The professional body
for accountants ACCA (the Association of Chartered Certified Accountants) is
asking whether businesses and policymakers in Pakistan are compromising the
performance of small business in a new report called 'Building the legal
framework to help business succeed'.
Whether through
over-familiarity or lack of awareness, there’s a risk a key ingredient in the
formula for success is being overlooked – the legal form through which
businesses operate.
The report calls on
government to put legal structures in place, so that all businesses can thrive
and benefit from the support mechanisms available. It explores the following
four key elements entrepreneurs and policymakers must consider:
Realising
the returns: Success can mean different things to different
businesses. The founder’s goals can range from financial security to ‘giving
something back’, and increasingly entrepreneurs are looking to be measured on
social and environmental goals alongside the monetary returns.
Investing
into the business: regardless of the owners’ final aims, every
business needs investment, and most will need more than the founders have
saved. How that money is raised, and who from, will have wider implications for
the rest of society. As technology changes the ways that can happen, regulators
must adapt to new structures.
Legal
characteristics and regulation: The defining legal characteristic of
a business form will be whether the business has a separate legal identity from
its owner. Who makes the business decisions, who will be liable if things go
wrong, and for how much, are vital considerations for those in the business and
anyone who might buy from, sell to or be employed by it. The frameworks need to
be effective, efficient and trusted.
Administrative
requirements: Aspiring entrepreneurs are often most concerned about
the ease of starting up and the burdens of registration and the like. Advisers
and existing business owners tend to be more concerned about the long term
running costs of annual filings and reporting requirements. Policymakers though
must address both, striking a balance between rigour and efficiency.
Sajjeed Aslam, head
of ACCA Pakistan says:
‘Small businesses are
the lifeblood of society in Pakistan, creating and sharing wealth at a local
level. It is vital the health and sustainability of all that the right legal
frameworks exist to enable every business to flourish. Building trust and
managing risk are key elements in enforcing a secure environment for
entrepreneurs, investors and customers alike.
‘Lawmakers must
ensure the legal forms available reflect the needs of a modern economy. The
roots of existing forms can be traced back hundreds of years, and while the
concepts of trust and economic growth haven’t changed, the way we do it has
changed beyond all recognition, and the pace of that change is accelerating.
Having the right businesses operating helps governments in two ways: by
deepening the pool of talent for procurement purposes and by providing social
support and social benefits that the state might otherwise have to fund
directly.
‘It is vital that
government can encourage, protect and regulate effectively the talents as well
as resources needed by businesses.’
This report builds on
ACCA’s existing body of guidance for members. In addition to drawing on
these previous
publications, ACCA undertook a desktop survey of available business forms in
nine jurisdictions (UK, Ireland, India, Pakistan, China, Singapore, Malaysia,
Nigeria and Hong Kong), analysing the key features under four main themes:
realising the returns; investing into the business; legal characteristics; and
administrative requirements.
The report can be
found on ACCA’s website: https://www.accaglobal.com/content/dam/ACCA_Global/professional-insights/business-forms/pi-business-forms-part3.pdf
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