Showing posts with label Setting up in India. Show all posts
Showing posts with label Setting up in India. Show all posts

Friday 3 July 2015

Company Incorporation in India

5 reasons private limited companies are back in fashion


“Is it better for startups to opt for an LLP instead of a privatelimited Companies?” “Doomsday for private limited companies!” “Draconian Companies Act 2013 makes life for private limited companies a bed of thorns!”“Startups…forget about private limited, LLP is the next big thing!”Even a few months back, consultants were advising startups against registering a private limited company. I cannot say I blamed them. There were good reasons.
The Companies Act, 2013, brought in its wake lots of practical dilemmas. The whole point of uprooting the old Companies Act was to prune age-old and, now, irrelevant provisions. This purpose seemed to have miserably failed. However, the present Government has amended the entire Companies Act. Additionally, various new measures have been introduced in order to facilitate doing business in India. By virtue of these initiatives, private limited companies are back in fashion.

1. No minimum capital required to start a private limited companyLLP always had an edge over the private limited companies when it came to this clause. In India, one can start an LLP (Limited LiabilitiesPartnership)with Rs 1 as contribution whereas, earlier, for a private limited company a minimum capital of Rs 100, 000 had to be provisioned for.
Impact of this amendment:
There is no minimum capital requirement and hence no burden of putting in such a large amount, as previously required, into the company bank account. This amount can be introduced as per the convenience of the business owners.

2. Introduction of Fast Track Mode of Incorporation:The Ministry of Corporate Affairs (MCA) introduced this new scheme, effective from 1st May, 2015. Now, instead of filing separate e-forms for allotment of Director Identification Number, Name of Company and Incorporation of a company in India, startups needto file one single form, INC 29, to incorporate their company.Now startups have two options:
·         The Fast Track Route: Filing of INC 29 with a fee of Rs2,000 in addition to the normal filing fees
·         The Regular Route: with the normal filing fees
Impact of this introduction:
This initiative was brought in to incorporate companies in a couple of days.After incorporating around over 15 startups by this method, we have found that incorporation, in reality, takes around around five days. Nevertheless, this indeed is a huge improvement over the existing timeline of 15 to 20 days.
3. Exemption from Filing of INC 21: A newly formed company could not commence operations until it has filed with the RoC a declaration that the paid-up capital has been subscribed by the signatories to the Memorandum. Hence, technically, startups had only one option–deposit the Rs 100,000 as soon as the company gets incorporated.
Impact of this exemption:
This requirement has been done away with. Hence, there is no undue pressure on startups to subscribe to the shares immediatelyon incorporation. Startups, take a deep breath and kick-start your operation.
4. Acceptance of Deposits from Members:In India, private limited companies are generally formed as closely held companies. In these types of entities, loans and advances from relatives and members are the most important sources of finance. Companies Act 2013 made it practically impossible for startups to run their businesses by categorizing loan from any party apart from directors of the company as “Deposits”. Moreover, the Directors were not allowed to advance such loans from borrowed funds. Companies accepting deposits were required to follow the rigorous provisions as applicable at par with the public limited companies, which included:
·         Issuance of  Circular
·         Filing of circular with ROC
·         Maintaining Deposit repayment reserve
·         Provision of  deposit insurance
Hence, the companies could take loans either from its directors or from banks. While it practically gets very difficult for directors to dish out personal resources, it also takes a lot of time and troubleto avail loans from banks. After numerous representations from various parties and councils, the Government has come up with a partial exemption.
Impact of this exemption:
Private Companies can now borrow money from members up to aggregate limit of paid-up share capital andfree-reserves. They would not need to comply with “Deposit”conditions. This in turn has again ensured the free flow of hassle-free resources.
5. Loans to Director: While private companies were not allowed to borrow money from any one apart from the directors, they were not allowed to advance money to anyone includingits directors. It was further prohibited for these entities to even provide guarantee for the loan that the directors availed intheir personal capacity. These provisions pertaining to loans faced severe criticisms.
 Impact of this exemption:
 A private limited company is now allowed to provide loan orguarantee/security to directors, subject to the following conditions:
·         Such guarantor company should not have a body corporate as a shareholder
·         Such company should not have borrowed money from bank/ financial institution/ body corporate exceeding twice its paid-up capital or Rs 50 crore, whichever is lower.
·         No repayment default is subsisting of such borrowings at time of giving the loans
Few others notable exemptions to private limited companies include:
·         Definition of Related Party relaxed: Holding, Subsidiary Company, Associate Company and sister concerns out of ambit.
·         Minimum time limit for rights issue relaxed. Minimum offer period can be reduced, if 90% members give their consent in writing or electronic mode.
·         Articles of Association may contain over-riding provisions to Companies Act pertaining to content andlength of notice, explanatory statement, quorum, chairman, proxies, restriction on voting right, show of hands and poll (subject to certain conditions).
·         Interested directors can now participate in board meeting subject to the disclosure of their interest.

In all, the Government has summarised the pain points of the businesses and tried to bring about a restorative mechanism. While we consultants had our fair share of trouble resolving the practical difficulties of companies Act, 2013, the startups suffered the most. While measures like no minimum capital requirement would grease the entry points for starting up, relaxations in deposit norms and provision for loans would lubricate the maintenance of the businesses

Monday 29 June 2015

Company Registration in India

Company Registration in India
For fast, flawless, and economical company formation in India and incorporation in places all across entire India, ours internationally admired law firm is now rather famous and popular by Indian and foreign individuals and companies. Superb and punctilious legal services connected with the company law, business and commercial law, intellectual property law, international business, foreign direct investment, labor and employment law, corporate taxation and insurance, and so on, have been ours highly appreciated services of ours internationally prominent IPR law firm of India, which is located in Delhi. For a long time, we have been extending these expert and reliable services in cities all across India, and other countries worldwide, with inspiring success and high commendations. In this truly informative webpage, we are providing comprehensive and vital information about ours internationally reputed company registration services in India.
So far, almost all hugely popular and highly preferred forms of companies have been formed and established in all around the whole country of India, on behalf of Indian and foreign people and companies, inevitably including the varieties of the private limited companies, public limited companies, limited liability partnership companies, unlimited companies, One person Companies, joint ventures, mergers and acquisitions, and branch offices, project offices of international corporations in India and subsidiary company in India. These types of companies can be set up in any interested economic fields and anywhere in India, for doing businesses at regional, national, or worldwide levels. The section below offers more information about the process of company registration, and our dutiful and expert company registration services.
List of Documents Required for Company Registration in India

The process for registering a public limited company is almost the same as the private (pvt) company registration process. For registration of both these forms of limited companies, immediately concerned is the registrar of companies (ROC) appointed in the targeted State of India, under the Section 396 of the Indian Companies Act, 2013. Along with impeccable services for private limited company registrations, ours public company registration services too, are internationally reputed. For knowing the difference between the private limited company and the public limited company, please visit our other pertinent articles. All tasks and services that exist during the entire company registration process in India, are handled adroitly by ours well-experienced, expert, and internationally renowned company lawyers. The following are the main and most important documents required during the process of company incorporation in India:
·         Complete Personal Details, along with Proof of Identity and Address.
·         Director Identification Numbers (DINs)
·         Digital Signature Certificates (DSCs)
·         Minimum one and Maximum Six Proposed Names of the company, in order of preference (Form INC  1)
·         Form INC 7 (For Incorporation of a Company)
·         Form INC  22 (associated with the address of the company being registered)
·         Form DIR  12 (related with appointment of Directors)
MOA and AOA

Tuesday 16 June 2015

STEP BY STEP GUIDE TO INCORPORATION OF PRIVATE LIMITED COMPANY IN INDIA

Private limited company incorporation procedures as per the latest Companies Act, 2013.
REQUIREMENT FOR STARTING A PRIVATE LIMITED COMPANY:
Minimum Members:
For starting a Private Limited Company, there should be at least a minimum of 2 members and a maximum of 200 members. The maximum number of members to 200 has been raised to 200 from 50 in the new Companies Act, 2013. The members can be appointed as the Directors of the Company.
Minimum Capital:
In order to register a Private Limited Company, a minimum of Rs. 1,00,000/- authorized capital and paid up capital has to be infused.
STEPS IN REGISTERING YOUR PRIVATE LIMITED COMPANY:
Register a private limited Company
Incorporation of Private limited Company
STEP 1: APPLY FOR DSC AND DIN
DSC stands for Digital Signature Certificate- obtain DSC for two Directors. DIN-Director Identification Number- a unique eight digit number has to be obtained for one time, valid for entire lifetime of the Director.
DOCUMENTS REQUIRED FOR APPLYING DSC AND DIN:
For DSC:
PAN card copy with self attestation – ID PROOF.
Voter id copy or Driving license copy with Self attestation – ADDRESS PROOF.
For DIN:
PAN card copy with self attestation- ID proof.
Voter id or driving license or passport copy or Aadhar card copy with self attestation- Address proof.

STEP 2: NAME RESERVATION:
Application for Reservation of Company name- A name plays an important role in Company incorporation process. The MCA has laid Naming guidelines for choosing proper name for your company.
A Company has two parts in his name- Prefix and Suffix.
Prefix which is the first part of company name must be unique and should not be common.
Suffix contains the business part of your Company. Suffix should reflect the business nature of your company. For e.g. Infosys Technologies Private Limited. Here Infosys is nothing but merging of two words- Information and Systems and suffix is Technologies, which reflects the business of the Company.
The Registrar of Companies will not approve any undesirable names for the company.
Form Inc-1 has to be filed for application for reserving Company name. Once the name is approved it is valid for up-to sixty (60) days from the date of application.
STEP 3: SUBMITTING FINAL FORMS ALONG WITH MOA AND AOA:
After applying and obtaining name for your company, the net step would be drafting MOA- Memorandum of Association and AOA- Articles of Association. MOA and AOA forms the life blood of your company. MOA contains the main business object that company is going to carry now and in mere future, AOA contain the internal rules and regulations of the Company.
Form INC-7 and Form DIR-3 has to be submitted for incorporating your private limited company.
Attachments required for Form INC-7
Memorandum of Association.
Articles of Association.
Form IN-10 with notarization.
Form INC-9 printed on stamp paper and notarized.
Form INC-8 Power of attorney given to the Practicing Company Secretary or Chartered Accountant for signing on Forms for your Incorporation. Should be printed on stamp paper.
PAN card copy of both the subscribers to the MOA & AOA.
Address proof copy of both the subscribers to the MOA & AOA.
Attachment required for Form DIR-3:
Form Dir-2- Consent to act as Directors of the Company.
Form INC-10- Specimen signature copy of both the Directors with Notarization.
Post Incorporation Filing:
Once the Certificate of Incorporation has been issued by the Registrar of Companies, the Company has to file Form INC-21 for Registered office address proof, within 30 days from the date of incorporation.
A Private Limited Company has to appoint an Auditor for his company within thirty (30) days from the date of its incorporation.