Entrepreneurship is important to society and the economy, but many business ideas remain just ideas due to a lack of accessible and simple information. In the maib edu project, we present useful information, including from the field of entrepreneurial education, to guide you on how to become a good entrepreneur.
Surely you've heard about the different ways of organising a business. What's the difference between each? Let us explain.
What is a peasant household, and what businesses fall under this status
A peasant household (PH) is an individual enterprise whose purpose is to produce agricultural products, process them and market its agricultural produce. It is based on private ownership of land and other assets and the personal labour of family members.
A peasant household may comprise a single individual who has reached the age of 18 and may bear their name. Still, it often consists of members of a family who work in the ph, such as the spouse, parents, children, including adopted children, brothers, sisters and grandchildren who have reached the age of 16, and other persons who are members of that family.
An important point is that family members must do more than 50% of the work carried out in the PH, and if not, the company must ensure that the situation is remedied within 3 months or cease to operate. Suppose a member of the peasant household has not participated in the household work for 3 consecutive years. In that case, he or she is to be excluded unless he or she was elected to an elective office, did military service, studied at an educational institution or was ill.
Regarding production limits, the Government has recently established a new legal framework in this respect. Cereal producers must not exceed an area of more than 40 hectares, and cattle and pig farmers must have no more than 200 and 300 head of cattle or pigs, respectively. Otherwise, they will no longer be able to operate as peasant farms.
Although a separate law covers all aspects of the peasant farm, it is registered with the territorial offices of the Public Service Agency (ASP) like any other business. Thus, to register a PH, you need to go through the following steps:
- Submission of the application;
- Receipt and examination - the stage at which you submit all the necessary documents;
- Issuing the decision.
Read more about the required documents, fees, terms of service and more here.
You can also read more about the rights and obligations of the peasant household in Law No. 1315 on peasant households.
What is an Ltd., and in which cases this form of business is chosen
Ltd is an abbreviation for Limited Liability Company, which is founded by natural and/or legal persons who have associated their assets to carry out a joint activity. A single person can set up a Ltd, but the number of employees can be up to several tens of thousands.
The number of members of an Ltd may not exceed 50, and it can carry out most entrepreneurial activities, some of which require the necessary licences.
At the same time, there is no minimum authorised capital for a limited liability company, whereas joint-stock companies, for example, have a mandatory share capital of at least 600,000 MDL. The limited liability company is the most widespread type of organisation of entrepreneurial activities in Moldova, with more than 55% of enterprises registered as such.
The founders of the limited liability company are liable for the enterprise's obligations only up to the value of their share(s). For example, if a person owns 50% of the shares, they will be liable for 25% of the company.
A Ltd can be registered at any territorial subdivision of the Public Services Agency upon presentation of the identity card. At this stage, it is also checked whether you have debts to the state or other businesses, unpaid fines or a ban on setting up new companies.
To establish a limited liability company, you need to go through three stages: registering the business, opening a bank/payment account and taking out a registration.
One important aspect is the Ltd's name, as it is not allowed to repeat an existing name. At the same time, you need a legal address confirmed with the tax authorities, which must be established immediately after registering the business. Thus, you will have to lease the space or land.
More details about all the necessary documents and the registration procedure can be read here.
What is a Joint Stock Company
JSCs are one of the most complicated legal and organisational forms, and companies operating under this status are usually large, such as banks or insurance companies. In the Republic of Moldova, only about 1% of all enterprises have the status of joint stock company.
The capital of a joint stock company is divided into shares and can be founded by one or more legal entities and/or individuals. Compared to a limited liability company, the owners of a joint stock company are called "shareholders" and hold shares and are liable for losses only up to the limit of the shares held. A board of directors and a committee of managers manage the company, and the state regulates the activity of the joint stock company through the National Commission for Financial Markets.
To set up a JSC, a minimum share capital of MDL 20,000 is required, and according to the law, the amount of the joint stock company's share capital cannot be less than MDL 600,000.
Read more about the rights and obligations of the Joint Stock Company here.
To found a Joint Stock Company, you need to go through several steps:
- Designate the shareholders;
- Register the Joint Stock Company with the Public Services Agency;
- Open a bank account;
- Hire an independent registrar;
- Register the securities with the National Commission for Financial Markets.
Read more about the legal steps, costs, and necessary documents here.
What type of business would best suit you?
