Author - Swapnil S

Private Limited Company is the best form to start a business

Page Content

1)Objective

2) Advantages operating business in the form of Private Company

a) Large Borrowing Capacity

b) Protect Personal Assets 

c) Assign Shares To Employees

d) Loan at lower rate

e) Credibility of Business

3) Conclusion


Objective

If we are thinking of starting a business, then it is better if you register it as a private limited company. Though people generally try to keep away from it because of a much complex registration process, you must understand that being registered as a private company gives you benefits which you will never get in other forms of business ownership, whether it be as a sole proprietary concern or as a partnership firm. Below, we look at some of the advantages:

Advantages operating business in the form of Private Company

Below mentioned are some of the advantages which an person can have if operate their business in the form of Private Limited Company :

Large Borrowing Capacity

When we register our business as a private limited company, your ability to raise funds will expand. In addition to adding more capital via the equity shares, our business will also be able to raise funds by issuing debt instruments like debentures, bonds, preference shares etc. In addition, banks and other large lending institutions usually have a preference to fund companies rather than sole proprietors or partnerships. We can raise these funds at lower interest rates. 

Protect Personal Assets  

If we operate your business as a sole owner or through a partnership, and if a situation occurs where the business suffers a huge loss and you have to shut it down, then our personal assets will also be at risk. When the business is unable to repay all the debt it has taken, the creditors will have the full legal right to recoup the debt from your assets, including your very home. However, registering the business as a private limited company helps you avoid such issues. In case of a wind up, only the assets of the business can be taken away by the creditors. They cannot touch your personal assets.

Assign Shares To Employees

When we run a business, one of the main drivers for its success will be the enthusiasm and the performance of its employees.  With a sole proprietorship or a partnership, we can only reward your employees by paying bonuses and such limited things. In contrast, when we are a private limited company, we can issue your employees with stock options which makes them own a part of the company. And as the value of the company rises, the stock values held by the employees also increase. As such, they are more likely to be committed to the success of the business, since their monetary benefit is tied directly to the progress of the company.

Loan at lower rate

In case of a private company we can borrow the money at very low interest as compared to the loan given to Sole proprietary concern or partnership firm. It will help the company in reducing their cost of Capital and increases the value of the company. So, always prefer to go for a private company rather than Sole proprietary concern or partnership firm.

Credibility of Business

Business increases their credibility if they operate as a private company instead of other forms of business. Sole proprietary concerns or partnership firms do not have larger recognition as compared to Private companies. 

Conclusion

So, consider registering your business as a private limited company is the best option for current entrepreneurs.

OVERVIEW OF SECTION 8 COMPANIES

PAGE CONTENT:

  1. INTRODUCTION
  2. MEANING OF SECTION 8 COMPANY
  3. ADVANTAGES OF SECTION 8 COMPANIES
  4. DISADVANTAGES OF SECTION 8 COMPANIES
  5. FEATURES AND LICENCE PROVIDING.
  6. WINDING UP
  7. PUNISHMENT FOR CONTRAVENTION
  8. CANCELLATION OF LICENSE
  9. FORMATION OF SECTION 8 COMPANY
  10. TAKEAWAY

INTRODUCTION:

All companies haven’t objectives of making profits by carrying out trade and commerce and many companies primarily have charitable and non-profit objectives. Such entities as well as companies are referred to as a Section 8 Company because they get recognition under Section 8 of Companies Act, 2013 and also these companies dedicate all their incomes and profits towards the furtherance of their objectives.

MEANING OF SECTION 8 COMPANIES:

The Companies Act says a Section 8 company means those companies whose objectives is to develop those fields of as mentioned, commerce, science, research arts, , sports, charity, social welfare, religion, environment education, protection, or other similar objectives and these companies also apply their profits towards the furtherance of their cause and do not pay any dividend to their members.

ADVANTAGES/PRIVILAGES OF SECTION 8 COMPNIES:

All businessman  primarily prefer to conduct charitable activities by forming Section 8 companies instead of regular Non-Government Organizations and associations because they have limited liability, so their personal assets will not be used in paying debts of the company. Here are some advantages that these companies enjoy

  1. Exemptions from carrying out several procedural compliances
  2. Stamp duties and high fees are not payable for registration
  3. No minimum capital requirements
  4. More credibility than compared to NGOs, societies, and trusts because they are recognized by the Central Government’s license
  5. They have perpetual existence and separate legal status
  6. They get several tax exemptions

DISADVANTAGES:

Following are the some disadvantages of section 8 companies

  1. The license is revocable on several grounds
  2. Can only use the profits for furthering charitable aims and objectives
  3. Members of the company cannot get any dividend
  4. Amendment of memorandum and articles requires Central Government’s permission
  5. Officers and directors do not get benefits and allowances

FEATURES OF SECTION 8 COMPANIES:

  1. Government license-Such companies can function only if they have the Central Government’s license. The Government can revoke this license as well
  2. Firms as members– Apart from individuals and associations of persons, Section 8 also allows firms to be members of these companies
  3. Limited liability– Members of these companies can only have limited liability. Their liabilities cannot be unlimited in any case
  4. No minimum share capital– Section 8 companies, unlike all other companies, do not require a prescribed minimum paid-up share capital
  5. Privileges- Since these companies possess charitable objectives, the Companies Act has accorded several benefits and exemptions under Income Tax to them
  6. Charitable objectives– Section 8 companies do not aim to make profits. Their objectives are purely charitable in nature and they aim to further causes like science, culture, research, sports, religion.

WINDING UP:

Section 8 companies can wind-up or dissolve themselves either voluntarily or under orders given by the Central Government and If any assets remain after satisfaction of debts and liabilities upon such winding-up, the National Company Law Tribunal can order the transfer of these assets to a similar company then It can also order that they must be sold and the proceeds of this sale should be credited to the Insolvency and Bankruptcy Fund.

PUNISHMENT FOR CONTRAVENTION:

Any company that contravenes provisions of Section 8 is punishable with a fine ranging from Rs. 10 lakhs to Rs. 1 crore but directors and officers of the company are liable to punishment with imprisonment up to 3 years and a fine between Rs. 25,000 to Rs. 25 lakhs and also Such officers can also face prosecution under stringent provisions of Section 447 (dealing with fraud) if they conduct any affairs with fraudulent motives

CANCELLATION OF LICENSE:

Section 8 companies require a grant of a license by the Central Government and all such licenses are revocable as well on the following grounds

  1. when its conduct is fraudulent, or it violates its own objectives and public policy
  2. the company contravenes provisions of Section 8
  3. terms of the license are violated

The Government can even order the company to be wound-up or amalgamated with another similar company under certain circumstances and the Government has to hear the company before passing such orders.

FORMATION OF SECTION 8 COMPANY:

 Section 8 companies procedure, a person or an association of persons can make an application to the Registrar of Companies using requisite forms to form a company with charitable objectives under Section 8 of Companies Act And the Central Government, if satisfied, can accept such an application upon any terms and conditions imposed under the license granted by it. Once accepted, the Registrar of Companies will register the company after the applicants pay all requisite fees and it is important to note that such companies can only be limited companies but all privileges and obligations of limited companies apply in this case. then these companies also do not need to include the words “Limited” or “Private Limited” in their names, as all other companies have to Since the existence of such companies is based on the license granted to them, they cannot even alter their memorandum or articles of association without the Central Government’s permission still they also cannot do anything that the license disallows

INCOME TAX EXEMPTIONS:

Under the companies act Section 12AA says an application is to be filed to the Income-tax commissioner with the necessary supporting documents and on the satisfaction of the commissioner, he/she shall grant the tax exemption to the company.

TAKEAWAY:

These companies were previously defined under Section 25 of Companies Act, 1956 with more or less the same provisions and the new Act has, however, prescribed more objectives that Section 8 companies can have but the famous examples of Section 8 companies include Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industries (CII). The objective of these companies is facilitating the growth of trade and commerce and India and A Section 8 Company has more credibility as compared to any other Non-profit organization structure like Trust or Society but the Section 8 Companies can be formed with or without share capital, in case they are formed without capital, the necessary funds for carrying the business are brought in form of donations, subscriptions from members and general public The main objective is to promote commerce, education, art science sports social welfare and protection of the environment or any other such objective but the Section 8 company is registered with the Central Government under the Ministry of Corporate Affairs

OVERVIEW OF ONE PERSON COMPANY AND PRIVATE LIMITED COMPANY

 Page content

  1. Introduction
  2. Meaning of one-person company and private limited company.
  3. Exemptions for one-person company
  4. Features of one-person company
  5. Features of private limited company
  6. Difference between private limited company and one-person company
  7. Takeaway.               

Introduction:

The revised Companies Act, 2013 of India completely revolutionized corporate laws in India by introducing various new concepts that did not exist before that. The growth of trade and business led to more difficulties that traditional forms of business didn’t solve. For below example, there having unlimited liability feature of a sole proprietorship form of business resulted in people forming partnerships, but even that proved to be too inadequate and risky. There is when the concept of companies emerged, and private limited and unlimited companies form of business is the oldest example of it.

Meaning Of One-Person Company:

Section 2(62) of Indian companies act 2013 defines a one-person company as a company that has only one person as to its member and Furthermore, members of a company are nothing that but subscribers to its memorandum of association of company, or its shareholders of company then So, an one person company is effectively a that has only one shareholder as its member.

Meaning Of Private Limited Company:

According to section 2(68) of companies act 2013 private limited companies are those companies which companies articles of associations fully restrict the transferability of shares and prevent the public at large from subscribers to them. It was the basic criteria that differentiate private companies to public companies.

Exemptions for OPC:

OPC having the following exemptions or privileges under the companies act 2013:

  1. Several provisions relating to meetings and quorum do not apply to them.
  2. Provisions relating to independent directors do not apply to them.
  3. Their financial statements need not include cash flow statements.
  4. They do not have to hold annual general meetings.
  5. A company secretary is not required to sign annual returns; directors can also do so
  6. Their articles can provide for additional grounds for vacation of a director’s office
  7. They can pay more remuneration to directors than compared to other companies

Features of One Person Company

  1. Single-member:

One Person Company must have only one member or shareholder, which difference between other private companies

  • Private company:

Under companies Act Section 3(1)(c) says that a single person can form a company for any lawful purpose and it further describes OPCs as private companies.

  • Nominee:

A main feature of One Person Companies that separates it from other types of companies is that the sole member of the company has to mention a nominee while registering the company

  • No minimum paid-up share capital:

Under Companies Act, 2013 has not prescribed any amount as minimum paid-up capital for One Person Company.

  • No perpetual succession:

There is only one member in an OPC, his death will result in the nominee rejecting to become its sole member of company. This does not happen in other type of companies as they follow the concept of perpetual succession

  • Special privileges:

One Person Company enjoy several type of privileges and exemptions under the Companies Act that other kinds of companies does not get.

  • Minimum one director:

One Person Company must have minimum one person (the member) as director and they can have a maximum number of 15 directors of the company.

Features of Private Limited Company:

  1. A private company can have a minimum of just two members (but just one is enough if it a One Person Company), and a maximum of up to 200 members
  2. Private companies cannot freely transfer their shares to the public like public companies Then so why stock exchanges never list private companies
  3. All private companies must include the words “Private Limited” or “Pvt. Ltd.” in their names
  4. There was a minimum paid-up share capital requirement of Rs. 1 lakh previously, but that is omitted now
  5. Since private companies do not freely transfer their shares and involve limited interest by members, the law has granted them several exemptions that public companies do not enjoy

Difference Between Private Limited Company and One Person Company:

  1. Board of Directors OF Companies

In the name OPC (One Person Company) there we have only one member in the company that means there is no need to hold any such Annual General Meeting (AGM) or Board meetings.

Above case is fully Contrary to this in a private limited company there is a Board of Directors which consists of a minimum of 2 Directors and a maximum of seven directors at the time of incorporation and also, it is mandatory to convene 4 Board meetings and 1 AGM in a financial year

  • Shareholders in the company:

In the One Person Company, only one person and one shareholder is required to incorporate and run the company, in this case the Director and the shareholder in the One Person Company is the same individual who holds the 100% shares in the company.

But in the Private Limited Companies there is minimum of 2 shareholders and a maximum of 200 shareholders are required during the incorporation of company and the shareholders of the private limited company can be any entity.

  • Investment by the NRI (Non-Resident Indian) or Foreign National:

The best advantages of having a Private limited company is that foreign nationals and NRIs can quickly start the PLC in India and also, 100 percent FDI under the automatic approval route is accessible in the Private Limited Company.

Otherwise in the One Person Company only the citizens of India are allowed to commence the company. otherwise, One Person Company is not eligible to Foreign Direct Investment.

  • Business Activities:

For the one person company Certain activities are restricted like an investment in securities, non-banking financial activities.  But the  company registered as a Private Limited Company can engage in such activities taking the approval of the concerned authority.

  • Controls and Ownership of the Company:

In the case of the private limited company, the ownership is divided between two members and based on the ratio of shares held by each member, the voting power is divided.

 But the One Person company, the sole member that is the Director has the complete ownership of the company, and it is not shared with any other person.

Takeaway:

One Person Company and the private limited Company have certain advantages and disadvantages and it was totally up to us, what kind of company you want to commence.

PROCEDURE TO REGISTRATION OF INDIAN SUBSIDIARY COMPANY

PAGE CONTENT:

  1. Introduction.
  2. Meaning of subsidiary company
  3. Advantages of Indian subsidiary
  4. Types of subsidiaries in India
  5. Documents required for incorporation
  6. Procedure to incorporation.
  7. Conclusion

Introduction:

A Indian Subsidiary Company is also known as a subsidiary or a sister company of parent company; and the company which practices control over it, is called as the parent company of subsidiary company, or holding company. A subsidiary company always controlled by the parent company (holding company) partially or fully.

A Indian subsidiary company is termed as subsidiary or sister company of holding or parent company. below given content, we will understand detailed information of Indian Subsidiary company registration procedure, documentation, types, and procedure required for it.

MEANING OF SUBSIDIARY COMPANY:

An Indian subsidiary, the parent company must own at least 50% or more of the subsidiary. When the parent company owns 100% of the subsidiary of parent company is known as a wholly-owned or fully owned subsidiary. But main thing is that the subsidiary company of a foreign parent company is a separate legal entity from parent company, and the subsidiary company is obligated to function under the rules and compliances of the country where it is situated or registered.

ADVANTAGES OFOPENING INDIAN SUBSIDIARY:

For registration of Indian subsidiary company there was various advantages in the business compliance in the case of the Indian subsidiary the following advantages will apply.

  1. Independent legal structure—The Indian subsidiary is an independent or separate legal structure from its parent company and it is regulated under the Indian commercial legislation.
  2. Transfer of shares: – The shares purchased by a shareholder can be simply transferred or exchanged to another party or person, after signing a share transfer form and a share certificate.
  3. Acquire property in India: – As the subsidiary is an independent structure, it is allowed to acquire properties in India.
  4. Incorporation with foreign direct investment: – as mentioned above, Foreign Direct Investment is widely allowed to Indian subsidiary companies and this applies to most of the economic activities that are available in those country.

Types of subsidiaries in India:

As per detailed defined under the revised Companies Act 2013, a Indian subsidiary is defined as a company in which a foreign legal entity owns at least 50% of the total share capital. The definition will explain that foreign company having legal rights and authorities on the structure of the board of directors of the subsidiary company.

DOCUMENTS REQUIRED FOR INCORPORATION:

  1. For Office Address:  Office Address proof (Electricity bill or rent agreement) and latest self-attested electricity bill in case of rented accommodation
  2. Indian National : Pan card compulsory, Address proof (latest Electricity bill or telephone bill, mobile bill, gas bill or latest bank statement), photo Id proof (passport or driving license or voter id)
  3. Foreign Nationals: Passport (mandatory), Address proof (electricity bill, telephone bill, latest bank statement or passbook or rent agreement in case of rented accommodation and latest electricity bill. Photo Id Proof- Passport Copy. Document must be attested by the Indian Consulate or public notary of respective country.

MINIMUM REQUIRMENT TO INCORPORATE INDIAN SUB SIDIARY COMPANY;

  1. Minimum Two Directors where one director should be resident of India.
  2. Two Shareholders

PROCEDURE TO INCORPORATION:

  • After minimum requirements (which was described as above) are clearly fulfilled then the owners have right to begin the procedure of incorporation.
  • First steps to go incorporation process with subsidiary company, minimum two directors apply for DSC (Digital Signature Certificate), with all the director’s mandatory to apply for DIN (Director’s Identification No).
  • After the above steps the applicant is required to apply for the name of the company in Form Spice+ Part A  as per the name application procedure.  But note that name you applied it must be unique from other company names
  • After successfully approval of name from ROC (Registrar of Companies) of Ministry Of Corporate Affairs, an applicant is required to fill Form Spice+ Part B
  • Then the filing of the company’s incorporation documents, fees of Registrar of companies have to pay online to ROC and also related Stamp duty is paid by the applicant. (Stamp duty is based on the authorized capital of the subsidiary company).
  • After the related determined fees paid to ROC verifies all filed documents which was upload in application. Form all which given above.
  •  Finally, the changes have been affected and the ROC is satisfied on the full application and documents requirement, then the Certificate of Incorporation is sent to the applicant via email in detailed manner.
  • If the above mentioned procedure of documents are available and the proper procedure is followed by the applicant, then there will not be any unnecessary delays from ROC and then company can be incorporated succefully

TAKEAWAY:

The Indian Subsidiary Company is determined the same as the other type of Indian Company, and the rules determined the Indian Company are the same for the Indian Subsidiary company. If the applicant company complies with the above-mentioned incorporation procedure along with the proper documentation, it will get the Certificate of Incorporation at earliest.

ONE PERSON COMPANY REGISTRATION (OPC)

PAGE CONTENT:

1. Introduction

2. Meaning of OPC

3. Definition of OPC

4. Advantages of OPC

5. Formation Of OPC

6. Salient features of OPC.

7. Conversion Of OPC Into Other Companies

8. Conclusion.

Introduction:

The introduction of OPC in the legal system is a move that would encourage corporatization of micro businesses and entrepreneurship with a simpler legal regime so that the small entrepreneur is not compelled to devote considerable time, energy and resources on complex legal compliances. This will not only enable individual capabilities to contribute economic growth, but also generate employment opportunities. One Person Company of sole-proprietor and company form of business has been provided with concessional /relaxed requirements under the Companies Act, 2013.With the implementation of the Companies Act, 2013, a single national person can constitute a Company, under the One Person Company (OPC) concept.

Definition of OPC:

As per provision of section 2(62) of the Companies Act, 2013 defined (62) “one person company” means a company which has only one person as a member.

Advantages of OPC:

1.            A Separate legal entity

OPC is a separate legal entity and capable of doing everything that an entrepreneur would do.

2.                  Easy Funding.

It is a private limited company, OPC can raise funds through venture capital, financial institutions, angel investors, etc. An OPC can raise funds thus graduating itself to a private limited company.

3.      More opportunities, Limited liability:

One of the advantages of One Person Company is that it has more opportunities, limited liability since the liability of the OPC is limited to the extent of the value of the share you hold, the individual could take more risk in business without affecting or suffering the loss of personal assets. It is the encouragement to new, young and innovative start-ups.

4.      Minimum Requirements:

Minimum 1 Shareholder, Minimum 1 Director, The director and shareholder can be the same person, Minimum 1 Nominee, Letters ‘OPC’ to be suffixed with the name of OPCs to distinguish it from other companies.

OPC have to face little compliance burden as compared to private limited companies, hence OPC can more focus on other functional and core areas.

5.      Benefits of being a Small Scale Industries (SSI):

An OPC can avail the various benefits provided to Small Scale Industries like the lower rate of Interest on loans, easy funding from the bank without depositing any security to a certain limit, manifold benefits under Foreign Trade policy and others. All these benefits can be boon to any business in initial years.

6.      Single Owner:

You, only the owner helpful in quick decision-making, controlling and managing the business without following any elongated processes and methodologies as adopted in other companies. The sense of belonging inspires to grow the business further.

7.      Credit rating;

The OPC with bad credit rating may even get the loan. The credit rating of OPC will not be material if the rating of OPC is as per norms.

8.      Benefits under Income Tax Law:

Any remuneration paid to the director will be allowed as deduction as per income tax law, unlike proprietorship. Other benefits of presumptive taxation are also available subject to income tax act.

9.      Receive interest on any late Payment:

OPC avails all the benefits under Enterprises Development Act, 2006. The newly start-up OPC is micro, small, or medium, hence they are covered under this act. As per the Act, if buyer or receiver receives any late payment (receives payment after a specified period), then he is entitled to receive interest which is three times the bank rate.

10.  Increased Trust and prestige:

Any business entity that runs in the form of the company always enjoys an increased trust and prestige.

Formation of One Person Companies:

A single person can form an OPC by subscribing his name to the memorandum of association and fulfilling other requirements prescribed by the Companies Act, 2013. Such memorandum must state details of a nominee who shall become the company’s sole member in case the original member dies or becomes incapable of entering into contractual relations. This memorandum and the nominee’s consent to his nomination should be filed to the Registrar of Companies along with an application of registration. Such nominee can withdraw his name at any point in time by submission of requisite applications to the Registrar. His nomination can also later be canceled by the member.

SALIENT FEATURES OF OPC:

A One Person Company is incorporated as a private limited company. It must have only one member at any point of time and may have only one director. The words “One Person Company” must be mentioned in brackets below the name of the company. The member and nominee should be natural persons, Indian Citizens and resident in India. The term “resident in India” means a person who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year. One person cannot incorporate more than 1 OPC or become nominee in more than 1 OPC. If a Member of OPC becomes a member in another OPC by virtue of his being nominee in that OPC then within 180 days he shall be meet the eligibility criteria of being Member in one OPC. OPC to lose its status if paid up capital exceeds Rs. 50 lakhs or average annual turnover is more than 2 crores in 3 immediate preceding consecutive years. Penalty amount for contravention of any of the provisions of the Rules: If the One Person Company or any officer of the One Person Company contravenes the provisions of the rules, the company or any officer shall be punishable with fine which may extend to Rs. 10,000/ and with a further fine which may extend to Rs. 1000/ for every day after the first during which such contravention continues.

Conversion of OPCs into other Companies:

Rules regulating the formation of one-person companies expressly restrict the conversion of OPCs into Section 8 companies, i.e. companies that have charitable objectives. OPCs also cannot voluntarily convert into other kinds of companies until the expiry of two years from the date of their incorporation.

 CONCLUSION:

The Companies Act, 2013 completely revolutionized corporate laws in India by introducing several new concepts that did not exist previously. On such game-changer was the introduction of One Person Company concept. This led to the recognition of a completely new way of starting businesses that accorded flexibility which a company form of entity can offer, while also providing the protection of limited liability that sole proprietorship or partnerships lacked

PROCEDURE TO REGISTRATION OF LIMITED LIABILITY PARTNERSHIP

Page Content

1) Objective

2) Procedure and Requirement for LLp Registration.

  1. DSC requirement

b. DIN requirement

c. Reservation of Named

d. Incorporation of LLP (FILLIP FORM) and documents required

e. LLP Agreement (FORM 3)

f.  Closure procedure

3) Conclusion


Objective

Whenever a person wants to start any business he/she needs to select the form in which he/she going to operate. If he/she decided to run their business in the form of Limited liability Partnership (LLP), then there is lots of question arises in their mind like how to incorporate the company and what is the compliance he/ she has to perform to proceed with their goals of doing business. So, to guide/assist them all I have mentioned some details below which should be kept in mind before taking any decision.

Procedural Part for LLP incorporation 

To incorporate LLP, one should follow the below procedure:

STEP 1: DSC requirement

To start the process of Limited Liability Partnership registration, first, we need to apply for the digital signature of the designated partners. This is important because all the documents required in the online LLP registration are digitally processed and would require digital signatures (DSC) of the designated partners. DSC certificates can avail from government recognized certifying agencies

STEP 2: DIN requirement

DIN is required by all designated partners or those who are intending to become the designated partners of the proposed LLP. In the current LLP registration process, we don’t need to separately apply for DIN rather during LLP registration when we fill FILLIP FORM where DIN can apply accordingly are allot.

STEP 3: Approval or Reservation of Name

In this, we should apply for the NAME registration facility which has been given by MCA.  We need to give any 2 names, which` we want to be the name of LLP. Then, the appropriate authority will Reserve any 1 name out of the 2 provided subject to availability and the same should be intimated to us. After that, we need to incorporate the LLP within 90 days from the name reservation date by filing FORM FILLIP.

STEP 4: Incorporation of LLP

To proceed further, we need to fill FILLIP FORM which can be downloaded from MCA website. This form requires details such as particulars of 

  • the proposed or approved name of the LLP,
  • business activity supposed to carried out by the LLP,
  • proof of address of registered office of the LLP,  
  • subscriber’s sheet, Interest in other entity, consent to become designated partner, details of the designated partners along with the DPIN, 
  • The total monetary value of the contribution to be made by partners in the LLP etc.

    Document required (before Application)

  • Proof of Office address 
  • NOC from the owner of the property.
  • Copy of the utility bills (not older than two months)
  • Subscriber Sheet including Consent.
  • In the case of Designated Partner does not have a DIN, it is mandatory to attach: Proof of identity and residential address of the subscribers (i.e KYC)
  • Details of LLP and/ or company(s) in which partner/designated partner is a director/ partner
  • Partnership Agreement filed in FORM 3.
  • Proof of identity and address of Applicant I, II.
  • Optional Attachment (if any).

STEP 5: Partnership Agreement (FORM 3)

After FILLIP form, we should fill the details of LLP Agreement into the FORM 3

attach agreement therein.

STEP 6: Closure Procedure

In the end, we have to file the FILLIP and FORM 3 to the MCA website electronically along with the statutory fees.

Conclusion

To conclude it, one should apply for the registration of a LLP as the procedure mentioned above so that no interruption will arise thereafter.

Procedure for Registration of Private Limited Company

Page Content

1)Objective

2) Procedure of registration of private limited company and required documents.

  1.  SPICe+
  2. Details of SPICE + form
  3. What is AGILE-PRO?
  4. Document Requirement
  5. E-AOA and E-MOA
  6. Closure procedure

3) Conclusion

Objective

Whenever a person wants to start any business he/she need to select the form in which he/she going to operate. If he/she decided to run their business in the form of Private Limited company, then there is lots of question arises in their mind like how to incorporate the company and what are the compliance he/ she have to perform to proceed with their goals of doing business. So, to guide/assist them all I have mention some details below which should be kept in mind before taking any decision.

Procedure of incorporation of company and required documents

To incorporate a company, first we should login to MCA website and fill and then file an SPICE + form along with appropriate documents.

1) SPICe+ (New Web Form for Company Incorporation)

SPICe+ stands for Simplified Proforma for Incorporating Company electronically plus which replaces the existing SPICe form. All the new company incorporations have to be done by the online filing of SPICe+ form. The other forms that need to be filed along with SPICe+ are 

a)AGILE-PRO

b)SPICe+AoA 

c)SPICe+MoA.

2) Details of SPICE+ form

The SPICE+ has been divided into 2 parts as follows :

Part AName Reservation (New Companies only)

In this, we should apply for NAME registration facility which has been given by MCA.  We need to give any 2 names, which we wants to be the name of company. Then, the appropriate authority will Reserve any 1 name out of the 2 provided subject to availability and the same should be intimated to us. After that, we need to incorporate the company within 15 days from the name reservation date by applying for PART B. 

Part B: Incorporation of Company

It includes the details of incorporation as earlier mention in SPICE ,E-MOA ,E-AOA ,AGILE PRO which we needs to fill and some of other details are shown below which will also be included into this part. 

Application for DIN if not attotted 

PAN Application

TAN Application

GSTIN Application (if applicable)

EPFO Registration

ESIC Registration

Opening of Bank Account for the Company

Profession Tax Registration (only for Maharashtra)

3). What is AGILE-PRO?

AGILE stands for Application for Goods and services identification number, employees’ state Insurance corporation registration plus Employees’ provident fund organisation registration. The old AGILE form is now replaced with the AGILE – PRO web form. In this government has made mandatory to be applied for EPFO Registration, ESIC Registration, Opening of Bank Account for the Company.

4). Documents Requirement

       For SPICE

  • Declaration by the first director(s) and subscriber(s) (INC-9)  (Affidavit not required)
  • Proof of office address
  • Copy of utility bills
  • Copy of certificate of incorporation of foreign body corporate (if any)
  • A resolution passed by promoter company
  • The interest of first director(s) in other entities
  • Consent of Nominee (INC–3) (if there)
  • Proof of identity as well as the residential address of subscribers (KYC)
  • Proof of identity as well as residential address of the nominee (KYC)
  • Proof of identity and address of Applicant I, II, III
  • Consent from Director (DIR 2)
  • Optional attachments (if any)
  • Attachments – Part A
  • Documents specified for ID prof.  is either passport copy or driving licence or voter id card (Any one document) 
  • Documents specified for address prof.  are either electricity bill or telephone bill or ga bill or mobile bill or latest bank statement (Any one and documents should not be older than 2 month)

For AGILE-PRO

a) Proof of principal place of business

b)Proof of appointment of Authorised Signatory for GSTIN
c) (Either of the documents– Letter of Authorisation/Copy of Resolution passed by BOD/
     Managing Committee and Acceptance letter.                                                                     

d)Proof of identity of Authorised Signatory for the opening of a bank account                      

e)Proof of address of Authorised Signatory for the opening of a bank account              

f)Specimen Signature of Authorised Signatory for EPFO.

5) E-MOA and E-AOA

Memorandum of article and article of association has been filled online only in which no attachment of documents required. DSC of professional and subscriber to MOA is required under this form.

6) Closure procedure

At the end , after filling all the details of PART A and PART B , there is automatically generation of 4 forms i.e E-MOA , E-AOA , AGILE PRO , SPICE. The director of the company and the practicing professional person needs to Digitally Sign on it and upload it to the site along with the required statutory fees. 

Within 2 weeks, if all the documents filed were correct, then the prescribed authority grants a Certificate of Incorporation(C.O.I) to the company.

Conclusion

To conclude it, one should apply for the incorporation of a company as the procedure mentioned above so that no interruption will arise thereafter.

HOW TO OBTAIN “DIN” DIRECTOR IDENTIFICATION NUMBER

PAGE CONTAINT

  1. Meaning Of Director Identification Number
  2. Importance Of DIN Number
  3. Features Of DIN Number
  4. Forms To Apply For DIN Number
  5. Step By Step Procedure To Apply DIN

MEANING OF DIN:

DIN is unique and separate identification number which is allot by the central government to the   each director of the company. when the DIN is allotted then the persons who get the DIN is eligible to take the directorship of the company.

DIN is the 8  digit unique numerical character which is unique number and have lifetime validity. On the basis of the DIN number directors details are available on the database DIN number is the specific to the each other.

IMPORTANCE OF THE DIN NUMBER:

DIN is very essential evidence to the any return or various type of the documentary signing on behalf of the director of the company there is din is essential. When any other person want to become the director to any other existing or new company then without DIN number it is not possible.

FEATURES OF DIN NUMBER:

DIN number is the unique identification number and it is specific to each director. DIN number having 8 digit numerical characters. DIN have single for one person and having lifetime validity. when the DIN is allotted then the director eligible for more than one companies to obtained the directorship. To get the more than one it is illegal and  in this case you need to surrender one DIN to the concerned ROC

FORMS TO APPLY FOR DIN:

DIN is allot by the ministry of corporate affairs of INDIA which is government website and for application of the din number there was the simple procedure to file the some forms . which was as follows:

There are three types of the forms by the some cases it was applicable to specific case.

  1. DIR-3 form
  2. DIR-6 form
  3. SPICe form.

In  first case when the person want to become a director of an existing company and not having DIN number then he need to file the form DIR-3 on the basis of these forms he get the DIN number from the MCA portal of the government of the India.

Second case, when the director want to change any details on the DIN number then he need to file this DIR-6 forms and upload it in to MCA portal after the payment of fees

In third case when the new company is form and person want to became the director of those companies the he need to submit his details in  SPICe form to the MCA portal and upload it .

STEP BY STEP PROCEDURE TO APLLY DIN NUMBER:

There is simple process to apply DIN.

STEP-1:

For filling the application firstly go to the MCA portal site and login to the site.

click on ‘Director identification number’ you can go to the DIR-3 form after the clicking on it was automatically downloaded. After on it you will fill it offline and in this forms you need to attached your scanned photograph one ID proof and address proof with the pdf itself.

Step-2:

When the forms  filled then you need to login again on MCA portal and go to the upload e-forms. but important thing is the forms is mandatory to digitally signed and all mandatory attachments and information is necessary.

Step-3:

After the completion of the uploading e-forms you have need to make the payment of 500 Rupees to the MCA portal.

Step-4:

When the step-3 of the payment is done then the DIN number generated automatically after the proper verification of the information you have filled the forms it was properly depend on who was signed to the documents.

There was two cases of the signed to the documents, first one is when signed by the practicing chartered accountant then the approved DIN was generated. otherwise when it was signed by the managing director or existing director then the provisional DIN was generated.

So all the above four steps you will successfully able to get the director identification number very easily.

Conclusion:

DIN number is very essential things to get the directorship of any Indian company. And procedure to get the DIN was very simple. Without DIN number not possible to become the director of company.

Major Compliance Applicable To Private Limited Companies

Content 

  1. Objective
  2. What is Private Limited Company?
  3. Major Compliance

          a) ROC Compliance

          b) Income Tax Return Filing

          c) GST Returns Filing

          d) Audit Compliances

          f) Quarterly TDS and TCS Returns Filing

          g) ESIC Compliances

          h) EPF Compliances

        4) Conclusion

Objective

Now-a-days, doing a business in this competitive environment is a very challenging task for the entrepreneur and along with handling business hurdles,he/she should have to comply with statutory compliances which shall be constituent by Government of India or any of its department like Ministry of Corporate Affairs (MCA). So, through this blog we would like to guide you in better understanding of this statutory compliances in case Private Limited Company.

Private Limited Company

As per section 2(68) of Companies Act, 2013 defines private limited companies as  those companies whose articles of association restrict the transferability of shares and prevent the public at large from subscribing to them and having a restriction on the no. of members into the company.

Major Statutory Compliances 

In case of Private company, one should have to do below mention compliances for smooth functionality of its business : 

  1. ROC compliances

Registrar of Companies is an office under MCA that deals with the administration of the Companies Act, 2013. It is the duty of the RoC to ensure private limited companies comply with the statutory requirements laid down under this Act. RoC functions as registry records related to the companies registered with them.

Meeting compliances

There should at least be four board meetings to be conducted in a calendar year and in case of a private company the minimum requirement is two. 1/3rd of the total number of directors or minimum 2 whichever is greater should be present at the meeting and be intimated to board at least 7 days prior about the agenda of the meeting. Minutes of the board meeting is to be kept at the registered office of the company

One AGM should be held every year and a gap of 15 months should exist between two AGMs and the same should be intimate to ROC.

 Annual Return Filing 

 There is 2 annual compliance should be filed by Companies as under:

  1. Filing of Annual Return Form (MGT-7)

Every private limited companies should file MGT 7  along with the fees within 60 days from the date of AGM or the date as may be extended by the prescribed authority which shows

-Details of the meetings (Board meeting and AGM)

-Registered office and principal place of business along with other holdings and associate companies

-Debenture holders/members including the changes made

-Key managerial personnel, Directors and Promoters (mention the changes made)

-Remuneration of Directors and Key managerial personnel

-Details of the legal matters that the company is involved in

-Shareholding pattern 

-Debentures, shares and other securities 

  1. Filing of financial statement (AOC-4)

Every private limited companies should file AOC-4 along with the fees within 30 days from the date of AGM or the date as may be extended by the prescribed authority which shows

-Details of the particulars on the Balance sheet.

-Details of the Profit and Loss account.

-Details of the Corporate Social Responsibility.

-All the Related Party Transactions that the company have entered into

-The audit report and any other transaction. 

2)  Income tax return Filing

Every company should file their income  tax return on or before the due date as specified in the Finance Act of that year.In case of company, it is 31st October of the Assessment year.

3) GST returns Filing (if applicable)

Currently, registration under GST law can be possible at the time of incorporation only while filing the SPICE + form.

Companies should have to file monthly or quarterly returns of the supply of the goods and services as per GST law if it has been applied for or has GSTIN.

4) Audit Compliances

Audit is compulsory for a Private Limited Company every financial year.Also, within 30 days of Incorporation of it, the board needs to appoint an Auditor (first auditor) for Private Limited Company.

If the board fails to appoint an auditor within 30 days, then the shareholders must be informed. They are then required to make an appointment within 90 days of incorporation.

5) TDS or TCS compliances (if applicable)

Companies should file their TDS or TCS (if applicable) on the last day of the following month from the relevant quarter and pay an tax amount on the 7th day of the following month  or the date as may be extended by the prescribed authority.

6) ESIC or EPF compliances (if applicable)

The Employees Provident Fund (EPF) will be deducted from every employees’ salary, and the payment due date is within the 15th of the following month. Payment and filing for the PF return date are the same, and you can process it at the same time. Therefore, the due date of the PF return is the same as the payment date, and that is before the 15th of the following month. The PF annual return due date is 25th April of the following year.

Every employer makes the Employees state insurance payment on a monthly basis, and the payment is given to the ESI department. The due date for ESI is the 15th of the following month, which can also exceed or change according to the department rules. 

The employer needs to pay ESI return on a half-yearly basis, and the due dates are also fixed as follows:

Period of Return                  Due date of filing of return

April to September                     11th November

October to March                       11th May

 Conclusion:

To conclude the above mentioned details, it is advisable to comply with all the above mention statutory requirement on time so to avoid from the penal provision of the respective law and take advantage of benefits given by government to non-defaulters. 

DIFFERENCE BETWEEN PRIVATE LIMITED COMPANY AND LLP

DIFFERENCE BETWEEN PRIVATE LIMITED COMPANY AND LLP

Page Contents

1) Objective

2) Major Difference Under Below Heading 

    a) Governing Law

    b) Requirement of Capital

    c) Name of Entity

    d) Registration requirement

    e) Formation Cost

    f)  Formalities of Incorporation

    g) Verifying authority as per sec 140 of IT Act,1961

    h) Liability

    i) Audit Compliance

    j) Income Tax Applicable Rate and Related Compliances

    k) Annual ROC Compliances

    l) Principal-Agent relationship

    m)  Unique identification number

    n) Statutory Meeting required

    o)  Right to Vote

    p) No. of members 

3) Conclusion

Objective

Whenever a person wants to start or to expand his/her business, he needs to think about the way in which he/she is going to do it. There are lots of forms in which he can incorporate his/her business like Partnership Firm, Company, Limited Liability Partnership, sole proprietary concern, etc.

As per the nature and complexity of the business, he/she needs to choose amongst them. Private Limited Company registration and LLP registration are the most popular and commonly used forms which normally used to start a business. We are describing here the difference between Private Limited company and LLP to understand these business formats so that entrepreneurs can opt better form of business to start their business.

Differentiate between Private company v/s Limited Liability Partnership

a) Governing Law

In the case of a company, it is governed by the Companies Act, 2013 whereas LLP is governed by the Limited Partnership Act, 2008, and various rules covered under it.

b) Requirement of Capital

To incorporate a  private company, there is a minimum requirement of Rupees 1 lakh and on the other hand, there is no such requirement in the case of LLP.

c) Name of Entity

Name to contain ‘Private Limited’ or ‘Pvt Ltd’ in case of Private Limited Company as suffix and Name should contain ‘Limited Liability Partnership’ or ‘LLP’ as a suffix in case of LLP.

d) Registration requirement

Both should have to get registered under their respective statutory authority i.e Registrar of company or LLP.

e) Formation Cost

The statutory fee for incorporation of Pvt Company is Relatively High whereas, in LLP, the cost of Formation is statutory filing fees, comparatively lesser than the cost of registration of Company.

f)  Formalities of Incorporation

Various E-forms are to filled online on the MCA site in case of Pvt company as under:

SPICE + Form : It includes, 

E-Memorandum of Association

E-Article of Association

AGILE form details

SPICE form details

INC-9 (Attached therewith)

DIR-2 (Attached therewith)

In the case of LLP, below mention form to be filed electronically.

FILLIP form

Partnership Deed in FORM 3

g) Verifying authority for ITR as per sec 140 of IT Act,1961

In the case of a company, by the managing director thereof, or where for any unavoidable reason such managing director is not able to verify the return, or where there is no managing director, by any director or any other person as may be prescribed. 

In the case of a limited liability partnership, by the designated partner thereof, or where for any unavoidable reason such designated partner is not able to verify the return, or where there is no designated partner as such, by any partner any other person as may be prescribed.

h) Liability 

The liability of members is limited to the amount required to be paid upon each share whereas, in case of LLP, the liability of the partners is limited, to the extent of their contribution towards the capital of LLP, except in case of intentional fraud or wrongful act of omission or commission by the partner.

i) Audit Compliance 

The audit is compulsory for a Private Limited Company every financial year. Also, within 30 days of Incorporation, its board needs to appoint an Auditor (first auditor) for a Private Limited Company.

If the board fails to appoint an auditor within 30 days, then the shareholders must be informed. They are then required to make an appointment within 90 days of incorporation.

But, LLP has to get its books audited if its Capital exceeds Rs 25 lakhs or if its Turnover exceeds Rs 40 lakhs in any financial year.

j) Income Tax Applicable Rate and Related Compliances 

The applicable Income tax rate for the companies if turnover less than 400 crore is 26% on the other side the effective income rate applicable for LLP is 31.20%

k) Annual ROC Compliances

In the case of Private Limited Company we need to file AOC-4 (Filing of Financial statement) and MGT-7(Annual Return) form compulsorily, due date for AOC-4 form is 29 October and for MGT-7 is 28 November. In the case of LLP, we need to file Form-11 (Annual Return) and Form-8 (Annual Accounts) and the due dates for from 11 is 30 May and for form 8 due date is 30 October.  If we don’t file these forms on time then we have to pay a penalty as specified so in the case of the company the late fees are Rs. 100 per day each form and in the case of LLP, the late fees are Rs. 50 per day. So it always advisable to do the annual compliances on time.

l)  Principal-Agent relationship

Directors share a Principal-agent relationship with the company not of the members and in case of LLP, Partners act as an agent of LLP not of other partners.

k)  Unique identification number

Every company and director of the Company should hold a Unique no. known as CIN and DIN and in the case of LLP, LLPIN and DPIN are allowed to LLP and Designated Partners.

o) Statutory Meeting required

Generally, there has to be 4 Board meeting is required to be conducted every year once per quarter and one Annual General Meeting in a year in case of a company but on the other hand there is no such provision for the compulsory conducting meeting in case of LLP.

p)  Right to Vote 

Voting rights is with the shareholders and it is based on the no. of shares they holds. In case of LLP, voting rights is as per the Partnership deed or agreement made between them.

q) No. of members

In the case of a private company, there is a minimum of 2 members and a maximum of 200 members required whereas in the case of LLP minimum of 2 partners and there is no maximum limit specified.

Conclusion:

To conclude the above-mentioned details, it is advisable to select appropriate forms of business by doing going concern analysis, brand image, area of operation, financial condition and independence, nature, and complexity of transaction involved.