Are you puzzled to choose your business? You are in the right place. Just briefly read this Article & you got your answer….
Are you puzzled to choose your business? You are in the right place. Just briefly read this Article & you got your answer….
CHOOSEN YOUR BUSINESS STRUCTURE…
Of all the options you can make when
starting a business, It is one of the most necessary is the type of the
legal structure you select for
your company. Not only will this
decision have an impact on how much you pay in taxes, it will have an effect on the
amount of paperwork for your business is required to
do, the personal liability you face
and your ability to raise money.
Types of Companies in India
– Types of Legal Entities in India
– Types of Corporate Entities in
India.
In India, the few following types of business entities are available:
4.
Partnership
Both the
Indian promoters and the foreign promoters can be form the following business
entities: Private Limited Company, Public
Limited Company, Limited Liability
Partnership, Partnership & Sole Proprietorship.
The foreign companies also have the options of forming the following kind of
business entities: Joint
Venture Company, Subsidiary
Company. It should be noted that a Joint Venture Company is not a
separate type of legal entity; it could be either a Private Limited Company,
or a Public
Limited Company. Similarly a completely owned Subsidiary of a foreign
company in India could be either a Private Limited Company, or a Public
Limited Company.
For a foreign
Investors in India it is necessary to choose a proper type of business
or corporate entity which is best suits its purposes and takes care of
liability issues and tax planning issues. Foreign
Companies planning to do business in India should pay special attention
to Entry Strategies in India for Foreign
Investors and corporate structuring to save taxes to the best extent allowed by
laws and global tax treaties.
It is also
mandatory for foreign
investors or foreign
shareholders, both individuals and corporate shareholders, to seek Government
Approvals for Investing in India In some of the special cases Foreign
Investment Promotion Board, FIPB Approval for Foreign Investment in India
is required. In other cases Reserve Bank of India, RBI Approvals
for Foreign Investment in India is required. The sectors where the RBI
Approval for foreign investors is available under automatic route can be found
at FDI in India Sector wise Guide.
There are various steps required to establish a business in
India, before and after incorporation, as mentioned hereinafter. See
also the Procedure for Formation of Company in India.
A Company
in India can have foreign directors to provide some conditions are fulfilled.
The directors of an Indian company, both Indian and foreigner directors, are
required to obtain DIN (Director Identification Number)
& DSC
(Digital Signature Certificate).
Also see the
Annual Corporate
Filings in India
for corporate maintenance requirements in India.
Private Limited Company
A private limited
company is a company which has the following characteristics:
·
Shareholders right to transfer shares is restricted.
·
The number of shareholders is limited to 200, &
· An invitation to the public to subscribe to any shares
or debentures is prohibited.
A Private Limited Company is one of
the popular form of business entity used for Foreign Investors in India,
including USA investors in India. There are many various requirements for
forming a private limited company in India. There are various steps
required to establish a business in India, before and after
incorporation, as mentioned hereinafter.
For Briefly Details visit: Private
Limited Company in India
Public Limited Company
A public company is defined as a
company which is not a private company. The following conditions apply only to
a public company:
·
It must have at least seven shareholders
·
A public company is not authorized to start a business
upon the grant of the certificate of Incorporation. In order to be eligible to
commence business as a corporation, it must obtain another document called
trading certificate.
·
It must publish a prospectus or file a statement in
lieu of a prospectus before it can start transacting business.
·
A public company is required to have at least three
directors.
·
It must hold statutory meetings & obtain
government approval for the appointment of the management.
For Briefly Details visit: Public
Limited Company in India
LLP (Limited Liability Partnership)
A law to allow Limited Liability
Partnership (LLP) in India has been enacted by the Parliament of India recently. (Limited Liability Partnership (LLP)
Act of 2008).
LLP is an alternative corporate
business entity that provides the benefits of limited liability of a company
but allows its members the flexibility of organizing their internal management
on the basis of a mutually-arrived agreement, as in the case in a partnership
firm.
This format would be quite useful
for small and medium enterprises in general and for the enterprises in services
sector in particular, including professionals and knowledge based enterprises.
As proposed in the Bill, LLP shall
be a body corporate and a legal entity separate from its partners. It will have
to perpetual succession. While the LLP will be a separate legal entity, liable
to the full extent of its assets, the liability of the partners would be
limited to their agreed contribution in the LLP.
Further, no partner should be
liable on account of the independent or unauthorized actions of other partners,
thus allowing individual partners to be shielded from joint liability created
by another partners wrongful business decisions or misconduct.
For more Details visit: LLP in India
DSC (Digital Signature Certificate) for Directors
The Directors for an Indian
company, both Indian and foreigners, are also required to get Digital Signature
Certificate - DSC - under the new requirements. Digital Signature Certificate
(DSC) is required for all Directors or authorized representatives of any
companies and professionals who will require to sign ROC forms or documents. A
DSC, like hand written signature, establishes the identity of the sender filing
the documents through internet which sender cannot revoke or deny. A DSC is not
only a digital equivalent of a hand written signature it adds extra data
electronically to any message or a document where it is used to make it more
authentic and more secured. There are various classes of DSC.
DIN (Director Identification Number)
The Directors for an Indian
company, both Indian and foreigners, must register and get an identification
number under the new requirements. It is called Director Identification Number-
DIN.
Requirements for a Private Limited Company
- · A Registered Business Name: This must be followed by the word Limited'. The Companies Registration Office exercises are some control over the choice of the name, it cannot be identical (or very similar to) the name of an existing company. It won't be considered if it is offensive or illegal and the use of certain words in a company (for example, `Institute', `National', `Corporation') can only be used in certain circumstances. The company name must be displayed in a conspicuous place at every office, or other premises where the company carries out business.
- A Registered Office: This is not necessarily be the same address as the business is conducted from. Quite frequently the address used for the registered office is that of the firm's solicitor or accountant. This is the address, though, where all official correspondence will go.
- ·
Shareholders: There are must be a minimum of two
shareholders (also described as `members' or `subscribers'). A private company
can have up to 200 shareholders.
- ·
Share Capital: The Company must be formed with a
stated, nominal share capital divided into shares of fixed amounts. Minimum
authorized capital of Indian Rupees 100,000 is required to form a private
company in India.
- ·
Memorandum of Association: The memorandum is the
company's charter. It states the company's name; the situation of its
registered office; its share capital; the fact that liability is limited and,
most importantly, the object for which the company has been formed. In theory,
the company can only operate in the areas mentioned in the objects clause but
in practice the clause is drawn to cover as wide an area as possible, and
anyway a 75 per cent majority of the members of the company can change the
objects whenever they like. Nevertheless, it is worth bearing in mind that
directors of the company will incur personal liability if the company engages
in a type of business which is not authorized by the objects clause. The
memorandum must be signed by at least three shareholders.
- ·
Articles of Association: The document contains the
internal regulations of the company, the relationship of the company to its
shareholders and the relationship between the individual shareholders. Many
companies don't bother to draw up their own articles but adopt (sometimes with
some modifications) articles set out in the Companies Act.
- ·
Certificate of Incorporation: This is the document,
which the registrar of companies issues to you once he has approved your choice
of name and your memorandum. When you receive this document your company
legally exists and is ready to trade
- · Auditors: Every company must appoint a qualified auditor. The auditor's duty is to report to the treasurer whether or not the books of the company have been properly kept, and that the balance sheet and profit and loss account presents (or doesn't present) a true and fair view of the company's affairs and complies with the Companies Act. Auditors are appointed or re-appointed at general meetings at which annual accounts are presented, and they hold office from the conclusion of the meeting until the next general meeting.
- ·
Accounts: The Companies Act lays down strict rules on
accounting. Every company must maintain a set of records, which show the
financial position at any one time with reasonable accuracy. The accounts
comprise a profit and loss account and balance sheet with the auditors' and
directors' reports appended. A new company's accounting reference period begins
on its incorporation and runs until the following 31st March - unless the
company notifies the registrar of companies otherwise. Within ten months of the
end of an accounting reference period, an audited set of accounts must be laid
before the shareholders at a general meeting and a set delivered to the
registrar of companies.
- ·
Registers, etc.: In addition to the accounts books,
companies are required to have: a register of members and share ledger; a
register of directors and secretaries; a register of share transfers; a
register of charges; a register of debenture holders; a book can be purchased
to hold all of the above. This will be provided automatically if you buy a
running concern.
- · Company Seal: All companies must have an engraved seal. This must be impressed on share certificates and must be used whenever the company has to execute a deed. Again, this is included in the ready-made company package.
Advantages of Incorporating in India
·
Many tax exemptions available to the company set up in
special Economic Zone.
·
Many tax incentives available to IT companies.
·
India has got double taxation treaties with many
countries.
·
Minimum authorized capital of only Indian Rupees
100,000 is required to form a private company in India.
·
Skilled & Intelligent employees available at
nominal rate
·
With its large base of English speaking skilled human
resource, It is most sought after destination for business process outsourcing,
Knowledge processing etc.
Where to Incorporate in India?
A company incorporated in any state of India can do business
in all the states of India. The following are the locations of Registrars of
Companies (ROC's) in India:
States in India
|
ROC Locations
|
Delhi & Haryana
|
Register of Companies Delhi & Haryana
NEW DELHI
|
Karnataka
|
Register of Companies Karnataka BANGALORE
|
Maharasthra, Dadra & Nagar Haveli
|
Register of Companies Maharashtra
MUMBAI
|
Pune, Kolhapur, Ratnagiri, Satara, Sindhudurga, Sangli, Sholapur
& Ahmednagar districts in Maharashtra
|
Register of Companies Pune
PUNE
|
Tamil Nadu
|
Register of Companies Tamil Nadu
CHENNAI
|
Coimbatore, Nilgiris, Periyar Salem, Dharmapuri & Dindigul,
Quaid-e-Milleth districts in Tamil Nadu
|
Register of Companies Coimbatore
COIMBATORE
|
Gujarat
|
Register of Companies Gujarat,
AHEMDABAD
|
Assam, Tripura, Manipur, Nagaland, Meghalaya, Arunachal Pradesh,
Mizoram & Shillong
|
Registrar of Companies Assam, Tripura, Manipur, Nagaland, Meghalaya,
Arunachal Pradesh, Mizoram & Shillong
|
Bihar & Jharkhand
|
Register of Companies PATNA
|
Goa, Daman & Diu
|
Register of Companies GOA, DAMAN, DIU
|
Jammu & Kashmir
|
Register of Companies JAMMU & SRINAGAR
|
Kerala, Amindivi, Minicoy & Lakshadweep Islands
|
Registrar of Companies Kerala
COCHIN
|
Madhya Pradesh & Chhattisgarh
|
Registrar of Companies Madhya Pradesh,
GWALIOR
|
Orissa
|
Register of Companies CUTTACK
|
Pondicherry
|
Register of Companies PONDICHERRY
|
Punjab, Himachal Pradesh & Chandigarh
|
Register of Companies JALANDHAR
|
Rajasthan
|
Register of Companies JAIPUR
|
Uttar Pradesh & Uttaranchal
|
Register of Companies KANPUR
|
West Bengal
|
Register of Companies West Bengal
KOLKATA
|
Andaman
|
The Register of Companies Andaman
PORT BLAIR
|
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