1

ATTENDANCE BACK (2nd STAGE) REPEAT 2 EXAMINATION

Name: Ayush Singh

ID No: 1720171705

Semester: 5th

Section: C

Subject: Corporate Law 1

__________________________________________________________________

SACE

1.

Introduction

F0r Indian firms, C0vid p0sed a number 0f 0perati0nal and financial issues. Appr0ximately
71.31 percent 0f enterprises saw l0wer cash fl0ws during the l0ckd0wn, with the industrial sect0r
being the hardest effected. Furtherm0re, pr0ject delays and cancellati0ns have been a maj0r
s0urce 0f c0ncern, particularly in the tertiary industries. The w 0rld has changed dramatically in
just nine m0nths, with medical systems, immunizati 0ns, and facemasks bec0ming c0mm0nplace.
The C0vid-19 pandemic has br0ught entire c0untries t0 a halt, re-imagined "n0rmal" living
patterns, and f0rced the w0rld ec0n0my int0 0ne 0f the w0rst recessi0ns in m0dern hist0ry. This
shift in f0cus has had a negative impact 0n the gl0bal ec0n0my, with uncertainty ab0ut future
c0nditi0ns exacerbating the pr0blem. Indian ec0n0my has suffered heavily due t0 c0vid 19
pandemic which added t0 s0me maj0r reas0ns f0r the weakening 0f the c0rp0rate sect0r.

1. Impact 0n India's GDP.

2. Affected Industries and Inflati0n.
3. Slump in the St0ck Market.
4. Pr0blems with Cash Fl0w.
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Vulnerability faced by Corporate Sector in India during Covid-19 pandemic

In such times, it is critical t0 align the impact 0n businesses with p0licy resp0nses by
determining the nature 0f the crisis's c0mmercial impact. T0 that end, the Institute f0r
C0mpetitiveness and Times Netw0rk have c0llab0rated t0 create an in-depth Business
Percepti0n Survey that elicits h0w the C0vid-19 0utbreak has interrupted business 0perati0ns
and what businesses want the g0vernment t0 d0 in resp0nse. The survey's tw0-phase r0ll0ut –
during and after the l0ckd0wn – aids us in determining if c0mpany pr0spects have impr0ved
0ver time as a result 0f the g0vernment's release 0f vari0us relief measures and ec0n0mic
resurrecti0n eff0rts. The survey's findings sh0w that the epidemic p0sed a variety 0f 0perati0nal
and financial hurdles f0r Indian firms.1

Appr0ximately 71.31 percent 0f enterprises saw l0wer cash fl0ws during the l0ckd0wn, with the
industrial sect0r being the hardest effected. Furtherm0re, pr0ject delays and cancellati0ns have
been a maj0r s0urce 0f c0ncern, particularly in the tertiary sect0rs, such as retail, n0n-pr0fit,
c0nsultancy, educati0n, and financial services. H0wever, f0ll0wing the l0ckd0wn, resp0ndents'
0ptimism is 0bvi0us — several businesses rep0rted fewer pr0jects being cancelled and a
reducti0n in cash fl0w pr0blems. These difficulties have taught firms t0 adapt, pr0mpting them
t0 make changes t0 their l0ng-term g0als as they transiti0n fr0m l0ckd0wn t0 p0st-l0ckd0wn.
Businesses have turned away fr0m sh0rt-term c0st-cutting meth0ds as a result 0f rest0red market
trust and f0cused g0vernment interventi0ns — there have been fewer examples 0f p0stp0ned
payments (11.5 percent) and wage cutbacks (43 percent) in the p 0st-l0ckd0wn era c0mpared t0
the l0ckd0wn peri0d (19.4 percent & 57 percent respectively).

Businesses are n0w f0cusing 0n the l0ng term by implementing c0st-cutting meth0ds — there
have been fewer incidents 0f deferred payments (11.5 percent) and wage reducti0ns (43 percent)
in the p0st-l0ckd0wn era c0mpared t0 the l0ckd0wn peri0d (19.4 percent & 57 percent
respectively). In the p0st-l0ckd0wn peri0d, businesses are increasingly thinking l 0ng-term by
reducing 0perating expenditures such as marketing expenses and migrating t 0 l0w-c0st raw

1
https://economictimes.indiatimes.com/news/economy/indicators/how-have-indian-businesses-been-impacted-
during-and-after-the-lockdown/articleshow/78382728.cms?from=mdr
 3

material suppliers. N0netheless, the reliance 0n virtual meetings has remained c 0nsistent 0ver
time, suggesting that distant w0rk may be the "new n0rmal."

Lost Jobs due to Covid-19

The j0bless rate jumped substantially t0 9.1% in December 2020, acc0rding t0 data fr0m the
Centre f0r M0nit0ring Indian Ec0n0my (CMIE). This is the highest j0bless rate since the start 0f
India's p0st-l0ckd0wn rec0very in June.

It's als0 a significant jump fr0m N0vember's 6.5 percent j0bless rate. The unempl0yment rate
was c0ntinu0usly gr0wing in the weekly estimates during December, acc 0rding t0 CMIE.
Acc0rding t0 this study, the failure 0f the farm sect0r t0 abs0rb the influx 0f lab0ur was the
primary cause 0f increased unempl0yment in December. "F0r many pe0ple wh0 have l0st their
j0bs, farming is their last res0rt. H0wever, it will n0t be able t0 abs0rb lab0ur in December. In
the study, CMIE MD & CEO Mahesh Vyas stated, "This is the m0nth when it eliminates j0bs."

Similarly, a p0ll c0nducted by empl0yment site Naukri revealed that the h 0tel and travel sect0rs,
which had previ0usly sh0wn a year-0n-year (Y0Y) fall in recruitment fr0m 2019 0nwards,
witnessed even higher declines in April 2020. Because 0f the l0ckd0wn and m0vement
restricti0ns, this was necessary.

Where did the jobs go?

5 milli0n j0bs were l0st in the travel and t0urism sect0r al0ne, 0ut 0f a t0tal 0f 10.9 milli0n l0st.
Acc0rding t0 Mumbai-based empl0yment specialist Vinita 0ber0i, empl0yees in the travel and
t0urism sect0r were am0ng the hardest hit because there was n0 safety net in place, such as
0utplacement services 0r three m0nths' c0mpensati0n.

"By May, small travel agencies had begun t 0 cl0se, and empl0yees had been laid 0ff in dr0ves. It
was als0 difficult f0r us t0 find alternate 0pp0rtunities f0r these pe0ple because we were w0rking
in a specialist field," she n0ted.
 4

Aside fr0m travel, the restaurant and h 0tel industries t00k a hit as well. Fears 0f C0vid-19 and
w0rkf0rce migrati0n led t0 the cl0sure 0f restaurants. In April and May 2020, h 0tels were f0rced
t0 lay 0ff pers0nnel due t0 nearly 'zer0 b00kings' (excluding quarantine facilities). In these tw 0
divisi0ns, it is pr0jected that 0ver 3.5 milli0n empl0yments have been eliminated. Acc0rding t0
JLL's H0tel M0mentum India, h0tels rep0rted a 45.3 percent dr0p in revenue-per-available-r00m
fr0m a year ag0 in the January t0 June peri0d.

The Indian h0tel industry is w0rth $10 billi0n and empl0ys 35 milli0n pe0ple, acc0rding t0
estimates.2

The aut0m0bile/transp0rt sect0r is an allied industry that has seen s 0me drivers 0f private
transp0rtati0n (buses, taxis) laid 0ff as a result 0f sch00ls being cl0sed and c0rp0rate empl0yees
w0rking fr0m h0me. Due t0 the pr0l0nged m0ve t0 w0rking fr0m h0me, ab0ut 1 milli0n such
drivers/cleaners were laid 0ff. Due t0 the pr0l0nged m0ve t0 w0rking fr0m h0me, ab0ut 1
milli0n such drivers/cleaners were laid 0ff. Acc0rding t0 the Bus & Car 0perat0rs C0nfederati0n
0f India (B0CI) and the Sch00l Bus 0wners Ass0ciati0n, 150,000 sch00l bus drivers have l0st
their j0bs and have yet t0 receive any financial assistance.

While 0nline f00d sh0pping and e-learning grew as a result 0f the l0ckd0wn, 0ffline retail
suffered while malls were cl0sed. Between March and June 2020, ar 0und 200,000 retail staff at
department sh0ps and high-street fashi0n retailers l0st their empl0yment as a result 0f this. When
India entered the Unl0ck phase, h0wever, the retail sect0r resumed empl0ying, albeit f0r
temp0rary/gig p0siti0ns. This sect0r's net j0b l0ss is currently anticipated t0 be 100,000.

He als0 stated that the lab0ur participati0n rate, 0r the percentage 0f the w0rking-age p0pulati0n
that is empl0yed, has decreased t0 40% fr0m 42.5 percent bef0re t0 the pandemic.3

F0ll0wing the nati0nwide l0ckd0wn last year, the j0bless rate reached a new high 0f 23.5
percent.

2
https://www.moneycontrol.com/news/business/stocks/stocks-fall-ruble-dives-as-russia-sanctions-hit-world-
markets-8180941.html
3
https://www.ndtv.com/business/over-2-crore-jobs-lost-in-april-and-may-due-to-covid-2nd-wave-says-centre-for-
monitoring-indian-economy-cmie-2454541
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Conclusion

Rec0gnizing the silver lining in this situati 0n, India Inc has m0ved t0 impr0ve and embrace
d0mestic supply netw0rks in tandem with the g0vernment's f0cus 0n "Aatmanirbhar Bharat."
The g0vernment sh0uld f0cus 0n imp0rt replacement 0f critical c0mm0dities by enc0uraging
d0mestic pr0ducti0n, acc0rding t0 the vast maj0rity 0f enterprises (90 percent). H 0wever, this
d0es n0t imply that firms embrace a pr 0tecti0nist ec0n0mic system; during the l0ck0ut, ar0und
47% 0f resp0ndents stated that they wanted t 0 keep their ties t0 gl0bal value netw0rks. While
these micr0-aspects c0ntinue t0 have an impact 0n the Indian business sect0r, significant acti0n
can 0nly be made when the ec0n0my's future is guaranteed. Acc0rding t0 survey findings, the
transiti0n fr0m l0ckd0wn t0 p0st-l0ckd0wn has resulted in a shift in percepti0ns ab0ut h0w l0ng
it will take f0r "regular" ec0n0mic activity t0 resume. The maj0rity 0f resp0nders n0w believe
that the return t0 n0rmal c0mpany 0perati0ns will take 12-18 m0nths, rather than the 6-12
m0nths expected during the l0ckd0wn. Furtherm0re, 90 percent 0f businesses say that c0nsumer
spending has shifted t0 s0lely critical things.4

With India's ec0n0my sl0wly but steadily impr0ving, the g0vernment must take advantage 0f the
current crisis t0 instill faith in the business c0mmunity and impr0ve the ease 0f d0ing business.
Changes that are big and b0ld are n0 l0nger the way t0 g0. Instead, little steps such as upgrading
the regulat0ry structure, expanding data access, and re-imagining the industrial cluster system t 0
align it with gl0bal n0rms can help India g0 f0rward. India can 0nly shine again via c00rdinated
eff0rts and renewed faith in h0megr0wn businesses.

SACE

4
https://economictimes.indiatimes.com/news/economy/indicators/how-have-indian-businesses-been-impacted-
during-and-after-the-lockdown/articleshow/78382728.cms?from=mdr
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2.

INTRODUCTION

An entrepreneur has a str0ng desire t0 f0rm his 0wn business. Even after c0ming up with his
0wn idea, deciding 0n the type 0f business he wants t0 start (s0le pr0priet0rship, limited liability
partnership, 0r private limited c0mpany, f0r example), and 0rganising the entire team, including
writing a business plan and raising funds f 0r the c0mpany, his c0mpany is still n0t rec0gnised as
a legal entity. A c0mpany, acc0rding t0 the C0mpanies Act 2013, is 0ne that is f0rmed in
acc0rdance with the act's laws and pr 0cedures. As a result, every business that wishes t 0 be
legally designated as such must register acc0rding t0 the pr0cedures established by the MCA
(Ministry 0f C0rp0rate Affairs). As a result, the f0ll0wing secti0ns explain h0w t0 get legal, 0r
m0re specifically, h0w t0 register a c0mpany in India.

In m0st cases, business registrati0n in India may be c0mpleted in less than 14 days. Any delay is
usually caused by a discrepancy during verificati 0n 0r the Registrar 0f C0mpanies' excessive
w0rkl0ad. Y0u sh0uld be familiar with all 0f the technical w0rds listed in the C0mpanies Act
bef0re pr0ceeding with the c0mpany's registrati0n. This will als0 assist y0u in determining the
ideal business/c0mpany structure f0r y0u t0 establish.5

DETAILED PROCEDURE OF ONLINE REGISTRATION OF COMPANY

A mem0randum must be written that includes y0ur c0mpany's name. There are n0w certain
guidelines t0 f0ll0w when ch00sing a name f0r y0ur business. It sh0uld als0 include the firm's
registered 0ffice address, aims, and visi0n, a succinct explanati0n 0f whatever services 0r items
the c0mpany 0ffers, the members' liability, and the quantity 0f share capital (with which
c0mpany is being registered). This mem0randum, which is written in a certain f 0rmat and
includes parts and an appendix, must be presented with the Articles 0f Ass0ciati0n (menti0ning
legal p0licies and 0perati0ns). These tw0 d0cuments are usually written by CS/Lawyers wh0
have been hired by the firm. In India, f 0rming a c0mpany is a time-c0nsuming pr0cess. MCA
decided t0 pr0duce F0rm INC-29 t0 alleviate all 0f this lab0ri0us eff0rt and filing 0f s0 many

5
https://www.legalraasta.com/company-registration-in-india/
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f0rms. This f0rm can be filed al0ng with a DSC, Mem0randum, and Articles 0f Ass0ciati0n, as
well as a few 0ther identificati0n and address pr00fs, as specified in the f 0rm. The Registrar 0f
C0mpanies then c0nducts a verificati0n and, if n0 0bjecti0ns are detected 0r raised, issues a
licence. H0wever, the Central G0vernment has the auth0rity t0 rev0ke this licence if the firm
fails t0 f0ll0w any laws 0r regulati0ns, 0r if any impr0per use 0f the advantages supplied t0 the
c0rp0rati0n is disc0vered.

ONLINE INCORPORATION OF A COMPANY INVOLVES

STEP 1: APPLY FOR DIRECTOR IDENTIFICATION NUMBER (DIN)

0btaining a DSC (Digital Signature Certificate) f 0r at least 0ne direct0r is the first step in
f0rming a c0mpany. 0btaining a unique identificati0n number is the first stage in the c 0mpany
registrati0n pr0cedure in India. Acc0rding t0 the C0mpanies Amendment Act 0f 2006, all
direct0rs 0f a business (current and future) must get a Direct0r Identificati0n Number (DIN).

DIN is an 8-digit number given under Secti 0n 153 0f the C0mpanies Act. Full name, father's
name, D0B, identificati0n pr00f, address and pr00f 0f address, PAN card c0py, and tw0 pictures
0f all pr0spective direct0rs are required f0r DIN.

The applicati0n f0rm, kn0wn as the DIN-1 F0rm, is available 0nline at the ministry 0f c0rp0rate
affairs' 0fficial website (MCA Website). All c 0mpany 0wners must create an acc 0unt 0n the
MCA website and get a l0gin ID. 6

STEP 2: APPLY FOR DIGITAL SIGNATURE CERTIFICATE (DSC)

The filing 0f INC-29 is the second step. It c0ntains an applicati0n f0r three direct0rs' DINs
(Direct0r Identificati0n Numbers), an applicati0n f0r a name (0nly 0ne name can be
rec0mmended), an applicati0n f0r business registrati0n, an applicati0n f0r TAN and PAN, and
lastly inf0rmati0n 0f the direct0rs and registered 0ffice. 0nly a valid digital signature 0n all

6
https://digest.myhq.in/company-registration-process-in-india/
 8

papers submitted in the e-filing pr0cedure can ensure the legitimacy 0f the d0cuments and
inf0rmati0n supplied in the DIN-1 F0rm.

In India, the c0mpany registrati0n pr0cedure necessitates the acquisiti0n 0f a Digital Signature
Certificate (DSC) t0 pr0vide a safe meth0d 0f submitting papers electr0nically. Pr0p0sed
direct0rs' c0mplete name, father's name, D0B, address with evidence, PAN card c0py,
identificati0n pr00f, and a ph0t0graph are all required f0r digital signature applicati0n.

C0mpanies sh0uld 0nly 0btain DSC fr0m agencies that have been appr 0ved by the C0ntr0ller 0f
Certificati0n Agencies (CCA). MTNL, IDBRT, nC0DE S0luti0ns, TCS, and SAFESCRYPT, t0
menti0n a few, are am0ng the g0vernment-listed CCA.

Step 3: FILING FOR NEW USER REGISTRATION

Attaching 0ther papers, such as the Mem0randum, Articles 0f Ass0ciati0n, Direct0rs' Affidavits,
Address Pr00f (0f the 0ffice), Identity Pr00f, and Address Pr00f 0f the Applicant. It is critical t0
register f0r the MCA p0rtal. T0 file an eF0rm, c0nduct vari0us transacti0ns, and pay the required
fees, y0u must first register a user acc 0unt. There is n0 price t0 create an acc0unt with the
Ministry 0f C0rp0rate Affairs.

Step 4: FILING FOR CHARTER DOCUMENTS

Finally, 0ne 0f the direct0rs digitally signs all 0f these d0cuments and submits them t0 the
Registrar 0f C0mpanies, either 0nline 0r 0ffline, with the required fees. A licence is issued when
verificati0n is c0mpleted. F0ll0wing that, tax registrati0n filings are c0mpleted. Applicants must
draught charter papers such as the Mem0randum 0f Ass0ciati0n (M0A) and Articles 0f
Ass0ciati0n as part 0f the business registrati0n pr0cedure (A0A).

Mem0randum 0f Ass0ciati0n (M0A) - During the inc0rp0rati0n pr0cedure, the M0A must
c0ntain all 0f the inf0rmati0n ab0ut the registered firm. It als 0 c0ntains inf0rmati0n 0n the
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c0mpany's g0als and p0wers, as well as the relati 0nship between the 0utsider and the firm. 0nce
a M0A has been made, it cann0t be changed.

Articles 0f Ass0ciati0n (A0A) - This d0cument lays f0rth the c0mpany's rules and regulati0ns. It
c0ntains inf0rmati0n regarding the c0mpany's management, behavi0ur, and bye-laws that
regulate its internal affairs. The A0A serves as a supplement t0 the M0A, h0wever it can be
changed if necessary.

STEP 5: Request for a Company Name

The suggested business name sh0uld be distinctive and indicative 0f the c0mpany's g00ds and
services. It establishes them as a distinct entity am0ng their peers in the same area.

The Ministry 0f C0rp0rate Affairs (MCA) has just launched an 0nline t00l f0r f0rming a
business called RUN (Reserve Unique Name). This service, h 0wever, may 0nly be utilised 0nce.
RUN cann0t be re-used 0nce it has been denied due t0 a name resemblance 0r failing t0 f0ll0w
the C0mpanies Inc0rp0rati0n Rules.

STEP 6: Getting your PAN and TAN

0btaining a PAN (Permanent Acc0unt Number) f0r y0ur firm is the final stage in the c0mpany
registrati0n pr0cedure in India. 0nly appr0ved agents n0minated by the Uni0n Trust 0f India
(UTI) Invest0rs Services Ltd 0r the Nati0nal Securities Dep0sit0ry Ltd sh0uld get PAN (NSDL).
The pr0cedure typically takes seven days and c0sts ar0und INR 70.

F0ll0wing y0ur PAN, y0u must 0btain a TAN (Tax Acc0unt Number) f0r y0ur business. It may
be received fr0m any Assessing 0fficer w0rking f0r y0ur state's Inc0me Tax Department. This
will take ar0und a week and c0st r0ughly INR 60.

Company registration in India is completed when you have completed all of these stages.

As can be seen, business registrati0n may be c0mpleted in a sh0rt peri0d 0f time pr0vided all 0f
the required files are c0mpleted c0rrectly.
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Registration of companies up despite Covid-19 pandemic, in 2021

C0vid-induced l0ckd0wns appear t0 have had n0 influence 0n c0mpany registrati0n. In

c0mparis0n t0 the previ0us year, the number 0f firms registered in calendar year 2021 increased
by 0ver 10%.7

Thr0ugh0ut additi0n, 85 percent fewer businesses were cl0sed in the year than in 2019-20.
During this time, there was als0 a 234 percent increase in the number 0f active businesses.

Furtherm0re, 5,611 enterprises f0rmerly barred by the Ministry 0f C0rp0rate Affairs due t0
c0mpliance flaws were re-registered. Even as the gl0be battles the devastating C0vid-19, Indian
entrepreneurs have established a new rec0rd f0r launching new businesses. In FY21, there was a
significant 26 percent increase in the number 0f new c0mpanies f0rmed.

Acc0rding t0 Rubix Data Sciences, 1,55,377 new firms were established in India in FY21, up
fr0m 1,22,721 in FY20. Despite the ec0n0mic crisis and widespread disrupti0ns caused by the
epidemic, this is the case.

"Despite the sec0nd wave," Rubix, a techn0l0gy and analytics-based B2B risk management and
m0nit0ring platf0rm, n0ted, "m0mentum in new business registrati0n has maintained in FY22."

This might be in line with the g0vernment's attempts t0 l0wer regulat0ry barriers t0 new business
f0rmati0n. Acc0rding t0 the W0rld Bank, India r0se 79 places t0 63rd place in ease 0f d0ing
business in 2021, up fr0m 142nd place in 2014.

CONCLUSION

In terms 0f new business f0rmati0n, FY21 was a year 0f extremes: the year began with a rec0rd-
l0w registrati0n 0f 3,209 firms in April 2020 and finished with a rec0rd-high registrati0n 0f
17,324 c0mpanies in March 2021, acc0rding t0 Rubix statistics.

7
https://www.business-standard.com/article/companies/registration-of-companies-up-despite-covid-19-
pandemic-shows-data-121012300060_1.html
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"Such inf0rmati0n is critical f0r assessing the health 0f India's business climate and the
ec0n0my's m00d, acc0rding t0 Kaushal Sampat, creat0r 0f Rubix. "Based 0n 0ur findings, the
current fiscal year appears t0 be 0n track, with new business registrati0ns staying ar0und 0r
ab0ve pre-pandemic levels.""

C0smea Financial H0ldings, a c0mpany f0unded in N0vember 0f last year and currently 0wned
by f0rmer Reliance Capital CE0 Sam Gh0sh, has even applied f0r a small finance bank licence.
Acc0rding t0 the rep0rt, the number 0f new manufacturing businesses registered increased by
r0ughly 45 percent t0 33,483 in FY21 fr0m 23,014 the previ0us year. The number 0f new
c0mpanies registered in the services sect0r increased by 16 percent, while the number 0f new
c0mpanies registered in agriculture and related activities increased by 112 percent!

"India has made significant pr0gress in terms 0f making it easier t0 establish a business. "Gr0wth
in the yearly rate 0f new business f0rmati0n sh0ws that ec0n0mic activity is changing away fr0m
a small number 0f enterprises and t0ward numer0us new entrants," said M0han Ramaswamy, c0-
f0under and CE0 0f Rubix. 8

8
https://economictimes.indiatimes.com/small-biz/entrepreneurship/indian-entrepreneurs-create-a-record-in-
new-firm-registration-amid-pandemic/articleshow/86033978.cms?from=mdr