Choice of business organisation

Factors Governing the decisions for suitable form of organization

 Nature of Business Activity

 Scale of Operation
 Capital Requirement
 Managerial Ability
 Degree of Control Management
 Degree of risk and Liability
 Stability of business
 Flexibility of administration
 Division of profit
 Managerial need
 Secrecy
 Cost, Procedure & Govt Regulation
 Tax Implications
 Geographical Mobility
 Transferability of Ownership
 Independence

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 Types of Companies
1) Private Company:- Section 2(68).
‘Private Company’ means company having minimum paid up share capital as may be prescribed
and having restrictions in its article regarding-
i. Right to transfer its shares;
ii. Prohibits any invitation to public to subscribe securities of company;
iii. Limits the number of members to two hundred provided that, when two or more person
hold share jointly they shall be treated as a single member for this purpose and counting of
such two hundred members does not include past and present employees of the company
Note :-As per the companies’ amendment act 2015, requirements of minimum paid up share capital
of one lacks is omitted.
Characteristics
1) Limited Liability
2) perpetual Succession
3) Index Of Members (If exceeds 50 Members)
4) Minimum Subscription
5) Prospectus
6) Members
7) Number of directors
8) Name 0f company (Pvt Ltd)

Incorporation of Private Company

1. Apply for Name approval
An online form available on MCA portal Called RUN (Reserve Unique Name) shall be
filled by applicant.
Such name Applied shall be valid for 20 days from the date of approval of name.
2. Preparation of documents for incorporation:-
 INC 9 - Declaration By 1st Directors & 1st Subscriber
 INC 8 - Declaration by Professional
 DIR2 – Declaration from 1st director along with copy of proof of identity & residential
address.
 NOC- From owner of property.
 Proof of office address
 If Director does not have DIN,
Attach proof of Identity & residential address.
 In Case of subscribers – all subscribers should have DSC.

3. Fill information in form :- Form no. INC-32(SPICE)

Feature OF SPICE
1) Maximum details of subscribers are 7.
2) Maximum details of directors are 20.
3) Apply for name only for 1 name.
4) Maximum 3 directors are allowed for filling applicant of allotment of DIN.

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4. Preparation of MOA & AOA:-
 After filling SPICE form Applicant has to download e-form INC-33 (MOA) & INC – 34
(AOA) form.
 Fill all information as required
 Attach DSC of all subscribers and professional on subscriber sheet of MOA & AOA

5. Fill details of PAN & TAN:-

 It is mandatory to mention details of PAN & TAN.

6. Submission of INC 32, 33, 34 on MCA website (www.mca.gov.in) upload all three documents &
make payment of the same.

7. Company will get Certificate of Incorporation along with CIN, PAN & TAN.

2) Small Company:- Section 2(85)

Small company means a company, other than public company
 Who’s paid up capital does not exceed 50 lack rupees or such higher amount as may be
prescribed which shall not be more than 10 crores.
 Turnover which does not exceed 2 crores or such higher amount as may be prescribed
which shall not be more than 100 crores.

Small Company cannot be:-

 Holding Company or a Subsidiary company
 Company registered under section 8.
 Company or body corporate govern by special act.

 It is private company so number of member shall not exceeds 200.

3) One Peron company :- section2(62)

 One person Company is a type of Private Company which has only one person as a member.
 Only a Natural Person who is Indian Citizen and Resident of India:-
 Eligible to Incorporate OPC &
 Eligible to be Nominee of a OPC
Here, Resident of India means a person who stayed in India not less than 182 days in
Preceding year.
 Natural person shall not be member of more than one OPC at any time and also cannot be
nominee of more than one OPC.
 Person being member of OPC become member of another OPC in which he was nominee,
then he has to decide one of such companies to be continued as member within 6 months.
 Minor cannot be member or nominee of OPC.
 OPC cannot be section 8 co. & also cannot carry out NBFC activities including investments
in securities of body corporate.
 Cannot convert voluntarily into any kind of co. unless 2 years have expired from date of
incorporation of OPC.
 If limit of paid-up share capital increased beyond 50 lacks or turnover exceeds 2 crores then
within 6 months mandatorily it has to convert into private company.

Privileges to OPC:-

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  No need to Prepare cash flow statement.
 Annual return may be signed by CS or director.
 Minimum numbers of directors is 1.
 No need to conduct BM if there is only one director.
 If more than 1 director, BM once in half calendar year & minimum gap between 2 meetings
should not be less than 90 days.
 No need to conduct AGM.
 No need to appoint Independent director.
 Non applicability of retire by rotation.
 OPC not counted for limit of directorship.
 Managerial remuneration may exceed 11% in total.

4) Public Company:- Section 2(71)

 Public Company means a company which is not a private company.
 Subsidiary company of public co. deemed to be public company even it is a private
company.
 Minimum 7 members are required to incorporate public company but there is no such limit
on maximum number of members of public company.
 Securities of public company are freely transferable.
 Features :
1. BOD:- It Comprises of minimum 3 directors & maximum 15.
2. Limited liability
3. perpetual succession
4. Publish financial records
5. Capital

5) Foreign Company: Section 2(42)

 Foreign Company means any Company or Body Corporate incorporated outside India but
 Has place of business in India either by itself or through electronic mode; and
 Conducts any Business activity in India an any manner.

 Every Foreign Company within 30 days from establishment of business in India has to file
following document to ROC.
1. Copy of charter document i.e. MOA & AOA.
2. Address of registered office of company.
3. List of directors & secretary of company.
4. Address of registered office of company in India.
5. Particulars of opening and closing place of business in India if any
6. Name and address resident person in India authorized to accept notices on behalf of
company.
7. Declaration by directors about not debarred from formation of company.
8. Any other information as may be prescribed.

● Foreign company within 30 days of its establishment in India, have to file

Form FC-1 according to provisions of companies act & FEMA 1999.

6) Government Company:- Section 2 (45)

 Govt. co. means any company in which not less than 51% of paid-up share capital is held by
Central Govt. Or by State Govt. or partly by central Govt. or partly by State Govt.
 Auditor of Govt. Company shall be appointed by CAG India.

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  Name of all Govt. Company shall be end with word ‘Limited’ be it Public Co. or Pvt. Co.
 AGM of Govt. co. can either be held at Registered Office or at any other place as approved
by central Govt.
 Govt. co. can have more than 15 directors even without passing special resolution.

Exemptions of Pvt. Co. :-

1. Exemptions Related to related party transaction under section 188.
Holding/subsidiary/Associate company of Pvt.company Not consider as related
party.
2. Sec 62. :Further issue.
 Time limit for acceptance by shareholders may be reduced from 15 days by
Pvt. by obtaining 90% of consent of its members.
 Only OR is required to be passed for offering shares to employees.
3. Conditions to accept deposits from members (SECTION 73) will not apply to Pvt. Co. if
accepts up to 100% of PSC & free reserve.
4. Section 101 – notice of GM, 102- special statement, 103- Quorum, 104- chairperson, 105-
proxy, 106-Restriction on Voting, 107- Voting through show of Hand & 109- Demand for
poll not applicable for Pvt. Co.
5. Sec 141 Audit & auditors- Pvt. Co. having PSC less than 100 cr. Will not counted in 20
companies within which auditor can do audit.
6. Sec 160, For standing for directorship deposit of Rs. 1 lacks is not required by Pvt. Co.
7. Sec 162, Single resolution may be passed to appointing more than one director
8. Sec 180, SR is not required by BOD to exercise their powers u/s 180.
9. In BM, interested directors can participate in meeting after disclosure of interest.
10. 196, Approval of CG for appointment of KMP is not required.
11. Pvt. Co. is exempted if it is start up from,
 Preparing cash flow statement.
 Accepting deposits from members with no limit.
 Annual return may be signed by CS or Director.
 BM once in half calendar year.

Nidhi Company (section 406)

1. Nidhi company is incorporated with an object of cultivating the habit of thrift and saving
among its members, receiving deposits from, and lending to, its members only for their
mutual benefit.
2. Primary object of Nidhi company is to carry on business of accepting deposits & lending
money to members borrowing only against jewel, or mortgage property

Incorporation of Nidhi:
 Incorporated only as a public company & shall have a minimum paid up equity share capital
of 5 lacks.
 Nidhi company shall not issue preference shares.
 If preference share issued before commencement of a company act 2013, redeemed as per the
term of agreement.
 No any other object in object clause of MOA except stated above
 Nidhi company add ‘Nidhi Limited’ word at the end its name.

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  Following points need to be ensured by Nidhi Co. within 1 year of its incorporation
- Minimum number of members required 200
- Net owed fund of 10 lacs or more
- Ratio of net owed fund not more than 1:20
- Unencumbed term deposit of not less than 10% of outstanding deposit as specified in
rule 14

Membership :
 Shall not admit BC or trust.
 Membership shall not reduce to less than 200.
 Minor shall not be admitted as member.

Restriction or prohibition on Nidhi Co.

- cannot do,
 Chit business, Insurance, Hire Purchases, Leasing Finance
Business other than accepting deposits & granting loans.
 Accepting deposits & loans to members only.
 Cannot enter into partnership agreement.
 Can’t issue preference shares or debentures.
 Can’t acquire another company.
 Can’t accept deposits & lend money to BC.

Share Capital & Allotment.

 Nominal value of equity share not less than Rs, 10.
 No charges on issue of shares.
 Allot minimum 10 equity shares to each member(Rs. 100 in value).

Branches of Nidhi:-
 Can open 3 branches within district.
 For opening branches file annual return & financial statement with ROC
 For more than 3 branches or outside district obtain approval from Regional Director &
intimate ROC within 30 days
 Cannot open branch outside the state.
 For closure of branch.
 Advertisement in vernacular newspaper at least 30 days prior
 Intimate ROC within 30 days from closure.
 Accepts fixed deposits = for min 6 months & max 60 months
 Recurring deposits = for min 12 months & max 60 months.
 Loans - up to 2 lacks – Total deposit less than 2 cr. up to 7 lacks, Total Deposit more than
2cr. & less than 20 cr.
 Up to 12 lacks – More than 20 cr. & less than 50 cr.
15 lacks – Total deposit more than 50 cr.
- Dividend cannot declare exceeding 25%.
- Half yearly return in form NDH-3.

Producer Co.:- ( Sec-465)

 Producer Company are still govern by co. act 1956.

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  Membership of PC is open to all who engaged in production of primary produce involving
production of agricultural products.
 Objects of PC
 Production, distribution, selling, marketing, export, of primary produce.
 Provide financial assistance to its members.
 Provide technical assistance to its members.
 Providing consultancy services & education.
 Involve process like Preservation, Drying, Packaging of Produce of its members.
 Manufacturing, supply, sale of machinary to its members
 Distribution of power, water, & air for Production.
 Provide insurance facility.
 Other ancillary services.

● Producer company can be incorporated by minimum 10 members who are individual involve
in primary production business or by 2 or more primary producer institutions.

Holding Company:- section 2(46)

 Holding company means a company in relation of which one or more companies are
subsidiary companies.
 This includes ‘ Body Corporate’.
Provision of HC :-
1) Financial statement of holding company :-
 Consolidated financial statement of holding company is required to be made and disclose .
includes details about subsidiary company , association company and joint venture .
2) If holding company has more than 1 subsidiary :-
 If it so then it will prepare consolidated financial statement of company and all subsidiaries ,
associated and joint venture in same manner as that of its own .
3) Separated financial statement :-
 Consolidated financial statement shall also be filed before annual general meeting along with
separate financial statement .
4) Discloser in balance sheet :-
Specifically disclose investment in subsidiaries .
5) Discloser in profit and loss of holding company .
 Dividend from subsidiary.
 Provisions for losses of Subsidiary company.

Subsidiary Company:- section 2(87)

 Subsidiary Company means a company in relation of which any other company is a holding
company.
 Holding Co. may include having
- Control over the comparison of BOD; or
- Exercises more than 50% of total Voting Power either by its own or together with
subsidiary co.
Associate Company:- Section 2(6)

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 - Associate co. means a company in relation in which other company has significant influence
but which is not a subsidiary company and it includes joint venture companies.
- Significant influence means, control of at least 20% of total voting power or control or
participation in business decision.

Charter document of companies

Memorandum of Association:
 It is constitution of a company on which structure of a company is built
 First step in the formation of company is to prepare documents called MOA.
Definition: As per section 2(56) - “Memorandum means MOA of a company as originally framed
and altered from time to time, in pursuance of any previous company law or this act.”
Form of MOA:
Table A - Applicable in case Company Limited by Shares.
Table B - Company limited guarantee not having share capital.
Table C - Company Limited by Guarantee having share capital.
Table D – Unlimited Company not having share capital.
Table E – Unlimited Company Having share capital.
Contents:
1. Name Clause:
 First Clause in MOA.
 Co. being a legal entity must have a name of its own to establish its separate identity.
 Name shall not-
Be identical or too nearly to name of an existing company, be such name which constitutes an
offence if used, or undesirable in operation of CG.
 Company can apply of name on RUN. Such name will be reserved for period of 20 days
 Registrar must make preliminary enquiries to allowed name which is not misleading.
 Object is to prevent use of names likely to mislead the people.
 CG has power to direct any company to rectify its name if it is identical or too nearly to name
of existing company & company have to change its name within 3 months from issue of above
direction after passing ordinary resolution.
 CG has another power to rectify the name of company which in his opinion constitutes an
infringement of registered trademark. Proprietor of such trademark may make an application to
CG but within 3 years from the date of incorporation of company then CG may direct company

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 to change its name within a period of 6 months from issue of such direction after passing
ordinary resolution.
 When company changes its name notice has to be given to registrar along with order of CG
within15 days from such change.
2. Situation Clause:
 Name of state in which registered office of company is to be situated must be given in MOA.
 Exact address of registered office is not required.
 Company must have to inform registrar of its Register Office within 30 days from incorporation
of company.
 Name and address of its Register Office is printed or affixed on every document of company.
 Negotiable instruments like hundis, promissory notes, BOE, etc. and other document also
contains it.

3. Object Clause:
 It contains the objects for which the company has been formed. It also determines purpose and
the capacity of company.
 It states affirmatively the scope & extent of power of company & states negatively nothing
should be done beyond such scope & extent.
 Act beyond the limit are ultra vires & hence void even entire body of shareholders cannot
rectify such act
 Although express powers are necessary a company may do anything which is incidental to
specified powers & such act will not be ultra vires.
 This enables shareholders creditors & those dealing with company to know what are permitted
range of enterprises.
 Memorandum is a limit beyond which a company can’t travel.

4. Liability Clause:
 Liability of members of company of company is to be specifically mentioned in MOA.
 Liability of members may either be limited or unlimited, further shall also state that,
i. In case of company limited by shares, liability of members is limited upto unpaid amount
of shares,
ii. In case of company limited by guarantee, liability of member become two fold.
1 up to unpaid amount of shares &
2 amount of guarantee which will be called by company at the time of its winding up.

5. Capital clause:
 this clause states the amount of capital with which company is registered
 Capital value which is registered in MOA is known as Nominal / Authorized / registered
capital.
 Company cant issue shares exceeds amount of nominal capital.
 Excess amount if received beyond such nominal amount must be return by company.
 Out of issued capital, Total amount actually subscribed is known as subscribed capital.
 Company calls money, amount paid by shareholders is known as paid up share capital.

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6. Declaration for Subscribers:
 This clause states that,” we several people whose names and address are subscribed below,
desire to form in to a company & agrees to take numbers of shares stated opposite to respective
names.”
 Then, names, address description, occupation of subscribers & number of shares taken & their
signature is entered.
 Requirements:
 Each subscriber must take at least one share
 Each subscriber must write opposite to his name number of shares which he
agrees to take.

7. OPC:In case of OPC, name of person who in the event of death of subscriber shall become the
member of company is entered in MOA is known as NOMINEE CLAUSE.

Articles of Association:
 AOA contains regulation for management of the company. These are the bye-law or rules
that will govern the functioning of company.
 AOA defines duties, rights & powers of governing body & subordinate to MOA.

Definition:
As per section 2(5),” ‘articles’ means article of association of a company as originally framed &
altered from time to time in pursuance of any previous company law or this act.”
Format of AOA:
Table F – AOA of Company limited by shares.
Table G – limited by guarantee having share capital.
Table H – Limited by Guarantee not having share capital.
Table I - Unlimited company having share capital
Table J – Unlimited company not having share capital.
Registration of Article:
 At the time of incorporation, company must file document called MOA & AOA to ROC.
Which must be duly signed by all the subscribers.
 Every type of company whether public or private, limited by shares or limited by guarantee,
having or not having share capital or unlimited company must register their AOA.

Entrenchment provisions:
 AOA contains provisions for entrenchment specifies the article may be altered only if
conditions are more restrictive than those of company law
 Entrenchment shall be either.
1. On Formation, or
2. By amendment in article, but such amendment must be agreed by all members in case of
private company and by passing SR in public company.

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  If article contain such provision for entrenchment whether on formation or by amendment,
company shall give notice to ROC.

Contents of AOA:
 Share capital, no of shares, values of shares, issue of preference shares, allotment of shares,
calls on shares, transfer & transmission of shares, nomination, share certificate,
dematerialisation, voting & other rights of shareholder, remuneration to directors etc.

Consistency of AOA with company act 2013. :

At any point of time AOA should not be inconsistency with company act 2013. Any such
condition or provision will be null & void & even all shareholders cannot rectify such
condition.
Subordinate to MOA:
If clauses in AOA going beyond MOA will be ultra virus.
Doctrine of a Ultra Vires.
 Act done by company which is not stated in MOA as objects or powers is prohibited by
doctrine of ultra vires.
 Ultra vires act is void neither company nor contracting party can sue on it even company
cannot make it valid by taking assent of all members.
 General rule is that an ultra vires act is incapable of ratification. But any act intra vires to
company but ultra vires to directors may be rectified by company in proper form.

Doctrine of ultra vires was 1st enunciated by lords of a classic case

‘Asbury railway carriage & iron co. Ltd. v/s Riche’

Memorandum of company in said case defines its object as: “Object for which company is
established are to make & sell or lent or hire railway plants / to carry on business of mechanical
engineers & general contractors //”
Company entered into a contract with M/s Riche, firm of railway contractors to finance the
construction of railway. Subsequently company repudiate the contract on the ground of its being
ultra vires.
Riche sued for damages on ground of branch of contract. According to him, the word ‘General
Contract’ in object gives power to company to enter into such contract.
House of lords held that the contract was ultra vires the company & therefore null & void. Even all
shareholder of company cannot rectify such contract as it is ultra vires to company.
Effects of Ultra vires Transaction
1. Void – ab – initio – null & void , cannot rectify.
2. Injunction – Members can get injunction to restrain a company wherein Ultra vires has been
or is about to be undertaken.
3. Personal liabilities of directors
4. Property acquires for any Ultra vires purpose though, represent money of company & so
belong to company.

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 5. Ultra vires borrowings does not create relationship of creditor & debtor.

Loans, Borrowings, Guarantee & Ultra vires rule:

 Ultra vires borrowings does not create a debtor & creditor relationship.
Even at the time of winding up of company, such depositor / are not treated as creditor to pay
amount
 If lender lend the amount for discharging lawful expenses he may recover the amount.
Whether a transaction is Ultra Vires to company can be decided on the basis of following:
1. If falls within object, not ultra vires & hence not void.
2. If falls beyond object ultra vires & hence void.
3. If it in excess of powers of directs but not company they can be rectified by
members but not possible it in excess of companies powers

Doctrine of constructive Notice:

 Every person dealing with company is deemed to have ‘Constructive Notice’ of contents of
MOA & AOA.
 Not only read those document but he should also have to understand them in according to
their proper meaning.
 Consequently, if a person enters into a contract which is beyond the powers of company as
defined in MOA he cannot as, general rule. Acquire any right under the contract against the
company.
 MOA & AOA when registered becomes public documents & anyone can inspect them with
nominal fees. So, every person dealing with company is presumed to know powers of
company as well as powers of Directors.
 Even if person has not read those documents, he is deemed to have proper knowledge of
those documents.
 If afterwards it is known that act is ultra vires he can’t acquire any rights against the company
under the contract.
 When MOA & AOA are registered, it becomes public document & anyone can inspect it by
payments of nominal fees.
 So, every person who is entering into a contract with a company is presumed to know exact
powers of company & its directors.

Board resolution for change of name.

“ RESOLVED THAT with reference to section 13 and other applicable provisions of co. act 2013.,
if any rules made thereunder & subject to approval of ROC & approval of members, the consent of
BOD be & is hereby given to change name of the co. from ABC Ltd. To VBC Ltd. Or as may be
approved by registrar.
FURTHER RESOLVED THAT for purpose of giving effect to this resolution on Mr. Vaibhav,
Director of company be & is hereby authorized on behalf of co. make application to MCA for
ascertaining availability proposed name by filling form RUN & to do all such acts, deed & things as
required in this regard”
Basic Draft :

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‘RESOLVED THAT with reference to section- of co. act 2013, & other applicable provision & AOA
consent of BOD/members be & is hereby given subject to approval of ROC to appoint M/s
zhadupocha& associate firm of CA as internal auditor of the company .
RESOLVED FURTHER THAT, for the purpose of giving effect to this, resolution Mr. Vaibhav,
director of a co. be & is hear by authorized on behalf of co. to make application to MCA & to file
requisite form & to do all such acts, deeds & things as required in this regard.”
Draft resolution for alteration of AOA:
“RESOLVD THAT with reference to section 14 & applicable provisions of co. act 2013, if any &
rules made thereunder consent of members be & is hereby given anonymously for alteration of AOA.
FURTHER RESOLVED THAT, for the purpose of giving effect to this resolution Mr Vaibhav,
director of co. be & is hereby authorized to file form no. MGT-14 within 30 days of passing this
resolution &to do all deeds acts &things as may be required in this regard.”

Doctrine of Indoor management:

 While doctrine of constructive notice protects co. against outsiders, principle of indoor
management protects outsiders against company.
 According to this doctrine, person dealing with co. is not bound to enquire internal
irregularities of co.
 Outsiders are bound to know external position of co. but are not bound to know its indoor
management.
 Further this doctrine says that, act of person acting as director will be treated as valid
although it may afterward be discovered that his appointment was invalid or that it had
terminated by any provision of AOA of co.

Royal British Bank v/s Turquand:-

 Directors of co. had authority to borrow money but by passing resolution in GM.
 Directors borrowed money from Turquand without passing resolution in GM.
 Turquant can sue company as he was entitle to assume that the necessary resolution
had been passed.

Exceptions:
1) Outsiders had knowledge of irregularity :
when outsider is aware about irregularity even then enter into an agreement , then cannot be
protected against doctrine of indoor management.
2) No Knowledge of MOA& AOA:
This doctrine does not protect the person who does not have knowledge of MOA, AOA Because,
person while dealing was not relayed on MOA,AOA.
3) Forgery:
doctrine of indoor management does not Extent to transactions involving forgery or any
transaction which void or illegal ab initio.
4) Negligence:
This doctrine no way rewards those who behave negligence.
5) Agency:

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 doctrine of indoor management does not apply where the question is in reward to the very
existence of an agency.
6) Act done is not merely ultra vires the directors/office but ultra vires to co. itself.

Doctrine of alter EGO:

According to this doctrine, court ignores status of shareholders, directors & officers in
respect of their liability and held them personally liable for their actions when they have
acted fraudulently/unjustly
‘Lennard carying co.Ltd.v/s Asiatic petroleum co. Ltd.’
This theory of alter ego is different from vicarious liability.
Legal effect of MOA & AOA:
1) Members bound to Co.
2) Company bound to members
3) Member bound to member
4) Co. not bound to outsider.

Alteration of Charter Documents.

Change in name of listed entity:
Following conditions should be fulfilled:
1) Time period of at least 1 year has elapsed from last name change.
2) At least 50% of total revenue in last 1 year from new activity suggested in new name.
3) At least 50% of total assets invested in new activity.
4) Then only file an application for name availability
5) Must take approval from stock exchange also.
6) If changed activity is not reflected in name of co. shall change name according to activity
within 6 months from change of activities.

Procedure for change of name:

 Board Meeting:
BM should be called to consider matter relating to change in name of company.
 Name availability from ROC:
Application to be made to ROC in RUN for ascertaining availability of new name.
 Board Meeting:
After confirmation of availability of name from ROC, another BM is held to,
- Note Down new name.
- Decide day, date, time & place for EGM,
- Approve notice of GM.
- Authorized CS to issue notice of EGM.
 Issue of Notice :
Notice is issued to all the members auditors & directors of co. at least 21 days prior to GM.
 Holding of EGM:

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 Hold EGM on specified date & pass SR u/s 13(1) for change in name clause of MOA.
 Filling with ROC:
- File copy of SR & explanatory statement if any, to ROC in Form no MGT-14 within 30
days from passing the resolution.
- Application for fresh issue of Certificate of Incorporation in new name of co. made in
form no INC-24 within 30 days from passing resolution.
 New Certificate of Incorporation (COI):
ROC may issue fresh COI to co. in form no INC-25.
 In case of name changed by any co, compulsorily use former name & new name at place of
business, other document like BOE, letter heads for at least 2 years form such change.

Rectification of Name (section 16).

a) If company or openion of CG about the name of any co. is identical with or too nearly
resemble the name co. which in existence had been previously registered. In such case, CG
may direct the co. to change its name within 3 months form issue of such direction by
passing Ordinary Resolution.

b) If registered proprietor of trade mark made on application within 3 years of incorporation or

change of name of co. to CG or CG has opinion that name is identical or too nearly
resemble to an existing trade mark, CG may direct the co. to change its name within 6
months by passing Ordinary Resolution from issue of such direction.

 Notice to ROC:
Whenever co. changes its name u/s 16 should give notice to ROC along with order of CG
within 15 days who shall carry out necessary changes in COI & MOA.

ALTERSTION OF REGISTERED OFFICE CLAUSE:-

(a) Shifting of RO to another place but within same city/town/village.

- Notice to directors to convey BM
- Convene BM & pass BR for change of RO.
- File notice of change of RO to ROC in form no INC-22 within 15 days.

(b)Shifting of RO outside local limits, but within same state & ROC.
- Notice to directors to convey BM.
- Convene BM & pass BR to approve day, date, time & place of GM
- Hold GM & pass SR.
- File copy of SR with explanatory statement with ROC in form MGT-14 within 30 days of
meeting
- File notice of change of RO to ROC in Form no INC-22 within 30 days.

(c)Shifting of RO from one ROC to another but within same state.

 Board meeting to be called & Board Resolution will be passed for change of Register office
 After confirmation by Board, General meeting will be called by Company secretary &
Special resolution will be passed in it.
 MGT-14 to field within 30 days with ROC.
 Co. will file form INC-23 (Seeking confirmation from RD) along with requisite fee.
 Co. shall minimum 1 month before filling any application with RD-

15 | P a g e
 a) Publish a notice at least once in daily newspaper published in English & in principle
language of that district in which RO is situated & circulating in that district.
b) Serve individual notice to each debenture holder, depositor & creditor of the co. clearly
indicating that any person who’s interest in likely to be affect may oppose & give his
intimation to Regional director along with the copy to co. within 21 days from date of
publication of notice.
 After approval from RD ( RD gives his order within 30 days from date of receipt of
application) co. will file copy of said order with ROC within 60 days in form INC-28.

(d)Shifting of RO from one state to another.

Board meeting will be called & BR will be passed for shifting of RO from 1 State to another.
 EGM notice will be given to shareholders ( 21 clear days )
 Publish notice to EGM in newspaper & also send copy of such publication to stock exchange.
 SR will be passed at EGM & intimation will be given to stock exchange within 24 hours of
conclusion of EGM.
 MGT-14 will be field with ROC within 30 days of passing such resolution.
 INC- 23 will be filed to RD along with necessary attachments.
 Minimum 30 days before date of filling form no INC-23. Publish a notice at least once
in daily newspaper published in English & in principle language of that district in
which RO is situated & circulating in that district.
 Serve individual notice to each debenture holder, depositor & creditor of the co. clearly
indicating that any person who’s interest in likely to be affect may oppose & give his
intimation to Regional director along with the copy to co. within 21 days from date of
publication of notice.
 CG shall dispose the application within 60 days & he will satisfy itself that alteration has
consent of creditors debenture holders, or all dues of creditor is discharged or adequate security
has been provided for such discharge.
 After approval from CG co. will file certified copy of ordering INC-28 to ROC within 30
days.

Alteration of object class [ sec 13 (8) and (9)] :-

 As per section 13 (1) of company act , company can change its object clauses by passing
special resolution .
 As per 13 (9) ROC will alter memorandum with respect to object to company and certify
registration within 30 days from filling special resolution.
 As per section 13 (8) , company which has raised money from public through prospectus and
has any unutilized amount out of such money , shall not change its object for which it raised
the money through prospectus unless SR is passed by company and –
 Details of resolution shall be publish in newspaper one in English and one is vernacular
language and shall also be placed on website of company if any .
 Dissenting shareholder shall be given an opportunity to exit by promotor.
Procedure :-

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  Notice to all director about board meeting .
 Convey board meeting and pass board resolution .
 Notice of general meeting to all members , auditor and director .
 If company raised any amount through prospectus and have unutilized portion then .
 Pass special resolution to alter MOA
 Publish an advertisement of SR .
 Opportunity to dissenting member to exit from promotor .
 Pass special resolution in general meeting .
 File with ROC in MGT -14 within 30 days .
 Special resolution passed by postal ballot in following company –
 Company having more than 200 members .
 Amount raised through prospectus is unutilized .
Alteration of liability clause :-
 Can change by passing special resolution as per sec 13 (1) .
Alteration of capital clause [sec 61 read with sec 64 ] .
 AOA power .
 Ordinary resolution [ special resolution if required by AOA ]
 SH7 to ROC (SEC 64)
Sec 61 (1) provides that , company may alter its share capital by passing ordinary resolution in
following ways .
 Increase in authorized share capital .
 Consolidation and division of share capital .
 Sub- division of shares .
 Cancellation or determination of share capital .
 Sub- division of share .
 Cancellation or diminution of share capital .
Notice to ROC :-
 Sec 64 provide that company having share capital shall give notice to ROC for alteration in
share capital in form no SH -7 within 30days .
Procedure :-
1. Ensure AOA gives power to change capital clause .
2. Board meeting and board resolution –
 Decision about increase in authorize share capital of company .
 Day, date , time and place of GM .
 Approval of notice .
 Authorize CS to issue notice .
3. Issue notice to member auditor , director .
4. Hold annual general meeting &pass ordinary resolution .
5. Filling with roc –
 MGT 14 if passed special resolution
 SH-7 within 30 days from passing resolution .

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Alteration of AOA :-
Company can alter AOA by passing special resolution .
No requirement of approval of ROC for alteration of AOA .’
AOA can alter in following manner :-
 By adoption of new set of article .
 By addition of new clause .
 By removing few clause .
 By amend specific clause .
 By substitution of specific clause .
Procedure :-
 Board meeting pass board resolution .
 Issue notice of general meeting to member, director , auditor .
 Convene GM pass special resolution .
 File copy of proceeding of GM to all stock exchange .
 File MGT -14 with ROC within 30 days along with copy of resolution and explanatory
statement
Note – sec 14( 1) leys down that , private company alter its AOA and removes restriction and
limitation which are required to be include in AOA of private company , thus such company ceased
to be private company from date of such alteration .
- 14(1) also leys down that ,any alteration effect of conversion of public company into private
company shall not take place except with approval of tribunal .
Effect :- alteration binds member and company to the same way as original article.
Sec 8 company cannot alter its AOA except with prior approval of central government

Summery
1. Special resolution MGT 14 .
2. Application to ROC to issue COI MGT 24 .
3. Fresh COI issued by ROC INC – 25 .
4. Notice to ROC for change in RO INC 22
5. Confirmation from RD INC 23 .
6. Copy of order from authority ROC INC 28 .
7. Alteration in share capital SH-7

Required resolution type

1. Change in name ( voluntary ) SR .
2. Rectification of name (compulsory ) OR
3. Alteration of RO SR
4. Alteration of object clause SR

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5. Alteration of liability clause SR
6. Alteration of capital clause OR
7. Alteration of AOA SR

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 Legal status of registered company .
Holding company :-
Company in relation to which one or more other companies means a company of which such
companies are subsidiary company known as ‘holding company ‘. company controlled by another
company is called subsidiary company & controlling company is called holding company.
Subsidiary company –
Subsidiary company means a company in relation to which any other company means holding
company –
 Control composition of board of director or ,
 Exercise more than half of voting power either itself or together with one or more its subsidiary .
Provision of HC :-
1) Financial statement of holding company :-
 Consolidated financial statement of holding company is required to be made and disclose .
includes details about subsidiary company , association company and joint venture .
2) If holding company has more than 1 subsidiary :-
 If it so then it will prepare consolidated financial statement of company and all subsidiaries ,
associated and joint venture in same manner from and manner as that its own .
3) Separated financial statement :-
 Consolidated financial statement shall also be filed before annual general meeting along with
separate financial statement .
4) Discloser in balance sheet :-
Specifically disclose investment in subsidiaries .
5) Discloser in profit and loss of holding company .
 Dividend from subsidiary.
 Provisions for losses of Subsidiary company.

Registration of Hindu Undivided Family (HUF) :-

 Deed is prepared on stamp paper declaring the formation of HUF.
 Many details are included in deed such as :
 name of Karta, Coparcener.
 Source of fund,etc.
 Creating HUF deed is not mandatory, however it is beneficial to create a deed.
 Key issues to be noted in preparation of HUF deed :
 It is a written document on stamp paper.
 Eldest male member of HUF becomes Karta of HUF and other members are co-
parceners.
 Name of HUF usually is on name of Karta followed by word HUF, eg : Vaibhav Balaji
HUF.
 Source of capital is written in HUF deed.

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  Declaration is given by each member that 'Karta has authority of accounts vested in his
hands and he has right to govern all transactions of HUF.
 Rubber stamp of HUF is also prepared.
 It is recommended that deed should be notarized –
 register the deed, obtain PAN,
 open current bank account,
 bank account should be open in the name of HUF.
 HUF has certain tax advantages such as gift over 50000 a year by HUF will be
taxable.
 There can be use of capital asset to establish' corpus of HUF.
 HUF is a separate legal entity for purpose of income tax return, same slabs are applicable to
HUF as to individual assesses.
 You cannot transfer your own money or assets into HUF.
 You can transfer ancestral property or money receipt on sale of ancestral property into HUF.
HUF can invest sums into share, mutual funds,etc.

NBFC (Non-Banking Financial Company) :-

Procedure for filing application with RBI :-
 Applicant is required to file online and also have to submit documents physically to regional
office if RBI.
 Website name is www.cosmos.rbi.org.in , here applicant can submit online form.
 Company can click on login page and download suitable application form.
 Company after filing will get company application reference number (CARN).
 Company has to submit hard copy of application form with supporting documents to regional
office.
 Company can check the status of application by CARN.

Associate Company :-
- Associate co. means a company in relation in which other company has significant influence
but which is not a subsidiary company and it includes joint venture companies.
- Significant influence means, control of at least 20% of total voting power or control or
participation in business decision.
- Joint venture means joint agreement whereby parties that have joint control of agreement have
right to net assets of agreement.
- Additional Compliances :
 It will considered as related party
 Consolidated financial statement includes financial statement of associate company
 Following persons can't be appointed as Independent Director in company if ;
 promoter, relative of promoter, director of such company
 he had / has pecuniary relationship with company
 holding / held position of KMP / has been employee of associate company.

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 Financial service organisation and its
registration process
1. Non Banking Financial Company :-
NBFC is a company , register under companies act 2013 ,
A. Engaged In A Business Of ,
 Loans and advances ,
 Acquisition of shares , debenture stock , shares , debenture bonds of government or local
authority or any other marketable security .
 Insurance business or chit business .
B. But Does Not Include –
 Institution engaged as primary business of agriculture .
 Industrial activity .
 Purchase / sale of any goods / services .
 Sales /purchase / construction of immovable property .
C. NBFC Is Same Like As A Bank But Different In Following Things –
 NBFC can’t accept demand deposit .
 Do not form part of payment and settlement system and can’t issue cheques drawn on itself .
 Insurance facility and credit guarantee corporation is not available to NBFC’s depositors
 NBFC Primary business is considered as financial activities only when its 50% of total asset
and 50% of total income generated from such activity .
 If company fulfil about the condition , it should get register as MBFC by RBI .
 This test is properly known as 50-50 test .
 Net own fund of NBFC of Ru 2 Cr or more .

Types of NBFC :-
1. Asset Financial Company .

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  Principle business of AFC is to provide finance for physical assets supporting economics /
product activity .
 For e.g. automobiles ,generator sets. Machines etc.
 Not less than 60 % of total asset and total income should generate from principle business .

2. Investmentcompany – PB (PRINCIPLE BUSINESS) of acquisition of securities .

3. Loan company – PB of providing finance whether by making loan or advance . does not include
AFC .

4. Infrastructure Debt Fund (IDF ):-

 75% of total asset is deployed in infrastructure loans .
 Net owned fund minimum 300 Cr.
 Minimum CRAR – 15% ( capital of risk asset ratio ).
 Minimum credit rating of ‘A’ or equivalent to A.

5. Infrastructure Debt Fund –

 Provide long term debt to infrastructure project .
 Provide either rupee or dollar denomination bond of minimum 5 years maturity .
 Only IFC can sponsor IDF .

6. NBFC – Micro Financial Institution –

 Minimum 85% of asset should satisfy following criteria .
 Loan distributed to borrower – with rural house hold .Annual income not exceeding one lac or
urban house hold annual income not exceeding 1.60 lac .
 Loan amount does not exceed 50,000 in 1st cycle and 1 lac in 2nd cycle .
 Total amount of loan doesn’t exceed 1 lac .
 Loan can be replayed in 24 months or more if loan amount exceeds 30000 , without penalty .
 Loan provided – without collateral security .
 50% of total loan given should be for income generation i.e. for production activities .
 Loan is repayable on weekly , monthly , forth nightly .

7. NBFC -Factors :-
 Non-deposit taking NBFC .
 Principle business is of factoring .
 50% of total asset and 50% of total income should be generated from its PB .

8. Mortgage Guarantee Company –

 Minimum 90% of business turnover is from mortgage business, or
 Minimum 90% of total income from mortgagee business .
 Net owned fund is 100 Cr.

9. NOFHC- Non-Operating Financial Holding Company .

 It is financial institution through which promotor /group of promotors will be permitted to
set new bank .

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  It’s NOFHC which hold bank and other financial services provider company regulated by
RBI or other regulators .

10. CIC-ND -SI – Systemically IMP Core Investment Company.

 It is NBFC which carries out business of acquisition of shares / securities if satisfies
following condition
 Hold minimum 90% of total asset is invested in equity , preference , debenture , bond of
groups company .
 Hold minimum 60% of total assets as investment in equity shares of group company .
 Does not trade in investment except through block sale .
 Doesn’t carry out any other financial activity except investment in securities of group
company .
 Asset sized is Ru. 100Cr .
 It accepts public fund .
NBFC net owned fund :- ECS+ free reserve + security premium amount + capital reserve out
of sales proceed of assets but not reserve created by revaluation of assets – accruing losses-
book value of intangible asset .
Benefits Of Incorporation NBFC
 Competitive interest rate .
 Quick processing .
 Less rules and regulation .
 Loan available to individual with poor credit rating .
Incorporation Of NBFC .
NBFC Is company register under company act. So it should get register under company act as
like other companies .
Registration Process With RBI –
Conditions –
 Minimum 1 director with NBFC background .
 Clean CBIL records .
 Understanding of NBFC background .
Procedure –
 Company required to apply online and submit physical copy of application with necessary
documents to regional office of RBI.
 Application submitted online through COSMOS application ,and downloaded submitted
application form .
 Then after filling form and attaching supporting documents submit at regional office of RBI

Housing Finance Companies :-

 HFC are primarily engaged in a business of providing homes loan and other related products.
 HFC is a company , register under company act 2013 .
 But it is regulated by national housing bank .

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  HFC has to get registration certificate from nation housing board before starting new
business.
 National housing bank provides COR only if ,
 HFC net owned fund is 10 Cr or more .
 Other condition of NHB act 1987 .
 HFC accepts Collateral Securityagainst loan, advance.
 Collateral security includes property for which loan has been granted .
 Usually amount of loan , advance depend upon value if collateral security .
 Loan given by HFC are a long period of time .

Benefits Of Incorporation :-
 Macro environmental is favourable forHFCs. Due to Pradhan Mantri Awas yojana its growth
accelerated .
 Holding period of capital gain of immovable property reduced from 3 to 2 years and
indexation is also base year of 1-4-2001 .
 Advantage of digital documents , reduce cost of finance .
 Overall growth has been noticed in this area .

Assets Reconstruction Company- (ARC)

 Net owned fund of ARC is Ru 2 Cr . or more .
 Assets reconstruction company act as an agent of bank of financial institution for recovering
their dues from the borrowers.
 If carries on the business of reconstruction or securitisation or both .
 It is NBFC regulated by RBI
 ARC helps in –
 Isolating non-performing assets ,
 Freezing focus on core activities FIs
 Development of market from such NPA’s .
Assets reconstruction company performs the following function
 Acquisition NPAs .
 Change /turnover of management / sale of business of borrower .
 Rescheduling of debt .
 Settlement of dues by borrower .
 It helps banks from keeping clean its books from NPA’s
Benefit –
 Banks can focus on it’s core business activities and ARC finds new business opportunities .
 ARC build ups investors confidence .it can maximises recovery by minimizing costs.
 Plays important role in development of capital market through secondary asset instrument .

Micro Finance Institution ( MFI ) :-

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  MFI offers loans and other financial services to low income population .
 Facilities provided to members likes loan , insurance deposit and other services .
 NABARD defines MFI’s as , ‘provision of thrift , credit and other financial services and
product of very small amount to poor in rural , semi-urban or urban areas provided to
customers to meet their financial need with qualification that
 Transaction value is small .
 Customers are poor .
Characteristics :-
 Provided financial services to those whose income is small and unstable .
 Mobilise resources both from external as well as internal i.e. by saving , sale of asset .
 Loan amount is small .
 No collateral security for loan .
 Period of loan is also short .
 Loan is flexible .
 Mostly group loan are given .
 Transaction cost is low due to group leading .

Nidhi company :-
 Allowed to open branches .
 Director hold office up to 10 consecutive years .
 Can declare dividend not exceeding 25%.
 Not allowed to conduct business of chit fund hire purchase finance , leasing finance
,insurance etc .
 Cannot enter into partnership .
Benefits :-
 Mobilises in small saving and useful who’s in urgent need of funds .
 Repayments is guaranteed and loans are secured .
 Higher rate of interest on deposit so attracts investors .
 BOD have high experience of handling finance .

Payment bank :-
 New model of introduce by RBI .
 Payment bank are just like normal banks which provides interest on deposit just like saving
account .
 Provide services like ATM CARD , debit card , net- banking , mobile -banking , etc .
 Cannot grant loan or issue credit card .
 Motive of introduction of these banks is to provide and make available banking services at
remote area .
 Bank account can be open instantly through mobile application .
Regulation :-
 Minimum capital requirement is 100 Cr .
 In 1st 5 year at least 40 % stake should be promoters .
 FDI is permitted .

26 | P a g e
  Maximum voting right is 10 % .
 Acquisition of more than 5% - RBI approval .
 Majority board of director must be independent .
 Cannot form subsidiary to undertake any non- banking activities.
 Deposit per customer not exceeding 1 lack .
 No lending .
 25% of branches in unbaked rural area .
 Use ‘ payment bank ‘ in its name .
 Incorporation as only public limited .
Summary –
1. Infrastructure finance company - 300 Cr.
2. Mortgage guarantee company – 100 Cr .
3. CIC -ND-SI - 100Cr. (asset size )
4. Housing finance company - 10Cr.
5. Asset reconstruction company – 2Cr .
6. Nidhi company ( paid up capital )- 5lacs .
7. Payment banks - 100Cr .

27 | P a g e
 Producer of conversion of business entities
Procedure for conversion of private company to public company .
1. Boardmeeting :- proper notice has to be send to all directors and hold BM for following
business.
 In -principle approval from board for conversion .
 Decided day , date , time and place of EOGM .
 Approval notice and agenda of GM and explanatory statement of GM .
 Authorise director or CS to send notice to members .

2. Issue notice of EOGM to all members , director and auditor of the company .

3. Hold EGM on specified day and pass SR for conversion. Such as SR is for –
 Approval of conversion .
 Alteration of MOA ( name clause ) and AOA .

4. Filling with ROC –

 Form MGT- 14 of SR along with explementary statement .
 Form INC 27 to make application for conversion of private company to public company .

5. ROC ,after satisfying itself , will issue fresh certificate of incorporation .

Conversion of public to private :-

Conversion of OPC into public / private company :-

1. Voluntary conversion :-
 Condition – if OPC wants to convert into private or public company , it is possible only after
expiry of 2 years from date of incorporation .

28 | P a g e
A. Boardmeeting – notice to all director along with agenda to approve following things .
 Discussion of director regarding conversion .
 Pass board resolution to increase no of director . (min 2 )
 Pass board resolution to increase no. of members ( min 2 ).
 Pass resolution to alter MOA AND AOA .
B. Filling with ROC –
 E-form INC-6 file within 30 days from resolution .
 Attachments –
 Copy of board resolution .
 Altered MOA and AOA and copy of latest financial statement .
 Copy of special resolution and any other information .
C. ROC – issue – fresh COI .

2. Compulsory Conversion :-

Conditions –
 If paid up capital shares capital exceeds Ru 50 lacs or average annual turnover of 3
consecutive FY exceed 2 Cr .
 Compulsory conversion within period of 6 months .
Process
A. Boardmeeting – notice to all director along with agenda to approve following things .
 Discussion of director regarding conversion .
 Pass board resolution to increase no of director . (min 2 )
 Pass board resolution to increase no. of members ( min 2 ).
 Pass resolution to alter MOA AND AOA .

B. Filling with ROC –

 E-form INC- 5 – OPC within 60 days give notice to ROC that it is ceases to be OPC and
now required to convert itself into private or public company.
 Attachment –
 Copy of board resolution .
 Copy of latest financial statement .
 Certificate from PCA of calculation of average annual turnover .
 E-form INC-6 file within 30 days from resolution .
 Attachments –
 Copy of board resolution .
 Altered MOA and AOA and copy of latest financial statement .
 Copy of special resolution and any other information .

C. ROC – ISSUE -fresh COI .

Conversion of private company into OPC :-

Condition –

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  Any private company other than sec 8 company having paid up share capital 50 lacs or
annual average turnover 2 Cr . can convert into OPC .
Procedure –
Boardmeeting -:- proper notice has to be send to all directors and hold BM for following business.
 In -principle approval from board for conversion .
 Decided day , date , time and place of EOGM .
 Approval notice and agenda of GM and exp state of GM .
 Authorise director or CS to send notice to members .

A. NOC –
 No objection certificate should compulsory obtain from members and creditors in writing
before -passing special resolution .
B. Notice of GM to – member, director, auditor

C. Hold GM – pass special resolution for conversion .

D. Filling with ROC –

 Form MGT 14 – special resolution along with explanatory statement .
 Form INC 6 – application for conversion .
 Attachment for form INC6 –
 NOC from member and creditor .
 List of member and creditors .
 Annual audited balances sheet and profit and loss account .
 Declaration by director regarding .
- Consent given by all members and creditor for conversion .
- Paid up share capital is 50 lacs .
- Turnover is 2 Cr.
E. ROC- issue – fresh COI .

Conversion Of LLP Into Company :-

1. Approval of name –
 Majority of partners has to give assent for conversion of LLP .
 LLP has to apply name availability for company .
 Name once accepted valid for 20 days .

2. DSC AND DIN -

 Future director of company must have DSC& DIN , so it is important to obtain it before
conversion .

3. Filling of form URC 1 - documents –

 List of members , name , address , etc .
 List of first director .
 Declaration by 1st director that he is not banned to be director

30 | P a g e
  List of partners of LLP and LLP agreement .
 Nominal shares capital and number of shares .
 No of shares taken and amount paid on it .
 Additional of word ‘limited’ or private limited in name .
 NOC in written from all creditors .
 Copy of newspaper advertisement and statement of accounts of company certified by auditor.

4. MOA& AOA is to be formulated and field with ROC after getting sanction of URC-1 .

5. E-form INC-32 SPICE –

 File INC-32 along with URC-1 with document –
- MOA &AOA .
- INC -9
- INC- 8 .
- DIR -2 , etc .

Conversion Of Company In LLP :-

1. Board meeting –
 Pass board resolution for conversion .
 Authorise any director to apply for name .

2. Application for name applicability –

 File form ‘RUN LLP’ with ROC .
 Attachment – board resolution approving conversion into LLP .

3. Obtain name approval certificate from ROC .

4. Drafting LLP agreement –

 Name of LLP .
 Partners and designated partners .
 PSR , proposed business .
 Contribution, rights and duties of partner .

5. Filling incorporation documents

 File FiLLip with ROC –
 Attachments –
- Proof of address of register office of LLP.
- Subscription sheet signed by promoter .
- Details of partners and DP .
6. E-forms -18 – ( application of conversion )
7. E-form – 19 – ROC issue COI .
8. E-form – 3- information respect of LLP agreement .

Conversion Of Section 8 Company Into Any Other Company .

Rule 21 of company (incorporation) rule, 2014 .

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1. Pass special resolution at general meeting for approving conversion .
2. Explanatory statement and reason of conversion –
 Date of incorporation .
 Principle object of company .
 Principle object of proposed company .
 Privileges if any enjoyed by company .
3. File MGT – 14 to RD.
4. File INC -18 to RD (application )
5. Copy of application to RD & ROC
Rule 22 of company incorporation rule , 2014 :-
1. Publish copy of notice within a week and send to RD in form no INC – 19 .
 One vernacular + website .
 One English .
 Website of company.
2. Copy of notice to chief commission of IT , IT officer transferred to members , directly or
indirectly .
3. Declaration by BOD that any income is not transferred to members , directly or indirectly .
4. NOC of any special status and file with RD .
5. Financial statement and annual return to RD.
6. Certificate from PCA/ PCS / PCWA that conditions are implied with .
7. RD may confirm conversion or impose any terms and condition .
8. Before such termination condition / rejection OOBH is given .
9. RD approval – copy of order in INC – 20 to ROC and copy of amended MOA and AOA .
10. Roc will issue fresh COI .

CONVERSION OF PUBLIC COMPANY INTO PRIVATE.

Public company may be converted into private by taking approval from Central Government (CG) on
an application made in form as may be prescribed.
PROCESS
1) An application is made to the Regional Director (RD) in form RD-1 within 60 days of passing SR
@ GM.
2) Following documents needs to be attached in RD-1
 copy of MOA & AOA
 Copy of minutes of GM
 Declaration by KMP that members are limited to 200 & there is no violation of rules of
deposits.
 Reason for conversion
 List of creditors & debenture holders of not more than 30 days before filling an
application.
 Name & address of every creditor & debenture holder
 Any person who want to inspect list of creditor & debenture holder can do so by
visiting registered office of company.

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3) Company have to issue an advertisement in INC-25A in vernacular & English newspaper atleast
21 days before the date of filling an application.
4) RD then will order his approval on resubmission or rejection within 30 days , if no order is passed
then it will be deemed approval.
5) Order of RD to be inform to ROC in form INC-28.

Dormant company
Introduction .
 Dormant company means an inactive company which does not carry out any business activity
.
 Who applies to ROC to change its status from active company to dormant company in its
record .
 Company can become dormant immediately or after few years , of incorporation .
 Major reason to change status of company is to start business after few years from
incorporation .

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Advantage :-
 New phenomenon in company act 2013 .
 Advantage to promotor who wants to hold the assets or intellectual property under corporate
shield for further use .
Definition :- (SEC 455)
 Where any company formed or register under this act for future project to hold assets or
intellectual property .
 And has no significance accounting transaction .
 Such company or an inactive company may make application to ROC in such manner as may
be prescribed for obtaining status of dormant co .
Inactive company :- Means,
 Not carrying any business or operation .
 Not made any significant transaction during last 2 FY .
 Not filed financial statement and annual return during last 2FY .
Significant Accounting Transaction Means , Other Than :-
 Payment of fees by company to ROC .
 Payment by company to fulfil requirement of this law .
 Allotment of share to fulfil requirement of law .
 Payment to maintain office and records

Obtaining dormant status :-

Sue moto –
 If fulfil criteria od sec 455 , can apply in MSC- 1 for become dormant company along with
fees .
By ROC –
 If company fails to file AOC-4 & MGT-7 for consecutive 2 years , may changed the status to
dormant company .

Legal Frame Work Of Dormant Company :-

 Maximum period for which company can remain dormant is 5 years .
 Company should apply to ROC before expiry of 5 years for become active from dormant or
for strike off .
 If company remain dormant for consecutive 5 years ROC may initiate strike OFF process on
company .
 If company fails to fulfil the criteria of sec 455 , then also ROC may initiate strike off
process.
Procedure
 Hold board meeting to fix day, date , time of general meeting .

34 | P a g e
  Obtain statement of account from auditor of company which placed before general meeting .
 Hold GM on decided day, date , time and place .
 Pass special resolution or obtain consent of ¾ in value of share holder and authorise BOD to
make application to ROC for producer status
 File E-form MGT -14 with ROC .
 Company shall file form MSC-1 with ROC along with copy of special resolution , statement
of account , declaration of board of director and fees .
 After ROC satisfies , ROC shall issue certificate in form MSC-2 .
Status Of Dormant Company Can't Be Obtain If –
 Inspection ,inquiry ,investigation carried against company .
 If prosecution has been initiated or pending against Company .
 Outstanding public deposit or default in its payment .
 Outstanding taxes , dues and duties .
 Outstanding loan whether secured or unsecured. However , can obtain NOC from unsecured
creditors on basis of which can obtain status of dormant company .
 No dispute in management of ownership of company and certificate of same should be filed
with form .
 Default payment of workmen’s dues .
 Company is a listed company .
Benefits :-
 Company hold 1 board meeting in half calendrer year where minimum gap should be 90 days
 Not required to prepare cash flow statement ,
 Provision of rotational auditor is not applicable .
 Low compliance cost as few statutory requirements.
 Advantage to promoter who can hold asset or intellectual property . under corporate shield
for future use .
 Can be dormant for consecutive 5 years .
Compliance Required By Dormant Company :-
 ROC maintains the register of Dormant company .
 Shall have minimum number of director i.e. 1in OPC, 2in private and 3 in public company .
 Intimate ROC in prescribe manner if change in BOD .
 Have to file return of dormant company MSC-3 within 30 days from end of FY .
 Company hold 1 board meeting in half calendar year where minimum gap should be 90 days .
 Not required to prepare cash flow statement ,
 Provision of rotational auditor is not applicable
Dormant To Active Company :-
 If company contravene with any provision of sec 455 then shall apply for active status within
7 days ,if fails then ROC may strike of name of company .
 Company shall give application in form MSC- 4 to become active from dormant prescribe
fees ,
 Also have to see requirement that annual return in MSC -3 have been filed by company .
 ROC if satisfy may issue certificate of active company in form MSC-5 .

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36 | P a g e
 striking off and restoration of name of
company and LLP .
Introduction :-
 Provision of striking off provide a opportunity for a non-working company to get
there name struck off from record of ROC .
 Due to striking off , status of company changed to dissolved and after dissolution /
liquidation, company ceases to exist .

Striking Of By ROC By Suo Moto :-

ROC can remove name of company under following cases .
 Company fails to commence business within 1 year of its formation .
 If company not carrying any business for period of 2 years immediately preceding FY and
not applied for status of dormant company .
 Subscribers of MOA have not paid subscription which they under take to pay at the time of
incorporation and declaration to this effect has not filed to ROC within 180 days from
incorporation u/s 10 A.
 After physical verification ROC found that company is not carrying any business .
Procedure :-
 Services of notice – ROC may notice in form STK-1 to company and all director regarding
its intention to remove the name of company from such removal .
 Reply to notice – company and all director required to send representation explaining the
why name company should not removed .
This representation should be given in within period of 30days from service of notice .
 Consideration of representation :- ROC may consider representation and if not satisfy ,
continuous with process of striking of .
 Publication of notice – to inform general public ROC publish notice in form no stk-5 at
- Official website .
- Official gazette .
- Also make publication in form STK-5A in newspaper one in English and one in
vernacular .
Public can give objection if any within 30 days .
 Intimation to regulatory authorities – ROC may intimate tax authorities central excise
authority about strike off and objection within 30 days .
 Striking off name of company – after expiry of 30 days if no objection is received by public
or authority , ROC can strike off name of company .
 Provision for realisation of amount due :- company should satisfy ROC that it has made
sufficient provisions to discharge its liabilities and obligation .
 Notice of dissolution – ROC may publish in official gazette in form no STK -7 and on
website of MCA regarding dissolution of company .

Strick off by company:-

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Following Company Can’t Apply For Striking Off –
 Listed company .
 Delisted company due to non-compliance of listing regulations .
 Sec 8 company .
 Vanishing company ( listed company who not filed return to ROC and stock exchange for
2yers , not carrying business at RO and directors are not traceable .)
 Company whose charges are pending .
 Company whose compounding is pending .
 Company whose deposit outstanding / default in payment .
 Company whose any prosecution is pending
 Company against whose any enquiry , investigation is pending.
Ground For Application .
 Fail to commence business within 1 year of incorporation .
 Company not carrying operation in 2years and applied for status of dormant company .
Situation in which company can’t apply for striking off –
If company involved in previous 3 month for application in following working then can’t apply for
striking off
 Chang its name .
 Change its registered office from one state to another state .
 Dispose of property for gain of its normal course of business .
 Engaged in any activity other than necessary for striking off ,
 Application to tribunal for compromise or arrangement not been concluded finally .
 Being wound whether voluntary or by tribunal .
Procedure :-
 Conduct board meeting and pass board resolution to apply to ROC for strike off ,also decide
venue of EGM .
 Company will set- off / pay all liabilities .
 Director sign and execute-
 Indemnity Bond in STK-3 and
 Affidavit in STK -4 .
 Statement of account certified by CA .
 Hold GM and pass SR .
 File e-form MGT -14 within 30 days to ROC .
 Apply to ROC in form STK -2 , along with fees 10000
Attachment
 NOC from concern authorities .
 STK -3 and STK -4 .
 Copy of special resolution .
 State of pending litigation if any .
 ROC publish notice in form STK-6.
 Intimation to tax authority , central excise authority and objection if any within 30 days .

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  On expiry of 30 days , if no objection then pass order of strike off and remove name of
company .
 Make and satisfy that company made provision for realisation of amount due .
 Publication of strike off in STK -7 at
 Official gazette and .
 Website of MCA .
Restoration of company By NCLT :-
By company through director By ROC By member / creditor/
workman
 Within 3 years .  Within 3 years  20 years .
 Restoration if only NCLT  If ROC feel’s company  Restoration if condition
satisfies that ROC strike obtain strike off u/s 248 on satisfies .
off name in not justified basis of false information .  Carrying business at time
way .  NCLT passes if it is strike off .
 Opportunity of being heard justified t to pass  It is justified to do that
to ROC ,company,
BOARD OF director.

Strike off name of LLP :-

 Sec 75 deals with strike of LLP act ,2008 .
Strike off by ROC sue motto :-
 If ROC ha reasonable reason to believe that LLP is not carrying out any business activity in
period of 2 years or more , can remove name from register of LLP .
Procedure :-
 Service of notice – to all partners and LLP regarding intention of removal of name along with
reason .

 Replay on notice – LLP and partners have one month from notice to reply and give reason
why LLP should not be removed from list.

 Consideration of notice – ROC may consider replay if not satisfied , continue with the
process of striking off .

 Publication of notice – publish notice on website of MCA for general public , they can rise
objection within 1 month.

 Striking off name – after expiry of 1month if no objection is raised then , ROC may remove
the name of LLP from register of LLP .

 Provision for realisation of amount due – ROC satisfies that LLP has made sufficient
provision to satisfies its liability and obligation .

 Notice of dissolution of LLP – publish on official gazette .

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Strike off by LLP -
When LLP is not carrying on any business activity for period of 1 year or more can appeal for
striking off .
Procedure :-
 Partners meeting and consent of all the partners .
 File pending annual filling including form 8 and 11 .
 Obtain approval from authority if LLP is governed by special law .
 Affidavit by designated partners – stating .
 Not commenced of business .
 No liability is pending .
 Indemnify any liability if arise after striking off .
 Application for striking off to ROC in form 24 .
 Attachment of form 24
 Financial details containing nil assets and nil liability .
 Latest income tax return .
 Affidavit by designated partner .
 Agreement of LLP
 Details of LLP and reason for closure .
 Details of executer and sign by all partners.
 Publish application on website of MCA to general public and authorise to arise objection if
any within 1 month .
 Strike off the name if no objection within one month .
 LLP should satisfied ROC that made provision for realise liabilities and obligation .
 Publish on official gazette about dissolution .
Restoration of LLP :-
Applicability

LLP partner creditors

 Within 5 years from publication in official gazette of removal of name .

 If they satisfies NCLT that ,
 LLP was carrying business at the time of striking off name
 Other justification and equitable reason ,
NCLT may restore LLP .

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 Corporate insolvency resolution process ,
liquidation and winding up an overview .
Introduction
 CIRP is apply to matters where minimum amount of default is 100000 Ru .
 Central government may specify any higher amount of value which shall not be more than
1Cr .
 Resolution process may be initiated by financial operation creditors or corporate debtors itself
Resolution process :-
1. Financial creditor itself or jointly file application to adjudicating authority in case of default .
2. Along with application furnish following things
 Records of default .
 Name of interim resolution professional .
 Any other information as may be specified .
3. Adjudicating authority within 14days ascertain the existence of default .
4. Where adjudicating authority satisfies that –
 Default has occurred and ,
 Application is complete and ,
 No disciplinary proceeding pending against proposed resolution professional .
Then admit the application OR,
 Default has not occurred or ,
 Application is not complete or ,
 Disciplinary proceeding pending against proposed
Then reject the application .
5. CIRP commence from the date of admission of application .
6. Adjudicating authority within 7 days communicate about admission or rejection to functional
creditor & corporate debtor .
7. (i) operational creditors deliver demand notice of defaulted amount along with copy of
invoice demanding payment to corporate debtors .
(ii) Corporate debtors , within 10 days from notice either ,
 Repayment of unpaid operating debt by electronic transfer or issue cheque .or ,
 In case of existing dispute , send copy of pending suit for such notice .
 CIRP should be completed within a period of 180 day .
 However , by passing resolution at meeting of committee of creditors and vote at 66% may
give extension for period of 180 days .
 Extension is provided only once and period for not exceeding 90 days .
Moratorium :-
 Adjudicating Authority passes order declaring Moratorium for prohibiting all the following
activities :

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  Institution of suit, continuation of pending suit or proceeding against corporate debtor
even execution of judgement, decree or order in any Court, tribunal ,arbitration or other
authority.
 Corporate debtor cannot encumber, alienate or disposed off any of it's legal right or
beneficial interest.
 Any action of foreclosure, recovery or enforce any security interest created by corporate
debtor including action under SARFAESI.
 Recovery of any property by owner or lessor where property is in possession of
corporate debtor. Order shall be in effect from commencement of CIRP till completion
of CIRP.

Interim Resolution Professional (IRP) :-

 IRP takes over the management of corporate debtor and undertake day to day affairs if
corporate debtor.
 He may appoint professionals and consultants.
 Primary duties :
 announcement about CIRP of corporate debtor,
 invite claims from creditors,
 valuation of corporate debtor.
 On receipt of claims from creditors prepare list of accepted claims.
 Within 30 days of CIRP, IRP shall constitute committee of creditors (COC).
 Also prepare information memorandum of corporate debtor.

Resolution Professional (RP) :-

 RP is new category of professionals who is registered with Insolvency Bankruptcy Board Of
India.
 Only registered as RP can act as RP.
 CS can also be RP subject to meeting criteria.

COC :- ( Committee Of Creditors )

 COC at its first meeting appoint RP.
 It either confirm appointment of IRP as RP or appoint another RP.
 Decisions of COC taken by 66% of voting majority.
 Creditors got voting rights to proportion of outstanding debt.
 RP takeover management of corporate from IRP and act under control of COC.

Resolution Plan :-
 Object behind CIRP is to get a chance to corporate debtor to revive itself from insolvency.
 Corporate debtor is in insolvency due to various reasons such as market condition, business
cycle or default of promoters etc.
 To revive corporate debtor from insolvency, RP invites proposals for revival.

42 | P a g e
  These resolution plans are put before COC, they approve most suitable plan.
 Such plan is submitted to the tribunal for approval.
 Once approval obtain, corporate debtor outside of CIRP.
 Plan includes pay off existing liabilities in full or part and restart the operation of corporate
debtor.
 Defaulting promoter is not able to takeover debt free or at lower cost by way of resolution
plan.

Liquidation Process :-
 Declaration by directors that company is not wound up to defraud any person.
 Insolvency professional is appointed as liquidator.
 Company maintained and preserve all it's registers.
 Liquidator prepares various reports and sends to company and Insolvency Bankrupsy Board of
India.
 Accept claims from creditors by liquidator.
 Complete liquidation Process within 12 months.
1. When company does not receive resolution plan or reject the resolution plan :
 pass order of liquidation and make public announcement.
 Order sent to authority which corporate debtor is registered.
2. Liquidation when RP intimates adjudicating authority about decision of COC of liquidation
before approval of resolution plan.
3. If adjudicating authority approve resolution plan but Corporate debtor contravene the same,
any person prejudicially affected due to such may apply to adjudicating authority for
liquidation.
4. If adjudicating authority approves resolution plan but contravenes by corporate debtor,
adjudicating authority itself pass order of liquidation.
5. One liquidation started, no suit or other proceeding instituted by or against corporate debtor.

Voluntary Liquidation (VL) :-

Corporate person who have not committed any default may initiate VL.
 Declaration by BOD that company is able to pay it's sent and not wound up to defraud any
person.
 Conduct meeting within 4 weeks from declaration to obtain special resolution for approval of
VL and appointment of liquidator. If company owns debt obtain approval from creditors
with 66% of majority.
 Within 5 days from approval make public announcement for inviting claims of stakeholders.
 Within 7 days from approval, intimate ROC.
 Within 45 days from approval, prepare preliminary report by liquidator about capital
structure, assets and liabilities of company and submit to the company.
 Verification of claims within 30 days from last date of receipt of claims and prepare list
within 45 days.
 Open bank account and deposit all money due to corporate debtor.
 Sale of assets, realise uncalled/unpaid capital amount.

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  Distribute within 6 months among stakeholders. 10) Submit final report by liquidator to
company,ROC and NCLT.
 Submit order of NCLT with ROC within 14 days.

Waterfall Arrangement :-
Satisfaction of amount due, according to priorities at the time of liquidation.
 CIRP cost and liquidation cost in full.
 Workmen's dues in preceding 12 months. Debt of secured creditors who relinquish security.
 Employees other than workmen dues in preceding 12 months.
 Unsecured creditors
 Amount due to CG/SG in preceding 2 years. Amount due to secured creditors who enforce
security.
 Remaining debts and dues.
 Preference shareholders
 Equity shareholders or partners.

Winding Up :-
 Process of closing down legal existence of Company/LLP.
 In which assets are realized, liability paid off and surplus distributed amongst contributors.
 Once winding up completed, entity dissolves.
 During winding up management of the company is in hands if liquidator.

Winding up (WU) :-
 It is process. WU is first stage in ending legal existence of company.
 During winding up creditors can raise claims.
 WU process carry out by liquidator.

Dissolution :-
 It is an end result. Dissolution is the last stage on which company ceases to exist.
 Not possible after dissolution.
 Dissolution only by order of adjudicating authority.

Note -Unregistered company cannot wound up voluntarily, thus, unregistered company can only be
compulsorily wound up by tribunal.
Winding Up by Tribunal :-
 Following cases, company may wound up by tribunal :
 application by company by passing special resolution.
 Application made by ROC or other person authorized by CG if it thinks fraudulent
conduct in company.
 If affairs of company against sovereignty and integrity of India, morality, public order
and decency.
 Company's default in filing AOC- 4 and MGT- 7 in 5 consecutive years.

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  Just and equitable ground.

Petition may be filed by -

 company,
 contributory/ contributors,
 company and contributory both,
 ROC,
 Authorized person appointed by CG,
 CG/SG if they are contributories.

Tribunal may pass within 90 days order :

 Dismiss it with or without costs.
 Appoint provisional liquidator.
 Pass order of winding up.
 Make any interim order.
 Any other order as it thinks fit.

Liquidator within 60 days :- Report to NCLT

 Details of assets and it's valuation.
 Amount of capital called up, paid up, subscribed and issued capital.
 Existing and contingent liabilities. Guarantees given by company.
 Intellectual property rights and framework owned by Company.
 List of contributories.
 List of holding and subsidiaries.

After it NCLT may pass the order of dissolution.

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 Formation of LLP
Features :-
 Body Corporate, separate legal entity , perpetual succession .
 Govern by LLP act 2008 .
 Use word LLP at end of its name .
 Liability of its partner is limited up to contribution ,in case of default / fraud – unlimited
 Must have two designated partners , one should be resident .
 LLP is result of agreement .
 Firm , private , unlisted public company – covert into LLP .
 Like company , LLP can wound by voluntary or tribunal .
Advantage :-
 Easy to form and wind-up .
 Flexible agreement .
 Taxation and less legal compliances .
 Limited liability and perpetual succession .
 management of company .
 easy transferability .
 no compulsory audit .
disadvantage :-
 Restricts access in capital market.
 Lack of secrecy due to dissolution requirement .
 Difficulties in formation of LLP – can’t form by single partner.
 Limitation in external commercial borrowings .
 Offence and penalties .
 Exit option not easy for LLP in case of default .
Procedure To Registration Of LLP :-
1. Obtain DSC .
2. DIN must for designated partners .
3. File ‘RUNLLP’- if 2 DINs are available , can apply for RUNLLP for name availability .
Name will be reserved for 90 days .

4. File from ‘FiLLiP – ( form for incorporation of LLP )

File this form to along with details relating to register office of LLP, principle business and
details of partners form must be digitally signed by designated partner and CA/CS/CMA .

( LLP 2nd amendment rules , 2018 _ replace form -1 with RUNLLP & Form - 2 with
FILLIP)

5. COI of LLP- within maximum 14 days of filing document .it is conclusive evidence of
formation of LLP . after incorporation , LLP gets LLPIN .

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 6. Drafting and filing LLP agreement –
 Draft LLP agreement .
 File same within 30 days of incorporation .
 In form 3
LLP Agreement :-
 LLP agreement means written agreement between partners of LLP or between LLP and its
partners which determines mutual rights and duties of partners and rights duties in relation to
that LLP .
 LLP agreement is like MOA and AOA which define scope and extent of LLP operations .
 Such agreement must be signed by all partners and by 2 witness , provide copy to each
partners .
Essential Clause
 Name of LLP
 Register office of LLP .
 Principle business of LLP .
 Name of designated partner .
 Rights and duties of designated partners .
 Amount of capital contribution .
 PSR
 Remuneration, interest on capital .
 Admission , retirement of partners .
 Bank a/c , BOA and annual compliance .
 Meeting and other provision .
Alteration Of LLP Agreement :-
 Alteration can be done by passing resolution .
 Then file form-3 within 30 days of to ROC form alteration .
 Attachment –
 Initial LLP agreement .
 Alteration of LLP agreement .
 Optional attachment if any .
 However, if LLP agreement is changing due to change in partner , designated partner then
file form 4 along with form 3 .
 Attachment –
 Concern of partner .
 Proof of change of name .
 If partner is company , resolution of company to become partner .
 Name of nominee appointed by partner .
Change Of Name –
 Reason business related , order of central government .
 Application to MCA .
 Maximum 6 names are allowed .
 Attachment –

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  Consent of all partner .
 Copy of LLP agreement .
 Copy of COI
 After approval , file form -5 with roc within 30 days .
 ROC approve and provide certification .
 Necessary changes in agreement .
Shifting Register Office –
Same state / same ROC / different ROC One state to another
 Consent of all partner .  Consent of all partner .
 Form 15  Form 15
 No public notice  Notice at least 21 days in vernacular and
 File within 30 days English .
 File within 30 days .

Annual Compliances :-
1. Annual return in form- 11 , within 60 days from end of FY i.e. on or before 30th may .

2. Financial statement in form -8 , on or before 30th October .

3. It return – if 44 AB audit applicable – 30 September AY .

- If transfer pricing - 30th November AY .
- Other cases - 31st July AY .
Event Based Compliance –
 Form 4 – change in partners within 30 days .
 Form 3 – change in agreement within 30 days
 Form 5 – change in name within 30 days .
 Form 15 – change in register office within 30 days .

 In case if, annual turnover exceeds 5crore or capital contribution exceeds 50 lacs
Annual returns should be certified by PCS.

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 Difference forms of business organisations
and its registration
Sole Proprietorship :-
 From of business that is owned , managed and controlled by an individual .
 Sole contribution contributor and risk barrier .
 Easiest form of business org. start .
Merits Demerits
 Easy to form .  Unlimited liability .
 Easy to windup  Limited resources .
 No legal requirement  Lack of many expertise .
 Control over the business .  Lack of continuity.
 Sole beneficiary profits .  Sole bearer of risk .

Procedure Of Formation :-
 No need of deed or agreement as only 1 person .
 However, need to register in to following act according to the status and type of business .
 Shops and commercial establishment .
 Register under MSM enterprise dev. Act , 2006 .
 Register as small-scale industry .
 Register under GST .
 Intellectual property laws .
 Law relating to professional taxes .
Partnership :-
 It is relationship with person who agreed to share of profit of business carried on by all or any
one of them acting for all .
 It has minimum 2 partners and maximum 100 .
Features –
 Agreement .
 Unlimited liability ,
 Share in profit and losses .’
 Mutual agency ,
 Registration .
 Restriction on transferability of share .

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Merits
 Easy to formation .
 Easy to windup .
 Pooling of financial resources and management skill .
 Sharing of risk .
 Typing .
Demerits –
 Unlimited liability .
 Dispute .
 Lack of continuity .
 Lack of expansion .
 Difficulty to withdraw from firm .

Types Of Partnership Firm

Partnership
 Partnership at will .
 Particular partnership .
 Partnership for fix duration .
Partners
 Active ,
 Nominal
 Dormant ,
 Partners by holding out .
Partnership deed
It is a written document between the partners and partnership firm
Ingredients –
 Name of firm and partner .
 Duration and type .
 Rights duties and obligation of partners .
 Contribution , PSR .
 Arbitration .
Registration Procedure :-
Registration is optional but unregister firm have following disadvantage .
 Partners cannot file suit in court against firm or other partners.
 Right arising from contract can’t be enforced in any court .
 Firm and partners cant claim setoff .
For registration application must be filed to registrar of firm along with
 Name of partners and firm .
 Type of partnership .

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  Duration if any .
 Principle place of business , etc .
 Every partner must have to verify and sign application .
 Application must be in form 1
 Duly affidavit
 And certified copy of partnership deed .
 Registrar of firm satisfies and provide COR
Hindu Undivided Family :-
Features Benefits
- Govern by Hindu law . - easy to form
- Management . - per. Existence .
- Membership by birth . - natural love between member
- Liability - freedom of selection of business .
- Minor also a part . - credit facility
- Dissolution - secrecy and quick decision .
Registration of Hindu Undivided Family (HUF) :-
 Deed is prepared on stamp paper declaring the formation of HUF.
 Many details are included in deed such as :
 name of Karta, Coparcener.
 Source of fund,etc.
 Creating HUF deed is not mandatory, however it is beneficial to create a deed.
 Key issues to be noted in preparation of HUF deed :
 It is a written document on stamp paper.
 Eldest male member of HUF becomes Karta of HUF and other members are co-
parceners.
 Name of HUF usually is on name of Karta followed by word HUF, eg : Vaibhav Balaji
HUF.
 Source of capital is written in HUF deed.
 Declaration is given by each member that 'Karta has authority of accounts vested in his
hands and he has right to govern all transactions of HUF.
 Rubber stamp of HUF is also prepared.
 It is recommended that deed should be notarized –
 register the deed, obtain PAN,
 open current bank account,
 bank account should be open in the name of HUF.
 HUF has certain tax advantages such as gift over 50000 a year by HUF will be
taxable.
 There can be use of capital asset to establish' corpus of HUF.
 HUF is a separate legal entity for purpose of income tax return, same slabs are applicable to
HUF as to individual assesses.
 You cannot transfer your own money or assets into HUF.

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  You can transfer ancestral property or money receipt on sale of ancestral property into HUF.
HUF can invest sums into share, mutual funds,etc.

Multi- State Co-Operative Society :-

 Multi- state co-operative society (MSCS ) act 2002 replaced earlier act 1984 .
 It can be formal either primary ( member are individual and institutional ) or federal
co-operative society ( only institutional member ).
 Object is to serve member in more than one state .
 It is body corporate with limited lability .
 Certain important point .
 Invest in recognised securities only
 Contribution to political parties on loan to non- member is prohibited .
 Audit is compulsory .
 Central government may direct special audit also .
Benefits –
 Provide loans at reasonable interest to poor .
 Function as per India i.e. can open branches in different districts and states .
 MSCS have low compliance cost .
 Member are owner and customer of society at same time , creates sense of belongingness .

Formation –
Application in form no 1 filed with central registrar of co-operative societies , new Delhi with
enclosure ;
 Certificate from the bank stating credit balance .
 4 copies of bye law .
 Area of operation .
 List of minimum 50 member from each state . along with copy of ID proof .
 If member of co-operative society signed by authorise representative of minimum 5 such
society register in different states .
 Copy of resolution passed by propose society and resolution passed by propose specify name
of and address of person for further correspondence .
 Contact number and e-mail address of chief promoter .

Formation registration of NGO’S

Sec 8 company .
If central government satisfies that :_
1. Object of company is to promote arts , commerce , science ,environment , sports
education , charitable and religious purpose or such other object .

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 2. Intend to apply its profit for promotion of its object .
3. Intend to prohibit the payment of division to its members .
Central may issue licence under this section .
 Company cant alter MOA without approval of central government .
 Company enjoys all the privilege and obligation of public company .
 Need not to use word LIMITED or Pvt Ltd at end of name .
 Can convert into any other kind of company .
 Central government can revoke licence if company fails to fulfil requirements,
 After revocation , if it is in public interest may issue order of winding up .
 After winding up any amount remain after satisfaction of creditors it will be transfer to
company having same object .
 After revocation , if it in public interest may order company to amalgamate with any other
company having same object .
 Penalty – company – minimum 10 lacs , maximum 1cr .
- Officer – jail extend to 3years . fine minimum 25000 and maximum up to 25 lacs
Features :-
 No minimum paid up capital requirement .
 OPC cant form sec 8 company .
 Exempt from stamp duty .
Exemption Available To Sec 8 Company :-
1. No need to appoint company secretary .
2. No need to appoint independent director .
3. No need to appoint more than 2 directors ,
4. No need to held first board meeting in 30 days of incorporation .
5. Board meeting once in half calendar year .
6. Can hold director ship in more than 20 companies .
7. Sec 101 , no need of 21 clear notice only 14 days’ notice ids required .
8. Dispatch of financial statement and other document in 14 days prior general meeting .
9. Sec 118 , no need to maintain and prepare minutes .
10. Sec 178 ,no need to form NRC and SRC .
Register Of Section 8 Company – Two Steps :-
1) Obtaining licence
Step 1 –
 Application in form RUN for name availability .
 Name should suggest object of company .
 Word like foundation , association , chamber can be used .
 No need to use ‘ltd’ or ‘Pvt Ltd’ at end of name .
 Name should not be beyond ambit of permission .
Step 2-
 Application in form INC -12 for obtaining licence

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 Attachments –
 INC-13 – draft MOA &AOA .
 INC-14- declaration by professional i.e. CA/CS/CMA .
 INC -15 – declaration by person who applying licence .
 Estimated income and expenses in next 3 years .
After obtaining licence one can apply in SPICE for incorporation .
2) Application for incorporation :-
Step 1-Application in form of SPICE , attachments .
 INC – 8 – declaration by professional .
 INC -9- declaration by each subscriber of MOA .
 INC - 10 – signature .
 MOA& AOA in e-form INC -33 and INC – 34 respectively.
 PAN card .
 Verification of registered office by filling from INC -22 .
Step 2 – while verifying registered office attach following things .
 Documents of title .
 Lease / rental agreement .
 Authorisation from the owner .
 Proof of evidence like telephone, gas , electricity etc.
Step 3- appointment of director :- from DIR 12
 Concept of director DIB .
 Affidavit by director
Step4 – certification of incorporation .
Trust :-
 Defined u/s 3 of Indian trust act , 1882 –‘ transfer of property by one person ( settlor ) to
another person (trustee) who manage that property for benefit of someone else (beneficiary )’
however , settlor must have legal title of property transferred .
Trust of two types :-
1. Private trust :-
 Private trust is regulated by Indian trust act 1882 .
 Trust whose beneficiaries are narrow and specific group such as employees of company , it is
private trust .
 Beneficiaries of private trust are definite and ascertained individuals .
 It has limited narrow domain .
 Tax exemption are not available to private trust .

2. Public trust :-
 Public trust are classified as charitable and religious .

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  It is govern and regulated by charitable and religious act 1920 , religious endowment act ,
charitable endowment act , etc .
 If beneficiaries make up large or substantial body of public it is a public trust .
 It enjoys tax exemption .
 in public trust interest is vested in an uncertain & fluctuating body.
 public trust have wider & stronger domain.
Trust Can Create Be Created By –
 Every person competent to contract .
 Company .
 AOP , trust by women ,trust by minor with permission of principle civil court of original
jurisdiction .
 HUF .
Exemption Available To Trust :-
 Exemption are available to trust primary govern by Income Tax act 1961.
1. Section 10 of IT ACT 1961 – total exemption for certain type of trust formed for purpose of
education , sport , research , hospital .etc.

2. Section 11 of IT act 1961 – income , profit or gain obtain by trust establish wholly for charitable
purpose are not included .

3. Section 12 of IT act 1961 – income excluded from taxable income .

 Income kept aside to extent of 25% of total income .
 Voluntary contribution toward corpus of trust.
 Charitable trust created for benefit of socially backword casts like ST , SC, woman children .
Formation Of Trust :-
1. Creation of trust deed –
Trust deed not required use of technical words as word which explains intention are sufficient.
Trust deed includes ,
 Name of trust .
 Name of settlor .
 Name of trustee .
 Name of beneficiary or it shall be public at large .
 Rights duties and obligation of trustees .
 Rights and duties of beneficiary .
 Intention of trust .

2. Obtain Signature Of Trustee , Settlor And Witness .

3. Rights of trust deed on stamp .
4. Register original deed with sub-registrar office .
5. At time of registration settlor and witness personally present .
6. Trust can apply for PAN by opening bank a/c
Societies :-

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According to sec 20of societies registration act , 1860 , society can formed for following purpose .
 Charitable society .
 Military orphan fund .
 Societies for promotion of science , literature ,fine art , diffusion of useful knowledge.
 Diffusion of political education .
 Foundation or maintenance of reading room for member or public .
 Public museums , galleries , work of art , design , etc .
Advantage –
 Easy process of formation and registration of societies .
 Record keeping requirement are minimum .
 Compliance cost is low .
 Least possibility of interference by regulator .
 Exemption from tax .
Disadvantage –
 Tax evasion only to extent a accepted by tax department .
 Not attractive for commercial investors .
 Lack of professionalism and managerial practice .
 Not allow to collect saving from there clients .
Consequences Of Registration And Non-Registration .:-
 Registered society obtain special legal status . such status is essential to .
 Obtain registration under IT Act .
 Hold property legally in its name .
 Provide recognition to world at large .
 Open bank a/c .
 Societies restricts its function mention in MOA .
 Can hold property and can sue and be sued on its own name .
 However, unregister society has no existence in the eyes of law .
 So, can’t claim any right to hold property and cannot sue and can be sued .
 Unregister society can’t claim benefit under IT act .
Registration of societies :-
 Any 7nor more member can register society.
 Resident individuals , companies , foreigners , registered societies can form society .
 Registration either can be done at state or district level .
 Document needed to submit to registration –
 Letter requesting registration , signed by founding members .
 Copy of MOA .
 Copy of rules and regulations.
 Name and address of all members of society.
 Minutes of meeting .
 Declaration by president of society .
 Sworn affidavit from president / secretary declaring relation ship between subscribers .

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  Register office and NOC from landlord .

Dissolution Of Society:-
 Minimum 60% of members express desire to dissolve society.
 If CG /SG is member of society , compulsory obtain consent before dissolution
 Reasons
o In case of contravention
o Ceased to function for more than 3 years
o Number of member below 7
o Unable to pay its debt or liabilities
o If it is proper to dissolve it.

Doctrine of cypres :- ( relating to trust )

 Cypres means as near to .
 When the object of trust or intention behind its formation become unlawful ,impracticable or
impossible then in such case court may order to continue with an object of which is as near to
the original one .
 This power of court is known as doctrine of cypres .
 This doctrine applies to charitable object which are general and not regular and not specific

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 Start-up and its registration
Start-Up Policy :-
 Campain was 1st announced PM Narandra Modi on 15th august . 2015 from red fort .
 Entity shall be consider as start-up –
 Up to 5 years from date of incorporation .
 If its turnover in any FY not exceed 25 Cr .
 Its working toward innovation development ,deployment or commercialisation of new
product , process or services driven by technology or intellectual property .
 However, entity formed by splitting -up or reconstruction of business already in existence is
not consider as ‘start-up’.
 Further , in order to obtain tax benefits , startup has to obtain certificate from inter-ministerial
board of certification , consisting of
 Joint secretory , department of industrial policy and promotion .
 Representativeof department of science and technology .
 Representative of department of biotechnology.
 Entity will ceases to be start-up in 1st 5 years if its turnover exceeds 25 Cr.
 Entity here means company, private company . register partnership firm .
Process Of Registration Of Start-Ups :-
Process shall be through mobile application .along with such application, following documents need
to be submitted .
 Recommendation in form of specific by department of industrial policy and promotion from
incubator established in a post-graduate collage in India .
 Letter of support by incubator which is funded from GOI or any SG to promote
incorporation.
 Recommendation from any incubator recognized by government of India GOI .
 Letter of funding not loss than 20% of equity by any incubation , angel fund , angel
networking , etc duly register with SEBI .
 Letter of funding by GOI for any specified scheme to promote innovation .
 Patent filed and published for promotion of business .

Indian States With Start-Up Policies ( Work Of GOI )

1. West Bengal – launched website called staurtupbengal.in to accumulate all stakeholder on

single platform and communication between start-up and innovation .

2. Odisha – come up with 10years plan with object of making Odisha top 3 investment
destination in India .

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 3. Rajasthan – setup around 50 incubators for allocated funding , to bring funding around 500
Cr. In next 5 years .

4. Karnataka – come up with plane of 5 years with focus to rise around 2000 start-up focused
just on technology and 600 start-ups focused on product .

5. Gujrat – come up with three fold strategy includes innovation come up with idea , institution
which facilities and government which approve and finance innovation .

6. Utter Pradesh – working to get more IT investment and promoting upcoming start-ups.

7. Jharkhand – recent entered in start-ups promotion policy .

Exemption For Start-Ups :-
(STREE Tune Foda ,Churaya and Rulaya ,)
 Simple process registration of start-ups through mobile application .
 Tax holiday i.e. not income tax for 3 years ,
 Reduction on cost of registration of patents up to 80% .
 Exemption to investor from capital gain liability if invested in start-ups .
 Easy exit opportunity within 90 days by exit window .
 Tender (government tender) can applied by start-ups .
 Fund availability as government set -up 10,000 Cr. Rupees fund to provide funds to start-ups
 Compliance - Less legal compliance .
 Research and development facility .
Tax Exemption For Start-Ups :-
 u/s 80IAC , start-ups get 100% rebate on profits for period of 3years .
 start-ups have minimum alternate tax at 18.5% .
 exemption to invest up to 50 lacs against capital gain .
 India holds 50% of equity , company invest for baying assets on or before due date of return
filling .
 domestic manufacturing company , established on or after 1st march 2016 ,will be taxed at
25% on fulfilling certain condition .
 can carry forward losses if 51% of shares holding or voting rights remain unchanged .
Exemption Of Start-Ups Under Company Act 2013
 no need to prepare cash flow statement .
 annual return may be signed by CS / director .
 hold board meeting ones in half year and minimum gap should be 90 days .
 u/s 73 not apply to start-ups to accept deposit .
 limit of acceptance of deposits is not applicable to start- up ( no limits ).
 Limits of issue sweat equity shares increased from 25% to 50% .
 Can issue ESOP to promoters and employees .
Important Points For Start-Ups :-

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 1. Choose right and legal structure for start-ups – crucial decision , for considering business
operations , tax , legal completion , etc .
2. Registration and business licences – after incorporation , necessary registration are required
for PAN , TAN , GST Registration , etc
3. Intellectual property protection – IP is very important asset for start-ups so proper
Registration adv. to start-ups for corporative
4. Founder equity split – spilt equity among founder according to their contribution to capital
and role played by each .
5. Founder agreement – it establishes relationship between founders of start-ups , represents
clear understanding between founder and mention roles and responsibilities .
6. Employment contract – enter into employment contract with employee with details of term
and condition with employee .
7. ESOP – this opportunity to buy shares at discounted price to attract new talent and retain
existing employee .
8. 3rd party agreement – prior to that agreement , non-disclosure agreement is important ,
agreement must contain that intellectual property is owned by start-ups and 3rd party can’t
claim rights on that .
9. Investment structuring – challenging and time-consuming task to rise capital for working
capital required and growth .
10. Compliance management – there are multiple laws are applicable along with mandatory
annual compliance so compliance management is extremely important .
Financing options :-
A) Seed Funding:-

 Funding done at initial stage is called seed funding and capital is known as seed capital .
 This Capital is raised from founders , family and friends .
 It is required for product development , market research and other initial compliances .
 It is very risky investment .
 Paperwork involved is very less ,
 Less legal fees required .
 Interest rate is also very low .

1. Equity Financing –
Start-ups are usually financed by way of venture capital / private equity / angel investor .

a. Venture capitalist / private equity .

This investment includes compulsory convertible preference share and company convertible
debenture .
b. Angle investor –
 It is group of professional willing to fund venture returns of equity stake .
 Restriction angle for invest in Indian company –
i) investee company within 3 years of incorporation , not listed on stock exchange and
turnover is less than 25 Cr.
ii) deal size is required in between 50 lacs to 5 Cr .
Series Funding –

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  After seed funding , or angel funding round , series funding round will start like series A to Z.
 Capital raised in series funding is intended to capitalised company for 6 months to 2years to
develop its product .
( SLR ne offer diya ke McD Pe Pepsi Free hai)
Things to know when rising ‘ series A round’
 Start early – be realistic and start process at least 7 to 8 months prior .
 Leverage your network – benefit of network .
 Be series A Ready – get familiar to know what venture fund looks to ascertain .
 Know standard Market practice – up to date .
 Engage a CS-
 Get Deal term right .
 Practice your pitch .
 Paper work in place .
 Create Fundraised momentum .

2. Debt Financing :-
a. Loans from bank and NBFCs –
Fund available for investor in asset and for expansion unlike venture capital, private fund no
share in ownership fixed rate of interest and required collateral documents –
 Application for loan by borrower .
 Sanction letter by bank .
 Agreement of loan .
 Document relating to collection i.e. hypoagree , pledge
b. External commercial borrowing :-
Type of rising finance by way of loan from non-resident lender . ECB accessed under tow rote –
automatic route and approval route .
c. CGTMSE – credit guarantee trust for micro and small enterprise .
 Launched by ministry of MSME , GOI to encourage entrepreneurs .
 Providing fiancé to both new and existing enterprise up to 1 Cr. Without collateral security.
From any commercial bank .
d. Unconventional Modes Of Finance Options –
I) crowd funding –
 Recent phenomena practice to raised seed funding through small amount collected from large
number of people .
 Usually through the internet – various company are also become specialised in crowd
funding.
 Enterprise can’t get money for his venture by showcasing his idea before large group of
people and trying to convince people to invest .
 SEBI in 2014 , prepares framework to allow start-ups and SME to rise early stage capital
through crowd funding .
II) incubators –
 These sets -ups procedure form seed funding stage , helps entrepreneurs to develops business
idea , providing resources and services in exchange of an equity stake ranging from 2 to 10%.

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  Incubators officers office space , administrative support , legal compliance , management
training, mentoring and excess to industrial experts . it also makes available funding through
angel investors or Venture capitalist.
 These are usually government supported institutes like IIM or IIT’s . technical institutes , etc .
 Incubation period can be 2-3 years .
MUDRA Banks :-
Micro units development and refinancing agency bank .
 It is public sector financials institution in India.
 It provides loan at low rate of interest to MFI's and NBFC’S who further provide credit on
MSMEs .
 It launched by PM NarendraModi as on 8th April ,2015 .
 These banks classify their client into 3 categories and maximum allowed loan is depend upon
data .
 Shishu – loan up to 50000.
 Kishor -loan up to 5 lacs .
 Tarun – loan up to 10 lacs .
 Eligible borrower under MUDRA bank are –
 Small manufacturing unit .
 Fruit and vegetable venders .
 Shopkeepers .
 Artisans .
 Basic criteria of loan are 18 years old .
 Loan available only for business and commercial purpose however one can purchase vehicle
used for business .
Procedure For Loan –
 Select category i.e. shishu, kishor , tarun .
 Application for loan along with ,
 Proof of identity .
 Proof of residence .
 Recent photograph .
 Machinery to be purchased and price of machinery .
 Address of business , enterprise
.
Mudra card –
After loan has been sanctioned under MUDRA yojana candidate get MUDRA card ,
like credit card can be used to buy business raw material etc . limit up to 10% of
business loan .( max 10000).

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 Joint venture collaboration and special
purpose vehicles
Joint ventures :-
 Joint ventures is commercial enterprise undertaking jointly by two or more parties which
otherwise retain their distinct identities .
 Joint venture is generally created for single activity or project and have limited time span .
 Joint venture can be defined as , an enterprise in which 2 or more investor share ownership ,
and controlled property rights and operation .
 Joint venture referred as ‘JV’ formed either by individuals , business entities , partnership or
combination there of .
 Contribution to joint venture may be in form of money ,services physical assets or intellectual
property , or combination of all .
Advantage :-
1. Risk sharing .
2. Economies of scale – if involve high fixed cost investment , can pool resources and archive
critical mass.
3. Market access – new distribution channels , identifying new customer base, etc becomes easy .
4. Exploring global market – easy to enter into global market by creating joint venture with foreign
company , otherwise difficult due to lack of experience and local barriers .
5. Easy acquisition of another entity – timing up with joint venture can attractive option to acquire
any company .
6. Cost efficient .
7. Flexible nature .
Disadvantage :-
1. Restricted flexibility where full concentration is required for joint venture project –
participant need to focus on joint venture product resulted into individual product suffers .
2. Unequal involvement .
3. Different culture may result in poor co-operation and integration .
4. Extensive research and planning required
5. Lack of clear communication .
6. Partners do not devotes 100% of their attention and so project becomes unreliable .
7. Creation of potential competitors in the forms of one’s own joint venture partner .
Strategies of joint venture –
1. Identification of prospective joint venture partner – prospective partner should be strong and
one partner compliment the other .

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 2. Reliable partners – strong and trustworthy partners create benefits for both joint venture and
partners .
3. Strong joint venture relationship – develop strong relationship to maintain profitability and
long-lasting venture .
4. Equal contribution – in terms of services , capital contribution and performance , skills and so
on .
5. Written agreement – agreement must be always written , which clearly specifies contribution,
rights responsibilities of each other .
6. Limited scope of joint venture – limitation defines at beginning itself , afterword can be
increase .
7. Defines business model – clearly defines nature , management ,structure , role , costs etc of
business which provides base for legal and financial frameworks.
8. Flexibility – try to be flexible .
9. Exit route – clear protocol in beginning itself for exit route .
Formation Of Joint Venture
1. Equity joint venture –
 It is an arrangement where the separate legal entity is created in accordance with agreement
of two or more parties .
 Generally, establish as limited liability company and is distinct from either of parties who
creates it .
 Each of arties become owner of company having equity in the company .
 Joint venture agreement defines function , operation , capital contribution , share of each
party etc.
 Generally , profit and losses of joint venture is distributed among parties according to ratio of
capital contribution .
 Key characteristics of equity joint venture –
 Agreement to create new entity .
 Share ownership .
 Share management jointly .
 Share responsibilities , regarding capital investment and other financing
arrangements.
 Share profit and losses accordingly to agreement .
 All above 5 characteristics . not be fulfilled in every equity joint venture for e.g. one
party may contribute capitals but not take participate in management .

2. Contractual joint venture –

 Contractual joint venture is used where establishment of special legal; entity is not required .
 Practice of Contractual joint venture not share ownership of business entity but enjoys
certain element of control over joint venture .
 Contractual joint venture is created where there is narrow project task limited activity , laws
of host country do not permits ownership of property by foreign citizen .
 Relationship between parties is created by preparing agreement .
 Key characteristics of Contractual joint venture –
 Two or more parties have common intention -of running business venture .
 Each party some inputs in forms of money or material .

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  Both the parties exercise certain degree of control on venture .
 Relation is not transaction to transaction relationship but character of relatively
longer time duration
Restriction Under FDI Policy Of GOI :-
 Generally , any non-resident entity can set up any equity base joint venture in India .
 Certain entities face restriction under FDI policy .

1) Citizen or entity of Pakistan can invest only after approval of GOI . cannot invest in defence ,
space , atomic energy and other prohibited sectors for foreign investors .
2) Citizen or entity of Bangladesh can invest only after approval of GOI .
3) NRI resident in Nepal and Bhutan and citizen of Nepal and Bhutan can invest or repatriation
basis subject to normal banking channel.
4) Foreign individual investor can invest only under portfolio investment scheme which limits
individual investor up to 10 % and aggregate investment 24% of capital .
5) Foreigner venture capital investors can contribute up to 100% of capital of Indian company
subject to regulation of policies .
Investment In Foreign In Different Type Of Entities –
 Company .
 LLP.
 Venture capital fund .
 Trust .
LLP As SPV (Special Purpose Vehicle) :-
 Foreigner company have only option of setting up company for SPV in India before
November 2015 .
 Foreign company not allowed to invest in partnership firm .
 Foreign investor is some LLP firm have allowed now .
 LLP as SPV between Foreign company and Indian company has advantage of being easy to
wind up after purpose is over and liability of both is limited .
 Key advantage .
 Low cost of incorporation .
 Flexibility as governance based on agreement .
 Low annual maintenance .
 Easy to wind up .
 Not compulsory auditing of ac .
 No need to pay DDT so, it is tax efficient .
Documents For Joint Venture :-
1) First stage may be called familiarisation stage .
 In this stage , parties prepare memorandum of understanding .
 MOU defines relationship at initial stage .
 MOU states duties of both parties .
2) Second stage may be called engagement phase –
 Contractual joint venture is created at this stage .

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  Parties putting higher amount of resources .
 This is legally binding contract .
3) 3rd stage is final stage –
 At concluding stage partner have developed higher confidence in each other .
 So, it is equity based joint venture is considered .
Essential Components Of Joint Venture :-
 Description – nature of agreement .
 Parties – full description of parties .
 Recitals – intention of parties .
 Operative part – rules , regulation , investment , activities , power , duties , etc .
 Legal aspect – amendment of joint venture agreement , dispute resolution mechanism , non-
disclosure agreement, identification , termination , etc .
Special Purpose Vehicle –
 Special purpose vehicle is formed for specific purpose .
 Its scope activity is limited to those activity which are required to be performed that special
purpose .
 Its operation closed ones purpose attained .
 Special purpose vehicle is generally subsidiaries company .
 Special purpose vehicle is formed with intention to undertake any purpose or project involves
leverage or speculation. Which help to parent company to undertake risky projects not
affecting whole company .
 In Special purpose vehicle into insolvency , parent company will not affected and vice versa .
 Special purpose vehicle is a entity having distinct identity from its promotors , sponsors ,
shareholders .
Benefits Of Special Purpose Vehicle :- [ LAST ClASS]
L Legal protection – limit liability .
A Asset ownership
S Securitization - Special purpose vehicle allows securitization of assets .
T Tax benefit assets ownership .
Cl Clarity on documentation .
A Accounting – sponsor company need not to show debt raised and losses of Special purpose
vehicle in balance sheet.
S Statutory requirement are minimum .
S Separating risk and capital of parent company .
Purpose Of Special Purpose Vehicle :-
 Parent company to make highly leveraged or speculative investment without endangering
entries company .
 Special purpose vehicle also formed by banks or Financial institutions for securitisation .

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  Indirect acquisition of assets for tax saving .
 Formation of Special purpose vehicle get easy financed and various approvals from state and
central government .

Setting Up Business Outside India And

Issues Relating Thereof
FEMA ,1999 .
 FEMA provides power to RBI in consultation with GOI , decide permissible capital
account transaction and limit of foreign exchange admissible for such transaction.
 Investment of foreign commitment by Indian entities in overseas market joint venture/
wholly own subsidiary .
 Two routes viz : 1] – Automatic Route , 2]- Approval Route ..
 Eligible entities who can make overseas investment .
 Company incorporated under Companies Act or Body Corporate under any act of
parliament .
 LLP , register under LLP Act, 2008 .
 Registered partnership firm under Partnership Act ,1932 .
 Other entity notified by RBI .
Prohibitions :-
 Indian company are prohibited from making investment in foreign entity engaged in real
estate or banking business without prior approval of RBI .
 Exception to real estate – development of township , construction of resident / commercial
premises , roads or bridges .
 Overseas entity having direct or indirect equity participation by an Indian party , shall not
offer financial product linked to Indian rupee .
Automatic route :-
 FC up to USD 1billion come under automatic route .
 Investment by Indian entity up to 400% of network of Indian as per last audited balance sheet
is eligible limit .
 For making investment overseas , Indian party approaches to authorise dealer category-I with
application and document .
 Investment / FC are subject to following condition .
1) Indian party invest in joint venture / wholly subsidiary only against equity participation –
If without equity participation , approval of RBI is needed for such approval AD bank forward
proposal by ensuring that laws of host country does not prohibits such investment .
2) CIBIL records must be clean of Indian entity , in/// should be not in in list of defaulter .
3) All transaction only through 1 branch of AD .
4) In case of full or partial acquisitions of foreign company , where investment exceed USD 5
million ,valuation must be done by MB / CA other authorities of host country .
5) Investment by way of SWAP of shares ,irrespective of amount , valuation must be done by MB/
CA other authorities of host country.

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 6) If investment in joint venture and wholly own subsidiary by partnership firm then partner holds
such shares on behalf of firm .

Method Of Funding –
 Withdrawal of foreign currency from AD bank .
 Capitalisation of export
 SWAP of shares .
 Proceeds of ECB / FCCB .
 Exchange of ADR / GDR for issue of FCCB .
 Balance held in EEFC account .
 Proceeds from correspondence fund raised through ADR / GDR issue .
General permission granted to person resident in India
1) Out of fund held in REC account .
2) Bonus share existing holding fore . current . shares .
Approval rout :-
 Prior approval of RBI is required under AR .
 Application along with necessary document submitted in from ODI to AD category I bank s.
 AD may submit form in online ODI application and transaction number generated by
application mention in letter .
 On approval , effect remittance under advice of RBI so UIN is allotted .
Examples Where Approval Of RBI Is Required –
 Overseas investment where limit of net worthof Indian entity is exceeding .
 Where sole proprietor or unregister partnership firm fulfilling certain criteria wants to invest
in overseas .
 Register trust or societies making investment in overseas by fulfilling certain criteria .
Issues In Choosing Location Outside India ;-
1 geographical –
 Infrastructure facilitates , transportation of goods , material , etc , supply chain management
relating to dispatch of finished produce , availability of labour , services and management .
2 Economic Aspect :-
 Cost of doing business , return from business , laws relating to labour or taxation ease of
doing business etc .
3 Political Aspect :-
 Friendly relationship with country friendly county , relation with nearing countries .
4 social aspect – interaction between commercial entities friendless of nation for relocation KMP .
5 technological aspect :- IP protection , power ,communication , telecom services , etc .

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 Maintenance of register and records.
Introduction :-
 Every company incorporated under company act 2013 is required to maintain various
register at register office .
 Such register must also keep open for inspection for directors , member , creditors ,other
persons .
 Extract also can be obtain of such register by paying certain fees .
 Private limited , limited or OPC all company .
 Penalty defaulting company is minimum 1 lac and maximum 10 lac .
 Penalty for defaulting officer imprisonment extended to 6months , fine minimum 25,000 and
maximum 1 lac.
List Of Register And Records Maintained.
Form name Description Section
1. MGT-1 Register of member Sec 88
2. Register . Index of member . Sec 88
3. MGT 2 Register of debt holder or security holders . Sec 88
4. Register Index of debenture and security holder . Sec 88
5. MGT 3 Register of foreign member , debenture holder and Sec 88
security holder .
6. Register . Index of beneficial owner . Sec 88
7. Register . Register of director ,KMP and their shareholding . Sec 170
8. SH -2 . Register of renewed and duplicate share certificate -
9. SH -3 Register of sweat equity shares. -
10. SH- 6 Register of employee stock option . Sec 62
11. SH-10 Register of shares and security bright back Sec 68
12. Register Register of deposit . Sec 73
13. CHG -7 Register of charges .
14. MNP-2 Register of loan , guarantee , security and Sec 186
acquisition made by company
15. MBP-3 Register of transaction not made on name of Sec 187
company .
16. MBP-4 Register of related party contract Sec189

Financial Records Maintained By Company

1. Income records :-
 Important to ascertain exact income earned by business .
 If income underestimated , penalty for tax evasion .
 If income overstated extra tax is paid .
 Important to find out exact profitability of company .

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  I. R contains information –
 Name of issuing business .
 Address .
 CIN &GSTIN .
 Price and nature of goods product .
 Details of tax paid .
 Total invoice value .

2. Expanses and purchase records :-

 To know profitability , expenses should be deducted from income , so expenses record are
important .
 What purchase made during its business conduct is detectable only by this record .
 This also important to know tax liability .
 Expenses purchases report contains –
 Product purchase .
 Price and tax paid .
 Credit documents .
 Cash vouchers , etc .

3. Banking record :-
 To ascertain exact financial strength of company it is necessary to maintain banking records.
 It must express amount withdrawn and deposited ,
 Records includes –
 Bank account statement along with reconciliation .
 Check book details .
 Amount deposited .

4. Cash records :-
 Large number of transactions are still conducted through cash .
 Cash records must be maintain to keep tight control over the expenditure through cash .
 Cash record contains –
 Cash collection register .
 Cash book map of all inward and outward movement of cash .
Statutory records :-
 Compulsory to maintain ,
 If not maintained then it invites penalty .
Statistical records :-
 Voluntary to maintain .
 No penalty
 Share transfer book .
 Share application and allotment .
 Register of share certificate .
 Agent book .

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  Call book .

Various Initial Registration And Licenses

1. NBFC ( Non Banking Financial Company) :- Same As 8th Chapter
Financial Company Exempt NBFC License From RBI.
 Housing Finance Company - regulated by National Housing Bank.
 Insurance Company - regulated by IDRA.
 Stock Broking - SEBI.
 Merchant banking company - SEBI.
 Venture Capital Company - SEBI.
 Company running Collective Investment Fund -SEBI.
 Mutual Fund - SEBI.
 Nidhi Company - MCA.
 Chit Fund Company - Central Government.
Documents Required For Applying NBFC License :-
 Certificate of incorporation of public limited company.
 MOA and AOA.
 PAN/TAN allotted to company.
 Director's profile,directors have gained NBFC experience.
 CIBIL records. Board report that company has not accepted public deposit.
 Board report that company is not carrying on NBFC activity.
 Auditor's certificate that company does not accept public deposits.
 Auditor's certificate that company do not carry on NBFC activity.
 Auditor's certificate that net owned fund on date of application, no lien on net owned funds.

2. Banking :-
 These company are regulated by Banking Regulation Act, 1949.
 No such company can carry-on business of banking unless it holds valid license issued in
this behalf by RBI.
 Before granting license, RBI satisfied following conditions:-
 company is able to pay it's present and future claims.
 It is not prejudicial to interest of deposit holders.
 It is not prejudicial to the interest of general public and to the banking system, monetary
stability and economic growth.
 It has adequate capital structure and earning prospective. Other necessary conditions.
Cancellation Of License :-
 RBI may cancel license if- company ceases to carry-on banking business. Fails to comply
with any terms and conditions.

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Appeals :-
 Company aggrieved by the decision of RBI within 30 days can appeal to Central Government
(CG). Decision of CG will be final.

3. IRDA ( Insurance Regulatory & Development Authority ) :-

 IRDA Act,1999 regulated insurance sector.
 Functions and Duties :-
 granting license , registering and Regulation insurance company.
 Protecting policyholder's interest.
 Creating norms and e-licensing insurance intermediaries.
 Regulating investment of premium amount by insurance company.
 Ensuring solvency margin.
 Overseeing premium rates.
 Norms for reporting.
Various License by IDRA :- License for starting insurance business. License for approving
insurance product i.e.policy. Appointment of insurance intermediaries. Investing insurance premium.
Account and auditing.
Registration :-
 No company can conduct insurance business in India unless it obtains license from IDRA.
 Life insurance can't be combined with other type.
 Registration process involves two forms (IDRA/R1) and (IDRA/R2).
Application For Registration In Form (IDRA/R1)
 enclosures :-
 if applicant is company = MOA and AOA.
 Details of directors.
 Proposed insurance business class.
 Sources of Share capital.
Additional Application In Form IDRA/R2 :-
 Cash deposit by company-
 Life insurance business- 1% of total gross premium (10cr Max).
 General Insurance - 3% of total gross profit but maximum 10cr.
 Reinsurance - 20cr.
 Marine Insurance - 1 lakhs.
 Paidup equity capital should be 100cr in life insurance business and 200cr for
reinsurance business.
 Terms and conditions, rates applicable.
 Certificate from Actuary that rates are workable.
Refusal of Registration :-
 Refusal intimate to applicant along with reasons. If IDRA/R1 rejected - appeal to SAT.
 If IDRA/R2 rejected- appeal to Central Government within 30 days.

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  Order of CG will be final.
Suspension of Registration (Temporary) :-
 Prejudicial to interest of policyholder.
 Fails to furnish any information.
 Does not co-operate in any enquiry.
 Does not file periodical return.
 Fails to invest in Infra or Social sector specified under insurance act.
Cancellation of Certificate of Registration :-
 Fails to comply with provisions of deposits.
 Fails to fulfill requirements of insurance act,1938.
 Contravention under Companies act, FEMA or GIC Act.
 Contravention of IDRA Act,1999.
 Fails to fulfill requirement to maintain amount of assets higher than amount if liabilities.
 Faces insolvency.
 Company amalgamate or merged with any other company.
 Company carries out business other than insurance business.
 Standing contracts pending for more than 6 months.
 If Central Government directs.
 If claims outstanding for more than 3 months.
Revival of Registration :-
 Comply with the provisions of deposits.
 Comply with Companies Act, Insurance Act, FEMA ,etc.
 For revival, insurer must have to fulfill this condition and satisfy authority only within 6
months from cancellation.

4. Telecom :-
 Body called TRAI (Telecom Regulatory Authority of India) regulates Telecom and
broadcasting sectors.
Scope and functions of TRAI :-
 Provide conditions for entry of new service providers and compliance norms.
 Specify tariff policy and regulate maximum time for advertisement.
 Cover cable and TV tariff policy.
 Consumer forum for redressal grievances.
OSP (Other Service Provider) in India :-
 new service providers includes tele- banking, tele- education, tele- medicine, tele-trading ,e-
commerce, call center, other IT-enable services are termed as OSP.
 OSP requires to obtain registration from Department of Telecommunication(DOT) .
Registration under OSP :-
 mandatorily registered as Pvt LTD Company.
 Submit application along with following documents –

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  MOA and AOA, Board resolution.
 Proposed activity and business name.
 List of directors.
 Present shareholding.
 Such document certified by PCS/ Director/ Auditor/ Notary.
 Registered license valid for 20 years.
 Submit annual return to DOT.
 Submit annual return within 6 months to DOT for renewal of license.
 Comply with other terms and conditions.

5. Information and Broadcasting (I & B) :-

 Ministry of I & B, branch of Government of India is an Alex body to regulate I &B.

 This ministry administrate as Prasad Bharti.
 Central board of film certification is responsible for regulation of motion pictures,broadcast
in India.
 This is mass communication media includes radio,television, films, press, print, advertising,
etc.
 This focuses on national integrity, environmental protection, family welfare, health care,
eradication of illiteracy.
Mandate of I & B :-
 News services through All India Radio and Doordarshan.
 Promotion of film industry.
 Import and export of films.
 Development of broadcasting and television.
 Administration of press.
Regulatory heads :-
 Broadcasting :-
 Prasad Bharti,
 Doordarshan,
 Aakashwani.
 Information :-
 Press Council of India (PCI),
 Press Information Bureau (PIB),
 Indian Institute of Mass Communication (IIMC).
 Films :-
 Central Board of Film Certification,
 Films and TV Institute of India,
 Film Certification Appellate Tribunal.

6. TAN :- Tax Deduction And Collection Account No.

 It is mandatory for those who deduct or collected tax .

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  It is 10 digit alphanumeric code unique to every TAN holder .
 TAN application is two ways .
 Application in form 49B by person who never applied for TAN .
 Who is applying for change in TAN .
 Application for TAN through online portal called NSDT .
 Application fees is Ru 65 .

7. GST :-
 Regulation under GST enables business to collect tax on behalf of government and avail
ITC .
 Entity whose aggregate turnover exceeds 20 lac in FY liable to be register under GST .
 Special category state like Sikkim , Arunachala Pradesh etc . limit of aggregate turnover
is 10 lac .
 GSTIN is 15 digit no , which includes .
 1st 2digit – state code .
 10 digit PAN number .
 13th digit – number of register in a state .
 14th digit – ‘Z’ by default .
 15th digit – check code .
Compulsory Registration Under GST Irrespective Of Aggregate Turnover For
 Inter state supplier .
 CTP , NRTP .
 E- commerce operator .
 Supplier under reverse charge mechanism ,
No Need To Obtain GST If
 supplying exempt supply .
 supply of G & S which are not liable to tax .
 supply of produce from land cultivation .
Procedure For Registration :-
 apply within 30 days from becoming liable for registration .
 5 days prior in case of CTP , NRTP .
 PO will provide or reject within 3 days .
 Date of registration will be date of becoming liable for registration only if applied with in 30
days .
 If applied after 30 days , date of registration will be date on which registration is granted .

8. IE code :-
 Every person or entity involve in important or export to or from India must obtain IE code .
 IE code issued by DGFT ( director general of foreign trade )
 IE code is important for importer to bring good in India and bank require importers IE code
for sending money abroad .
 If code is important for exporters for sending good out of India and bank require export IE
code for collecting money from abroad .

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  IE code is 10 digit code having life time validity .
 This is important to avail benefit relating to export .
Registration of IE code :-
 Online application at DHFT on web site http://dgft.gov.in .
 1st prepare application for i.e. Aayat Niryat form 2A.
 2nd submit supportive documents in form 2A.
 Identity proof like PAN card , Aadhar card , etc .
 Electricity bill .
 Current account cancelled cheque , etc .
 3rd and file application to DGFT along with prescribe fees.
 Finally on approval of form , one can get IE code .
Features :-
 International explosure
 Government benefits .
 No renewals .
 No annual compliance .
 Individual person .

9. SSI / MSME :-
 All classes of enterprise , e.g. HUF, sole proprietorship , AOP , co-operative ,partnership firm
, etc can obtain registration under SSI/MSME and avail benefit .
Advantage / benefits of registration of SSI / MSME .
 Easy availability of finance without collateral security .
 Preference for government tenders.
 Reservation policy for manufacturing / production sectors .
 Time bound resolution dispute with buyers .
 Concession in electricity bill .
 Stamp duty , octroi benefits .
 Protection against delayed payment .
Registration process :-
 SSI can obtain registration through online portal of NSIC. Website is www.nsicpronline.com
or through physical subject of form to office of NSIC .
 NSIC provides single point registration scheme (SPRS).
 NISC registration valid for 2 years and renewable .
 Copy of application forward to inspecting agency by NSCI and inspecting agency provide
recommendation on it .
 After that , NSIC will issue GP registration certificate i.e. government Purchase Registration
certificate .
Documents along with application :-
 Details of plant and machinery , date of purchase and actual amount .’
 Title document of premises or lease deed .

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  Stock of raw material and Finished goods.
 Financial statement of preceding 3 FY .
 Technical person employed .
 Electricity bill copy .’
 Bankers report giving details of financial status ,
 Copy of PAN .
If applicant is partnership firm .
 Names of partners.
 Partnership deed .
 Power of attorney in favour of one of the partners.
If Applicant is Co-operative Society–
 Certificate of registration .
 Bye-laws / regulations .
 Share capital , movable and IP , etc .

If Applicant is Private Company-

 MOA
 AOA
 COI
 Details of directors.

10. MSME registration :-

 any type of organisation like AOP , partnership firm . sole proprietor , co-operative society
,etc can obtain registration under MSME .
 This registration is not compulsory , however ,provides various benefits .
 Registration of MSME / Udyog Aadhar is based on investment in plant and machinery made
by manufacturing concern or invest in equipment made by service provider .
Criteria for registration :-
A. Manufacturing –
 Micro enterprise – entity where investment in plant and machinery does not exceed Ru 25 lac .
 Small enterprise – investment in plant machinery is more than 25 lac but not exceeding 5cr.
 Medium enterprise – investment more than 5Cr but not exceeding 10 Cr .

B. Service –
 Micro enterprise – entity whose investment in equipment does not exceed 10 lac
 Small enterprise – investment more than 10 lac but not exceeding 2 Cr .
 Medium enterprise – investment more than 2Cr but not exceeding 5 Cr .

11. Industrial license –

 Due to liberalisation in 1991 industrial licence where abolish by GOI .
 Only few sector are under industrial licence .
 Only 18 industries where short listed out of which today there are only 5 industries are under
compulsory industrial licencing .

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  Alcoholic drink ,
 Cigars , cigarettes and tobacco product .
 Aerospace and defence equipment’s of all type .
 Industrial explosive , gun powder , safety fuses .
 Hazardous chemicals .
 Earlier there was reservation for MS and ME . for certain product , for which large industry
manufacture must have to obtain industrial licence. This was to promote MSME and prevent
competition on large scale .
 Now to encourage greater investment , better technology , and competition government de-
reserved this policy .
 Large industries are now permitted to manufacture , bread , wood , pickles , chutneys ,
groundnut oil , tables and chairs etc without obtaining industrial licence .

12. Industrial Entrepreneurs Memorandum (IEM).

 IME is an application for acknowledgement of units .
 Eligibility –
 Manufacturing – large scale industries having investment more than 10 Cr .
 Service – large scale industries having investment more than 5 Cr .
 Promoter can apply for IEM when ,-
 Set up new industries .
 Expansion of new industries .
 Introducing new article .
 SSI unity into large scale industry .
 Application to government in prescribed form with DD of Ru 1000 with 6 copies ,
 Government of India acknowledge and inform director of industry .

13. ESI :- [ Employers State Insurance ]

 This is regulated by ESI act 1948 .
 This scheme benefits employee and family to avail medical treatment and surgical facilities .
Registration Of Employer :-
 Any employer having more than 10 employee is mandatory required register under ESI .
 Registration from i.e. from 01 , within 15 days from submiss company will get IN 1 code
number .
 Documents .
 documents relating to establishment of company .
 copy of PAN .
 list of employees .
 list of sub , directors and stakeholders with ID proofs .
 ID proof live voter ID .
Registration Of Employee :-
 File from -1 along with family photo .
 Within 3 month , ID provided to employee .
 Employees earning wages of 21,000 or less are eligible for ESI scheme .

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  Employees with disability having limit of 25000 .
 Per month employee contribution is 1.75% of salary and 4.75% for employer .

14. Provident Fund :-

 This is to provide financial stability when person no longer fit to work .
 In this scheme both employer and employee have to contribution part of amount every month
to PF account .
 PF register is compulsory with entity employing more than 20 employees are employed .
 Employer and employee contribution 12% each per month
 PF registration process :-
 Application from called ‘ performa of coverag’ for register .
 Temporary PF no will generate then submit all supportive document .
 Once PF authority carry out inspection and verification document .
 Allot PF registration letter .
 Documents –
 MOA, AOA , COI – public or private company .
 Partnership deed – partnership .
 Partisan deed – HUF .
 Certificate of registration – co-operative society .

15. FCRA Registration –

 Foreign contribution regulation act , 2010 .
 Charitable trust , sec 8 company , societies receiving foreign contribution are required to
obtain registration under FCRA , 2010 .
Eligible :-
 Investment of foreign contribution for its define cultural , social , economic etc purpose .
 Entity is in existence for min 3 years .
 Send of minimum Ru 10 lacs in last 3 years toward objective .
 Preferable are trust , sec 8 company and societies .
Before granting registration , look that person is,
 Is not benami ,or fictitious .
 Not convicted or prosecuted for any offence .
 If person is non industrial , then its directors should not be convicted or prosecuted for any
offence .
 Not involved in forceful religious change .
 Not created any violation or disharmony .
 Not mis -utilise the fund , etc .
 Acceptance of foreign contribution not likely to affect pre.
 Sovereignty and integrity of India .
 Public interest .
 Friendly relation with foreign state .
 Security , scientific interest of state , etc .
Such acc should not lead to an offence and should not endanger life or physical safety of any person

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Apply for registration
 Application with prescribe form along with following documents
 Copy of registration certificate ,
 MOA & AOA ,
 Audited statement for past 3 years
 Reporting activities during last 3 years .
 Once registration granted it is valid for 5 years and renewal 6 month prior date of expiry .

16. Pollution :-
 For some industries projects , environmental clearance need to be obtained .
 Such clearance is obtained from ministry of environment .
 If investment is less than 100 Cr. , no such clearance needed .
 However , certain requires compulsory clearance like pesticides ,bulk drugs ,
pharmaceuticals etc .
 SSI with investment less than 1 Cr are exempted from above criteria .

17. Drug Licence :-

 To start pharmacy business , drug licence is required .
 Central dug standard control organisation and state also are 2 establish . issue drug licence in
India.
Drug licence for retailer – issue to run shop .
 It requires minimum area of 10 square meter .
 Storage facility along with refrigeration and air conditioners .
 Register pharmacist throughout working hours .
Drug Licence For Wholesaler –
 Required minimum 15 sq. m. area .
 Storage facility along with refrigeration and air conditioner.
 Staff – register pharmacist or graduate with 1 year experience or SSLC with 4 year
experience .
Documents –
 From for application along with fees .
 Affidavit by chemist .
 Appointment of chemist if employed .
 Incorporation certificate , MOA , AOA , partnership deed if any .
 Principle place and branches if any .
 Proof of ownership of premises or lease deed , etc .

18. FSSAI (Food Safety And Standard Authority Of India )

 FASSAI license is mandatory for starting food business it is 14 digit registration no licence
no .
 This helps to reduce adulteration and improves standard of products .
FSSAI registration :-

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  It is compulsory for small food business conductor .
a. Manufacturer or seller of food or petty retailer, hawker etc
b. Distribution of food at religious or social places except caterers
c. Small or cottage industry whose aggregate turnover in a year not exceeding rs, 12 lacs and
whose.
 Production capacity up to 100kg.
 Milk- 500 litters
 Slaughtering capacity is 2 large animal or 10 small or 50 birds in a day.
 Registration or rejection within 7 days.
FSSAI Licence
 Any person other than small or petty food traders, require to obtain FSSAI licence.
 This is obtain at two levels , state and central.
 Large manufacturers / processors/ importers require central FSSAI licence.
 Medium size food manufacturers/ processors require state licence.
 For obtaining licence, application along with fees is required.
 Licence is granted for 1 to 5 years, higher fees for obtaining licence for more years.

19. Registration Under Shops And Establishments :-

 Establishments means
 Commercial establishments, hotels, theatres, restaurants, places of entertainment.
 Additionally, establishment that state government notify
 Shops means,
 Where goods are sold,
 Services are rendered.
 Includes godown, warehouses, office, etc.

Registration Of Shops And Establishments

 Submit application to chief inspector within 30 days along with various details,
 Name of employer
 Name of establishment
 Number of employees
 Address of employer and establishment
 Nature of business, etc
 This application along with fees submitted verified by inspector and provide certificate of
registration valid for 5 years.
 This must be displayed at prominent place
 Communicate any change within 15 days to chief inspector and he will after verification
provide fresh certificate of registration.
 On closure of business , intimate within 15 days, he may remove and cancel certificate of
registration.
20. PAN :-
 PAN is required & mandatory under IT Act 1961.

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  It is 10 digit alphanumeric number , unique to every card holder
 Any corporate doing business in India require PAN Card whether it is registered in India or
Abroad
 If any person who is not require to pay tax still it is mandatory for him to hold PAN if earning
income.
 In absence of PAN government will charge tax @ rate more than 30 % of total invoice
payment.
 Following persons require PAN Card:-
o Body Corporate
o Companies
o LLP
o Firms
o AOP, BOI, Trusts, Private firms
o OPC Sole proprietor
o FII's , etc,.
REGISTRATION OF PAN
 Indian citizen submit application for PAN in form 49A & Foreigner submit in form 49B.
 Earlier it was physical but now its on internet portal called NSDL
 Fees for PAN application in India is 110 & For outsiders it is 1020.
 Along with application supportive documents are also have to be submitted to NSDL
portal.

IDENTIFYING LAWS APPLICABLE TO VARIOUS

INDUSTIES & THERE INITIAL COMPLIENCES

Check list for Compliances

For incorporation as OPC, Small company, Private & Public company
1. Obtaining DSC.
2. Obtaining DIN.
3. Select name & apply to MCA for name availability.
4. Draft MOA, AOA.
5. Sign & File documents including MOA & Stamp duty.
6. Receipt of CERTIFICATE OF INCORPORATION from ROC.

For incorporation as LLP

1. Deciding partners & Designated partners.

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 2. DIN & DSC
3. Apply for name in RUN-LLP form.
4. File form FiLLiP for registration.
5. Submit form-3 for agreement & partner's details in form-4.

Checklist for annual compliances

1) FOR OPC:-

a) MBP-1 = Interest disclosure by directors

b) DIR-8
c) Board meeting
d) Appointment of auditor
e) File form ADT-1 of auditor's appointment
f) Annual Filling = AOC-4 & MGT-7.

2) FOR SMALL & PRIVATE COMPANY:-

a) MBP-1 = Interest disclosure by directors
b) DIR-8
c) Board meeting
d) Appointment of auditor
e) File form ADT-1 of auditor's appointment
f) Annual Filling = AOC-4 & MGT-7.
g) Hold annual general meeting
h) Adoption of accounts
i) Maintain statutory records.

3) FOR UNLISTED PUBLIC COMPANY:-

a) MBP-1 = Interest disclosure by directors

b) DIR-8
c) Board meeting
d) Appointment of auditor
e) File form ADT-1 of auditor's appointment
f) Annual Filling = AOC-4 & MGT-7.
g) Hold annual general meeting
h) Adoption of accounts
i) Maintain statutory records.
j) Certificate of annual return by PCS if paid up capital exceeds 10 crore or turnover exceeds 50 crore.
k) Secretarial Audit of company by PCS to
_ all listed company
_ public company having PSC of 50 Crore or more & turnover of 250 cr or more.

4) FOR LISTED COMPANY:-

a) MBP-1 = Interest disclosure by directors
b) DIR-8
c) Board meeting
d) Appointment of auditor
e) File form ADT-1 of auditor's appointment

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 f) Annual Filling = AOC-4 & MGT-7.
g) Hold annual general meeting
h) Adoption of accounts
i) Maintain statutory records.
J) Certificate of annual return by PCS
k) Filling annual account in XBRL format
l) Compliances prescribed in SEBI (ICDR) REGULATION, 2015.

5) ANNUAL COMPLIANCES FOR LLP:-

a) Maintenance of Minutes book
b) Form-4 for change in partners
c) Supplementary LLP agreement in form-3
d) E-Form-8 _ Statement of accounts.
e) E-Form-11_ Annual Return.
f) Tax Return.

LAWS RELATING TO INDUSTRIES & INDUSTRIES IN SPECIFIC :-

 Important act was Companies Act, 2013 which helps in formation, financing, functioning, winding up
of companies. Helps CG to regulate company by this act.
 Industries (Development & Regulation) Act, 1951 empower government to take necessary steps for
development of industries, regulate it's pattern & direction of industrial development.
 Indian Contract Act, 1872 governing legislature for contracts, lays down principles, relating to
formation, performance & enforceability of contracts.
 Industrial Disputes Act,1947 helps for settlement for industrial disputes, strikes or lock-outs can be
lawfully resorted.
 Indian Trade Unions Act, 1926 deals with registration trade unions, there rights, liabilities &
responsibilities.

Factories Act, 1948.

 This act is to regulate the working of factories
 Administered by Ministry of Labour & Employment & by SG through Factory Inspectorate.
 According to Act, Factory means;
 Where 10 or more workers are working or were working on any day of preceding 12
months & manufacturing process carries out with the aid of power.
 Where 20 or more workers are working or were working on any day of preceding 12
months & manufacturing process carries out without the aid of power.
 This act does not includes mines, mobile units, railway running shed, hotels, restaurants or
eating places.

Mines Act, 1952.

 Provides measures relating to health, safety & welfare of workers in coal & oil mines.

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 Administered by Ministry of Labour & Employment through directorate general of mines safety.
 According to Act, Mines Means;
 Any excavation for purpose of searching for or obtaining minerals.
 Includes bores, boring holes, oil wells, crude containing plants, shafts etc,.
 Includes conveyors such as aerial ropeways, railways, tramp ways, power stations ,
plans.
 Includes premises connected with mining operation & near or in mining area.

Motor Transport Workers Act, 1961 :-

 Provides welfare of workers in motor transport & regulate condition of there working
 This act applies to transport undertaking, employing 5 or more motor transport workers.
 SG may by notification make apply such act to motor transport undertaking even having less
than 5 workers.
 According to act motor transport undertaking means; " An undertaking engaged in carrying
passengers or goods or both by road ways for hire or reward includes private carriers"
 According to this act no adult worker have to work more than 8 hours a day & 48 hours in a
week.
 No adolescent need to work for more than 6 hours including interval of half an hour.

Inter-State Migrant Workmen ( Regulation of Employment & Condition

Of Services )Act, 1979.
 Protect rights & regulates the working of Inter-State Migrant Workers.
 This act applies to establishment or contractor having 5 or more Inter-State Migrant
Workers.
 Act provides to give facilities to this workers of transportation, wages during conveyance,
protected clothing , proper residential accomodation medical facilities ,etc.

Labour Welfare Fund For Social Assistant to Workers

 5 welfare funds set up under ministry of Labour & Employment.
 This is for workers engage in or employed in beedi industry or non-coal mines & cine
workers.
 It facilitate workers by providing housing, medical care, educational facilities, etc.
 It includes;
 Mica Mines Labour Welfare Fund.

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  Limestone Mines Labour Welfare Fund
 Dolomite Mines Labour Welfare Fund
 Iron Ore Mines , Manganese & Chrome Ore Mines Labour Welfare Fund
 Beedi Workers Welfare Fund
 Cine Workers Welfare Fund.

States Promotion Employees ( Condition Of Services ) Act, 1976.

 It regulates Condition of Sales Promotion employees.
 Sales Promotion employees means, " Any person by whatever name called employed for
hire or reward "
 Such person includes,
_ Who is employed in supervisory capacity,
_ Draw wages exceeding 1600 per month,
_ Employed mainly in managerial or administrative capacity.

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 INTELLECTUAL PROPERTY ACT

 Intellectual property means creation of human mind & human intellect.

 Owner or holder of such property may assign its use to another person.
 IPR helps creator to prevent from using their inventions, designs, or other creations.
 It is intangible property consist bundle of rights. Mainly it contains Trademark,
Copyright, Patent, & Design.

TRADEMARK
 It is regulated by Trademark Act, 1999.
 Trademark is a word, phrase, symbol or design that distinguishes product or services
of one business from it's competitors.
 Trademark act provides for regulation of marks, renewal terms, recognition to well
known marks.
 Letter 'R' in a circle with TM can be used only after the recognition.

TYPES OF TRADEMARK
1. Generic :- Using name of product for product. Like 'Salt' for salt. these marks can never
function as TM.
2. Descriptive :- Mark describing the characteristics of product like using mark 'Fair' for fairness
cream. Weaker marks & so hard to protect.
3. Suggestive :- Mark suggesting characteristics of product like 'Habitat' for home furnishing
products.
4. Arbitrary :- Mark which exist in popular vocabulary but have no logical relationship to goods
or services like 'Blackberry' for phones.
5. Invented/Coined :- Mark which are coined a new word which has no dictionary meaning like
'Adidas'. Strongest mark & thus easier for registration & protection.

Enforcement Of Trademark :-
 If a person is using similar mark for similar or related goods or services or using well-known
mark, the other person can file a suit against person for violation of IPR i.e Trademark
irrespective of the fact that TM was registered or not.
 Court may pass order for permanent or interim injunction, damages for profit, etc,.

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 Infringement of TM is cognizable offence & criminal proceeding can also be initiated against
infringers.

GEOGRAPHICAL INDICATION OG GOODS (

REGISTRATION & PROTECTION ) ACT , 1999.
 Due to lack of statutory provisions, Indian geographical indications has been misused by
persons outside India.
 Turmeric, Neem & Basmati drew a lot of attention toward this aspect of IPR.
 For providing adequate protection to geographical indications parliament had passed a
legislation namely Geographical Indications of Goods ( Registration & Protection ) Act, 1999.
 Salient Features :-
 Provisions for definitions of several important terms like 'Geographical
Indications' , goods, etc,.
 Provision for maintenance of register of geographical indications in 2 parts -
PART-A & PART-B.
 Registration of geographical indications of goods in specified classes.
 Registration of users of registered geographical indications .
 Prohibition of registration of certain geographical indications.
 Prohibition of assignment of geographical indications as it is public property.
 Prohibition of registration of geographical indications as trademark.
 Provisions for framing rules by CG.
 Provision for higher level of protection.
 Provisions relating to offences & penalties.

DESIGN ACT, 2000.

 Design act, 1911 was replaced by Design Act, 2000.
 Industrial design laws deals with original designs of an industrial product.
 An industrial product usually contains both element of art as well as craft, that
means artistic & functional elements.
 salient Features :-
 Definition of terms like 'article', 'design', etc,.
 Provision of delegation of powers of controller.
 Provision of identification of non-registrable designs.
 Provision for substitution of applicant before registration of design.
 Providing for compulsory registration of any document.

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  Registration are to be maintain on computers as register of design.
 Provision for restoration for laps design.
 Provision of ground of cancellation of design.
 Provision for initiating cancellation proceeding.
 Quantum of penalty imposed for infringement of registered designs.
 Appeal against order of controller before High Court.

PATENTS ( PATENTS ACT, 1970.)

 A patent grants property rights on an invention, allowing patent holder to exclude others
from making, selling or using innovation.
 It provides competative advantage at market place.
 Definition of invention in Patents Act, 1970 includes new product as well as new process. So
patent can be applied for product as well as process which is new.
 Patent provides monopoly to patent holder to excludes others from making & using
invention & use exclusively & exploit that invention in the market.
Following points are not patentable :-
o Frivolous ,
o Obvious ,
o Mere arrangement or rearrangement of known device ,
o Contrary to well established natural law ,
o Contrary to law ,
o Against morality ,
o Injurious to public health ,
o Mere discovery of new use for know substance ,
o Mere discovery of scientific principles ,
o Method of agriculture or horticulture.
Enforcement of Patent Rights :-

- Infringement of patent consist of an unauthorised making , using, selling, or offering for

sale any patented invention within India.
- Only civil proceeding can be initiated in court of law.
- Court may issue order of - Permanent/ interim injunction , Damages on account of profit
, Delivery of infringed goods , Cost of legal proceeding.
Terms & restoration of lapsed patents :-
 Term of patent is 20 years from application.
 Non-payment of renewal fees results in cessation of patents.
 Patentee may within 18 months from cessation, male an application for restoration.

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 COPYRIGHT ( INDIAN COPYRIGHT ACT, 1957. )
With copyright protection holder has exclusive right to modify, distribute, perform, create , display,
& copy the work.
Copyright protection is applicable to :-
 Original literacy
 Dramatic
 Musical work
 Artistic work ( Drawing, Painting, Photograph, etc,.)
 Cinematograph film
 Sound recordings.
Creation of copyright in the form of literacy, music, etc protects the following rights :-
 Reproduce the work
 Issue copies of work to public
 Perform the work in public
 Communicate work to public
 Make any translation of work
 Make any adoptation of work i.e Conversion of dramatic work into non-dramatic , literacy
work into dramatic work , re-arrangement of literacy work or dramatic work, etc.
Owners of copyright :-

I. In musical recording : Lyrist, Composer, Singer, Musician, Producer.

II. Work by journalist : Proprietor.
III. Work produced for valuable consideration : Person for whom the work is produced.
Assignment of copyright :-
Owner or prospective owner of copyright may assign to any person a copyright either wholly
or partially. such assignment should be in writing , signed by assigner or his authorised agent.
Term of protection of copyright :-

 General rule is that copyright lasts for 60 years

 In case of Original literacy, dramatic, musical & artistic work, 60 years is counted from
the year of death of author.
 In case of cinematograph film & sound recording period of 60 years started from the
date of publication.
Exception to the use of copyright :-
 For the purpose of research or private study
 For the purpose of education & religious ceremonies.
 Review or criticism

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  Reporting current events
 In connection in judicial proceedings.
Infringement of copyright :-

Copyright considered as infringed only if substantial part is made use of unauthorised.

Substantial varies case to case but it is matter of quality rather than quantity.
Cases involving infringement of right may include ;
- Sale or hire of infringing copies,
- Importation or public exebition of infringed copies,
- Distributing infringed copies affects prejudicially interest of owner of copyright.

Penalty :-
- For 1st infringement : Fine of minimum 50000 & 6 months imprisonment.
- For 2nd & subsiquant : Fine of minimum 1 lacs & 1 years imprisonment.

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 COMPLIENCE UNDER LABOUR LAWS

1) Factories act, 1948.

 This act is to regulate the working of factories
 Administered by Ministry of Labour & Employment & by SG through Factory Inspectorate.
 According to Act, Factory means;
 Where 10 or more workers are working or were working on any day of preceding 12
months & manufacturing process carries out with the aid of power.
 Where 20 or more workers are working or were working on any day of preceding 12
months & manufacturing process carries out without the aid of power.
 This act does not includes mines, mobile units, railway running shed, hotels, restaurants or
eating places.
# Safety measures :

 Fencing of machinery
 Self-acting machines
 Device for cutting of power
 Prohibition of young person on dangerous machines
 Prohibition of employment of children & women near cotton openers.
# Working hours, spread over & overtime of adults :

 Weekly hours not more than 48.

 Daily not more than 9 hours
 Intervals of rest of at least half-an-hour.
 Spread over not more than ten & half hour
 Extra wages for overtime double than normal
 Women should employed from 6am to 7pm
# Employment of young persons :

 Prohibition on employment of young children i.e. 14 years or less

 Non-adult member must have to carry Certificate of Fitness
 Woking hours not more than four & half hour.
# Welfare Measures :

 First aid box for every 150 workers

 Canteen facility if number of workers is 250 or more
 Creche facility where more than 30 women workers works.
 Restroom facility where 150 workers works
 Washing facility

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  Storage & drying clothing facility
# Annual leave with wages :

 Worker having worked for 240 days is eligible for one day leave for every 20 days worked.
 Worker having worked for 240 days is eligible for one day leave for every 15 days worked.
 Accumulation of leave for the year is 30 days.

MINIMUM WAGES ACT, 1948.

Main object of this act is to fix minimum wage rate in certain employments.
Government can fix minimum wages on the basis of
- Time work
- Piece work @ piece rate
- Overtime work done for piece work.
# Committee :

 Appointment of committee is for fixing & revising minimum rates of wages

 Committee consist of representative of employer & employee in equal number &
independent person not exceeding 1/3 of it's total members.
 One such person is to be appointed as Chairperson.
# Overtime :

 Working in excess of number of hours or days than normal working days is considered as
overtime.
 Payment for overtime must be double than ordinary rate of wages
 1 & 1/2 times in case of agriculture labour.
# Fixing hours for normal working :

 Normal working day constitutes including of interval .

 One day rest of seven days with remuneration
 Payment for work on a day of rest should not be less than overtime rate.
# Claims by employees :

 Employee can file claim within 6 months

 Compensation up to 10 times on under or non-payment of wages.

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 PATMENT OF WAGES ACT , 1936.
# Applicability :
Acts applies to persons employed in;
- Factory
- Railways, whether directly or through sub-contractor
- Any industrial or other undertaking.
# Time of payment of wages :

 Where less than 1000 employees are employed shall be paid before expiry of 7th day
of following month.
 Where more than 1000 employees are employed shall be paid before expiry of 10th
day of following month.
# Mode of Payment :-

Payment made in current coins or notes , or by cheque or crediting bank account.

Government may compulsorily specify payment of wages through cheque or crediting bank
account only.
# Deductions :-
o Deductions for fines, loans, advance paid, over payment of wages, income tax
payable, life insurance, contribution to provident fund or ESI contribution, etc,. is
permissible.
o Deduction of wages in case of damages due to negligence of employee results in loss
to the employer.
o If any services accepted by employee
o When employee is absent for whole or part or day for unauthorised reason
o If 10 or more person absent without reasonable cause, deduction of wages upto 8
days is permissible.

EMPLOYEE STATE INSURANCE ACT, 1948.

- Applicable to all factories. Appropriate government may extent or exempt any factory or
establishment for applicability or non-applicability of act.

- Factory means;
 Where 10 or more workers are working or were working on any day of preceding 12
months & manufacturing process carries out with the aid of power.

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  Where 20 or more workers are working or were working on any day of preceding 12
months & manufacturing process carries out without the aid of power.
Registration Of Employer :-
 Any employer having more than 10 employee is mandatory required register under ESI .
 Registration from i.e. from 01 , within 15 days from submiss company will get IN 1 code
number .
 Documents .
 documents relating to establishment of company .
 copy of PAN .
 list of employees .
 list of sub , directors and stakeholders with ID proofs .
 ID proof live voter ID .
Registration Of Employee :-
 File from -1 along with family photo .
 Within 3 month , ID provided to employee .
 Employees earning wages of 21,000 or less are eligible for ESI scheme .
 Employees with disability having limit of 25000 .
 Per month employee contribution is 1.75% of salary and 4.75% for employer .

Benefits to insured :-
I. Payment in case of sickness
II. Payment to workmen for sickness arising out of pregnancy.
III. Payment to person suffering from disablement.
IV. Payment to dependence of insured person
V. Medical treatment
VI. Payment of funeral expenses upto 1500.

EMPLOYEES PROVIDENT FUND & MISCELLANEOUS

PROVISIONS ACT, 1952.
# Applicability :-

- Applies to whole of India except Jammu & Kashmir.

- Factories where 20 or more workers employed
- Voluntary for factories where less than 20 employees worked.
# Non-applicability :-
- Co-operative societies act, 1912

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 - Any establishment of CG or SG where employees are entitled to other benefits such as
contributory PF or old age pension.
# Contribution :-

 Equal contribution by employee & employer @ 12% of wages

 Maximum employer may contribute upto 15000
 Employee may contribute voluntarily more than 12%
 Contribution by 15th of every month
 Rate of contribution will be 10% in case of sick industries or industries of jute, beedi, brick,
coir, gum.
# Penalty :-

- If employer made any default in transferring period of default less than 2 months : 5% of
arrears p.a,
- If it is in between 2 - 4 months : 10% of arrears p.a
- If it is in between 4 - 6 months : 15% of arrears p.a
- If it is more than 6 months : 25% of arrears p.a

PAYMENT OF BONUS ACT, 1965.

#Applicability :-

 Every factory according to Factories Act, 1948.

 Establishment in which 20 or more persons are employed on any day during an accounting
year.
#Eligibility :-

 Person who work for more than 30 days in year & drawing salary upto 21000.
#Amount of bonus & time of payment :-

 Minimum 8.33% of salary & maximum 20% of salary however no need to pay bonus in 1st 5
years of incorporation if there is loss in a business.
 Pay within 8 months from end of financial year.
 Company can adjust interim / puja bonus if any paid.
#Statutory registration & records :-

 Form A : Computation of allocable surplus

 Form B : Set-on & set-off allocable surplus
 Form C : Amount actually distributed.
 Form D : Annual return.

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 PAYMENT PF GRATUITY ACT, 1972.
# Applicability :

 Factories, companies, shops & establishments employing 10 or more employees, registered

establishment .
# Non-applicability :

 Apprentices
 Employees of CG & SG.
# Time of payment :

 After expiry of 5 years of rendering services

 Superannuation
 Retirement or resignation
 Death or disablement
# Display notice on conspicuous place
# Employee submit nomination within 30 days
# Amount of gratuity cant be attached under any decree
# Imprisonment for 6 months or 10000 fine for false statement or representation
# Imprisonment for minimum 3 months to 1 year & fine for default in complying with provisions.

EMPLOYEES COMPENSATION ACT, 1923.

Applicable to all over india, all workers irrespective of their status and salary
# Liability of employer :

 On death or personal injury resulting into total or partial disablement or disease cased
during course of employment
# Amount of compensation :

 Death : 50% of monthly wage multiple by relevant factor or 80000 whichever is more
 Permanent total disablement : 60% of monthly wage multiple by relevant factor or 90000
whichever is more
# No person eligible for compensation :

 If disability for period of not exceeding 3 days

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  Injury to person due to his negligence as if he was influenced by drink or drugs , wilful
disobedience of order, removal of safety gaurds.
This act will not apply when ESI act is applicable.

CONTRACT LABOUR ( REGULATION & ABOLITION )

ACT, 1970.
 This act is enable to regulate employment of contract labour & improve working condition.
 Act is implemented both by CG & SG. CG has jurisdiction over establishment like railways,
banks, mines, etc,. & SG has have jurisdiction over units located in a state.
 Contract labour means ' workers engaged by a contractor for user enterprises.'
 Generally engaged in agriculture, plantation, construction, ports, docks, railways, airlines,
shipping, road transport, etc,.
 This act is applicable to every establishment or contractor in which 20 or more employees
are employed.
# Registration & licensing of contractor :
 Contractor is required to obtain registration when 20 or more workers are employed.
 It can be revoked if obtained by suppression or misrepresentation or in contravention of any
act.
# Welfare measures to be taken by contractor :

 Canteen facility where 100 or more employees are employed.

 First aid facility.
 Rest rooms.
 Drinking water, latrines, & washing facilities.
Such facilities may be given by principle employer & then adjusted from amount payable to
contractor.

# Registers :
 Principle employer has to maintain register of contractor.
 Contractor has to maintain register of - workers, employment card to workers, issue service
certificate on his termination.

INDUSTRIAL DISPUTE ACT, 1947.

# Objective :

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Secure industrial peace & harmony by settlement of industrial disputes by negotiations.
This act deals with retrenchment process, procedure of layoff , rules for strikes & lockouts of
companies.
# Meaning of industrial dispute :
 Where any employer discharges, dismisses, retrenches or terminates an individual workman
any dispute or difference between workman, any dispute or difference between workman &
employer connected with such discharge, dismissal, retrenches or termination shall be
deemed to be an industrial dispute.
# Significance :
As industrial dispute has adverse effect on industrial production, cost, quality, human satisfaction,
process & welfare of society. So Industrial dispute act, 1947 was passed to preventive & corrective
measures.
# Scope :
 It ensures social justice for employer & employee
 Avoiding illegal strikes & lockouts.
 Regulate layoff & retrenchment.
 Secure industrial peace & harmony.

## IMPORTANT DEFINITION :

1) WAGES :
 All remuneration capable of being expressed in terms of money payable to workman in
respect of work done in employment & includes ;
- Allowances
- House accommodation or supply of light, water, etc,.
- All travelling concession
But it excludes;
- A bonus,
- Contribution to PF or other funds which is required by law.
- Any gratuity payable on termination.

2) Public utility services means ;

 Any railway services or carriage of passengers or goods by air
 Services in connection with major port or dock.
 Any postal, telegraph, or telephone services

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  Services who supplies power, light or water to public
 Public conservancy or sanitation
 Any other services.

3) Dispute settlement authorities under act :

 Industrial Dispute Act provides following Dispute settlement authorities
- Works committee
- Conciliation officer
- Conciliation board
- Court of enquiry
- Labour court
- Industrial tribunal
- National tribunal
- Arbitrators
- Grievances settlement authority.

4) Work committee :
 Industry which has 100 or more workers employed appropriate government may require
constitute a work committee.
 Such committee consist of equal number of representative of employer & employee.

5) Conciliation officer :
 He has duty to act as mediator in between the parties to resolve the dispute.
 Starts conciliation proceeding & bring settlement between parties.
 If fails to settle, report to appropriate government.
_ Duties of Conciliation officer :
- Hold conciliation proceeding.
- Investigate the matter
- Fair & amicable settlement of disputes
- Copy send to parties
- If fails, intimate to appropriate government.

6) Conciliation Board :
 It consist chairman who is independent person
 Members may be 2 or 4 equally appointed by both disputing parties

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  Main function is to promote settlement between disputes of parties.

Duties of Board :
- Investigate the matter
- Bring the parties to settlement which is fair & amicable.
- If fails, report to government.

7) Court of Inquiry :
 Government may initiate court of enquiry for find out matter connected with an industrial
dispute.
 It consist 2 or more members & one of them appointed as chairman.
 Court enquire about only those matters referred by government & submit report to
government.

8) Adjudication :
1. Labour court : Appropriate government is empowered to constitute 1 or more labour
courts to adjudicate disputes of industry.
2. Industrial tribunal : Appropriate government is empowered to constitute 1 or more
Industrial tribunal to adjudicate disputes of industry. It consist only one person as presiding
officer. He may be judge of High Court or District judge having experience of minimum 3
years.
3. National Tribunal : Appropriate government is empowered to constitute 1 or more
National Tribunal to adjudicate disputes of industry. Main function is to adjudicate
industrial dispute involve question of national importance or affecting interest of 2 or more
states. It consist 1 person as presiding officer who is judge of high court or member of
labour app tribunal for minimum 2 years.

9) Grievances settlement authority :

 Industry employed 50 or more workers provide Grievances settlement authority to
employees.
 20 or more workmen have 10 or more Grievances settlement authority.
 It consist equal number of members of employees & employer.
 Chairman selected by employer amongst members of employee every year.
 Total number of members can't exceed 6.
 Complete the process within 45 days.
 Aggrieved person may appeal to employer & who redress further within 1 month.

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 STRIKES & LOCKOUTS :

1) Strikes : Cessation of work by a body of person employed in an industry or refusal under

common undertaking of any number of persons. Strikes doesn't includes mere stoppage of work
but concerted action for enforcement of an industrial demand.

2) Layout : Temporary closing of place of employment or suspension of work or refusal by an

employer to continue to employ any number of persons employed by him.

Where strike is a weapon of employee for enforcing their industrial demand, layout is weapon of
employer to make accept his demand.
Industrial Dispute Act not take away these rights, however regulate it for peace & harmony.

__Procedure Of Strikes or Lockouts :

Strikes or Lockouts will be void if ;
o Without giving notice of Strikes or Lockouts , conducting it within 6 weeks before striking
off.
o Within 14 days of giving notice.
o Before expiry of date of Strikes or Lockouts specified in notice
o During pendency of conciliation proceeding.
No need of notice if already Strikes or Lockouts is existed in industry.

__ Prohibition on Strikes or Lockouts :

o During pendency of conciliation proceeding & 7 days after conclusion of proceeding.
o During pendency of proceeding before labour court , industrial or national tribunal & 2
months after conclusion of proceeding.
o During pendency of arbitration proceeding & 2 months after conclusion of peace.
o During any period in which settlement or award is in operation.

__ Penalty :
o Strikes : 1 month imprisonment + Fine upto 50.
o Lockouts : 1 month imprisonment + Fine upto 1000.

LAY-OFFS :
#Provision of lay-off will not apply to ;

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 o Establishment having less than workmen.
o Seasonal character industry.
o Establishment having own provision relating to lay-off.
#Right of compensation during laid-off :
o Worker must be permanent i.e. his name must be on muster rolls.
o Served to establishment for not less than year.
o laid-off continuously
o Eligible compensation is upto 50% of total basic wages & dearness allowance.

#Maximum days allowed to lay-off of employee by employer is 45 days only for such 45 days, 50%
of compensation will be available.
#Workmen not entitle to compensation :
o If worker refuses to accept alternate employment of establishment of same employer within
city or town or upto 5 miles from establishment.
o If worker fails to present at establishment during normal working hours, even one day.
o If lay-off due to strike or slowing down of production.

RETRENCHMENT :
 It means termination by employer of the services of workmen for any reason, but it does
not includes ;
- Voluntary retirement
- Retirement due to age of superannuation
- Termination of services due to non-renewal of employment contract
- Termination due to continuous ill-health.

Retrenched employees who offer themselves for re-employment shall have preference over the
others.
# Continuous precedent to retrenchment :
o Served for minimum 1 year to company by employee
o Three months notice or payment of such period
o Compensation equivalent to 15 days average pay
o Application for permission to specified authority
o Compulsory permission from competent authority
o If no application seeking permission is made or permission is refused thr retrenchment
shall be illegal.
# During pendency of proceeding :
o Cannot dismiss the employee
o Cannot alter the contract
o Cannot take action against him.

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 TRADE UNION ACT, 1926.
#Registration :

o Any 7 or more members can form trade union by subscribing their names.
o There should be at least 10% or 100 workers whichever is less, employed in industry with
which the trade union is going to connect.
o On the date of application, 7 members must be engaged or employed in establishment.
# Details of registration :

o File prescribed form

o Names & addresses of members
o Address of head office
# Cancellation :

o If registration so obtain is by fraud or in contravention or it has ceased to exist.

o Number of members reduced below requirement.
# Disqualification :
o Person is disqualify to be an officer of trade union if he is minor
o or involve in moral turpitude & 5 years not elapse.

MATERNITY RELIEF ACT, 1961 WITH MATERNITY

BENEFIT (AMENDMENT) ACT, 2017.
 This act is to provide healthy environment for woman & her child by protecting dignity of
motherhood & new persons birth.
# Cash benefits :
o Leave with average pay for 8 weeks before delivery
o Leave with average pay for 18 weeks after delivery
o Medical bonus of 25
o Additional leave for 1 month if women proved illness due to pregnancy, miscarriage or
premature birth
o In case of miscarriage, 6 weeks leave with average pay from date of miscarriage.
# Non-cash benefits :
o Light work for 10 weeks before expected delivery
o Two nursing breaks until children is 15 months break.
o No discharge, or no change in condition of employment during leave
o Pregnant woman dismissed may still claims maternity benefits.
o But if dismissal is due to misconduct then she will not be entitle for such benefits.

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# Applicability & eligibility :
o Applicable to every establishment which are factories, mines, plantation, government
establishment, shops & establishment under relevant acts.
o Woman is eligible who worked for minimum 80 days in last 12 months.
# Key highlights of amendment

INCREASE MATERNITY BENEFITS : Unlike earlier where only 12 weeks ( 6 weeks before & 6
weeks after delivery ) available from maternity benefits. now, total 26 weeks are available.
NO INCREASE BENEFITS FOR 3rd CHILD : Increased maternity benefit is available only for 2
children , for 3rd & subsequent child it is not available. Only 12 weeks is available.
ADOPTION / SURROGACY : Who adopt not more than 3 months old age child or
commissioning mother, entitled to maternity benefits for 12 weeks from the date of child is
handed over.
CRECHE FACILITY : Available where 50 or more employees are employed want compulsory
crèche facility.
Work from home & prior intimation

PREVENTION OF SEXUAL HARASSEMENT OF WOMEN

@ WORKPLACE ACT, 2013.
# OBJECTIVE :
o Protection against sexual harassment of women at workplace.
o Redresser of complainants of sexual harassment.
o Safe environment free from sexual harassment.

# Sexual harassment is considered as violation of fundamental right of woman to equity under

article 14 & 15 & rights to life under article 21 of Constitution of India.
# sexual harassment : Any unwelcomed act or behaviour such as physical contact & advances,
demand or request for sexual favours making sexual coloured remarks, showing pornography or
any other unwelcome physical, verbal or non-verbal conduct of sexual nature.
# Complaint committee & procedure :
a) Internal complaint committee : Act make mandatory for every employer under whom 10 or
more workers are employed to form ICC.
__ ICC consist of ;
Presiding officer
2 or more members from employee who have experience in social work
Half of such members must be woman.

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b) Local complaint committee : LCC is formed at district level, it comes in picture when complaint
is against employer or where less than 10 employees worked & not have ICC.

# Complaint procedure :
Aggrieved woman can make written complaint to ICC / LCC within a period of 3 months
from the incidence or in case of series of incidences 3 month from date of last incident.
If aggrieved woman is unable to make complaint in writing, ICC / LCC should help her.
If aggrieved woman is unable to complaint due to illness or incapacity, her relative, friend or
co-worker who has knowledge about incidence with written consent of woman can make
such complaint.

CHILDREN & ADOLESCENT LABOUR ( PROHIBITION &

REGULATION ) ACT, 1986.
__Object of this act is to prohibit children in some employment & regulate in some.
# Hours & period of work :
As many number of hours provided by each act.
Not exceeding 3 hours without interval of at least 1 hour.
Inclusive time of interval, period of work not more than 6 hours a day
Work in between 8 a.m to 7 p.m
No need to overtime
Eligible for weekly holidays
# Notice to inspector :

 Employer who employed any child as a labour, must have to give notice within 30 days to
inspector & such notice must contains ;
- Name & address of establishment
- Name of administrator
- Nature of work of establishment
 If any dispute arises for age of child then matter will be referred to medical authority.
# Maintenance of register :

 Name & date of birth of every child

 Number of hours & period of work
 Nature of work &
 Other particulars.
 Inspector have authority to inspect such register.
# Health & Safety :

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Cleanliness in place of work
Disposal of waste
Fencing of machines
Prohibition of children to work on dangerous machines
Self-acting machines
Lighting
Drinking water
Protection of eyes
Maintenance of building
Safety of building & machinery
Precaution in case of fire
Spittoons
Latrine & urinals
Ventilation.

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