Category - Incorporation Services

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 you 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.

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 the Federation of Indian Chambers of Commerce and Industry (FICCI) and Confederation of Indian Industries (CII). The top ca firm in Mumbai clearly explain about 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

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.

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

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 A – Name 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.

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

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.

INTRODUCTION:

Ministry of corporate affairs has received many representations from various stakeholders requesting for grant of one time opportunity, so as to enable them to complete their pending compliances by filing necessary documents and forms in the MCA-21 registry including annual filings without being subject to a higher additional fees on account of any delay filing.

Thus, recently Ministry has launched a scheme known as “Companies Fresh Start Scheme, 2020” where condoning the fees of delaying filing the above mentioned documents with Registrar, it relates to waiver of additional fees and granting of immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with certain flings.

OBJECT OF THE CFSS-2020 SCHEME:

The main object of this scheme to  give companies a one-time opportunity to make a fresh start by waiving off the additional fee as charged under section 403 of Companies Act, 2013 and granting of immunity from launching of prosecution and proceedings for imposing penalty on account of delay associated with certain filling. Further, CFSS-2020 also gives an opportunity to defaulting inactive companies to get themselves declared as ‘dormant company’ under the provisions of the Companies Act, 2013 (Act) or file the Form STK-2 for  striking off of name of the Company.

BENEFITS OF CFSS-2020 SCHEME:

The following benefit can avail from CFSS-2020 scheme.

1. Pay only normal fees as prescribed under the Companies (Registration and Office) Rules, 2014 so no additional fees need to pay if filing done up to 30/09/2020.

1. Immunity from launch of prosecution/penalties, pertaining to delay associated with filing of belated documents only. However, any violation of law, such as any proceedings involving interests of any shareholder or any person qua the company or its directors or key managerial personnel would not be covered by such immunity.

1. For Disqualified Directors: If all the directors are disqualified then such company has to first appoint new directors and then after appointment of new director such companies can avail the Scheme.

NON APPLICABILITY OF THE SCHEME:

The scheme will not be applicable in below situation.

1. Companies against which final notice of striking off of the name has been initiated by ROC.

However, a struck off company can avail the benefits of the Scheme after due process of revival from NCLT during the Specified Period. If a company is revived after 30th September, 2020 then such companies can’t avail the benefit of this Scheme.

ii)  Companies which have voluntarily filed STK-2.

iii) Companies which have been amalgamated.

iv) Companies which have already applied for Dormant status i.e. Dormant Companies as specified u/s 455 of the Act.

v) Vanishing Companies**

vi) Forms.

 Form SH-7 related to increase in authorized share capital

 Charge related documents i.e. {CHG-1, CHG-4, CHG-8 and CHG – 9}.

WHAT IS MEANING OF VANISHING COMPANIES:

There is no formal definition as per Companies Act, 2013 but pursuant to General Circular No. 2/2010, it was defined as:

A company registered under the Companies Act, 1956 and listed with Stock Exchange which, has failed to file its returns with Registrar of Companies and Stock Exchange for a consecutive period of two years, and is not maintaining its registered office at the address notified with the Registrar of Companies or Stock Exchange and none of its Directors are traceable

WHAT FORMS WHICH CAN BE FILED UNDER THE COMPANIES FRESH START SCHEME, 2020. :

The forms which are subject to additional fee under section 403 of Companies Act, 2013 are eligible for filing under CFSS, 2020 and are divided into.

Annual Based Forms:

• Annual Return- MGT-7
• Financial statement- AOC-4

Event Based forms:

♦Other forms required to be file with ROC Like.

– PAS-3

– MGT-14

– ADT-1

– Any other form.

Except Two Forms. :

– SH-7- Increase in Authorized

– Charge related form (CHG-1, CHG-4, CHG-8 or CHG-9) Capital.

Validity Of The Scheme:

1st April, 2020 to 30th September, 2020 (“Specified Period”).

COMPANIES FRESH START SCHEME FOR INACTIVE COMPANIES:

Inactive companies can complete there filing process under CFSS, 2020 and can simultaneously, either: Apply to get themselves registered as Dormant Company by filing form MSC-1 at a normal fee or Apply for striking off the name of the company by filing form STK-2 by paying normal fee.

GRANTING IMMUNITY FROM PROCEEDINGS AND PROSECUTION UNDER CFSS, 2020:

Defaulting companies will be required to pay only normal fee at the time of filing of belated documents and no additional fee will be charged. Upon filing, immunity will be granted to such company that no prosecution or proceedings for imposing penalty will be initiated against such company related to such delay filing. However, please note that immunity will be granted only with respect to delay and not with respect to any other consequential proceedings including proceedings involving interest of any stakeholders or any other person qua the company or its directors or Key Managerial person would not be covered under the immunity.

CASES WHERE APPEALED COULD NOT BE FILLED:

There can be certain cases where order is passed by adjudicating authority imposing penalty for delay in filing of documents, statements, returns etc. with MCA.

However, no appeal has been filed by the company or its officer against such order before regional director u/s 454(6) of Companies Act, 2013 on date of commencement of scheme. In such case, where last of filing of appeal falls between 1st March, 2020 to 31st May, 2020 (both dates inclusive) then an additional period of 120 days will be allowed with effect from such last date to all the companies or their officers to file their appeal. During such additional period, prosecutions for non-compliance of order shall not be initiated as far as it is related to delay filing of any document, statement or return.

KEY PROVISIONS OF CFSS, 2020:

Under the CFSS 2020 scheme, any company which has failed to file the Annual Returns and Financial Statements or any return or form which are governed under section 403 of the Act, then such defaulting companies can file such belated documents in the MCA-21 registry at a nominal fee as prescribed under the Companies (Registration and Office) Rules, 2014 with the ROC during the currency of the CFSS 2020 i.e. with effect from 1st April 2020 to 30th September 2020.

The defaulting inactive companies can also simultaneously apply for obtaining dormant status under the provisions of section 455 of the Act or apply for striking off the name of the company by filing e-form STK-2, by paying the normal fees as applicable under the Act.

On completion of CFSS 2020 on 30th September 2020, e-form  CFSS-2020 shall be available for filing for companies availing benefit under the scheme and an immunity certificate will be issued by the MCA.

The CFSS 2020 does not apply to companies stroke off by ROC under section 248, companies which have already applied for strike off, companies which have been amalgamated under a scheme of arrangement or merger, companies which have already filed for obtaining dormant status under section 455 of the Act, the vanishing companies and on forms for increase in capital & charge related forms i.e. form SH-7, CHG-1, CHG-4, CHG-8 and CHG-9.

CONCLISION:

CFSS-2020 is very good scheme and welcome step taken by Ministry of corporate affairs, and another good step taken by government in the area of ease of doing business apart from another step taken in the area of direct and indirect tax. Stake holder can take benefit of this scheme by only paying normal fees and easily avoid hefty additional fees. It is expected that lots of companies will take the benefit of this scheme and do their regular compliance and subsequently run the company in a disciplined manner. Make My Filing is leading services provider in the area of corporate compliance, registration and, startup services, etc. at an affordable rate so any of your compliance is pending then you can avail the services of make my filing where you can complete your pending compliance under company fresh start scheme 2020 well within time in affordable cost and without paying any penalty.