, typically involved in production or
industrial activities;
- Family businesses, which are managed and
funded by family members.
A sole proprietorship is an individual engaging in
entrepreneurial activities independently without
establishing a legal entity. These individuals use
their personal resources and capital to conduct
small to medium-sized operations. Typically
classified as small business entities, sole
proprietors can operate in various economic
sectors, including trade, services, agriculture,
industry, and other areas.
One of the defining characteristics of sole
proprietorship is that these entrepreneurs bear
personal liability for the capital they invest in the
business. Due to the absence of a legal entity, their
operations are regulated by simplified legal
requirements, which helps them avoid additional
expenses and bureaucratic processes. Sole
proprietors can also make rapid and efficient
decisions in production or service processes, as
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they manage their business independently.
Establishing and launching a sole proprietorship
does not require registering an additional legal
entity, making it a straightforward and efficient
process for newcomers, aiding them in establishing
their place in the market. Sole proprietors have the
right to make independent decisions for their
businesses, granting them greater managerial
freedom. This autonomy enables them to make
quick and profitable decisions, providing a
competitive advantage.
Sole proprietors typically operate under a
simplified tax regime, which eases the tax payment
process. However, their legal status may be subject
to certain restrictions, such as limitations on
specific types of activities or contractual
agreements.
Sole proprietors represent one of the most active
segments of small business, contributing to the
sustainable development of the economy, as well as
to increasing employment and income levels. In
developed countries, small businesses and private
entrepreneurship are recognized as effective
means of ensuring socio-economic stability and
play a vital role in promoting employment and
income growth. From the early years of
independence, Uzbekistan has been building and
continually improving a regulatory and legal
framework to facilitate effective activities for this
sector.
It is also noteworthy that on April 26, 2012, the
Law of the Republic of Uzbekistan "On Family
Entrepreneurship" was adopted, along with the
Cabinet of Ministers' resolution from July 29, 2009,
"On Measures for Developing and Expanding
Family and Handicraft Entrepreneurship without
Establishing a Legal Entity." These regulatory acts
created additional opportunities and convenience
for citizens wishing to engage in entrepreneurship.
According to these legal documents, family
entrepreneurship is defined as a joint
entrepreneurial activity carried out by spouses
based on their jointly owned property. This activity
involves the personal labor of spouses and
assisting family members and does not involve
forming a legal entity .
A craftsman (master craftsman or artisan) is an
individual who, either independently or with the
assistance of apprentices, uses traditional
techniques, tools, and small-scale mechanization to
create items that meet established functional and
national aesthetic standards. These items (works,
services) reflect the functional and aesthetic norms
of craftsmanship rooted in national tradition.
Legal entities engaged in entrepreneurial activities
can be classified based on the following main
criteria:
Equity contributions (limited liability companies,
additional
liability
companies,
joint-stock
companies);
Participation in entrepreneurial activity (general
or limited partnerships);
Personal
labor
participation
(production
cooperatives, private farms);
Participation in management (private companies,
farming enterprises).
CONCLUSION
In conclusion, state-guaranteed freedom of
entrepreneurial activity plays a crucial role in the
continued development of the economy in
Uzbekistan. Reforms and incentives supporting
entrepreneurship have resulted in a yearly
increase in the number of entrepreneurial entities
in various organizational-legal forms across the
country.
REFERENCES
1.
The Constitution of the Republic of Uzbekistan
https://lex.uz/docs/6451070
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