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Sr. no. Question no. Page No.

1 Q1 3
2 Q2 6
3 Q3 14
4 Q4 18
5 Q5 20
6 Q6 22
7 Q7 29
8 Q8 30
9 Q9 35
10 Q10 35
11 Q11 37
12 Q12 38
13 Q13 39
14 Q14 39
INDEX

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Q 1. What are the laws/acts/rules that we have discussed till now?

–(i) Name (ii) Reference (iii) What does it cover?

Ans.

Branches of laws-

1. Civil Law
2. Criminal Law
3. Constitutional law
4. International Law
5. Industrial Law

Acts –

1. Companies Act 2013

2. Partnership Act 1932
3. LLP Act 2008

Civil Law -

The Civil Law is indubitably and certainly the most important branch of law for every
constitutional country. The Civil Law consists of a body of rules, procedures, regulations and
judicial precedents that helps in resolving the various non-criminal disputes. These disputes are
either between individuals or organizations and can be on a variety of problems like ordinary
issues, private matters, marriage conflicts etc. Bishnoi Advocates being one of the top law firms
in Mumbai provides a complete gamut of legal services and expert counsel regarding the civil
law India.

Criminal Law –

There was no criminal law in Ancient time. The society was uncivilised. Neither the life nor the
property was safe in that society. At that time people believed only on one thing a life for a life.

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Time changed and the people made law based upon theirreligion. They segregated law according
to their Holy book and their culture.

In the antiquated Hindu law, it was the obligation of the ruler to rebuff the guilty party. The
Hindu law-providers didn't explicitly recognize common wrong wrongdoing, still, the
distinction in punishments and strategy which they have recommended shows that they
plainly acknowledged how the criminal part of a contrasted from its common regard. After
the triumph of the nation by Muslims Mohammedan criminal law was presented in our
nation, and the Indian Courts applied Mohammedan criminal law in the organization of
equity.

Constitutional Law

The Constitution of India (IAST: Bhāratīya Saṃvidhāna) is the supreme law of India. The

document lays down the framework demarcating fundamental political code, structure,
procedures, powers, and duties of government institutions and sets out fundamental
rights, directive principles, and the duties of citizens. It is the longest written constitution of any
country on earth. B. R. Ambedkar, chairman of the drafting committee, is widely considered to
be its chief architect

It imparts constitutional supremacy (not parliamentary supremacy, since it was created by

a constituent assembly rather than Parliament) and was adopted by its people with a declaration
in its preamble. Parliament cannot override the constitution.

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 International Law

The term International Law or Law of Nations has been used in contradistinction to the National

Law or Municipal Law which means the law of country. International Law is, generally, above
and outside, the national laws of the various States and to some extent operates on the territories
of all the States.

A law, howsoever important and crucial, is not of much use if it is not properly defined and
codified. There is no single universally accepted definition of international law, though some
good attempts have been made in that direction. .

The words international law was used for the first time by eminent British jurist, Bentham in
1780. Since then, these words have been used to denote the body of roles which regulate the
relations among States. Though international law can be traced to ancient Greece, Rome and
India, it cannot be denied that the public international law which we know today has come to us
through Europe. It is determined by the modem European system.

Companies Act 2013

The Companies Act, 2013 passed by the Parliament has received the assent of the President of
India on 29th August, 2013. The Act consolidates and amends the law relating to companies. The
Companies Act, 2013 has been notified in the Official Gazette on 30th August, 2013. Some of
the provisions of the Act have been implemented by a notification published on 12th September,
2013. The provisions of Companies Act, 1956 is still in force.

Partnership Act 1932

The Indian Partnership Act 1932 defines a partnership as a relation between two or more persons
who agree to share the profits of a business run by them all or by one or more persons acting for them
all. As we go through the Act we will come across five essential elements that every partnership must
contain.

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LLP Act

A corporate business vehicle that enables professional expertise and entrepreneurial initiative to
combine and operate in flexible, innovative and efficient manner, providing benefits of limited
liability while allowing its members the flexibility for organizing their internal structure as a
partnership.

Q.2 Classify companies in India with a short explanation and reference of the
relevant section of the Law/Act/Rule

Based on Incorporation–

Statutory Companies

Statutory corporations are public enterprises brought into existence by a Special Act of the
Parliament. The Act defines its powers and functions, rules and regulations governing its
employees and its relationship with government departments. This is a body corporate created by
the legislature with defined powers and functions and is financially independent with a clear
control over a specified area or a particular type of commercial activity. For examples – Airports
Authority of India.

Registered or incorporated companies-

These are formed under the Companies Act, 1956 or under the Companies Act passed earlier to
this. Such companies come into existence only when they are registered under the Act and a
certificate of incorporation has been issued by the Registrar of Companies.

Based on Liability–

Companies limited by shares

These types of companies have a share capital and the liability of each member or the company
is limited by the Memorandum to the extent of face value of share subscribed by him. In other
words, during the existence of the company or in the event of winding up, a member can be
called upon to pay the amount remaining unpaid on the shares subscribed by him. Such a
company is called company limited by shares.

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Companies limited by Guarantee

These types of companies may or may not have a share capital. Each member promises to pay a
fixed sum of money specified in the Memorandum in the event of liquidation of the company for
payment of the debts and liabilities of the company [Sec 13(3)] This amount promised by him is
called ‘Guarantee’. The Articles of Association of the company state the number of member with
which the company is to be registered [Sec 27 (2)].

Unlimited Liability companies

Section 12 gives choice to the promoters to form a company with or without limited liability. A
company not having any limit on the liability of its members is called an ‘unlimited company’
[Sec 12(c)]. An unlimited company may or may not have a share capital. If it has a share capital
it may be a public company or a private company. If the company has a share capital, the article
shall state the amount of share capital with which the company is to be registered [Sec 27 (1)]

Based on Number of Members–

Public Company

According to Section 3 (1) (iv) of Indian Companies Act. 1956 “A public company which is
not a Private Company”, If we explain the definition of Indian Companies Act. 1956 in regard to
the public company, we note the following : i) The articles do not restrict the transfer of shares of
the company

ii) It imposes no restriction no restriction on the maximum number of the members on the
company.

iii) It invites the general public to purchase the shares and debentures of the companies

Private Company

According to Sec. 3(1) (iii) of the Indian Companies Act, 1956, a private company is that
company which by its articles of association :

i) limits the number of its members to fifty, excluding employees who are members or ex-
employees who were and continue to be members;

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ii) restricts the right of transfer of shares, if any;

iii) prohibits any invitation to the public to subscribe for any shares or debentures of the
company. Where two or more persons hold share jointly, they are treated as a single member.
According to Sec 12 of the Companies Act, the minimum number of members to form a private
company is two. A private company must use the word “Pvt” after its name.

One Person Company-

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

Such companies are generally created when there is only one founder/promoter for the business.
Entrepreneurs whose businesses lie in early stages prefer to create OPCs instead of sole
proprietorship business because of the several advantages that OPCs offer.

Based on Domicile–

Foreign Company

It means any company incorporated outside India which has an established place of business in
India [Sec. 591 (I)]. A company has an (26) established place of business in India if it has a
specified place at which it carries on business such as an office, store house or other premises
with some visible indication premises. Section 592 to 602 of Companies Act, 1956 contain
provisions applicable to foreign companies functioning in India.

Indian Company

These companies are registered in India under the Companies Act. 1956 and have their registered
office in India. Nationality of the members in their case is immaterial.

Other Companies

Government Companies.

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A Company of which not less than 51% of the paid up capital is held by the Central Government
of by State Government or Government singly or jointly is known as a Government Company. It
includes a company subsidiary to a government company. The share capital of a government
company may be wholly or partly owned by the government, but it would not make it the agent
of the government . The auditors of the government company are appointed by the government
on the advice of the Comptroller and Auditor General of India. The Annual Report along with
the auditor’s report are placed before both the House of the parliament. Some of the examples of
government companies are - Mahanagar Telephone Corporation Ltd., National Thermal Power
Corporation Ltd

Non-Government Companies.

All other companies, except the Government Companies, are called non-government companies.
They do not satisfy the characteristics of a government company as given above.

Subsidiary Company. [Sec. 4 (I)].

A company is know as a subsidiary of another company when its control is exercised by the
latter (called holding company) over the (25) former called a subsidiary company. Where a
company (company S) is subsidiary of another company (say Company H), the former
(Company S) becomes the subsidiary of the controlling company (company H).

Holding Company [Sec. 4(4)].

A company is known as the holding company of another company if it has control over the other
company. According to Sec 4(4) a company is deemed to be the holding company of another if,
but only if that other is its subsidiary. A company may become a holding company of another
company in either of the following three ways :- a) by holding more than fifty per cent of the
normal value of issued equity capital of the company; or b) By holding more than fifty per cent
of its voting rights; or c) by securing to itself the right to appoint, the majority of the directors of
the other company , directly or indirectly. The other company in such a case is known as a
“Subsidiary company”. Though the two companies remain separate legal entities, yet the affairs
of both the companies are managed and controlled by the holding company. A holding company

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may have any number of subsidiaries. The annual accounts of the holding company are required
to disclose full information about the subsidiaries.

Section 8 Company

It is a Company that is  licensed under Section 8 of the Companies Act, 2013 (the Act), erstwhile
known as the  Section 25 Company under the Companies Act, 1956, which had the main object;
For promoting research, social welfare, religion, charity, commerce, art, science, sports,
education, and the protection of the  environment or any such other object, provided that  the
profits, if any, or the other income is applied for promoting only the objects of the company and
Also, No dividend is paid to its members.

Small Company

Small company is a special status given to companies registered under Indian Companies Act,
2013 due to its scope of business, measured in terms of capital and turnover. The companies
enjoying the status of small company enjoy certain benefits in form of exemption from
applicability of provisions. To claim the status of the small company, it does not need to register
a company in India; rather a company already registered and fulfilling provided conditions is
known as a small company.

Associate Company

As per Section 2(6) of the Companies Act, 2013, an Associate Company is defined as follows:

“Associate Company”, in relation to another Company, means a company in which another

company has a significant influence, but which is not a subsidiary company of the company
having such influence and includes a joint venture company.

For a Company to be considered as an Associate Company of another company either the

company should have significant influence over the other Company or it should be a joint
venture company.

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Producer company

A producer company can be defined as a legally recognized body of farmers/ agriculturists with
the aim to improve the standard of their living, and ensure a good status of their available
support, incomes and profitability. Under Companies Act 1956, a Producer Company can be
formed by 10 individuals (or more) or 2 institutions (or more) or by a combination of both (10
individuals and 2 institutions) having their business objective as one of the following:

 Procurement
 Production
 Harvesting
 Grading

of the primary produce of the Members or import of goods or services for their benefit.

Dormant Company

One such aspect which was introduced in the Companies Act 2013 was the concept of Dormant
Companies in section 455 of this act. In common parlance, the word “Dormant” means inactive
or inoperative. A dormant company is an excellent opportunity to start a company for a future
project or hold an asset/intellectual property without having significant accounting transactions*
On the other hand if a company has not filed its annual returns for two consecutive years then
such a company will also be called as a dormant company.

Private Ltd. Company

A Private Limited Company is a business entity held by small group of people. It is registered for
pre-defined objects and owned by a group of members called shareholders. Startups and
businesses with higher growth aspiration popularly choose Private Company as suitable business
structure.

The business entity gets recognised as a Company through its registration under Companies Act
of 2013 in India. The governing body is Ministry of Corporate Affairs, widely known as MCA.
The definition of Private Company under the Act is provided here to understand its basics.
Section 2 (68) of the Act defines a Private Company as under:
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A Company having a minimum paid-up share capital as may be prescribed, and which by its
articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred;
(iii) prohibits any invitation to the public to subscribe for any securities of the company

Limited Liability Partnership

A Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited
liability. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is
not responsible or liable for another partner's misconduct or negligence. This is an important
difference from that of an unlimited partnership. In an LLP, some partners have a form of limited
liability similar to that of the shareholders of a corporation. In some countries, an LLP must also
have at least one "General Partner" with unlimited liability.

An LLP is a body corporate and legal entity separate from its partners. It has perpetual
succession.

Being the separate legislation (i.e. LLP Act, 2008), the provisions of Indian Partnership Act,
1932 are not applicable to an LLP and it is regulated by the contractual agreement between the
partners.

Every Limited Liability Partnership shall use the words "Limited Liability Partnership" or its
acronym "LLP" as the last words of its name.

One person Company

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

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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.

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

Partnership Company

A partnership firm is an organization which is formed with two or more persons to run a business
with a view to earn profit. Each member of such a group is known as partner and collectively
known as partnership firm. These firms are governed by the Indian Partnership Act, 1932.A
partnership is a formal arrangement by two or more parties to manage and operate a business and
share its profits. in a partnership business, all partners share liabilities and profits equally.

 A partnership is an arrangement between two or more people to oversee business

operations and share its profits and liabilities.
 In a general partnership company, all members share both profits and liabilities.
 Professionals like doctors and lawyers often form a limited liability partnership.
 There may be tax benefits to a partnership compared to a corporation.

Sole proprietorship

The sole proprietorship is the simplest business form under which one can operate a business.
The sole proprietorship is not a legal entity. It simply refers to a person who owns the business
and is personally responsible for its debts. A sole proprietorship can operate under the name of
its owner or it can do business under a fictitious name, such as Nancy's Nail Salon. The fictitious
name is simply a trade name--it does not create a legal entity separate from the sole proprietor
owner

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Question no. 3)

What are the most common legal structures of business in India? Mention
reference of the relevant section of the Law/Act/Rule

In India we have basically three types of business structures namely Sole proprietorship,
Partnership firms and Company (pvt or public), however a new hybrid form of partnership firm
and company known as Limited liability (LLP) emerged a few years ago

One person company

One Person Company (OPC) can be formed with only 1 owner, who acts as both the director as
well as a shareholder of the company. There can be more than 1 director, but not more than 1
shareholder. It is registered as per the compliance and regulatory guidelines of the Ministry of
Corporate Affairs (MCA).

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.

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

The concept of One Person Company in India was introduced through the Companies Act, 2013
to support entrepreneurs who on their own are capable of starting a venture by allowing them to
create a single person economic entity.
■ One of the biggest advantages of a One Person Company (OPC) is that there can be
only one member in an OPC, while a minimum of two members are required for
incorporating and maintaining a Private Limited Company or a LLP.

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■ Similar to a Private Limited Company, a One Person Company is a separate legal entity from
its promoter, offering limited liability protection to its sole shareholder, while having continuity
of business and being easy to incorporate
Limited Liability Partnership

It is a better version of partnership firm

■The most vital reason for registering as LLP is the limited liability

■The members of the firm are only liable for a small amount of debt incurred by it. This is
entirely different from proprietorship and partnership where the personal assets of directors and
partners are not protected if the business becomes bankrupt.

■Since LLPs are not capable of issuing equity shares, LLP should NOT be chosen for any
business that has plans for raising equity funds

A Limited Liability Partnership (LLP) is a partnership in which some or all partners have limited
liability. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is
not responsible or liable for another partner's misconduct or negligence. This is an important
difference from that of an unlimited partnership. In an LLP, some partners have a form of limited
liability similar to that of the shareholders of a corporation. In some countries, an LLP must also
have at least one "General Partner" with unlimited liability.

An LLP is a body corporate and legal entity separate from its partners. It has perpetual
succession.

Being the separate legislation (i.e. LLP Act, 2008), the provisions of Indian Partnership Act,
1932 are not applicable to an LLP and it is regulated by the contractual agreement between the
partners.

Every Limited Liability Partnership shall use the words "Limited Liability Partnership" or its
acronym "LLP" as the last words of its name. .

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Sole proprietorship

The sole proprietorship is the simplest business form under which one can operate a business.
The sole proprietorship is not a legal entity. It simply refers to a person who owns the business
and is personally responsible for its debts. A sole proprietorship can operate under the name of
its owner or it can do business under a fictitious name, such as Nancy's Nail Salon. The fictitious
name is simply a trade name--it does not create a legal entity separate from the sole proprietor
owner

A sole proprietorship is a type of unregistered business entity that is owned, managed and
controlled by one person. Sole proprietorship is the most common type of business in India and it
is used by most micro and small businesses operating in the unorganised sectors.

Proprietorships are simple to start and have minimal regulatory compliance requirements for
operating. This entity is ideal for entrepreneurs who are getting into business for the first time
and for small businesses with few clients.

Partnership Firm

In a General Partnership firm, the Partners collectively own and manage the business and
share their responsibilities and liabilities with each other. Although considered simpler to
set up, each partner has ‘unlimited’ liability [his personal property can be used to settle the
liabilities of the Partnership].

Partnership Firms in India are governed by the Indian Partnership Act, 1932. As per
Section 4 of the Indian Partnership Act:-

“Partnership is the relation between persons who have agreed to share the profits of a
business carried on by all or any of them acting for all”

Thus as per the above definition, there are 5 elements which constitute of a partnership
namely: (1) There must be a contract; (2) between two or more persons; (3) who agree to

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carry on a business; (4) with the object of sharing profits and (5) the business must be carried
on by all or any of them acting for all.

Persons who have entered into partnership with one another to carry on a business are
individually called “Partners“; collectively called as a “Partnership Firm”; and the name
under which their business is carried on is called the “Firm Name”

A partnership firm is not a separate legal entity distinct from its members. It is merely a
collective name given to the individuals composing it. Hence, unlike a company which has a
separate legal entity distinct from its members, a firm cannot possess property or employ
servants, neither it can be a debtor or a creditor. It cannot sue or be sued by others.

It is only for the sake of convenience that in commercial usage terms like “firm’s property”,
“employee of the firm”, “suit against the firm” and so on are used, but in the eyes of the law
that simply means “property of the partners”, “employees of the partners” and “a suit against
the partners of that firm”.

Q 4. Compare them

Sole OPC Partnership LLP Private Ltd.

proprietorship
Registratio Registration of Registration of the Registration of LLP will be Private Limited
n the company company is Partnership is registered Company will be
is Not compulsory optional. If with the registered with
Compulsory. under MCA under registered, Ministry of the Ministry of
Companies Act Partnership is Corporate Corporate Affairs
2013. registered under Affairs under under the
the Partnership the Limited Companies Act,
Act, 1932. Liability 2013.
Partnership

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 Act, 2008
Liability A A One Person Partnership is LLP is a Private Limited
Sole Proprietor Company, liability not recognised separate legal Company is a
has Unlimited is limited to the as a separate entity separate legal
liability extent of share legal entity and registered entity registered
capital. the promoters under the LLP under the
are personally Act, 2008. Companies Act,
liable for the The partners 2013. The
liabilities of the of a LLP are Directors and
partnership. not personally Shareholders of a
liable for the Private Limited
liabilities of Company are not
the LLP. personally liable
for the liabilities
of the Company.
Foreign Sole Foreign ownership Foreigners are Foreigners are Foreigners
ownership Proprietorship is Allowed if one is not allowed to allowed to are allowed to
does not allow the director and the start a invest in a invest in a Private
Foreign other is the nominee. Partnership. LLP only with Limited Company
ownership, However, both the prior approval under the
director and the of Reserve Automatic
nominee cannot be Bank of India Approval route in
foreign citizens and Foreign most sectors.
Investment
Promotion
Board (FIPB)
approval.
Transfer  Proprietorship Transfer ability is Not Ownership Ownership can be
ability does not allow allowed to 1 person transferable. can be transferred by
Transfer ability. only in One Person transferred. way of share
Company. transfer.
Existence A Proprietorship One Person Existence of a Existence of a Existence of a

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of entity cease to exist Company, existence Partnership LLP is not Private Limited
with the death or is independent of business is dependent on Company is not
retirement of the directors or nominee dependent on the Partners. dependent on the
sole member. the Partners. Could be Directors or
Could be up for dissolved only Shareholders.
dissolution due voluntarily or Could be
to death of a by an Order dissolved only
Partner. of the voluntarily or by
Company Regulatory
Law Board. Authorities.

Taxation Taxed as One Person Partnership LLP profits Private Limited

individual, based Company profits profits are taxed are taxed at Company  profits
on the total are taxed at 30% at 30% plus 30% plus are taxed at 30%
income of the plus surcharge and surcharge and surcharge and plus surcharge
Proprietor. cess as applicable. cess as cess as and cess as
applicable. applicable. applicable.

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Registratio IndiaFilings IndiaFilings IndiaFilings IndiaFilings IndiaFilings
n Cost offers Proprietor offers One Person offers Partners offers LLP offers Private
ship Registration  Company Registrati hip Registration  Limited Company
at an all on at an all inclusive Registration at at an all Registration at an
inclusive price of price of Rs. of an all inclusive inclusive all inclusive price
Rs.6,000/- Rs.16,000/- price of price of of Rs. of
Rs.6,000/- Rs.8000/- Rs.16,000/-

Maximum  Can have only A One Person The maximum A LLP can A Private Limited
Number of one person as Company can have number of have Company can
Members member. only two people, partners can be unlimited only have a
viz. Director and only 20. number of maximum of 200
Nominee Director. Partners. shareholders or
members.
Minimum Can have only A minimum of two A minimum of A minimum A minimum of
Number of one person as persons are required two persons are of two two persons are
Members member. to start a One Person required to start persons are required to start a
Company, viz. a Partnership. required to Private Limited
Director and start a LLP. Company.
Nominee Director.
Name of The Promoter’s The choice of name The Promoters The choice of The choice of
the Entity choice of name provided by the choice of name name name provided by
can be used for Promoter must be can be used for provided by the Promoter
the approved by the the Partnership. the Promoter must be approved
Proprietorship. Registrar of No approval is must be by the Registrar
No approval is Company. Only necessary for approved by of Company.
necessary for names that are not using name; the Registrar Only names that
using name; identical / similar to however, it is of Company. are not identical /
however, it is an existing company good to avoid Only names similar to an
good to avoid or LLP name and trademarked that are not existing company
trademarked names that are not names. identical / or LLP name and
names. offensive or illegal similar to an names that are not

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 would be allowed. existing offensive or
The name of the company or illegal would be
entity will end with LLP name allowed. The
the words “OPC” or and names name of the entity
“One Person that are not will end with the
Company”. offensive or words “Private
illegal would Limited
be allowed. Company”.
The name of
the entity will
end with the
words
“Limited
Liability
Partnership”
or “LLP”.

5 b) Define factory ;shop & establishment giving references to the specific clause
in the law.

TheFactoriesAct,1948

1. Short title, extent and commencement.—

(1) This Act may be called the Factories Act, 1948. 1[(2) It extends to the whole of India
2[***].]
(3)  It shall come into force on the 1st day of April 1949.
2. Interpretation.—In this Act, unless there is anything repugnant in the subject or context,—
(a) “adult” means a person who has completed his eighteenth year of age;

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 (b) “adolescent” means a person who has completed his fifteenth year of age but has not
completed his eighteenth year;
[(bb) “calendar year” means the period of twelve months beginning with the first day of January
in any year;]
(c) “child” means a person who has not completed his fifteenth year of age;

Shop & Establishment act

An Act to consolidate and amend the law relating to the regulation of conditions of work
and employment in shops and commercial establishments.

Whereas it is expedient to consolidate and amend the law relating to the regulation of conditions
of work and employment in shops and commercial establishments in the State

 The Shops and Establishments Act basically includes amendments and laws relating to :

 the regulation of working hours,

 payment of wages,

 leave or holiday

 the terms of services and

 any other conditions of work for people working in various establishments.

These rules apply to people employed in:

 shops

 commercial establishments

 establishments for public entertainment or amusement and

 other establishments.

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5 c) What business are covered under the term shop & establishment.

The Shop and Establishment Act is applicable nationwide, and all the commercial
establishments, such as the hotels, and eateries, amusement parks, theatres, and other
entertainment houses, as well as any other such public amusement places, come under the
purview of the Act.

d) What are the different legal documents used in business? Explain in short.

Trademark 

Trademark registration a name can help strengthen your brand, which is good.

Articles of Association/Incorporation

This is the secondary document playing a vital role in defining the company’s internal workings,
their rights, duties and management. It contains the by-laws and other rules & regulations that a
company runs by. The contents of AoA remain in sync with the MoA and the Companies Act.

A non-disclosure agreement (NDA)  

Non-disclosure agreements are an important legal framework used to protect sensitive and

confidential information from being made available by the recipient of that information

Memorandum of association

MoA is an abbreviation for Memorandum of Association, and AoA stands for Articles of
Association. They safeguard and structure your business, helping in establishing the company’s
identity, working methodology, and goal.

Shareholder’s Agreement 

 It is one of the most crucial startup documents that helps to determine the rights and liabilities of
these shareholders and their ability to exercise these rights

Intellectual Property assignment agreements 

6. What are compliances for the 5 forms of business we have discussed?

23
  Mandatory Compliances for an LLP

Registered LLPs  with the Ministry of Corporate Affairs (MCA) needs to file the following
mandatory compliance requirements :

S. No. Particulars Due Date/Status

1) LLP Form 3 (LLP Agreement) within 30 days of incorporation of LLP

2) PAN Application Required to be obtained immediately, acts as an

identification number for every tax payer and is
required for opening Bank Account also

3) Opening of Bank Account in Current Account needs to be opened for carrying

LLP Name out transactions

4) Form 8 (Statement of Account within 30 days from the end of six months
and Solvency) of financial year to which it relates

5) Form 11 (Annual Return of within 60 days of closure of financial year

LLP)*

6) Filing of Income Tax Return 31st of July every year

In case Audit is not required 30th of September every year
In case Audit is required

7) Designated Partner’s KYC on or before 30th of September every year

8) Mandatory Audit of Accounts If Capital contribution exceeds 25 Lakhs

or
Turnover exceeds Rs. 40 Lakhs

Mandatory compliances for proprietorship

 Sales Tax/VAT Returns Or the Service Tax Returns

 Annual Income Tax Returns

24
Mandatory compliances of OPC

ANNUAL COMPLIANCES LIST OF OPC COMPANY

SR.NO.   SECTION PARTICULAR OF THE COMPANY

1 MBP-1 184(1) Every Director of the Company in First

Meeting of the Board of Director in each
Financial Year will disclose his interest in
other entities

2 DIR-8 164(2) Every Director of the Company in each

Financial Year will file with the Company
disclosure of non-disqualification.

3 MGT-7 92 Annual Return: OPC will file its Annual

Return within 60 days of entry of ordinary
resolution in Minute Book. Annual Return
will be for the period 1st April to 31st March.

4 AOC-4 137 Financial Statement: The Company is

required to file its Balance Sheet along with
statement of Profit and Loss Account and
Directors ‘Report in this form.

Attachments:
1.) Balance Sheet ,
2.) Statement of Profit & Loss Account,
3.) Directors’ Report,
4.) Auditors’ Report and Notice of AGM.

5 OTHER – As Per Notification Of MCA Or Specified By

The Act

Private ltd. Company

25
ROC Compliance

S.No Compliance Forms to be filed Time Period

1. As per Section 10 A INC-20A Within 180 days from

(Commencement of the date of
Business) of the Incorporation of the
Companies Act, 2013, Company with the
inserted vide ROC
the Companies
(Amendment)
Ordinance, 2018 w.e.f.
2nd November, 2018, a
Company Incorporated
after the ordinance and
having share capital shall
not commence its
business or exercise any
borrowing powers unless
a declaration is filed by
the Director within 180
days from the date of
Incorporation of the
Company with the ROC.

2. Filing of the particulars of INC-22A Active Form Form INC-22A was

the Company & its required to be filed
registered office. before 25th April
2019 (Applicable to
all companies
registered before 31st
December 2017). If
yet on filed then

26
 penalty is Rs.
10,000/-
(If not filed then
Company Status will
be Active-Non-
Compliant)

3. DIN KYC through DIR 3 DIR 3 KYC 30th September

KYC Form is an Annual
Exercise. Penalty after
due date is Rs. 5000/-(one
time)

4. Transaction during the DPT-3(Half Yearly All the Company

year, which are deposits Return) having any
as well as and which are outstanding
not deposits (exempted loan/amount as on
deposits) 31st March of every
Auditor’s Certificate is financial year has to
mandatory. This is to be furnish details and
filled every year. bifurcation of such
outstanding amount
irrespective of the
fact whether such
amount is falling
under the definition
of deposit or not by
30th June

5. Filing of Financial AOC-4 Within 30 days from

statement and other the conclusion of the
documents AGM, other than
OPC(In case of OPC

27
 within 180 days from
the close of the
financial year)

6. Filing of Annual Return MGT-7 Within 60 days from

the conclusion of
AGM
Company having
paid-up share capital
of ten crore rupees or
more or turnover of
fifty crore rupees or
more, shall be
certified by a
Company Secretary
in practice and the
certificate shall be
in Form No. MGT-
8.

7. Appointment of Auditor ADT-1 Within 15 days from

the conclusion of
AGM

8. Filing of Resolutions and MGT-14 Within 30 days from

agreements to the the date of Board
Registrar Meeting.
Some Other Event based Compliances in a Company.

 Transfer of Shares.
 Appointment and Resignations of Directors/ Auditors.
 Appointment of Managing Director/ Whole Time Director.
 Executing various types of Agreement with Parties.

28
 Allotment of shares.
 Change in Bank Signatories.
 Increasing Capital of Company.
 Charges
 Change in Memorandum / Articles of Company.
 And others
Tax Compliance for partnership Firm

Documents Required for Annual Compliance of a Partnership Firm

 Invoices of sales and purchase during a financial year.

 Invoices of expenses made during a financial year.
 Bank statements of the bank accounts of the partners.
 Copy of TDS returns filed.
 Copy of GST returns filed.

Q 7. Critically evaluate the effectiveness of the present legal system for successful business
operations. Suggest improvements, if any.

Loopholes and suggestions which I found in our business regulations are as following

29
  Perceptions of stakeholders are inadequately captured In India, continuous changes are
taking place in the business and economic environment of the country. Changes are also
continually being made in the economic governance system. These include changes in
government policies/measures; amendment of existing legislations or enactment of new
ones such as the new competition law; establishment of sector regulatory bodies in utility
sector such as electricity, petroleum and natural gas. All such measures are designed to
ensure that markets function well in the new economic policy regime and yield desired
results. But serious efforts have not been made to take into account the perceptions of
stakeholders on these matters.
 Lack of data on compliance and enforcement For the assessment of regulatory quality we
need to examine a mapping between desirable inputs and desirable outcomes. This
provides us a framework to study the performance of regulatory regimes in a country. But
India lacks data on these parameters which constrains assessment. For example,
Regulatory Impact Analysis has not been used in the Indian context because of lack of
data on costs and benefits of regulations. Exhaustive primary surveys are needed to
collect credible data on these variables. Such cost-benefit analyses are necessary for
scientific choice among candidate regulations or for passing judgement on existing ones.
Similarly, the thrust of economic reforms has been to allow for more competition
resulting in better quality, lower prices and greater availability of products to the
consumer. The assessment of welfare impacts can be made through Consumer Impact
Assessment (CIA). Such assessment will help in enhancing the accountability of
regulators and government departments towards consumers and force them to be more
consistent and transparent in their decision-making.

Question 8. Of the five options, which structure would be best for my business?

Ans - Limited liability partnership

Q c. What are the advantages in choosing this option?

Safe homes
30
 1. I or my partner are not personally liable and cannot be forced to pay a business debt or
liability with personal property or assets. 

2. In llp there is pass through tax such that it avoids double taxation. LLP partners will only
pay their own personal income taxes, while the LLP will not be taxed as a business entity.

Textile website (Sole proprietorship)

1. For me proprietorship will be easy to start as there not much of capital and legal
formalities are needed.

2. In case if my business won’t work it will be easy for me to shut it down without any
lgela formalities.

Q c). What are the disadvantages in choosing this option?

Safe homes

 Income is personal income and is taxed accordingly. There may be tax advantages in
registering as a company, but this will depend on your personal circumstances.
 Profit can not be retained in the same way as a company limited by shares. This means all
earned profit is effectively distributed with no flexibility to hold over profit to a future tax year.
 An LLP must have at least two members. If one member chooses to leave the partnership
the LLP may have to be dissolved.

Textile website

 If there will be any losses then only I have to bear it, there is risk of huge loss and unlimited
liability of business.
 I wont be abke to transfer my business to anyone else because of all the gst and income tax will
be linked to my pan card ony.

31
Q e) .What would be the process of incorporation of my business entity?

The incorporation for the safe homes which is an llp company will be as following
-

STEP – I: Apply for Name Approval:

A. Login on MCA Website

We have to login into account on MCA Website. (create a new account)

B. Details required to be mentioned in online form:

(i) Entity type LLP

(ii) LLPIN (LLPIN and it has to be entered only when an existing company wishes to change its
name and is using RUN to reserve a new name)

(iii) Proposed name “Safe Homes” (Auto Check Facility)

(iv) Comment (Mention Objects of the proposed LLP and any other relevant information Like
Trade Mark etc.)

(v) Choose File (Any attachment)

C. Choose File:

This option is available to upload the PDF documents. If applicant want to attach any file, can be
upload at this option.

D. Submission of Form on MCA Website:

After completion of above steps user shall submit the Form with MCA website.

E. Payment of Fees:

There is no option of pay later challan in RUN. Applicant has to pay fees immediately after
submission of form. After payment challan shall be generated.

F. Validity of Reserved Name:

Reserved name shall be valid for 20 days from the date of approval of Name.

32
Quick Question – RUN

i. Whether DIN or DSC required for filing of Run form? 

DSC & DIN not required for filing of RUN form for reservation of Name. Only account of MCA
portal is mandatory.

ii. How many resubmission options are allowed in RUN? 

Only one Resubmission of application is allowed in case of reservation of Name.

iii. What shall be the validity of the Name after approval? 

Reserved name shall be valid for 20 days in case of allotment of name for New LLP.

iv. How many name can be apply through this form? 

Two Name can be mentioned in RUN form.

v. What shall be the government fees for RUN? 

As per Register office Fees Rules, Fees shall be Rs. 1,000/-

vi. Is it mandatory to attach documents while reserving name?

No.

It is mandatory to attach relevant documents and No Objection Certificates (NOCs) only when a
name which requires the approval of a Sectoral Regulator or NoC etc.

STEP – II: Preparation of Documents for Incorporation of LLP:

After approval of name or for Incorporation of LLP applicant have to prepare the following
below mentioned Documents;

∇ Proof of Office address (Conveyance/ Lease deed/ Rent Agreement etc. along with rent
receipts);

∇ NOC from the owner of the property.

∇ Copy of the utility bills (not older than two months)

∇ Subscriber Sheet including Consent.

33
 ∇ In case of Designated Partner does not have a DIN, it is mandatory to attach:Proof of identity
and residential address of the subscribers

∇ All the Designated Partners should have Digital Signature.

∇ Detail of LLP(s) and/ or company(s) in which partner/designated partner is a director/ partner

∇ Copy of approval in case the proposed name contains any word(s) or expression(s) which
requires approval from central government;

STEP – III: Fill the Information in Form: [FiLLiP]

Once all the above mentioned documents/ information are available. Applicant has to fill the
information in the e-form “FiLLiP”.

Features of FiLLiP  form:

 Person can apply the Name also in this form.

 Applying for PAN / TAN will be compulsory for all fresh incorporation applications filed
in the new version of the SPICe form.
Single Window Form:

Earlier if a Person wants to incorporate LLP then it has to apply for the DIN, Approval of the
Name Avaibility, Separate form for Registered office address, etc. But this form is a single
window for Incorporation of LLP.

This form can be used for the following purposes:

∇ Application of DIN

∇ Application for Avaibility of Name

∇ No need to file separate form for address of registered office

STEP – IV: Submission of FiLLiP on MCA-:

Once FiLLiP form ready with the applicant, upload form on MCA website and make the
payment of the same.

34
STEP – V: Certificate of Incorporation-:

Incorporation certificate shall be generating by LLPIN.

STEP – VI: Preparation of LLP Agreement-:

After Incorporation of LLP. Partners have to execute the LLP Agreement. LLP Agreement shall
execute on Stamp Paper. (Amount of Stamp Paper 1% of Capital of LLP). LLP Agreement shall
be file in e-form LLP-3.

CAUTION TO BE TAKEN BY PROFESSIONALS:

1. Obtain engagement letter from Partners:– As per certification in e-form FiLLiP, a

professional declares that he has been engaged for the purpose of certification. Therefore it is
advisable to obtain an engagement letter.

2. Ensure all attachments are clear enough to read: – As per certification in e-form FiLLiP, a
professional declares that all attachments are completely and legibly attached.

Incorporation of textile website-

1.The license issued by Registering authority like the Certificate of Practice issued by the
Institute of Chartered Accountants of India, the Institute of Cost Accountants of India, Institute
of Company Secretaries of India, the Indian Medical Council, Food and Drug Control
Authorities,
2. The registration/licensing document issued in name of the proprietary concern by the Central
Government or the State Government Authority/ Department, etc,
3. The banks may also accept the IEC (Importer Exporter Code) issued to the proprietary concern
by office of the DGFT as an identity document for opening of the bank account etc,
4. Complete Income Tax return (not just the acknowledgement) in name of the sole proprietor
where the firm’s income is reflected, duly authenticated and acknowledged by the Income Tax
Authorities,
5. The utility bills such as the electricity, water, and the landline telephone bills in the name of
the proprietary concern ,
6. GST Registration/Certificate.

35
Q. 9

a) How will you set up your company?

I will look for legal solution platform like vakil search to help me fulfilling the legal
formalities and documents for my company

b) What will it cost?

It will cost me around 5000 to 8000. If I go for vakil search then it will be done with in
15-30days.

Q 10 –Explore your business ideas and check what are your legal requirements towards
the business physical requirements. Refer to the table we discussed.

Safe Homes

Physical Operations Applies to my business? If yes, what are my needs?

(Yes/No)
Facility yes Office space
Equipment & Materials yes For sanitizing
Employees yes Full time
Professional Assistance yes To train the employees

Legal requirements –

Office registration

Some laws related to HR

Equal remuneration Act

Maternity Benefit Act

Payment of Bonus Act

Sexual Harassment Act

Employees compensation Act

36
Textile Website

Physical Operations Applies to my business? If yes, what are my needs?

(Yes/No)
Facility No
Equipment & Materials No
Employees yes Full time
Professional Assistance No

We can apply same acts of HR here too for the employees.

Q 11. What are the compliances for the company structure selected for your business idea?

Ans. For safe homes the company structure is LLP, so the compliances of LLP are as following-

S. No. Particulars Due Date/Status

1) LLP Form 3 (LLP Agreement) within 30 days of incorporation of LLP

2) PAN Application Required to be obtained immediately, acts as an

identification number for every tax payer and is
required for opening Bank Account also

3) Opening of Bank Account in Current Account needs to be opened for carrying

LLP Name out transactions

4) Form 8 (Statement of Account within 30 days from the end of six months
and Solvency) of financial year to which it relates

5) Form 11 (Annual Return of within 60 days of closure of financial year

LLP)*

6) Filing of Income Tax Return 31st of July every year

In case Audit is not required 30th of September every year
In case Audit is required

7) Designated Partner’s KYC on or before 30th of September every year

37
 8) Mandatory Audit of Accounts If Capital contribution exceeds 25 Lakhs
or
Turnover exceeds Rs. 40 Lakhs

And for the ‘textile website’ its sole proprietorship , so the sole proprietorship are only recognised
via their government and tax registrations, so the extent of their compliance is limited to the annual filing
of their service, professional or sales taxes.

Q 12. What are the legal documents that will be required for your business ? who are the
documents applicable for?

Textile website (Proprietorship firm)

1. The license issued by Registering authority like the Certificate of Practice issued by the Institute
of Chartered Accountants of India, the Institute of Cost Accountants of India, Institute of
Company Secretaries of India, the Indian Medical Council, Food and Drug Control Authorities
2. . The registration/licensing document issued in name of the proprietary concern by the Central
Government or the State Government Authority/ Department, etc,
3. The banks may also accept the IEC (Importer Exporter Code) issued to the proprietary concern
by office of the DGFT as an identity document for opening of the bank account etc,
4. . Complete Income Tax return (not just the acknowledgement) in name of the sole proprietor
where the firm’s income is reflected, duly authenticated and acknowledged by the Income Tax
Authorities,
5. The utility bills such as the electricity, water, and the landline telephone bills in the name of the
proprietary concern,
6. GST Registration/Certificate.
7. Registered office proof.
8. Registering as SME.

Safe homes (LLP)

Legal Documents Required For LLP Registration

 Latest passport size Photographs of all partners

38
 PAN ( Permanent Account Number) of all Partners (Minimum 2)
 Identity Proof of each partner, (Aadhar Card, Passport, Driving License or Voter ID
Card)
 Address Proof of all partners (Bank Statement or Passbook, electricity bill, telephone bill,
Aadhar card or any utility bill)
 Copy of Mobile bill, telephone bill, electricity bill or Bank Statement of all Partners with
Present address
 Registered Office Address Proof – Electricty Bill along with Rent Agreement / ownership
proof of proposed registered office.
 Stamp paper for LLP Agreement of State where LLP is to be Incorporated
 Documents Must be self attested
 NDA for my clients.
 AOA for the registrar.
 MOA for the registrar.

Q 13. Are there any business specific or industry specific requirements for your business?

No there are no business specific or industry specific requirements for my business.

Q.14 What are the tax implications for your business idea? Please give suitable references.

Safe homes (llp)

Tax Rates (For AY 2020-21)

Long – term capital gain 20 %

Short – term capital gain u/s 111A 15 %

Other Income 30 %

Textile website (Sole proprietorship)

39
Income Tax Slabs Tax Rate Health and Education Cess

Rs.3,00,001 to Rs.5 lakh 5% 4% of Income Tax

40