MCA provided waiver of additional fees on list of forms

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Annual Return of LLP (Form 11) required to be file by July 31, 2021

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DIR-3 KYC form to be filed by September 30, 2021

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RBI to give booster shot to Covid-hit services, MSMEs

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The tax department has launch the much-awaited new portal 2.0

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MCA launches first phase of MCA21 V3.0 portal

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RBI announced to cut the key repo rate, at which it lends to banks, for a third straight time by 25 basis points to 5.75 percent.

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  • What is DIR-3 KYC?

DIR-3 KYC is Form launched by the Ministry of Corporate Affairs. This form will be used to update KYC of all Directors. In this digitized era, application in e-form DIR-3 was sufficient to obtain DIN. This is a one-time process for any person who wants to be a director in one or more companies. However, now with MCAs move to update its registry, all directors with a DIN will have to submit their KYC details annually in Form DIR-3 KYC.

  • Who has to file DIR-3 KYC form?

Any Director who was allotted a DIN by or on 31st March, 2021 and whose DIN is in ‘Approved’ status will have to submit his KYC details to the MCA.

For Financial year 2020-21 onwards - Every Director who has been allotted DIN on or before the end of the financial year, and whose DIN status is ‘Approved’, would be mandatorily required to file form DIR-3 KYC before 30th September of the immediately next financial year.

After expiry of the respective due dates, system will mark all non-compliant DINs against which DIR-3 KYC form has not been filed as ‘Deactivated due to non-filing of DIR-3 KYC’.

  • Modes of DIR-3 KYC:

Following are the two modes of DIR-3 KYC:

1. DIR-3 KYC e-form based

2. DIR-3 KYC WEB based

  • Who can file e-form DIR-3 KYC?

Any DIN holder, who is filing his KYC details for the first time with MCA, must file all KYC details only through e-form DIR-3 KYC. There is no option for such a person to access the web-service for his KYC. Further, any DIN holder who wants to update any information of his KYC details must update the same through filing of e-form DIR-3 KYC only. Please note that no update in details can be made by accessing the web-service for DIR-3 KYC.

  • Who can file KYC through DIR-3 KYC web-service?

Any DIN holder who has already submitted e-form DIR-3 KYC in any of the previous financial years and who does not require update in any of his KYC details as submitted, may perform his annual KYC by accessing DIR-3 KYC web service. No fee is payable up to the due date of each financial year. After the due date, a fee of Rs.5000 shall be payable.

  • What are the Roadblocks involved in filing the e-form DIR-3 KYC?

1. Every Director will have to provide unique personal mobile number and email address while filing the e-form. This mobile number and email address will be verified by an OTP (one-time password).

2. The second check implanted here would be that the director has to use his own digital signature while filing this e-form.

3. Further, the third test to ensure that complete and right information is provided will be that the e-form should be certified by a practicing Chartered Accountant or Company Secretary, or Cost and Management Accountant.

  • Due Date and Penalty Charges for Not Filing DIR 3 KYC Form:

As per the provisions of Rule 12A of the Companies (Appointment and Qualification of Directors) Rules, 2014, every individual who is allotted DIN as on 31st March of a financial year must submit his KYC on or before 30th September of the immediately next financial year.

If the DIN holder does not file his annual KYC within the due date of each financial year, such DIN shall be marked as ‘Deactivated due to non-filing of DIR-3 KYC’ and shall remain in such Deactivated status until KYC is done with a fee of Rs.5000/-.

  • Documents required to file DIR-3 KYC Form:

1. Proof of permanent address (Madatory)

2. Copy of Aadhar Card (Optional)

3. Copy of Passport (Optional)

4. Proof of present address (If not same as permanent address)

  • Details required to file DIR-3 KYC e-form?

1.DIN

2. Applicant’s full name

3. Father’s full name

4. Latest passport size photograph

5. Citizenship

6. Nationality

7. Residency

8. Occupation Type

9. Educational Qualification

10. Date of Birth

11. Gender

12. PAN Number

13. Aadhar Number

14. Permanent residential address

15. Mobile Number

16. Email ID

  • Step by step guide to filing your DIR-3 KYC:

Step 1: Download the Form

First and foremost step is to download the DIR-3 KYC form from the MCA website.

http://www.mca.gov.in/MCA21/dca/downloadeforms/eformTemplates/NCA/Form_DIR-3_KYC.zip

Step 2: Fill in the DIN details

Directors must fill in the DIN in the KYC form, whose status is ‘Approved’.

Directors with deactivated DIN because of non-filing of KYC Form, can fill the form after the prescribed due date by paying late filing charges.

Step 3: Furnish the Required Details in the DIR- 3 KYC Form

Name & Relevant credentials

The applicant must fill his/her first & last name and also the first & last name of his/her father.

1. Director must enter his name which is mentioned in his PAN

2. Address furnished in the form will be authenticated with the PAN database

3. Single alphabets, Acronyms, and Short forms are not permitted

Citizenship, Residency & Nationality

1. The applicant must select whether he/she is citizen of India? (Yes/No)

2. The applicant must select whether he/she is resident of India? (Yes/No)

3. A Director needs to declare his/her Nationality

4. Directors with foreign nationality must declare the nationality mentioned in his passport

Age Declaration

A director must enter his date of birth (DOB) in the DD/MM/YYYY format. Age declaration is mandatory because the person below the age of 18 years is ineligible to file this application.

Address

A director must mandatorily enter his permanent residential address and attach a proof of permanent address. When the current residential address is different from the permanent residential address, it becomes compulsory to furnish the current residential address.

Note: A foreign pin code can be furnished only when the state selected is “NA”.

Personal Mobile number & Email address

The applicant must enter unique personal mobile number and email address.

Step 4: PAN Verification

Permanent Account Number (PAN) verification is mandatory. First, a director must enter his PAN and then click on the ‘Verify income-tax PAN’ button. Then, the system verifies the details of the director on the basis of the PAN card number.

Note: The PAN furnished in the form should match with the PAN mentioned in the DSC for successful authentication. In case when the foreign nationals do not have a PAN, the name furnished in the form must match with the name mentioned in the DSC for successful authentication.

Step 5: Attachments to be attach

1. Proof of permanent address

2. Copy of Aadhar Card (self-attested)

3. Copy of Passport (self-attested)

4. Proof of present address (If not same as permanent address)

5. Optional attachments, if any

Step 6: Certification Details:

The applicant must enter the practicing professional details as per respective fields and click on “Check Form”

Step 7: Authentication of e-form

1. Director must digitally sign the e-form.

2. Directors must ensure that the e-Form is authenticated which means it is digitally signed by a Chartered Accountant/Cost Accountant, or a Company Secretary, practicing the profession. Furnishing the details of the practicing professional along with their digital signature is a crucial task which cannot be avoided.

3. Further applicant should click on “Prescrutiny” button.

Step 8: Update Contact Details and Verify OTP

1. A director must update his/her contact details by entering his/her mobile number and e-mail address, which gets verified through an OTP.

2. When a director enters these contact details, he/she needs to get them verified through an OTP by clicking on the ‘Generate OTP’ button after the submission of these details. Separate OTPs are sent for mobile number and email address.

3. Only the directors who are not residents of India are allowed to enter the country codes other than +91/91/0

4. It should be noted that an OTP will successfully be sent to the mobile number & email address for a maximum of 10 times/day and twice in 30 minutes against one form

5. Click on the “Submit button”

Step 9: Uploading of e-form on MCA Portal

The applicant should upload respective signed-certified e-form on MCA portal by doing Log IN and must click on “Submit” button.

Step 10: SRN Generation

Once the e-Form DIR-3 KYC is submitted successfully, an SRN is generated and allotted to the user for the future use correspondence with the MCA.

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What is Share Valuation ?

Valuation of shares is the process of knowing the true value of the company.  Share valuation is done based on various quantitative techniques and the share value will vary depending on the market demand and supply.

The share price of listed companies which are traded publicly can be known easily. But w.r.t private companies whose shares are not publicly traded, valuation of shares is really important and challenging.

Shares Valuation methods :

The selection of method for share valuation depends upon the purpose of valuation, and using combining two or more methods will give more accurate results.

  • Income approach: This approach has two methods, (a) Discounted Cash Flow (DCF) DCF method uses the projection of future cash flows to determine the fair value and if this data is reasonably available, the DCF method can be used. (b)  Price Earning Capacity (PEC) method. PEC method uses historical earnings and if an entity is not in the business for a long time and just started its operations, then this method cannot be applied.

  • Asset Approach: If a company is a capital-intensive company and invested a large amount in capital assets or if the company has a large volume of capital work in progress then an asset-based approach can be used. This method is also applicable for valuing the shares during amalgamation, absorption, or liquidation of companies.

  • Market-driven: Based on demand and supply of shares, and most useful in case of listed company shares.

Various regulatory bodies have prescribed different valuation method and authorized/recognized different professionals for valuation of the company, and this leads to create confusion amongst all stakeholders, below given is a simple and is easy use table containing vital information about method/regulations and professionals authorized to do valuation

Regulations/ Corporate Action

Valuation by

Method

Remark

AS PER FEMA REGULATION (FDI)

ISSUE OF SHARES

Chartered Accountant or SEBI Registered Merchant Banker or Cost Accountant

Internationally accepted pricing methodology

Issue at a value higher than the FMV

 

 

 

 

Transfer of Shares FEMA

By Resident to Non Resident

Chartered Accountant or SEBI Registered Merchant Banker or Cost Accountant

Internationally accepted pricing methodology

Price should not be less then valuation price

 

 

 

 

Transfer of shares FEMA

By Non Resident to Resident

Chartered Accountant or SEBI Registered Merchant Banker or Cost Accountant

Internationally accepted pricing methodology

Price should not exceed valuation price

 

 

 

 

Companies Act 2013

Issue of Shares Section 62  (Further issue) if done by Special Resolution.

  1. Existing shareholders
  2. Employees under ESOP
  3. Any other person except mentioned above, if resolution by a special resolution, i.e Issue of shares on preferential basis

 

Registered Valuer with IBBI

w.e.f 31/1/2019

Internationally accepted pricing methodology

Right issue by Board meeting Valuation Report not needed

 

 

 

 

  • Section 230 Compromise or Make Arrangement
  • Section 232 Merger or Amalgamation
  • Purchase of minority shareholding
  • Liquidator – Section 258 Companies Act (NCLT) related cases
  • Submission of report by liquidator Section 281 of CA 2013
  • Declaration of insolvency in case of proposal  to wind up voluntarily

Registered Valuer with IBBI

w.e.f 31/1/2019

Internationally accepted pricing methodology

w.e.f 31st January 2019

 

 

 

 

Transfer of shares as per Income Tax act (Book value)

If shares are held as capital assets

Chartered Accountant or Assesses himself

As per formula given by Income tax department

 

 

 

 

 

Transfer of shares as per Income tax act

Discounted cash flow

If shares are held as capital assets

Effective 24.05.2018

Category I Merchant Banker

Discounted cash flow

  • If price is less then FMV then impact of tax on buyer and seller (Section 56(2)(x) and Section50CA
  • Needed in shares are held as capital assets

 

 

 

 

Transfer of Shares as per Income Tax if shares are held as stock in trade

NA

NA

NA

 

 

 

 

Transfer of shares as per Income tax to buyer as per section 56(2)

Any such shares received (by the buyer) under the following circumstances would be outside the ambit of section 56(2)(x) -

  1. from any relative; or
  2. on the occasion of the marriage of the individual; or
  3. under a will or by way of inheritance; or
  4. in contemplation of death of the payer or donor; or
  5. from any local authority; or
  6. from any trust or institution referred to in section 10(23C); or
  7. from any trust or institution registered under section 12AA; or
  8. by way of transaction not regarded as transfer under specific circumstances as stated under Section 47; or
  9. from an individual by a trust created solely for the benefit of relative of the individual.

 

NA

NA

NA

 

 

 

 

Issue of Shares as per Income Tax act (Issue of shares at a premium)

Effective 24.5.2018

Merchant Banker

Discounted cash flow method

Effective date 24.5.2018 (CBDT circular)

 

 

 

 

Issue of Shares as per Income Tax act (Issue of shares at a premium)

Book Value method

CA or at the option of Assessee

As per method prescribed by Income tax department

 

 

In a nutshell this post is an attempt to concisely give a insight into the this often complex subject on the different types of valuation methodology and what determines them.

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There was a monastery high up in the hills that had very strict rules between its resident monks. The monks took a vow of silence and no one was allowed to speak at all barring the head monk. There was just one exception to this rule. Every year, the monks were permitted to speak just two words.

After his first year at the monastery, one monk was summoned to his annual meeting with the head monk. “It has been one year,” said the head monk. “What are the two words you would like to speak?”

“Bed hard” said the monk.

“Thank you” replied the head monk.

One year later, the monk was again summoned to the head monk’s office. “It has been one more year,” said the head monk. “What are the two words you would like to speak?”

“Food awful” said the monk.

“I see,” replied the head monk.

Yet another year passed and the monk once again met with the head monk who asked, “What are your two words now, after these three years?”

“I quit!” said the monk.

“Well, I can see why,” replied the head monk. “All you ever do is complain.”

You may well be wondering what has this to do with communication skills? The answer is simply this…

The more you say, the less people will remember what you have said. 

If you found this story amusing, you will almost certainly remember it and be able to tell it to others.

Had each of the three conversations between the monk and the head monk been a paragraph or two, you would probably struggle to remember it, and most likely not bother.

Much the same goes for your communications with your prospects and customers. 

If you want them to remember what you said, aim to convey your message powerfully, impactfully and with as few words as possible, and maybe with a short story. Stories sell.

Though education and knowledge are essentials for development of mankind, it is communication that can provide them the platform to develop themelves in this modern age.

With strong and impactful communication skills, you can clearly create positive change in your business.  Business Leaders with great communication skills are the ones who bring solutions, drive change, motivate and inspire their colleagues. 

Useful guide on communication skills that could help promote your business:

The more you think and analyse the goals of your business and potential customers, the better you can communicate with them through blog posts, social media, videos, and advertisements.

What and how you communicate about your profession and business, matters the most when someone’s asking you or your introducing it to potential clients. Your style of presentation, communication, vocabulary, body language, and listening makes it possible to get a positive impact on your business in front of people.

People remember you, how you did it with them. Everything that you do in marketing from social media posts to blog posts, search engine ads to display ads, radio ads to TV ads, everything is communicating about you and your product/services. 

Your text, images, infographics, videos, likes, shares, selfies, and updates communicating about you online and offline. Many people can take it positively and many will take it negatively. But directly and indirectly, it is marketing. 

Better and effective communication markets your personality, business and goals in the market, more than dull and negative communication.

Following are some key tips for effective marketing communications.

1. Listen and understand the need of the market

Listening to customers may be a great way for you to gather enough business-important information.  After all, the best business decisions are based off data and not guesses. Customer feedback is one of the best ways to gather business-specific data that lets you understand how your customers really feel about the product or service you deliver.  By listening to customers, you keep the finger on the pulse of your business.

2. Simplify and stay on your message

In this digital world our attention time is massively reduced, hence to gain attention we have to communicate by delivering simple and focussed message.

3. Make communication your priority

Silence creates uncertainty. Do not to take away one of your competitive advantages by not making communication a priority.

4. Think before you communicate with your customers/employees

If you don’t think that what you say plays an important role in your life, think about the last time you missed an opportunity because you didn’t speak up, or when you didn’t get a job because of something you said that made the company think you weren’t the right person for the job.

There are many times in life where the outcome will depend on what you say and how you say it.

5. Check your message before you send

This will help you from ‘oh no’ or ‘yikes’ moments and therefore the reason why many mail service providers have confirmation before final sending of mail.

6. Be brief, yet to the point

Your communication should be brief, and powerful, words should be used as if we are spending money.

7. Emotional awareness and management of same

Emotional awareness of communication with target group and management of same makes your communication effective and hit bullseye in the mind of target customers.

8. Prove through your words and actions that you’re trustworthy

Along with communication you need to prove your word, as communication your words like are bullet which you can’t take back.

Today most business communication happens with writing emails, social media posts etc.  Hence it is essential to communicate effectively in written message, and written messages have longer life.

Remember,

“BEST WRITERS ARE BEST READER”

Expand your horizons to more challenging material than you typically read, and pay attention to sentence structure, word choice, and how the material flows.

Imitate Writers You Admire

Before we go any further, a disclaimer – imitation is not the same as plagiarism. Don’t rip and eventually developed your own style, but reading the works of these writers and seeing how they construct their essays and books are immensely helpful to you as a writer.

Develop a habit of editing your work, read before you send the message to your prospects.

In summing up,

Communication skills help to plan, manage, organize, promote, innovate various marketing, management, development, construction processes, and systems. They are important to market and promote business.

Communication skills help to build and inspire people to work towards organizational goals. It’s the most important tool that a business can use to provide a great customer experience. 

Communication skills are important to remove the communication gap between employers and employees, reduce stress and improve productivity.

Clear, though through and confident communication inspires everyone to achieve organizational goals effectively and harmoniously. That’s why communication skills are very important in business management and organizations.

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We all come on to planet “Earth” with clearly defined expiry date. We have limited time and life thrusts multiple objectives; be achieving family work balance, career, spiritual development, etc.

You can actually multiply your expected years of life with the number of days in a year and can see how much limited time is left with all of us. For Eg. if your age is 45 years and your life expectancy is 65 years it means you have only 7300 days (365*20 years) if you remove holidays, Saturday, Sunday then time left with us is even more less. I am giving you a perspective of how you could manage your time effectively to get more out of your life and also supplementing it with tools that I have come across which can be helpful for you.

18 effective strategies for Managing your Time efficiently

1. Plan your day in advance: 

Planning ahead is one of the surest ways to ensure that you will manage your time and day more effectively. Keep a few minutes aside every morning to mentally go over everything you have to do.

2. Keep a to-do list handy: 

Actually get down to writing the key deliverables of the day. Make short points that you can tick off once the task is complete. This will give you a great sense of accomplishment as well.

3. Allot time blocks for activities: 

Time blocks are the amount of time you allot to a certain activity. It is believed that the average concentration span lasts for approximately 45-50 minutes. Thus, account for that much time for important jobs, it will give you a better understanding of how much you can achieve in a day.

4. Try and complete tasks on time: 

The most productive people are those who complete what they set out to do. It's just like when we gave our board exams, we got exactly three hours to finish, not a minute more or less. If you approach tasks with that mindset, you will add much more productivity to your day

5. If not, atleast get started

Don't get stressed out if you can't complete what you've begun, the more important thing is to get started. For example, if you need to submit a project by Friday, begin a little bit of work on it by Monday. This helps you space it out and reduces any last-minute haste.

6. Keep a buffer for contingencies: 

There will be some tasks that will take more time than you expected. So keep a little buffer time just in case. This is most common in activities that involve other people -- a meeting may take longer than expected or a doctor's visit may set you back by an hour or more because of the waiting.

7. Lower your ringtones: 

The phone is increasingly becoming a bane as much as it is a boon. In tasks that need your undivided attention for completion, it may just be a good idea to put your ringtone on silent or better still, switch the phone off altogether

8. Don't respond to every email and ping: 

We are becoming a generation that is living with digital anxiety. We see an email or hear a ping and think we need to reply to it instantly. But unless it's an emergency, everything else can wait

9. Minimize the distractions: 

Have you ever felt yourself get so carried away by distractions that you find yourself completely forgetting the urgency of the task at hand? That's what happens when breaks become distractions that last too long. Distractions maybe many, but keep reminding yourself about what you set out to do and quickly bring your focus back to the task

10. Identify the urgency of tasks: 

As per the Eisenhower Method, there are some things that are urgent and important and can't wait at all, like responding to a fire alarm. Then there are others that are important and not urgent, like buying a new shoe, you may need it but not right away. And then there are still others that are urgent but not important - the odd call in between your work day; and finally, there are things that are neither important nor urgent, like planning for the next vacation. Depending on the urgency and importance, schedule your tasks accordingly.

11. Stay flexible and ready for surprises

No matter how planned you are, be sure something will throw you off gear. A fluid and flexible mindset is the best at such times. If someone cancelled an appointment that you travelled a distance for, don't fret, just go explore that part of the city.

12. Finish meetings and conversations on time

Sometimes people can talk till the cows come home. When in a meeting, keep an agenda and stick to it; when chatting with friends and family, mentally fix a time and once you think you need to end it, politely excuse yourself. Ending conversations sooner can help you save a lot of time.

13. Realize that multitasking is a myth: 

Don't think you can be at a meeting, keep typing away on your laptop and still pay attention to those around you. Not only will your performance be affected, but you will also be wasting the time of the other people present.

14. Recognize your support systems: 

Delegation is sometimes the fastest way to beat time and that's when you depend on those closest to you. If you need to pick up your child but you're stuck at work, call your child's friend's mother and ask her if she can oblige. But make sure you return the favor too.

15. Make people aware of your schedule: 

When those around you have clarity on your schedule, they will know exactly when to call you and when not to. This is a very polite and friendly way of putting a "do not disturb" signboard without offending anyone.

16. Learn to say "no": 

You can't be everywhere and do everything. There's no point spreading yourself thin, you'll lose face and lots of energy and eventually keep no one happy. Say no to what's not possible and make more time in your day for yourself

17. Brief talk on phone/social media/whatsapp:  

Make sensible use of phone, social media and do not use the same for gossip, nagging or criticism, take pause and think and use the medium. Whether you really need to communicate something, going to add value to caller/respondent.

18. Review your day: 

At the end of the day, look back and take stock of what happened and what didn't. It will tell you what you need to focus on in the coming days. Reviewing your day is also a pat on the back - you'll realize just how much you are actually capable of

  • Credits- inspiration from Ms. Ritika Bajaj and Mark Ford. (From Common sense Living)

Conclusion

Creativity matters in every area, be it business, being a leader, handling your family, and many more. Time management is very important in every field and our imagination should have be used for exploring new option and inspiration.

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Are you looking for Business ideas for starting-up and are confused?

Business sounds fascinating and to start the entrepreneur journey is more of an excitement for many people waiting on the sidelines. If you are thinking of starting your new business in 2021 then let me also tell you starting a business can be a daunting affair as there are so many contingencies from covid to lockdown etc.

I am here to make your entrepreneurship journey easy. The COVID-19 pandemic has changed so much about how people consume products and services. Hence, instead of thinking big businesses, let’s re-channelize our thoughts and focus on businesses where there is a need and can be started without too much of a hassle and maybe overriding existing business frameworks. Here are some 10 exciting small business ideas, where wannapreneurs or prospective entrepreneurs can try their luck and experienced the thrilling journey of entrepreneurship in 2021.

 

1. Information Business- Create and Sell Digital Courses.

This business idea is currently hot property. Unlike traditional courses, Digital Courses are not a tangible product. The margin in this business in very high. Everyone is into making courses with prerecorded videos and then selling on their own website or third-party websites on commission basis. Before diving headlong into this business idea, the trick is to find out what is in demand and what is useful enough in your course that they will be willing to pay for your course. Creating and selling digital courses requires one time investment and recurring advertising cost. It is a freedom business model.

 

2. Freelance Copywriter

Freelance copy writing is a great business to run. If you are good with words and having a basic knowledge of marketing helps you to establish yourself as freelance Copy Writer. You can write blogs, Press Releases and Web content for the companies and in return you would be paid for your services. The main advantage of Freelance Copy Writer is that you can operate from the comfort of your home or say any place for that matter if you are travelling.

 

3. Affiliate Marketing

Affiliate marketing is process by which affiliate or advertiser earns commission for marketing another person’s or company’s product. If you are good at marketing and you want to make a quick buck and you don’t have your own product then in that case you can resort to affiliate marketing. The sales are tracked via affiliate links from one website to another. You as an affiliate can market or advertise for as many products of different companies and earn commission. The primary thing in this business is that you should should be good at marketing or advertising.

 

4. Food Truck

As rent in major cities across the country increases, it is becoming more difficult for specialty food artisans to have their own shop in the middle of the town where their customers are more likely to be.

Food Trucks provide the great solution as you can park your food truck near local events, gardens, public places etc., wherever you are likely to draw your crowd. It gives you great mobility and ease on pockets. Food truck helps you to take your home-made recipes to hit road and develop a thriving business. Do check your local laws and state requirement in respect of permissions and food safety before you start the business of food truck.

 

5. Real Estate Agent

Real estate agent are those people who deal in buying and selling of residential or commercial property on behalf of their clients. They are paid commission for successful completion of the deal. You can help your client to find their dream property that fits their budget. It is great to start real estate agency and you can operate from your home and for meeting your client you can choose café or hotels etc. Basic knowledge of real estate and networking is required.

 

6. Graphic /Logo Designer

Every micro, small and medium enterprise needs a business logo to start their business with. Once the business is started, they need banners or promotional materials to promote their brand in the market. If you are creative and can organize content into a visually pleasing format you can start business being a Graphic Designer. As a graphic designer you can help businesses in designing logo, flyers, visiting card, social media post etc. It can be started with minimum infrastructure which includes laptop, desk and few designing software’s.

 

7. Digital Marketing

Every business every corner of the world will have their basic business website. As the importance of internet keeps growing, businesses understand the importance of marketing themselves in the Digital World. As a Digital Marketer you can help business with following activities:

a) Search Engine Optimization

b) Google Ads

c) Social Media Marketing

d) Display Ads

e) Managing their FB, Insta and LinkedIn Accounts

Digital marketing is very important in today’s world and it helps to grow your brand and business. Digital Marketing services are always in demand and small business would always prefer outsourcing rather than having a costly in-house team. It is also one of the business opportunities that gives you freedom to work from home.

 

8. Photography

You can start business of photography if you love camera and lightning. Even though you are a beginner you can learn photography and can be a professional photographer if you have a passion to pursue it. It is one of the low-cost business ideas. Set up your website and upload some of the finest clicks for the audience to check out your work. You can master in any of the specialties below to build a strong photography career:

a. Portrait Photography

b. Photo Journalism

c. Fashion Photography

d. Still life Photography

e. Sport Photography

f. Editorial Photography

g. Architectural Photography

 

9. Consulting Business

If you have been in a business world for long time and you are knowledgeable and passionate about a particular domain, then starting a consulting business in that particular domain is a great option. You can be paid for being a speaker in various corporate events and seminars. You can start your consulting agency and can consult smaller business and can charge fees in return. You can grow your consulting and advisory business and can hire Employees or Virtual assistants to take it to the next level.

 

10. Online Book Keeping Services

Every business requires book keeping service. If you are knowledgeable and well versed with the technology then you can offer book keeping service online. By operating this business, you have full autonomy of running your own business. You can learn various software’s which allows you to maintain books of accounts online and then you can offer book keeping service to small business. Small business does prefer to outsource their book keeping services to professionals rather than having a costly in-house accountants. All these business ideas shared above may sound a tad easy to initiate when it comes to capital, logistics, manpower and other infrastructure, but it sure will need a steely resolve to get it activated. Nevertheless, you must always take cognizance of following things before starting any business to make the journey more fulfilling

a) Look for your passion

b) Focus on niche

c) Start small and sustainable

d) Legal perspective of the business

e) Scale as you grow

 

For any Business solutions, consulting or  mentorship, please reach out to us.

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Why Market Research could make or break your business

  • By : Product Management Group
  • May 17, 2021
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Oh, I should have thought this through!’ ‘Can’t figure why the market is not responding favourably to my product’ ‘Oh fish, why is the client drop rate so high after first use’ You would have heard these refrains extensively in your professional life. Well look no further, it has been commonly observed that many to be entrepreneurs while starting up or current business owners while introducing a product does so on instinct, or checking with known contacts or affiliates or better still the opportunity played up for them. It is something that 99% of the people refrain from doing so, when they embark on a new journey or a project.

It all weighs in between a poor planned person or a better planned person with Market research and data.

Market research is not for the faint hearted. Every human being faces same challenges and there is a constant battle inside their own mind, a part of them that nudges to do hard work and be ready for challenges and the other part asks them to find out shortcuts to achieve their goals fast. We believe that if all of us has better understanding of time and data we could take favourable decisions and marketing research is one such tool that help entrepreneurs in taking informed decisions.

 

The importance of marketing research:

Market research is an important step to succeed, no matter which business you are set out to do.

 

What is market research? 

Market research is studying and gathering information about your consumer needs and preference, getting to know your customer base better, what they like and dislikes.

This help in a conclusive decision or closing a deal in a much sure-footed manner. Best way to do market research in today’s age is the internet. Market researchers go to tool, to find analysis about their customers. A lot of information could be gathered about consumers and your competitors, helping you take wise and important decisions.

People are ready to give information.

 

What do they need from a brand? Their expectations from the brand?

Marketing research techniques aims to identify potential customer, better precision to reach customer and a whole set of other objectives. We will share 10 types of market research technique to identify potential customer

1. Analyze your competition:  if you do not have customer base, analyze your competitors and identify customer groups interested in your products or services.

2. Identify customer’s needs:  Group or segment customers based on needs, psychology and behavior, interest, habits, frequency of purchase of product or service.

3. Ask yourself some questions:  what is your consumer mindset? What online community are they part of? What does a member of online community consider to be important? What’s their language?  What their attitude about the subject, what is current level of information, some audience have a wide range of knowledge what are they suspicious about? What encourages them?  what do they love?  And what do they ultimately want?

4. Google key word research tool: Terms and phrases your target audience searches using various online tools available. This will help you align your offerings with what the discerning consumer wants.

5. Perform some experiments:  Another great way to know customers behavior. You could set up small samples and test the theory to get important data.

6. Do personal interviews: personal interviews, un-structured open-ended questions, they usually do not represent large amount of population, they give insights into customers. Ensure that the sample set is of adequate size

7. Online research: You could use Social Media responses by user groups to get information on your discerning user base.

8. Formal or written research: This research is done by using newspapers, magazines, journals. This research is good as opinions collated are on basis of formal data.

9. Ask a question to your audience: Polls and Surveys are excellent tools for research. Ask after customer made purchase, or even potential customer by email.

 

Market research is very important it helps to find target customer, getting customer reaction on product already sold by the company or before product launch.

At the outset we need to ascertain the addressable market, understand the demand matrix. How much demand is there for the idea? What could be the likely consumer pool, how can we price the offering, whether low, moderate or high price. You need to put your ideas in to this demand matrix.

 

1. High end means high price and few customers, think up Montblanc, Bentley, Rolls Royce, amazing companies with super products, but large no of people never buys them. 

2. Golden goose price is relatively high and number of customers are massive. Think about Apple iPhone, natural example, this is sweet spot pricing, gives as mass market feel,

3. Price is low but number of customers is massive, what kind company you can think about?  MacDonald’s, Star bucks, is perfect example.

4. Last category, you may love it but may not be profitable business. You want to do it, you have passion and knowledge and creditability but few are interested, like teaching salsa to youth, cake making business, you can’t charge them more here.

 

You need to find out demand, product fit, pricing, and marketing strategy and therefore you need to employ market research tools based on above matrix to derive market intelligence.

 

10 best commonly used market research tools, used widely by entrepreneurs across the globe

1. Google trends, by analyzing google search, phrase, word, searched as percentage of total search in your market, google trends has research features, easy to navigate and is totally free.

2. Statista, is one of the business tools that gives access to market research from data institutes and govt institutes researching various industries. It helps to understand nature of competition, relative size of industry and has some amazing feature, such as content and information design, ecommerce information your business needs. Basic plan of statista is free, for corporates its $700 pm.

3. Tableau public is free data visualization tool with built in BI and Big data backed. It provides market data with analysis and you get simple visual representation of complicated data with graphs and build dash board in a minute. Tableau can be linked with google sheets, and it all comes at zero cost.

4. Google analytics, well google analytics is not product to provide mark research entirely but give analysis of traffic on your website, main feature, reporting traffic, key word guidance, custom dash board etc. If you are small business, you can use free service, if you want extensive features, you can buy Google Analytics 360

5. Make my persona, this tool you can definitely offer more market insights. With Make my persona you can create easy personal ‘in form’ and layouts. It comes with question series and download documents options. This tool is free.

6. Google key word planer, is a fantastic tool and it carries out phrase and word match related to your business. Google key word planner, gives your new keywords, how you audience searches within the market and also gives monthly search details. It has column for new customers and is market research tool.

7. Ubersugget, is simple tool for market research on keywords and content. All you need to input is a phrase and it brings a long list of suggestion. It is free with a cap on number of searches in a day and its feature includes overview of domain, keyword idea, content suggestion etc ubersuggest is free to use.

8. Google alerts, is one of the best research tools, you will get email alerts real time on keywords, create links and easy to use, you can use this tool for free.

9. Pew research center is fairly decent research tool that has mass data base, they conduct demographic data, public information search etc. Its features are smooth user interface, and huge data base and the tool is free.

10. Quora and medium, is public interaction blog forum that gives you wonderful information about information searched, query asked by people around the global and this is absolutely free.

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Target customer means the type of person that a company is looking for to sell its products or services. People often get confused between Target market and potential Target customer. Target market is a broad group of potential customers defined by ranges. For Example, for your business, a target market might be ages 20 to 40 years or person drawing income more than Rs.5 lacs. This is the group most likely to avail your product or services. This target market needs to be broken down to a specific target customer should you decided to customize for maximum benefits.

 

The Basics:

Think about who your target customer is before starting your business. It is important to create a detailed profile of the person and his lifestyle. In this way, your target customer will be a prime customer for your products and services. Selecting a product or service for the target customer will increase the probability of a sale for you. Not every customer will be a potential customer for you, in fact, not every customer will find your product valuable enough to buy.

 

Why it's important

Target market helps in identifying which of your product is exactly going to appeal to a particular age group. In case of menswear, age group 20-40 years is a sensible target audience. Target customer can be an individual or an adult group which would be a brand’s most likely, to avail the product or services they want. It's the people who are the users of the product or service and who would be brand advocates. Types of Target Customers The age groups mentioned above are the four target customer groups in most businesses. Most businesses face major challenges when trying to engage with target customers. And in order to gain maximum benefits from target customers, it is necessary to know the four types of targets.

 

Target customer vs. target market

Target customer is a much-hyped concept. Many brands name their products as Target customer and then conveniently forget about it as it doesn't work for them. They are the people that your products will be aimed towards. However, you should always keep in mind that even for the target customers you should still cater to the broader range and keep your business alive. We will understand how to identify your target customer and improve your marketing and sales strategy through this quick guide.

1. What is the difference between target customer and target market?

Target customer is a broad group of people, businesses, or products being sold by a company. This group is defined by ranges.

 

The target customer

Target customers are unique groups of people that fit your business to a very precise form. They can be divided into 6 categories of people.

1. Gender

2. Age

3. Location

4. Earning capacity

5. Purpose of life

6. Education level

If you are operating a retail shop then gender is the main consideration. If you are running a BPO or an internet business then the age is also essential. For sales of services where the target customer has to be served the right way. The income is also key and therefore education level plays a key role.

Target customers should be;

a) Right for your business

b) Accessible in terms of age

c) Accessible in terms of income level

d) In terms of gender

e) Accessible in terms of location

 

How to Design a Target List? How to identify the target customer?

The first question you need to answer is how you will make sure that your company sells to your target customer. The best way is to study your target customers profiles and observe their activities. You should decide who your customer is by observing the following: Company/Professionals looking for marketing help. Plant operators looking for business insights or new opportunities Marketing companies who are running out of ideas to promote their products, consultants looking for new clients

Acquiring clients and referral marketing should be a priority for your business. This is the main target market of your company. You should find out the needs and interests of the clients to customize marketing material and promotional campaigns to boost your sales.

Targeting of customers can make or break for any organization, and with ever increasing advertising and digital marketing spends, and it is essential to hit the bulls eye with precision to get better ROIs

I will share with you 5 tactics to identify your target customer:

1. Start with your current customers

2. Collect demographic data of your target customers

3. Look for trends

4. Go Niche

5. Create market positioning map and don’t over complicate the same.

 

Start with your current customers

Look at the characteristics of your best existing customers and organize that list into at least one profile based on shared characteristics.  Current or previous customers can also provide useful data and insights.  Research your database of previous customers (this can even be offline customers if you are just starting out with a website) and try to spot trends.

This can be a good starting point with minimum cost.

 

Collect demographic data of your target customers

To better understand the customer, I would suggest marketers up draw up their demographic portrait.   It is important to make the portrait as detailed as possible, Collect data on user behavior, location, and demographics.  For example, once you have identified potential customer say 45 year man with particular income range, then find out other details such as his hobby, decision making process, home, family etc.  This portrait is very much useful for niche marketing.

 

Look for trends

You want first to identify what is the purpose of your product or service. Really take some time on researching and finding the benefits that your product or service provides. Then you will identify who exactly is buying or in need of your particular services. Then you can go to popular online forums to see who exactly is asking questions or interested in that industry/niche.

This will help you pinpoint what age group, gender, and industry that your target audience might be in. Once you have narrowed down who this audience might be, you will be in a better position to market specifically for this group of people. Google analytics, facebook, Youtube, Amazon are also useful to find out the trends.

 

Go Niche   Know your niche and own it

Join every forum, Facebook group, LinkedIn that you can. Immerse yourself in the community, understand your customer’s problems, see the world through their lens.  Join trade associations, attend events, join groups and forums where your target audience hang out. Listen to podcasts, Q&As, etc. Lurk and listen to their stories, problems, etc. Interact if you have something of value to offer for free. DON’T sell or promote anything when you’re in this research phase. Once you’ve gathered enough data about your target audience’s pain points, you can then build your website, product or services to answer those questions and provide solutions to their problems.

 

Create market positioning map and don’t over complicate

A good way to identify a target market for your website is to use a market analysis method known as market mapping. This is a simple diagram that allows you to identify gaps in the market or industry your product/service/website operates in.

You can prepare a mindmap of the details you have about target customers identified by you and use the same parameters for your customers and find out the gap, this gap is the opportunity for you.

Don’t over complicate the same, you can use simple pen and note book to store information you have gathered and no need for fancy analytical tools.

Once you have this knowledge, you can adjust your digital marketing campaigns accordingly, or even branch out and target a new market and new demographics along the way, as your audience is not always the one you might expect.

 

Conclusion

The objective of this guide is to assist you in identifying your target market and find the best ways of increasing your sales by targeting or following the niche route to achieve your goal.

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Start A Business Today, The Right Way – A Step By Step Guide

  • By : Product Management Group
  • April 30, 2021
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Human race, right from the outset have been creative whether to hunt for food or sheer sustenance on this planet. Perhaps ‘creativity’ has evolved as one single storehouse of power that has led to human growth over other species. It is by harnessing this power of creativity using which tools were made to fulfill requirements of survival to the lifestyle era today. Business had its humble beginnings right from barter or exchange and negotiation era to the monetization format that we see today.

We have all seen or read about how enterprises or businesses were built right from the Industrial revolution 1.0 period to the current Industrial 4.0 network economy phase we are in now. Growing number of entrepreneurship ventures is a reflection of a growing and vibrant economy. Those were the days when people seeing an opportunity started using their own capital and thereafter once they saw growth went to Banks, Institutions and Private money lenders to invest in their businesses. Today there is a shift of capital providers from traditional banks to venture capitals, family offices and private equity becoming investors in businesses where they see potential of growth and scale.

You see people across age groups, educated and uneducated all trying to make a mark in entrepreneurship. The reason to embark on this journey could be as myriad as path to livelihood to pursuing passion, identifying a niche demand or sheer thrill of experiencing the unexpected with entrepreneurship and making dis-proportionate money in the process. However, the risk and uncertainty involved is one of the reasons why there are a very few entrepreneurs and a large number of people who work for entrepreneurs is because most of the people out there are uncomfortable with investing time, energy and money.

I am taking an unconventional approach in bringing out this guide based on my personal entrepreneurship journey.

Let me begin by sharing that in this digital and mobility world, the cost of launching a company today has gone down from the earlier multiple thousands of $$ to a Laptop and internet if you have the idea or a business in mind, with the upside return probability of 1000X. Today’s generation is fascinated with Business, entrepreneurship, startups propelled by the regular announcement of venture capital funding, valuations, unicorn announcements and the droves of millionaires and billionaires that’s being created in its wake.

I wouldn’t want to dampen your spirits, well the reality is entrepreneurship is a roller coaster journey, thrilling and downright bordering insanity. Incase the reason you are courting entrepreneurship is

-> You hate your current job

-> You want to make obscene wealth

-> Everyone and their uncle are doing it

-> Comparing your life with a batchmate of yours who is on this journey.

Well, all the above are the worst reasons to be an entrepreneur!

Remember, choices in Life are everything

If you have read until here, you are keen on pursuing entrepreneurship and want to know the steps to get going on the journey.

For the young and uninitiated, I wouldn’t recommend dropping out of school or a job to Startup, but I would definitely recommend them to work in a startup to get a hang of what it takes to get their ship going. The only goal in your 30s should be to build an opportunity generating machine for your future.

Now what’s an opportunity in case you are confused, it is a simple equation

Your Content (Business idea) + Network(distribution) + Time = Your Opportunity

Let’s now get down to brass tacks on how to start a Business. Here are some of the key points once must follow before starting any business.

 

Zeroing in on the idea. Look for your Passion and then focus

 

Entrepreneurship is a lottery of efforts. I believe the business idea should start with the person asking questions to himself / herself.

-> What is valuable, am I passionate about this

-> What can I uniquely do

-> What is nobody else doing

When you put your head critically around each of the points above, the idea will crystallise like you have never imagined ever. Well, it is pertinent to mention that you don’t need a new idea as such to start a business. Does the idea give you excitement or say you have a compelling desire or passionate of doing it? I am not saying you cannot choose activity other than your passion, there are entrepreneurs out there doing business which is not their passion, still they have achieved a success in what they are doing. It is just that choosing an business idea which you are passionate about makes your entrepreneurship journey more fulfilling and the probability of success higher.

I would recommend – take up one idea. Make that one idea your life, think of it, dream about it, live on that idea. Let the brain, muscles, nerves and every part of your body be full of that idea and just leave every other idea alone. That is the sure-footed way to success.

 

Is the idea a Pain point that needs a solution?

 

Any business idea that is a real pain point and a problem that is faced by a large number of people is surely a sweet niche spot to be in. If your solution resolves that pain point in a unique manner impacting lives, it’s a great business idea to begin with. Remember any idea that solves problems for discerning consumers will have latent demand (unique selling proposition USP) and will have a huge advantage to begin with.

 

Validation | Market Research | Benchmarking the Business Idea

 

Before you get into the pilot seat, it is important to gauge the characteristics of the market for your business idea. It would be worthwhile to gauge your idea on the following parameters

- if there would be an enduring and predictable demand.

- Is the fragmentation in the market high enough

- Good and decent industry margins

- Low competitive professionalism

- Low industry customer satisfaction

- Startup capital needed matches your personal capacity

As you know that “Business Starts at Home”, it is better to start validating your idea from close friends, relatives, potential customers and with entrepreneurs. Ensure that the sample set is fairly large for a decisive decision on the idea. Doing this exercise will help you to evaluate the initial pros and cons of the business idea and will also help you get into a more detailed market research

Market research helps to evaluate the feasibility of new product or service, by gathering information about consumer needs and preferences. It helps to validate your business idea before going big. Market research helps entrepreneurs understand the demand of the market, market size, competitors and the competition. It gives you basic sense of, whether the business idea you are looking to launch will succeed or not. Market Research can be done in the following way:

  • Studying competitors
  • Freeze your market segment
  • Define your customer or Buyer Persona
  • List of questions for research participant
  • Survey
  • In depth Interviews

 

3 ‘S’ Small, Slow and Sustainable

 

This 3 ‘S’ says everything about going ahead with your business idea. You should always start small, maybe pilot in a small market, build up slow and always try to develop a sustainable business model. Most of the young entrepreneurs try to go big too soon and end up in a vortex, burning out.

Going slow helps to understand if the solution to the problem is being received by the consumers in the right perspective, does it need calibration. Being small gives you a flexibility to change the structure or implement the solution effortlessly to overcome such problems and this helps to develop a robust business model which does not need roll back and will stand the test of time.

 

Setting up a Legal Entity

 

Setting up a legal entity for your business is one of the important aspects in the entrepreneurship journey. There are various types of legal entities available to start your business and popular ones are:

- Private Limited Company

- Liability Partnership and

- One Person Company to name a few.

Each type of entity has their own characteristics and depending on your business requirement, your ambition, roadmap you could choose one that is appropriate, else take guidance from Abiza.

You should be looking at your future plans such as business operation, funding requirement & sources, Geographic segmentation, business structuring etc. before selecting any type of legal entity for your business.

Quick Tip: The most popular and business suited form of legal setup is Private Limited Company and it fulfills all the requirement as mentioned above and to know about Private Limited in details please click on this link https://www.abiza.in/private-limited-company).

 

PS: Non-Residents, to understand the process and requirement for setting up Private Limited in India please click on this link https://www.abiza.in/knowledgehub-details/HowCanNonResidentsRegisteraPrivateLimitedCompanyinIndia

 

Developing a competitive edge | Moat

 

The term economic moat, popularized by Warren Buffett, refers to a business' ability to maintain competitive advantages over its competitors in order to protect its long-term profits and market share from competing firms.

In layman’s language moat means the ability to create something unique which your competitors don’t have or will need a lot of catching up to do and due to that you have competitive edge and that would defend your businesses from ceding market share and profits to the competition.

Nevertheless, this is a definitely how you would have started and will sharpen as you go along. Moat can be of any type say for example creation of Strong Brand, Unique patented solution, creation of intangible assets or technology, having strong presence on social media etc. Having moat in the business reduces your marketing expenditure as that can be your best-selling point which your competitors don’t have to offer.

 

I have tried to cover the important aspects of starting up a business which I feel are most important for any entrepreneur to start the entrepreneurship journey.

 

Entrepreneurship is the ultimate high and is living a few years of your life like most people won’t, so that you can spend the rest of your life like most can’t!

 

Last but not least, do you have the ability to work for 60+ hours weekly to achieve your dreams. Surely you can if you are passionate!

 

Trust the above will give you a good head-start to start your own business. In case you want any guidance you are free to write to us @ connect@abiza.in or call 8448440306 .

 

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Hi, I am Bhavesh Desai, Founder-Director of business solutions platform Abiza.in. I have been through the 9 to 6PM grind for a decade and thereafter have spent over a decade and over as an entrepreneur seeing and experiencing the prism from both sides.

 

Have had some really successful stints and and equal number of failures. Without an afterthought let me tell you that entrepreneurship is the ultimate high any individual can experience in his or her lifetime.

 

Entrepreneurship borders on edge of Insanity most days but the thrill of creation is too much of an addiction to let go. In this writeup I wish to treat a small but vital item known as ‘bad day’ which tends to be routine in the life of a business owner. I wish to bring an unfiltered ringside view on how to go about handling a bad day and how if you respond to it using the tips I am sharing below, you could possibly turn it into a something valuable as well.

 

Well, if you have read until here, surely you are looking forward to reading the pearls of wisdom I have to offer you. Read on!

 

Here are five tips to turn bad day into a valuable and epic day.

 

First one is Get Perspective.

This is a powerful word in retrospect and if understood in its entirety can change any negative thoughts into a positive one. It reminds us that every situation could have been much worser and therefore we must count our blessings each day. Every individual should take a pause and understand the world order about how over half the world’s population lives life earning between $1-2 each day, and thereby how blessed they are. A balanced perspective could possibly turn the  current bad day situation into a much better zone.

 

Second is Pivot what’s the opportunity here (WTOH),

Let’s just say you are stuck in traffic and have difficulty getting to pick up your date for your  dinner date. Maybe you have bad day due to fight with a family member, or you have not got to your budgeted sales as expected, if these kind of situations have you in a bind, you should simply WTOH, which allow you to pivot,

Explore what’s the opportunity, this will help you to hunt for a better future outcome. For instance you ask yourselves WTOH, when you fight with some family member, see what’s the opportunity here, learn forgiveness, understanding family members better, better communication, stop instant reaction and see the change. In a similar manner with every bad day you can slice out opportunity.

 

Third tip is Pharmacy,

When I have a difficult or a bad day, I get out, ride my car and travel to the woods. There I then just walk and take in the serenity, fresh air, natures sound and smells and these create neuro transmission in my brain. I come back with renewed energy and better mind frame.

Often times I just go for cycling, go for yoga, for walk, jumping jacks where no one is looking, helping create pharmacy in my brain thereby aiding neuro biological happiness hormones. Most days after work you feel different, when you have a bad day. The simple solution is to go for a walk and get oxygen to your brain to remove toxicity. Simple hack isn’t it - change the current situation, place and move on.

 

Fourth tip is Pages,

Get into the habit of writing and journaling. I recommend open a journal and turn to fresh white page and pour your frustrations, thoughts, wishes and others with honesty. This activity does something powerful and notice it bring changes around you.

If you have feeling of anger, sadness, disappointment, lower energy feeling and you bottle them up inside you, it would bring in toxicity, frustration and low productivity.

Trust me what I am sharing you is a very effective hack. Be a friend with journaling daily and write your feelings and this will create good positive vibes.

 

Fifth tip is Planet,

The understanding that we are all but one with the Planet(nature) is very important for all of us. Being one with nature is life and is therefore a sweet recovery method. Go for walking in a park or on beach, near ocean, where animals are grazing. When you go out in nature, it grounds and anchors you.

 

When you connect with nature, what does it do?

It gives you a recovery method and gives fresh energy. You feel that you are part of something bigger than you and may be channelizes your bad day taking you to good place.

Life really is so incredible and beautiful and happens the way you steer it. Bad day is nothing but bad and false mind systems judging it as bad.

Those who are experts in steering their emotions and feelings, no matter what the situation is, they are able to be positive, optimistic, inspired and when difficulty arises, they see a silver lining.

They take these situations as challenges and keep rising further and further in their lives. On the other hand, those who get entangled in the cobwebs of their emotions with any negative happenings they keep repeating and replaying it like broken record in their mind and consequently they feel dejected and depressed and become ineffective in their work.

Power of positive thoughts, when you travel by car to pass time sometimes you listen to a radio station. You have multiple options you can listen to, viz stations that are transmitting western music, or Indian classical, or station broadcasting news, taking about weather etc.

 

Similarly, we have with in us two broadcasting station, one is Radio P and Radio N. Radio P is the channel within us that talk to us positively, and Radio N is our own channel that give us negative message.

Option in your hand the way you talk to yourself about it, makes such a vast difference in your outcomes is stark. The interesting thing is that the station which we repeatedly choose and get logged into, if constantly is listening to negativity, your mind develops a taste for it.

Those who are intelligent or are mentored right realize their happiness and positivity depends on the way they talk to themselves.

 

Here’s and example from the past. Take a look at the greater innovator Thomas Alwa Edison, he has 1093 American patents to his credit. Thomas Edison was not born a genius, he was poor performer in school, his teacher called his mother to school and said your tommy is too stupid, and I can’t teach him, take him home.

Thomas Edison’s mother said my child is not stupid, I will teach him, he was home schooled and when he became a young man, he started selling items on train to contribute to his household income. He was almost deaf in his left ear. The manager of the local Telegraph office pleased with him for helping his daughter gave him a break and he began working with telegraph office and after which Thomas never looked back.

A reporter much later asked him Mr. Edison were you unhappy because you were deaf and can’t hear.

Look at the positive attitude of Mr. Edison’s reply. He replied ‘my external ears are closed but I have my inner ears open, using which I have received number of ideas and inventions, which enriched me’

Success requires first of all understanding the differentiation of beneficial and negative attitudes. Secondly thereafter the exercise of our free will to choose these beneficial attitudes, and thirdly repetition of those until they become automatic to us and become our second nature.

Hope you gained good practical insights and can use them in your day-to-day lifestyle immensely. Follow us to get your success capsule regularly.

 

Good Luck!!

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How Can Non-Residents Register A Private Limited Company In India – Learning Curve

India has been one of the fastest growing economies globally amongst the developing countries. The rate of growth has been unprecedented and statisticians have forecasted India to be the 3rd largest economy by 2035.

This growth has been fuelled by demand in the core sector, technology, healthcare, consumer segment, logistics and in its wake, have led to opportunities and entrepreneurship never seen before. Also, the demographic dividend (population) is highly favourable with India having a young population for the next 35 years, with the current average age at 29 years.

All these factors have piqued interest amongst the global community for investments in India and this is exhibited by the Foreign Direct Investments (FDI) flows into India. The Government on its part has also been simplifying the regulatory climate and making it conducive for cross border investments and ease of doing business. The World Bank Index 2020 for Ease of doing business has placed India on the 63rd Rank. India jumped 79 positions from rank 142 in 2014. While there is still a long road ahead, the efforts put in by the Government have been immense and will continue eclipsing all barriers in the days to come. Non- resident Investor segments includes Individuals as well Body Corporates, who have shown keen interest in Investments in India in the last couple of years. The growing numbers in the Non-Resident investments across greenfield projects, traditional businesses and even start-ups are a testimony of their confidence in the economy and the opportunities it presents in growing their wealth.

Contrary to many of the retrograde feedbacks Non-Residents would have about setting up a businesses in India due to the regulatorily climate, our belief is that if various legal compliances and laws of land are understood, managed properly in the right framework, the process is simple and seamless or else it could result in a nightmare.

The most widely used form of business for Foreign Direct Investment by Non-Residents is Private Limited Company for setting up their business in India. Private Limited Company with Foreign Direct Investment in India is governed by Companies Act, 2013 & Foreign Exchange Management Act, 1999 and it is regulated by Ministry of Corporate Affairs (MCA) & Reserve Bank of India -the regulatory bodies.

What awesome is that the process of registration of a Private Limited Company is quite simple and can be completed within a week and the best part is that it can be registered without your physical presence. In other words, you can be in any corner of the world and can register a Private Limited Company in India.

The idea here is to remove cobwebs and to share thoughts on how Non-Residents can register a Private Limited Company in India, fulfil compliances under Companies Act, 2013 and Foreign Exchange Management Act, 1999, once the company is registered in an effortless manner.

Before we dive deeper into the steps of registering a Private Limited Company in India, let us understand the basics of Private Limited Company and various terms used while registration of Private Company. Effort has been made to explain these terms in a simple language so it can be easily understood and the right perspective gained from it. Surely once you skim through these you will be in the better position to appreciate and understand the registration process.

Top 8 commonly used Key terms in Company registration activity:

1. Shareholders:

a. Shareholders are those people who invest money in the company, they are also known as owners of the company.

b. Minimum number of shareholders required are 2 (Two) to start the company.

c. Shareholders and Directors can be same person.

d. Any individual or registered Body Corporate having legal existence and identity in the eyes of law can become shareholder in the company.

2Directors

a. The person(s) who manage day to day affair of the company are known as Director of the Company and are fully responsible for any type of default/noncompliance in the company.

b. Minimum two number of Directors are required in the company. Out of these, 2 (Two) directors 1 (One) should be mandatorily Indian Resident as defined under the Income Tax Act, 1961.

c. Any natural person of sound mind can be appointed as the Director of the company.

d. Directors are always appointed/confirmed by the shareholders of the company.

e. The person who is appointed as the director of the company is allotted 8 digits unique number ie; Director Identification Number (DIN) and the same number can be used for all the subsequent appointments as and when required.

3. Digital Signature Certificate

DSC is the abbreviated form of Digital Signature Certificate used commonly in India. It is electronic form of signature used for signing all applications for registration of the company and other formal documents.

4. Memorandum of Association

Memorandum of Association is the charter document of the company and it contains the following information:

a. Name of the Company;

b. Objects;

c. Place of Registered Office;

d. Authorized Share Capital (as defined below);

e. Subscribers to Memorandum

5Articles of Association

Articles of Association is also the charter document of the company containing internal rules and regulation of the company. It also defines interse roles & responsibilities between shareholder and director, directors and company and company & outsider.

6. Registered office

You can select any place to be your registered office of the company. State selection is very important role while selecting your registered office as your company can claim benefits from various policies of the state governments in addition to central government benefits depending on the type of your business.

7. Share Capital

a. There are 2 (Two) types of share capital i.) Authorized Share Capital and ii.) Paid Up Share Capital.

b. Authorized share capital means the capital mentioned in the memorandum of association up to which the company is authorized to raise the money from the shareholders.

c. Paid up capital means the capital which is raised from the shareholder of the company.

d. Company cannot raise capital more than its authorized capital. In order to raise more capital company needs to alter the memorandum of association and increase its authorized capital post which the paid up capital can be raised.

8. Ministry of Corporate Affairs

Registration of Private Limited Company in India is governed by Ministry of Corporate Affairs (MCA). You can visit www.mca.gov.in for obtaining more information on the governing authority. Ministry of Corporate Affairs has further delegated powers to Central Registration Centre (CRC) which looks after all the matters related to registration of all type companies and Limited Liability Partnership (LLP) and their routine compliances.

Now that you have a hang on the terms used in registration of Private Limited Company in India, lets now get to our main agenda of getting a grip on the process of registration of Private Limited Company in India for Non-Residents. Here are the steps for you to understand the complete registration process.

6 STEPS to Register a Private Limited Company for Non-Residents (Individuals/Body Corporates)

Step 1: Obtain digital signatures (DSCs) of all people who are required to be appointed as the Director and individual shareholder of the company.

Note: In case shareholder is body corporate then Digital Signature is not required.         

Step 2: Choose a unique name for the proposed company to be registered. Name availability can be checked by Clicking Here

Once the name availability search is completed, then the application is required to be made in Form Spice + Form (Part A) for reservation of the proposed name.

Quick Tip: Please also undertake a trademark search before making name application of the proposed name as it reduces the chance of getting name rejected. Trademark search can be done by Clicking Here 

Step 3: Once the confirmation for proposed name is received from the Ministry of Corporate Affairs, you are required to proceed to filing, complete application with all the details of shareholders, directors, share capital, main objects, registered office etc in Spice+ Form (Part B), Spice+ MOA & AOA, Spice+ Agile Pro with all the requisite documents need to be attached with the said form for verification.

A. Following are the documents required in case Foreign Direct Investment is done by Non-Resident (Individual) who can be Director and/or Shareholder of the proposed Indian company

1. PAN, if available

2. Passport Copy Mandatory

3. Proof of Address (Electricity Bill/Bank Statement/Telephone Bill/Mobile Bill not older than 2 months)

Note: 

If the documents are signed in India, then copy of Visa and stamped passport, proving his/her presence in India at the time of signing is required.

- If the documents are signed outside India, then the same have to be notarized by a Public notary of the residence country and consularized or apostilled by the competent authority, as the case may be.

B. Following are the documents required in case Foreign Direct Investment is done by Non-Resident (Body Corporate) who can only be a shareholder of the proposed Indian company

1. Charter Documents (Memorandum of Association and Articles of Association

2. Proof of Identity & Address s defined above for the Director of the Body Corporate attesting the Charter Documents

Note: All the documents are required to be duly translated in English and required to be certified by Indian Consulate

C. Following are the documents required for Registered Office Address:

1. Proof of Registered office address (Conveyance/ Lease deed/Rent Agreement/Maintenance Bill).

2. Copy of the utility bills of the registered office (Electricity Bill/Telephone Bill not older than two months).

Step 4: Submit the complete application with the Ministry of Corporate Affairs as prepared in Step 3 by using Digital Signature of all the proposed Directors of the Company.

Step 5: Submitted details and documents in Step 4 will be verified by the authorities and on it being found in order they would proceed for approval of the application. In case of any discrepancy found by the Central Registration Centre (CRC), then the application could be sent back with the remark for resubmission within the given time frame.

Step 6: The last step in completing the registration process is issuance of Certificate of Incorporation (COI and unique Corporate Identification Number (CIN) by the CRC and the same is sent on the email used during the registration process.

Please make note that no hard copies of any documents are ever sent by MCA or CRC to Director/Shareholder or to company at the registered office.

And viola, that completes the Registration process with the receipt of the COI and CIN no. Now that you have the green light to start business operations in India, you may still want to know post company registration what the ongoing or routine compliances would be etc.

You are in luck and we will try to answer some of the most common queries. You may be curious to understand the post compliance required to be complied by Private Limited Company under Companies Act, 2013 and Foreign Exchange Management Act, 1999 (FEMA). Well, here is the take;

1. Post Registration compliances under Companies Act, 2013

a. Holding First Board Meeting within 30 days of registration.

b. Appointment of First Statutory Auditors within 30 days of registration

c. Depositing fund in the Company’s Bank Account by the Non-Resident Shareholder within 60 days of registration.

d. Issuance of Share Certificates to Non-Resident Shareholders within 60 days of registration.

e. Filing of Form INC 20A i.e. Business Commencement Certificate within 180 days of registration.

2.  Post Registration compliances under FEMA, 1999

a. Filing of Form FC-GPR for reporting of allotment of shares within 30 days of allotment of shares to Non-Resident.

Surely, we hope if you are a Non-Resident you have got some mighty valuable inputs on this important topic of making investments in India. Last but not the least the process and the compliances for registering a Foreign Subsidiary in form of Private Limited Company remains the same as explained above with a small change that in order to form a Foreign Subsidiary there should be one Shareholder who shall be Non Resident Body Corporate holding at least 51% of paid up share capital of the proposed Indian company.

Abiza.in has been at the forefront of helping Non-Residents Individuals and Body Corporates to make Foreign Direct investments into India by hand holding the entire process and also deeply engaged with these relationships in fulfilling their routine compliances. Our Online platform backed by competent professionals have the expertise across a wide array of regulatory, compliance and a multitude of business solutions making business easy.

Feel free to write to us/ contact us on connect@abiza.in and we would only be glad to help. You could also subscribe to our Newsletter for regular inputs.

Phone - +91 844-844-0306

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MSME – UDYAM REGISTRATION

Ministry of MSME launch one-time scheme for faster registration for increasing UDYAM Registration.

Now MSME can do Registration with PAN and GST up to 31.3.2021, this is Transitional provisional.

Ministry of MSME had revised the definition of MSMEs and process of registration w.e.f. 1st July, 2020. It also launched a new portal for MSME/Udyam registration (https://udyamregistration.gov.in). Since then, the portal is working smoothly.  In a major first, this portal is seamlessly integrated with CBDT and GST networks.

Now MSME registration is paperless, and Ministry has instructed all of its Field Establishments such as MSME-Development Institutes, MSME Technology Centers, NSIC, KVIC, Coir Board to extend full support to entrepreneurs for Udyam Registration.

MSME Meaning?

Under the new definition, manufacturing and service MSMEs will be defined under a common metric that will be a mix of investment in plants and machinery or equipment and turnover.

BENEFITS OF REGISTRATION

The benefits of MSME registration is not extended to trading activities as trading companies, who just mediate to sell finished goods and create a link between manufacturer and customer.

BENEFITS OF MSME REGISTRATION:

  • Collateral-Free Loan Facilities & Priority Lending
  • Credit Linked Capital Subsidies for MSMEs
  • Low Interest rate on loan
  • ISO Certification Charges Reimbursement
  • Incubation Scheme For MSME
  • Market Development Assistance Scheme for MSME
  • Subsidy on Patent Registration
  • Protection against Delayed Payments
  • 100% tax exemption for Innovative startups

 

  • Concessions on Electricity Bills
  • Tender Preference to MSME
  • Concessions on Electricity Bills
  • Prime Minister Employment Generation Programme for MSMEs

Fees for Registration of MSME: No Fee for MSME Registration

TO KNOW MORE PLEASE VISIT our website www.abiza.in (https://www.abiza.in/msme-registration)

 

                                                                      ***********

 

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DIRECTOR

Directors of the company are the individuals that are elected as, or elected to act as, representative of the stockholders to establish corporate management related policies and to make decisions on major company issues. The success of the company depends upon the competence and integrity of its directors. According to section 2(10) of Companies Act, 2013, the Board of Directors or Board in relation to a company, means collective body of directors of the company. As per section 149 of the Companies Act, 2013, the Board of Directors of every company shall consist of individual only, thus no body corporate, association or firms shall be appointed as director.

A director of the board may be appointed as

1. First Director

2. Resident Director

3. Women Director

4. Independent Director

5. Alternate Director

6. Additional Director

7. Small Shareholder Director

8.  Nominee Director

First Director

> According to section 152 of the Companies Act, 2013, the subscribers to the memorandum of association who are individuals shall be the first directors of the company until the directors are duly appointed

Resident Director

> As per section 149(3) of the Companies Act, 2013, every company shall have at least one director who is stayed in India for a period of not less than 182 days during the financial year

> For newly incorporated company the above section is applicable proportionately at the end of the financial year in which it is incorporated

Women Director

> According to 2nd proviso to section 149(1) read with Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014, following companies must have at least one Women Director

1. Listed Companies

2. Public Companies whose paid up capital is rupees 100 crore or more

3. Public Companies whose turnover is rupees 300 crore or more

Independent Director

> It means a director other than managing director or a whole time director or a nominee director who does not have any material or pecuniary relationship with the company or directors

> Independent Director is an non-executive director

> As per section 149(4) of the Companies Act, 2013, read with Rule 4 of Companies (Appointment and Qualification of Directors) Rules, 2014 following companies to have specified number of independent directors

1. For All Listed Companies [At least one-third of total number of directors]

2. For Public Companies whose paid up capital is rupees 10 crore or more or with turnover of rupees 100 crore or more or with outstanding loans, debentures and deposits of rupees 50 crore or more [Atleast 2 independent directors]

3. Joint Venture, Wholly Owned Subsidiary and a Dormant Company defined under section 455 of the act are not covered under this above rule

> Appointed for a period of 5 consecutive years and term shall not be more than 2 consecutive terms

Alternate Directors

> As per section 161(2) of Companies Act, 2013, the person who act in the absence of  original director during his absence for a period not less than 3 months from India

> It must be authorize by the article or by a ordinary resolution passed in the general meeting

> On the return of the original director, the alternate director shall vacate his office

Additional Director

> As per section 161(1) of the Companies Act, 2013, a person who fails to get appoint as a director in general meeting cannot be appointed as Additional Director

> It shall hold office up to the date of next AGM or the last date on which AGM should have been held whichever is earlier

Small Shareholder Director

> As per section 151 of the Companies Act, 2013, every listed company may have one director elected by small shareholders

> Small Shareholder means a shareholder holding shares of nominal value of not more than twenty thousand rupees or such other sum as may be prescribed

> It can be elected by Listed Company voluntarily or by small shareholders

> A person shall not hold the office of small shareholder’s director in more than two companies

1. Election of Small Shareholders

A Listed Company may upon notice of not less than

1. 1000 small shareholders, or;

2. One-tenth of the total number of shareholders, whichever is lower have a small shareholder director elected by the small shareholder

2. Notice of intention to propose a candidate

> It shall leave a signed notice of a candidate who is intending to be a director at least 14 days  before the meeting specifying their details and proposed director details

3. Tenure, Retirement and Association

> It shall hold office for a period not exceeding consecutive 3 years

> He is not liable to be retire by rotation

> He is not eligible for re-appointment after the expiry of his tenure

> He shall not appointed any other capacity with the company for a period of 3 years from the date of cessation as a small shareholder’s director

Nominee Director

> As per section 161(3) of Companies Act, 2013, the board may appoint any person as a director nominated by any institution or by the central government or the state government by virtue of its shareholding in Government Company

> A nominee director is an individual nominated by an institution, including banks and financial institutions, on the board of companies where such institutions have some ‘interest’

> The ‘interest’ can either be in form of financial assistance such as loans or investment into shares

> The main purpose of appointment of such persons is to safeguard the interest of the nominator, without conflicting with his/ her fiduciary duty as a director

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BOARD COMMITTEES

A board committee is a small working group consisting of board members, for the purpose of supporting the board’s work. They perform expertise work and members of committee are expected to have expertise in the specified field. It improves board effectiveness and efficiency, in areas where more focused, specialized and technical discussions are required. It enables better management of full board’s time and allow in-depth scrutiny and focused attention.

Mandatory committees under Companies Act, 2013 given below

1. Audit Committee

2. Nomination Committee

3. Stakeholders Committee

4. Corporate Social Responsibility Committee

Mandatory committees under SEBI (LODR) Regulations, 2015 are given below

1. Audit Committee

2. Nomination Committee

3. Stakeholders Committee

4. Risk Management  Committee

 

Particulars

Audit Committee

Nomination Committee

Stakeholders Committee

Corporate Social Responsibility Committee

Applicability

All Listed Companies,

For Public Company,

Paid up capital ≥ 10 crore      or

Turnover ≥ 100 crore

or

Loans or Borrowings > 50 crore

All Listed Companies,

For Public Company,

Paid up capital ≥ 10 crore      or

Turnover ≥ 100 crore

or

Loans or Borrowings > 50 crore

All Listed Companies, and for other companies whose Number of shareholders or debenture holders ≥ 1000

Net worth > 500 crore rupees

Turnover > 1000 crore rupees

Net profit > 5 crore rupees

Members

Atleast 3 directors

Atleast 3 Non-executive directors

Atleast 3 directors

Atleast 3 directors

For Private companies ≥ 2

 

Independent Directors

For Listed Entity [Atleast two-third]

For other companies[[Majority of the total number of members]

For Listed Entity and other companies

[Atleast 50%]

 

No such condition is required

Atleast 1

Chairperson

For Listed Entity [Independent director]

Independent Director and shall not chair any other committee

Non-executive and can be Independent Director or not

No such Condition

Presence at AGM

Chairperson

Chairperson may be present

Chairperson

No such Condition

Act, Section and Rules

Companies Act 2013,

Section 177,

Companies (Meetings  of Boards and its Powers) Rules 2014,

SEBI (LODR) Regulations 2015

Companies Act 2013,

Section 178,

Companies (Meetings  of Boards and its Powers) Rules 2014,

SEBI (LODR) Regulations 2015

Companies Act 2013,

Section 178(5),

Companies (Meetings  of Boards and its Powers) Rules 2014,

SEBI (LODR) Regulations 2015

Companies Act 2013,

Section 135,

Companies (Corporate Social Responsibility Policy ) Rules 2014,

Not mandatory under SEBI (LODR) Regulations

Non Applicability

For Unlisted Public Company

[Joint Venture,

Wholly Owned Subsidiary, and Dormant Company]

For Unlisted Public Company

[Joint Venture,

Wholly Owned Subsidiary, and Dormant Company]

No such Criteria

No such Criteria

Number Of Meetings

For Listed Entity

[Atleast 4 meetings in a year and gap between two meetings should be more than 120 days]

For other Companies

[As desirable to serve it Purpose]

For Listed Entity

[Atleast once in a year]

For other Companies

[As desirable to serve it Purpose]

For Listed Entity

[Atleast once in a year]

For other Companies

[As desirable to serve it Purpose]

As desirable to serve its purpose

Quorum

For Listed Entity

[2 members or one-third of total members whichever is greater with minimum 2 independent directors]

For other Companies

[As decided by BOD]

For Listed Entity

[2 members or one-third of total members whichever is greater with minimum 1 independent directors]

For other Companies

[As decided by BOD]

As decided by BOD

As Decided by BOD

Purpose

1) It examines financial  statement and auditor’s report

2)Boost confidence in the integrity of company financial reporting, internal control process and risk management process

3)It review auditor’s performance, independence and audit process, etc.

1) It helps in election of members of BOD

2) Handling matters related to employment and remuneration of senior management and personnel’s remuneration and incentive schemes

3) Devising a policy on diversity of BOD, etc.

1) To resolve grievances of security holders

2) To review service render by Registrar and Share Transfer Agent, etc.

 

1) To formulate CSR Policies

2) To recommend amount of expenditure to be incurred for CSR activities

3) To monitor CSR Policy

4) To institute a transparent monitoring mechanism for implementation of CSR Projects, programs or activities undertaken by the company, etc.

 

Particulars

Risk Management Committee

Applicability

Top 500 Listed Entities

Members

Board of Directors and Senior executives and majority consist of Board Members

Independent Directors

No such Criteria

Chairperson

Shall be member of BOD

Presence at AGM

No such condition

Act, Section and Rules

SEBI (LODR) Regulations, 2015,

There is no requirement for formation of risk management committee under Companies Act, 2013

Non Applicability

Other than Top 500 Listed Companies

Number Of Meetings

For Listed Entities

[Atleast once in a year]

Quorum

As decided by BOD

Purpose

1) Monitoring and reviewing process and procedure of risk management and risk mitigation

2)Framing and implementation of risk management policy, etc.

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Postal Ballot and Its Provisions

  • By : abiZa Team
  • May 8, 2020
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PASSING OF RESOLUTION BY POSTAL BALLOT [SECTION 110]

INTRODUCTION

‘Postal Ballot’ means voting by post or through any electronic mode.

The concept of postal ballot is welcome step. Usually, at an AGM attendance is by a few hundred members. The AGM of some coveting companies are held in remote places, where the registered office of such companies situate. This make it inconvenient for the members to attend in large number. Further, members do not evince much interest in attending AGM.

The postal ballot brings the voting at the doorsteps of members. Hence, a very large number of members can conveniently participate in voting on the resolutions of the company.

PROVISIONS

It is mandatory for a company to pass resolution by postal ballot in respect of such items of business as the Central Government may, by notifications, declare to be transacted only by means of postal ballot.

It is, however, discretionary for a company to pass any resolution by way of postal ballot other than-

1. Ordinary Business items; and

2. Any business in respect of which directors or auditors have a right to be heard at any meeting.

It may be noted that One Person Company (OPC) and other companies having members upto 2two hundred are not required to transact any business through postal ballot.Following is the listed of businesses specified by the Central Government, in respect of which the resolutions shall be passed by means of postal ballot only:-

1. Alteration of objects clause of the memorandum and in the case of the company in  existence immediately before the commencement of the Act, alteration of the main objects of memorandum;

2. Alteration of articles of association in relation to insertion or removal of provisions which, under sub-section (68) of section 2, are required to be included in the articles of  a company in order to constitute it  private company;

3. Change in place of registered office outside the local limits of any city, town or village as specified in sub-section (5) of section 12;

4. Change on objects for which a company has raised money form a public through prospectus and still any unutilized amount out of the money so raised under sub-section (8) of section 13;

5. Issue of shares with differential rights as to voting or dividend or otherwise under sub-clause(ii) of clause (a) of section 43;

6. Variation in the rights attached to a class of shares or debentures or other securities as specified under section 48;

7. Buy-back of shares by a company under sub-section (1) of section 68;

8. Election of director under section 151of the Act;

9. Sale of the whole or substantially the whole of the undertakings of a company as specified under sub-clause (a) of sub-section (1) of section 180;

10. Giving loans or extending guarantee or providing security in excess of the limit specified under sub-section (3) of section 186’

It may be noted that Central Government can, at any time, include or delete the items to be transacted through postal ballot only.

It may be further noted that aforesaid items of business, required to be transacted by means of postal ballot, may be transacted at a general meeting by a company which is required to provide the facility to members to vote by electronics means under section 108, in the manner provided in that section.

PROCEDURE FOR PASSING RESOLUTION BY POSTAL BALLOT 

1.Convene a Board Meeting to pass the resolutions for the following purposes:

> To approve the notice of resolution to be sent to the shareholders;

> To approve the postal Ballot Form; and

> To fix the responsibility for the entire postal ballot on the Company Secretary and a Functional Director.

2. A notice setting out the draft of resolution to be passed together with the reasons for passing the resolution should be sent to all the shareholders.

3. The company may issue the notices either,-

> under ‘Registered Post’ or ‘Speed Post’; or

> through Courier service; or

> through registered e-mail of the members provided to the company.

Further, an advertisement shall also published in a leading English Newspaper and in one vernacular language Newspaper circulating in the State in which registered office of the company is situated, about having dispatched the ballot papers.

4. The company may make a note below the notice of the General Meeting for understating of members that the transaction(s) at Sl. No……requires consent of the shareholders through postal ballot.

5. The Board of Directors shall appoint one scrutinizers (not being an employee) who, in the opinion of the Board, can conduct the postal ballot voting process in a fair and transparent manner.

6. The assent or dissent of the shareholders should be sent within 30 days from the date of posting the notice. The assent or dissent otherwise received after 30 days from the date of issue of notice shall be treated as if reply form the members has not been received.

7. The scrutinizers hall submit his report as soon as possible after the last date of receipt of postal ballot, but not later than 7 days thereof.

8. The results shall be declared by the Chairman of the meeting. It may be noted that the date of passing of the resolution by postal ballot will be the date of declaration of the postal ballot by the Chairman.

9. The resolution should be approved by requisite majority of shareholders, i.e. in the case of ordinary resolution, votes cast in favour is more than vote caste in against it; and in the case of special resolution thee vote caste in favour is three times more than vote caste in against.

It may be noted that voting under ‘postal ballot’ is not by show of hands; but shall be with reference to the paid-up value of share capital held by the registered shareholders.

DETAILED CHECKLIST FOR POSTAL BALLOT

Sl. No.

Particulars

Remarks

1

Before Board Meeting activities

> Decide Scrutinizer for Postal Ballot and receive his consent.

> Draft of the Notice, Explanatory statement along with proposed resolution shall be finalized

> Finalize Printer, Dispatcher and Agency to design the Notice, if any. – discuss the time required by them, cost and other procedural work

> Finalize e-voting agency – prepare final documents to be executed with e-voting agency and take confirmation (signing shall be done after Board meeting only)

> Take pre paid envelop permit from Post office for Postal Ballot envelop.

> Discuss with RTA regarding cut off date for Notice and list of Shareholders on cut off date & Voting

> Decide calendar of Events

> Prepare Agenda of the Board Meeting

> Printing of Postal Ballot Envelops, Postal Ballot Form and prepaid envelops can be done before the Meeting

Advance mail to NSDL and CDSL by copying RTA in case record date/cut off date is other than friday)

2

Call a Board Meeting as per section 173  and SS 1 and dispatch Agenda and Notice of the Board Meeting

X-7 (excluding date of BM and date of Notice)

3

Transact the following transaction in the Board Meeting

>  Identify the business to be transacted through Postal Ballot.

> Approve the Notice of the Postal Ballot – Notice shall contain Proposed Resolution and Explanatory Statement

> Authorise Company Secretary or in case of no CS, any director of the Company to

i) conduct the Postal Ballot Process

ii)  sign and send notice along with other documents

> Appoint Scrutinizer for Postal Ballot

> Appoint an agency for e-voting

> Decide record date [cut off] for sending of Notice and ascertaining the eligibility of the members who are entitled to vote.

> Decide calendar of event.

> Authorize Chairman/ or in his absence any other director to receive the

i) scrutinizer’s register

ii) report on postal ballot and other relating documents.

Note: cutoff date can be taken on Friday and the Banpose of shareholders by CDSL & NSDL. It will save the cost of the Company. Some RTA does not charge for the data of shareholders for Postal Ballot subject to the condition that intimation to NSDL and CDSL and RTA given in advance.

X

4

Filing of Necessary form with ROC, if Required

X+30

5

Intimate Stock Exchanges and upload on the website of the Company if any matter is relating to Regulation 30 of SEBI Regulations and Website disclosure under regulation 46.

 within 30 minutes or 24 hours to stock exchange

Upload on website within 24 hours of submission

4

Advance intimate to stock exchange specifying the purpose of record date

Record Date – 7 Working days -1-1

5

> Printing of the Notices along with explanatory statements, Postal ballot Form (Generally 3 days taken it could be exceed)

> Overprinting of details of shareholders by RTA (time taken approx. 24 hours)

> File an application for activating/obtaining EVSN to NSDL/CDSL/evoting agency – (any time after board meeting but before starting of E-voting)

> Obtain details of shareholders from RTA regarding as on cutoff date.

> Provide information to NSDL for sending email Notice to Shareholders atleast one day before the starting of E-voting.

X+5

6

> Send Notice along with relevant documents to Shareholders, Directors, Auditors, and Secretarial Auditors by speed post or Registered Post or by courier or by email (email is to be sent by NSDL/CDSL/RTA).

> Put Notice of Postal Ballot on the Company Website, NSDL/CDSL Website

> Send notice of Postal ballot to stock exchanges pursuant to regulation 30 (within 24 hours from sending of the Notice to shareholders but it could be before sending of the Postal Ballot.

> Put the disclosure made to STXs under regulation 30 on website of the Company (within 24 hours)

X+7 (any other date can be taken but shall be as per schedule of Events)

X+7

X+8

X+9

7

– Advertisement in Newspaper at least once in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and having a wide circulation in that district, and at least once in English language in an English newspaper having a wide circulation in that district, about having dispatched the ballot papers and specifying therein, inter alia, the following matters, namely:—

(a) a statement to the effect that the business is to be transacted by postal ballot which includes voting by electronic means;

(b) the date of completion of dispatch of notices;

(c) the date of commencement of voting;

(d) the date of end of voting;

(e) the statement that any postal ballot received from the member beyond the said date will not be valid and voting whether by post or by electronic means shall not be allowed beyond the said date;

(f) a statement to the effect that members, who have not received postal ballot forms may apply to the company and obtain a duplicate thereof; and

(g) contact details of the person responsible to address the grievances connected with the voting by postal ballot including voting by electronic means.

(Other requirement to be fulfilled as mentioned in the Legal Provisions)

X+8

(Forthwith is mentioned in statutory provisions)

8

> Send Newspaper publication to STXs pursuant to R.30 of SEBI (LODR) (within 24 hours)

> Put the disclosure made to STXs under regulation 30 on website of the Company along with Newspaper Publication

X+9

9

E-voting and Time line for receipt of the Post Ballot

Note: Resolution by postal ballot shall be deemed to be passed on on the last date specified by the company for receipt of duly completed postal ballot forms or e-voting.

Voting shall be open for atleast 30 days.

X+8 to X+38 (Date of Resolution passed)

E-voting can be start on the date of dispatch or next date (its practice)

10

Scrutinizer shall maintain a register of Postal Ballot Forms and other documents

 

11

> The scrutinizer shall submit his report to the Chairman who shall countersign the same.

> Based on the scrutinizer’s report, the Chairman or any other director authorized by him shall declare the result of the postal ballot on the date, time and venue specified in the notice, with details of the number of votes cast for and against the Resolution, invalid votes and the final result as to whether the Resolution has been carried or not.

> Place such result along with the scrutinizer’s report on the website of the Company & evoting agency. [i.e. declaration of result]

> File the copy of the result along with Scrutinizer Report with the Stock Exchanges.

> The result of the voting along with the scrutiniser’s report shall be displayed on the Notice Board of the company at its Registered Office and its Head Office as well as Corporate Office, if any,

 

 

X+38+2

(within 48 hours of last date of receipt of Postal Ballot Form)

12

File necessary ROC forms MGT-14, MR-1 etc, if any.

Date of passing of Resolution + prescribed limit

13

Preparation and signing of minutes

Date of passing of Resoluton+30

14

Return of Postal Ballot and other documents to Chairman by Company Secretary

After signing of Minutes

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1.RESIGNATION OF DIRECTOR

 (1) A director may resign from his office by giving a notice in writing to the company and the Board shall on receipt of such notice take note of the same and the company shall intimate the Registrar in such manner, within such time and in such form as may be prescribed and shall also place the fact of such resignation in the report of directors laid in the immediately following general meeting by the company:

Provided that a director shall also forward a copy of his resignation along with detailed reasons for the resignation to the Registrar within thirty days of resignation in such manner as may be prescribed.

(2) The resignation of a director shall take effect from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later:

Provided that the director who has resigned shall be liable even after his resignation for the offences which occurred during his tenure.

(3) Where all the directors of a company resign from their offices, or vacate their offices under section 167, the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in general meeting.

STEPS ARE REQUIRED TO BE TAKEN BY THE COMPANY IN SUCH A CASE

A Director is part of a collective body of Directors called the Board, responsible for the superintendence, control and direction of the affairs of the Company. Meaning thereby, director is a person who is responsible to carry out operations in the company and perform all other related activities.

Every director is allotted with a unique number called as Director’s Identification Number (“DIN”) under Companies Act, 2013 (“The Act”). Registrar of Company (“RC”) keeps details of all the directors of company including their appointment, change in information related to them and their resignation.

1. Resignation by Director (Section 168 of the Act)

Section 168 of the act contains provisions related to resignation of director from company. Section 168(1) provides that a director may resign from his office by giving a notice in writing to the company. Board shall take note of such notice on its receipt.

Resignation of director shall be effective from the date on which notice is received by the company or any other date specified by director in the notice, whichever is later. (Section 168(2)

2. Intimation about resignation to ROC

2.1  Intimation by Company (Section 168 read with Rule 15)

The Company shall intimate the ROC about resignation of director within 30 days from date of receipt of notice in form DIR-12 and shall also publish the information about resignation on its website. (Section 168(1) of the Act read with Rule 15 of Companies (Appointment and Qualification of Directors) Rules, 2014.)

Company shall also place the fact of such resignation in director’s report to be laid in the immediately following general meeting.

2.2 Intimation by Director (Section 168 read with Rule 16)

Proviso to Section 168(1) read with Rule 16 of Companies (Appointment and Qualification of Directors) Rules, 2014 provides that director may also forward a copy of his resignation alongwith detailed reasons to registrar within 30 days of his resignation in form DIR-11.    

It is imperative to note that till 6th May, 2018, proviso to Section 168(1) and rule 16 contained “Shall” instead of “May” for filing of Form DIR-11, i.e., till 6th Mar, 2018, filing of DIR-11 was mandatory on part of director. However, Companies (Amendment) Act, 2017 and The Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018 replaced “Shall” with “May” thereby removed mandatory filing requirement of DIR-11. Accordingly, filing of DIR-11 is at discretion of director

3. Information to be furnished in DIR-11

While filing DIR-11, director is required to furnish following information:

1. Corporate Identification Number (“CIN”)

2. Name, address and email id of the company will auto-populate based on CIN.

3. DIN of director resigning from the company

4. Name and nationality of director will auto-populate based on DIN

5. Date of appointment

6. Designation of director

7. Category of director (Promoter/professional/independent)

8. Date of filing of resignation with the company

9. Effective date of resignation specified in the notice of resignation

10. Reason for resignation

11. Whether confirmation is received from the company (Yes/No)

4. Attachment to form DIR-11

Director is required to attach following documents to form DIR-11:

1. Notice of resignation filed with the company

2. Proof of dispatch

5. Other points to be considered

When a director files eForm DIR-11 for intimating about his resignation before the company files eForm DIR-12, an email will be sent to the company for filing the eForm DIR-12 and the status of the Director in the company will be changed to ‘Resigned’ against the selected designation. Once the company files the relevant eForm DIR-12, the status shall be changed as per the existing system.

1. REMOVAL OF DIRECTORS [SECTION 169]

The shareholders of a company may, by passing an ordinary resolution at a general meeting, remove a director before the expiry of the period of his office. However, the following directors cannot be removed by the company unless otherwise stipulated in terms of their appointment;-

1. Where the company has availed itself of the option to appoint not less than 2/3rd directors according to the principle of proportional representation u/s 163;

2. A nominee director appointed by a financial institution under the terms of a loan agreement;

3. a director appointed  by NCLT u/s 242.

It may be noted that an independent director re-appointed for second term u/s 149(10) shall be removed by the company only by passing a special resolution after giving him a reasonable opportunity of being heard.

A special notice shall be required off the intention to make any resolution for the removal of a director not less than 14 days (excluding the day of service & the date of meeting) before the meeting. On receipt of notice, the company shall forthwith send a copy of the same to the director concerned, whether or not he is a member of the company, is entitled to be heard on the resolution at the general meeting.

Where the notice is received well in advance, the company can conveniently send the notice of the resolution to the members by including the same in the notice of general meeting. Otherwise, the company has to notify the same by way of two newspaper advertisement, one in English newspaper and another in vernacular language, atleast 7 days before the meeting.

Where the director make representations in writing to the company (subject to reasonable length) and request for circulation for the same to the members, the company is duty bound to do so, unless it is received by to it too late. If a copy of the representation is not sent to the members, as aforesaid because they were received too late or because of the company’s default, the director may require that the representation shall be read out at the meeting. However, a copy of the representations need not be sent to the members and representations need not be read out at the meeting, if on the application, either of the company or of aggrieved party, the national Company Law Tribunal (NCLT) is satisfied that the rights so conferred are being abused to the needless publicity for defamatory matter.

The company shall, in its general meeting, discuss the proposal and pass the necessary resolution. The vacancy caused by such removal may be filled at the same meeting; provided special notice of the proposed appointment has also been given. If the vacancy is not filled at the meeting, it may be filled by the Board as a casual vacancy. However, the director who has been shall not be appointed.

The director so appointed shall hold office till the removed director could have held office, had he not been removed.

It may be noted that the provisions of this Section shall not deprive a person removed under this section of any compensation  or damages payable to him in respect of the termination of his appointment as director as per the terms of contract or terms of his appointment as director, or of any other appointment terminating with that as director.

 STEPS ARE REQUIRED TO BE TAKEN BY THE COMPANY IN SUCH A CASE

Two cases arise either the company itself removes the director, or in case the director does not attend three Board meetings in a row.

1. In case the company removes the Director:

> Seven days notice will be given to all the Directors informing about the removal of Directors.

> In the Board meeting, a resolution for the holding of an (EGM) extraordinary general meeting will be held along with the resolution for the removal of the director subject to the approval of the shareholders.

> The Board members of the company will hold a Board meeting by providing seven days of clear notice. This notice has to be issued within 21 days by the company which excludes the day on which the notice was sent and received.

> In the board meeting, the Board members will discuss and then decide whether to remove the director.

> Before passing the final resolution, a choice is given to the director to present anything in favour of himself.

> After the resolution is being passed, two forms of DIR-11 and DIR-12 are needed to be filed in this case. The director files DIR-11 while the company itself files DIR-12 with the ROC (Registrar of the Companies) along with the Board Resolution.

> In the end, the name of the concerned director has to be removed and finally withdrawn from the master data of the company of the MCA (Ministry of Corporate Affairs) website.

2. In case the director does not attend three Board meetings in a row:

> According to Section 167 of the Companies Act, 2013, if a director does not attend three consecutive Board meeting during the time period of 12 months then it is considered as a director has vacant the office. This 12 month means the day on which he was absent at the first board meeting even if he/she got the prior notice of all the meetings.

> The absence of the director will be considered as if he/she has left the office and the FORM DIR-2 is filed then.

> After this, the name of that concerned director will be removed from the MCA website.

Final thoughts

The Removal of the director in any company entirely depends upon the company itself and the director. The concerned director who is removed has to follow a procedure prescribed by the Board of Directors or the shareholders in accordance with the provisions of the Companies Act 2013.

1. RETIREMENT OF DIRECTORS [SECTION 152(6)]

Section 152(6) provides that unless the articles provides otherwise for the retirement of all directors at every annual general meeting, not less the two-third (2/3rd) of the total number of directors (excluding independent directors, whether appointed under this act or under any other law) of a public company shall----

1. be persons whose period of office is liable to determination by retirement of directors by rotation; and

2. save as otherwise expressly provided in this Act, be appointed by the company in general meeting.
The remaining directors (i.e. non-rotational/non-retiring/permanent directors) in the case of public company shall be appointed as per provisions contained in the articles of the company.

In case there are no such provisions in the articles, those directors shall also be appointed by the company in general meeting.

At the first annual general meeting held after the date of general meeting at which the first directors are appointed in accordance with aforesaid provisions and at every subsequent AGM, one-third (1/3rd) of the rotational directors shall retire at every subsequent AGM, or if there number is not three or multiple of three, then the number nearest to one-third (1/3rd) shall retire from office. Thus, if there are six rotational directors (i.e. director liable to retire by rotation), two will retire in each of the three years. However, if seven such directors and three in the third year. In case of eight such directors, the number to retire would be three, three and two.

Those directors, who have been longest in office since their last appointment, will retire. As between persons who became directors on the same day, retirement, in the absence of an agreement, will be determined by lot.

Where a director retires by rotation at the annual general meeting of a company, the company at the same meeting may appoint: i. the retiring director; or ii. some other person in the vacancy.

If the AGM of the company is not the held or cannot be held, the directors due to retire by rotation shall retire on the last day on which AGM should have been held. If AGM is adjourned, then they will retire at the adjourned AGM; provided it is within the prescribed time. [Consolidated Nickel Mines Ltd.]

Consequences of non-appointment of directors at an AGM u/s 152 [Sec. 152(7)]: if at the said AGM, the vacancy is not so filled and the meeting has not expressly resolved not to fill the vacancy, the meeting, through it has disposed of all other matter on the agenda, shall stand adjourned till the same day in the next week, at the same time and place, or if that day be a national holiday, till next succeeding day which is not a national holiday, at the same time and place.

If at the adjourned meeting also, the vacancy is not so filled-up and resolution not to fill the vacancy is not passed , the retiring directors shall be deemed to have been re-appointed (i.e. automatic reappointment). However, in the following cases even if automatic re-appointment of retiring director shall not take place:-

 (i) at that meeting or at the previous meeting a resolution for the re-appointment of such director has been put to the meeting and lost;

(ii) the retiring director has, by a notice in writing addressed to the company or its Board of directors, expressed his unwillingness to be so re-appointed;

(iii) he is not qualified or is disqualified for appointment;

(iv) a resolution, whether special or ordinary, is required for his appointment or re-appointment by virtue of any provisions of this Act; or

(v) section 162 is applicable to the case.]

The re-appointment as above shall be effective from the day of adjourned meeting.

In case the vacancy is not so filled at the AGM and also be the retiring directors do not get automatically re-appointed, the vacancies may be filled by the Board of Directors.

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DEFINITION & MEANING OF DIRECTOR

Section 2 (34) of the Companies Act, 2013 defines a director. As per this, “director’ mean a director appointed to the Board of a Company.

Further, Section 2(10) provides that the “Board of Directors” or “Board”, in relation to a company, means the collective body of the directors of the company.

A company is an artificial person, So, it acts through an agency of human beings. The directors of a company serve the purpose of agency for the company i.e., they act as an agent for performing various activities of the company.

LEGAL POSITION OF DIRECTORS

The true position of company directors is that of agent and their real relationship with the company is governed by the arrangement of agency as governed by the Contract Act. This position was established long back in Ferguson v. Wilson.

To some extent, directors are also trustees for properties of the company and of the rights, which are conferred on them by law and conventions. Directors stand in fiduciary position towards the company in regard to the powers, conferred by them on the Companies Actor by the articles of the company; and also with regard to the funds of the company, which are under their control. [Smith v. Anderson]

It must, however, be noted that directors are not trustees for the company in the strict legal sense, as they manage the property of the company which is not vested in them. Whereas the property of a trust is vested in its trustees and they manage the same.

TYPES OF DIRECTORS

There are two types of company directors. They are :

1. Full-time directors (Executive Directors) with their designations as managing directors, whole-time directors, technical directors, etc.; and

2. Part-time directors (Non-executive Directors) who are professionals and for their livelihood do not depend upon one company but serve on the Board of Directors of a large number companies.

ALL WAYS IN WHICH DIRCTOR CAN LEAVE FROM THE POST OF DIRECTORSHIP

1. DISQUALIFICATIONS OF DIRECTOR [SECTION 164]

Section 164(1) provides that a person shall not be eligible for appointment as a director of a company, if —

1. he is of unsound mind and stands so declared by a competent court;

2. he is an undischarged insolvent;

3. he has applied to be adjudicated as an insolvent and his application is pending;

4. he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence.

However, if a person has been sentenced to imprisonment for not less than six months and a period of seven years or NCLT and the order is in force;

1. an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;

2. he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;

3. he has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or

4. he has not complied with sub-section (3) of section 152; or

5. he has not complied with the provisions of Section 15(1).

It may be noted that the disqualifications referred in clauses (d), (e) and (g) shall continue to apply even if the appeal or petition has been filed against the order of conviction or disqualification.           

Section 164(2) provides that no person who is or has been a director of a company which-

1. has not filed financial statements or annual returns for any continuous period of three financial years; or

2. has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.

It may be noted that where a person is appointed as a director of a company which is in default of aforesaid clause (a) or clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment.

Rule 14 of Companies (appointment and Qualification of Directors) Rules, 2014 Provides that every director who is disqualified u/s 164(2), shall inform to the company concerned in Form DIR-8 (Intimation by Director) before he is appointed or re-appointed.

Whereas company fails to file the financial statements/annual returns/fails to repay any deposits, interest, dividends/fails to redeem its debentures as specified u/s 164(2), the company shall immediately file Form DIR-9 (Report by the Company to Registrar), to the Registrar furnishing therein the names and addresses of all the directors of the company during the relevant financial years. But when a company fails to file the Form DIR-9 within a period of 30 days of the aforesaid failure, officers of the company as specified u/s 2(60) shall be the officers in default. Upon receipt of the Form DIR-9 the Registrar shall immediately register the document and place it in the documents file for public inspection.

Any application for removal of disqualification of directors shall be made in Form DIR-10.

Section 164(3) provides that a private company may, by its articles, provides that a person shall be disqualified for appointment as a director on any grounds in addition to those specified in Section 164(1) and (2).

1. VACATION OF OFFICE OF DIRECTORS [SECTION 167]

a.The office of a director shall become vacant in case—

b. he incurs any of the disqualifications specified in section 164;

Provided that where he incurs disqualification under Section 164(2), the office of the director shall become vacant in all the companies, other than the company which is in default under Section 164(2);

1. he absents himself from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board;

2. he acts in contravention of the provisions of section 184 relating to entering into contracts or arrangements in which he is directly or indirectly interested;

3. he fails to disclose his interest Pin any contract or arrangement in which he is directly or indirectly interested, in contravention of the provisions of section 184;

4. he becomes disqualified by an order of a court or the Tribunal;

5. he is convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced in respect thereof to imprisonment for not less than six months:

Provided that the office shall be vacated by the director in case of orders referred to in clauses (e) and (f)-

1. for thirty days from the date of conviction or order of disqualification;

2. where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed of; or

3. where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed of;

4. he is removed in pursuance of the provisions of this Act;.

5. He, having been appointed a director by virtue of his holding any office or other employment in the holding, subsidiary or associates company, ceases to hold such office or other employment in that company.

6. If a person, functions as a director even when he knows that the office of director held by him has become vacant on account of any of the disqualifications specified in subsection (1), he shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

7. Where all the directors of a company vacate their offices under any of the disqualifications specified in sub-section (1), the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in the general meeting.

8. A private company may, by its articles, provide any other ground for the vacation of the office of a director in addition to those specified in sub-section (1).

STEPS ARE REQUIRED TO BE TAKEN BY THE COMPANY IN SUCH A CASE

Step1:  Due intimation to Director about the vacation of his office as a Director.

As a matter of good corporate governance, the company should inform the Directors about such vacation.

Step 2: Disclosure by listed Company to Stock Exchange

If Company is listed, it is required to disclose the occurrence of such an event to stock exchange not later than twenty hours from the occurrence of such an event as per Regulation 30 of SEBI (LODR) Regulations, 2015.

Step 3: Filing Form DIR-12 

The Board will File Form DIR-12 within 30 days of vacation of office of Director with Registrar of Companies.

Step 4:  Noting of such vacation in next meeting of Board of Directors

The Board will note such vacation of office of Director in the next meeting of Board of Directors immediately held after such vacation.

Step 5: Disclosure of such vacation in Director Report

The Board of Directors must disclose such vacation of office of Director in their report.

 Important points to be kept on part of the Company:

 1. Proper notice of the Meetings of Board of Directors should be issued to the Director concerned.

 2. Sending Draft Minutes and Circulation of Final Minutes of the Board Meeting held till the date of his automatic vacation of office to Director concerned.

As cited in guidance note on Secretarial Standard on the meeting of Board of Directors issued by ICSI   “A Director, who ceases to be a Director after a Meeting of the Board is entitled to receive the draft Minutes of that particular Meeting and to offer comments thereon, irrespective of whether he attended such Meeting or not. The fact that the Director has vacated his office, by any reason whatsoever, shall not affect his right to receive such Minutes.” These provisions are mutatis mutandis applicable for circulating a copy of the signed Minutes of that Meeting to the Director(s) so appointed or ceased.
Consequently, the Company is required to send draft minutes and circulate final minutes of the meeting of Board of Directors held till the date of vacation of office of director to Directors concerned. 

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RELATED PARTY TRANSACTIONS (SECTION 188)

1. Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement with a related party with respect to—

(a) sale, purchase or supply of any goods or materials;

(b) selling or otherwise disposing of, or buying, property of any kind;

(c) leasing of property of any kind;

(d) availing or rendering of any services;

(e) appointment of any agent for purchase or sale of goods, materials, services

or property;

(f) such related party's appointment to any office or place of profit in the company, its subsidiary company or associate company; and

(g) underwriting the subscription of any securities or derivatives thereof, of the

company:

Provided that no contract or arrangement, in the case of a company having a paid-up

share capital of not less than such amount, or transactions not exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a resolution:

Provided further that no member of the company shall vote on such resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party (not applicable in case of private company):

Provided also that nothing contained in second proviso shall apply to a company in which ninety per cent or more members, in number, are relatives of promoters or are related parties:

Provided also that the requirement of passing the resolution under first proviso shall not be applicable for transactions entered into between holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.

Explanation.— In this sub-section,—

(a) the expression “office or place of profit” means any office or place—

(i) where such office or place is held by a director, if the director holding it receives from the company anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

(ii) where such office or place is held by an individual other than a director or by any firm, private company or other body corporate, if the individual, firm, private company or body corporate holding it receives from the company anything by way of remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;

(b) the expression “arm’s length transaction” means a transaction between two

related parties that is conducted as if they were unrelated, so that there is no conflict of interest.

(2) Every contract or arrangement entered into under sub-section (1) shall be referred to in the Board’s report to the shareholders along with the justification for entering into such contract or arrangement.

(3) Where any contract or arrangement is entered into by a director or any other employee, without obtaining the consent of the Board or approval by a resolution in the general meeting under sub-section (1) and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting within three months from the date on which such contract or arrangement was entered into, such contract or arrangement shall be voidable at the option of the Board or, as the case may be, of the shareholders and if the contract or arrangement is with a related party to any director, or is authorised by any other director, the directors concerned shall indemnify the company against any loss incurred by it.

(4) Without prejudice to anything contained in sub-section (3), it shall be open to the company to proceed against a director or any other employee who had entered into such

contract or arrangement in contravention of the provisions of this section for recovery of any loss sustained by it as a result of such contract or arrangement.

(5) Any director or any other employee of a company, who had entered into or authorised the contract or arrangement in violation of the provisions of this section shall,—

(i) in case of listed company, be punishable with imprisonment for a term which

may extend to one year or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both; and

(ii) in case of any other company, be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees.

When prior approval of company by resolution required for related party transaction [Rule 15 of Companies (Meeting of Board and its Powers) Rules, 2014] : For the purpose of first proviso to sub-section (1) of section 188, except with the prior approval of the company by a resolution, a company shall not enter into a transaction or transactions, where the transaction  or transactions to be entered into---

1. as contracts or arrangements with respect to clause (a) to (e) of sub-section (1) of section 188 with criteria, as mentioned below—

2. sale, purchase or supply of any goods or materials directly or through appointments of agents amounting to 10% or more of the annual turnover or Rs. 100 Cores, whichever is less, as mentioned in clause (a) and clause (e) respectively of sub-section (1) of section 188;

3. selling or otherwise disposing of, or buying, property of any kind directly or  through appointment of agents amounting to 10% or more of the net worth or Rs. 100 Crores, whichever is less, as mentioned in clause (b) and clause (e) respectively of sub-section (1) of section 188;

4. leasing of property of any kind amounting to 10% or more of the net worth or 10% or more of the turnover or Rs. 100 Crores, whichever is less, as mentioned in clause (c) of sub-section (1) of section 188;

5. availing or rendering of any services directly or through appointment of agents amounting to 10% or more of the annual turnover or Rs. 50 Crores, whichever and clause (e) of sub-section (1) 188;

Explanation : It is hereby clarified that the limits specified in sub-clauses (i) to (iv) shall apply to (iv) shall apply for transaction or transactions to be entered into individually or taken together with the previous transactions during a Financial Year.

1. is for appointment to any office or place of profits in the company, its subsidiary company or associate company at  a monthly remuneration exceeding two and half lakh rupees as mentioned in clause (f) of sub-section (1) of section 188; or

2. is for remuneration to any underwriting the subscription of any securities or derivatives thereof the company exceeding one percent of the net worth as mentioned in clause (g) of sub-section (1) of section 188.

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AUDITOR

According to section 139 of Companies act 2013, the Board of directors of a company shall appoint an Individual or Firm as the first auditor of the company, other than Government Company within 30 days of registration of the company. The appointment of first auditor shall be ratified by members at the first AGM. In case of Government Company, first auditor shall be appointed by Comptroller and Auditor General within 60 days from the date of its incorporation. Every Auditor of a Company shall have a right to access at all times to the books of accounts and vouchers of the company. The Auditor shall make a report to the members of the company on the accounts examined by him and on every financial statements or other documents to be laid before the company in general meeting.

Procedure for removal of Auditor

[Section 140 and Rule 7 of the Companies (Audit and Auditors) Rules, 2014]

1. Opportunity of being heard to Auditor

> The company shall give notice to the Auditor of its intention to remove from their office in the company.

> The company shall give a reasonable opportunity of being heard to the concerned auditors to explain themselves why they shouldn’t be removed from the office

2. Board Resolution

> The Board being satisfied with the reasons of removal shall pass a resolution for the same and authorise any official for filing an application with the Central Government

3. Central Government/Regional Director approval

> Make an application to the Central Government in e-form ADT-2 within 30 days of passing Board Resolution along with Board resolution as an attachment

4. Special Resolution

> After obtaining approval of the Central Government, the special resolution has to be passed at a General Meeting of the shareholders within 60 days of receipt of approval of Central Government.

> File e-form MGT-14 with ROC for registration of special resolution

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BOARD MEETING [Companies (Meetings of Board and its Powers) Rules, 2014]

Board meetings are crucial for a company’s development as the because of the reason that in these format meetings are held to devise the policies, drive the management, strategize and evaluate the expectations of the stakeholders. Meetings of the board are significant in the light of running of the company more efficiently and effectively and for proper functioning.

> Section 173 deals with Meetings of the Board and Section 174 deals with Quorum

> Section 110(18) of the Companies Act 2013, mandated every Company to observe Secretarial Standards-1 with respect to Board Meetings specified by ICSI

Sr.no

Topics

1

Frequency of the Meetings

2

Notice of the Meeting

3

Agenda and Notes of the Meeting

4

Minutes

5

Convening of a Meeting

6

Cancellation of convened Meeting

7

Quorum of the Meeting

8

Day, Time and Place for holding Meetings

9

Adjournment of Meeting

10

Proxy

11

Attendance Registers

12

Chairman of the Meeting

 

1. Frequency of the Meeting

> Every company public or private shall hold the first meeting within 30 days of date of its incorporation and a minimum number of four Board meetings to be held in each calendar year

> There should be gap of not more than 120 days between two consecutive meetings

> Incase of One Person Company, Small Companies, Dormant Companies, one Board meeting is required to be held in each half of the calendar year and gap between 2 meetings is  not less than 90 days [section 173(5)]

> Specified IFSC Private Company shall hold the first Board meeting within 60 days of its incorporation and thereafter hold atleast one meeting in each of the calendar year

> Inacse of Section 8 Company, shall hold atleast one meeting within every six calendar months

2. Notice of the Meeting

> Meeting should be held after giving minimum 7 days notice [section 173(1)], incase the company sends the notice by speed post or by the courier, an additional two days shall be added for the service

> The notice shall be given in writing to every director at his address registered with the company and such notice shall be sent by hand delivery or post or by electronic means [section 173(1)]

> The notice shall specify the serial Number, day, date, time and full address of the venue of the meeting

> Meeting can be called at a shorter notice if atleast one Independent Director, if any, in the company shall be present at the meeting and where the Company is not require to appoint Independent Director, there is no need to compile with such conditions

> Notice shall be issued by the Company Secretary or where there is no Company Secretary, any Director or any other person authorised by the board for the purpose

> Every officer whose duty is to give notice will be liable for INR 25000 if it fails

3. Agenda and Notes of the Meeting

> The Agenda and Notes should of the business to be transacted should be enclosed with notice

> It mentions details of proposals and business to be transacted

> Supplementary Notes on any of the Agenda items may be circulated at or prior to the meeting shall be taken up with the permission of Chairman and with the consent of majority Director present in the meeting, which shall include atleast one Independent Director, if any

> Any item not included in the Agenda may be taken up with the permission of Chairman and with the consent of majority Director present in the meeting, which shall include atleast one Independent Director, if any

4. Minutes

> Every company shall keep Minutes of all Board and Committee Meetings in a Minute Book

> Minutes helps in understanding the proposals and decision taken at a meeting

> A company may maintain it Minutes in physical or in electronic form with Timestamp

> Minute shall state the type of meeting, name of the company, date, day, time, venue, the name of Director, the Company Secretary and any invitees for specific items

> The Draft Minutes should be circulated within 15 days of Board meeting by hand or by speed post or by registered post or by courier or by electronic means to all the members of the Board

> Minutes shall be entered within in the Minutes Book within 30 days of the Board meeting

> A copy of signed Minutes shall be circulated within 15 days after these are signed

5. Convening of a Meeting

> Generally the Secretary or a Director on the direction of the Chairman/Managing Director shall call a Board Meeting

6. Cancellation of Convened Board Meeting

> When the items of business for which Board Meeting was convened have been altered or become non-existent then Board meeting convened may be cancelled by a notice to the directors

7. Quorum of the Meeting

> The Quorum for the Board meeting shall be one-third of the total strength of the Board or 2 directors, whichever is high [section 174(1)]

> Any fraction contained in the one-third shall be rounded off to the one

> Total strength shall not include Directors whose places are vacant

> If the number of Interested Directors exceeds or is equal to two-thirds of the total strength, the remaining Directors present at the Meeting, being not less than two, shall be the Quorum during such item [section 174(3)]

> If a Meeting of the Board could not be held for want of Quorum, then, the Meeting shall automatically stand adjourned to the same day in the next week, at the same time and place or, if that day is a National Holiday, to the next succeeding day which is not a National Holiday, at the same time and place [section 174(2)]

>  If there is no Quorum at the adjourned Meeting also, the Meeting shall stand cancelled.

> Quorum shall be present not only at the time of commencement of the Meeting but also while transacting business.

> Directors participating through Electronic Mode in a Meeting shall be counted for the purpose of Quorum, unless they are to be excluded for any items of business under the provisions of the Act or any other law [section 174(1)]

> Interested Directors may also be counted towards Quorum in case of Private Company after disclosure of his interest

> The continuing Director can act to increase the number of Directors to obtain Quorum [section 174(2)]

> The quorum for Section 8 company is either 8 members of the Board or 25% of his total strength whichever is less

> For Listed entities, the quorum of Board meeting from April 1,2020, shall be one-third of its total strength or three directors whichever is higher including one Independent Director for Top 2000 Listed Companies  

8. Day, Time and Place of the Meeting

> It should be held only on working day excluding Public Holiday

> It may be held during business hours or outside the business hours

> It can be held at any place in India or outside India

9. Adjournment of Meeting

> If a Meeting of the Board could not be held for want of Quorum, then, unless otherwise provided in the Articles, the Meeting shall automatically stand adjourned to the same day in the next week, at the same time and place or, if that day is a National Holiday, to the next succeeding day which is not a National Holiday, at the same time and place [section 174(2)]

> If there is no Quorum at the adjourned Meeting also, the Meeting shall stand cancelled

> Fresh notice is not necessary, it is however desirable to give notice

10. Proxy

> A director cannot appoint proxy or his representative to attend and it is necessary to attend the meeting personally [section 173 (2)]

> Nominee directors are allowed to appoint the observer as per the terms of loan agreement

> A director may appoint observer with the consent of the Board to observe the proceedings of the Board meeting, if he is not available to attend the meeting

> An observer has no right to speak or vote

11. Attendance Registers

> Every company shall maintain separate attendance registers for the Meetings of the Board and Meetings of the Committee.

> Every Director, Company Secretary who is in attendance and every Invitee who attends a Meeting of the Board or Committee thereof shall sign the attendance register at that Meeting.

> The attendance register shall be kept in the custody of the Company Secretary. Where there is no Company Secretary, the attendance register shall be kept in the custody of any Director authorised by the Board for this purpose.

> Leave of absence shall be granted to a Director only when a request for such leave has been received by the Company Secretary or by the Chairman.

12. Chairman of the Meeting

> The Chairman of the company shall be the Chairman of the Board. If the company does not have a Chairman, the Directors may elect one of themselves to be the Chairman of the Board.

> It would be the duty of the Chairman to check, with the assistance of Company Secretary, that the Meeting is duly convened and constituted in accordance with the Act or any other applicable guidelines, Rules and Regulations before proceeding to transact business

> If the Chairman is interested in any item of business, he shall, with the consent of the members present, entrust the conduct of the proceedings in respect of such item to any Dis-interested Director and resume the Chair after that item of business has been transacted.

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GENERAL MEETING

[COMPANIES (MANAGEMENT AND ADMINISTRATION) RULES, 2014]

Annual General Meeting which is held every year for the members of the company which discloses functioning of the company all over the previous Financial Year in details in quantitative and qualitative aspects. It transact items of ordinary business as well as special business specifically require to transact at an AGM. The AGM ensures the interest of shareholders is protected. It provides opportunity to the shareholders to review the functioning of the company during the previous year.

> Section 110(18) of the Companies Act 2013, mandated every Company to observe Secretarial Standards-2 with respect to Board Meetings specified by ICSI

  SR.NO

                     TOPIC

   SECTION

      1

           Holding of  AGM

          96

      2

    Day, Time and Place of AGM

   96 and 96(2)

      3

                     Notice

         101

      4

                    Quorum

         103

      5

            Adjourned Meetings

         103

      6

                  Chairman

         104

      7

                   Auditors

         146

      8

          Secretarial Auditors

           -

      9

                 Directors

           -

     10

                  Proxies

          105

     11

              Voting Rights

   106 and 107

     12

                  E-Voting

          108

     13

                    Minutes

          118

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Holding of AGM

> It shall hold First AGM within a period of  nine months from the closing of first financial year

> The subsequent AGM shall be hold within a period of six months of the closure of relevant financial year

> The top 100 Listed Entities shall hold AGM within a period of five months of the closure of relevant financial year

> The time lag between two successive AGM shall not exceed 15 months

> AGM should be held once in each calendar year

> Extension for first AGM is not granted, however ROC may extend period for not exceeding 3 months for subsequent AGM for special reason

2. Date, Time and Place of AGM

> It should be call on a day which is not a National Holiday

> It shall be called during business hours i.e. between 9 a.m. to 6 p.m.

> However AGM convened during business hours may continue even after business hours

> It shall be held either at Registered office of the company or at some other place within the city, town or village in which the Registered office of the company is situated 

3. Notice

> AGM of a company can be called by giving not less than 21 days clear notice either in writing or through electronic mode

> For the purpose of reckoning twenty-one days clear Notice, the day of sending the Notice and the day of Meeting shall not be counted.

> In case the company sends the Notice by post or courier, an additional two days shall be provided for the service of Notice

> In case of section 8 companies 14 days clear notice is required

> Notice in writing of every Meeting shall be given to every Member of the company. Such Notice shall also be given to the Directors and Auditors of the company, to the Secretarial Auditor, to Debenture Trustees, if any, and, wherever applicable or so required, to other specified persons

> In case of companies having a website, the Notice shall be hosted on the website.

> Notice shall clearly specify the nature of the Meeting and the business to be transacted thereat

> In respect of items of Special Business, each such item shall be in the form of a Resolution and shall be accompanied by an explanatory statement which shall set out all such facts as would enable a Member to understand the meaning, scope and implications of the item of business and to take a decision thereon

> In respect of items of Ordinary Business, Resolutions are not required to be stated in the Notice except where the Auditors or Directors to be appointed are other than the retiring Auditors or Directors, as the case may be

> Notice and accompanying documents may be given at a shorter period of time if consent in writing is given thereto, by physical or electronic means, by not less than ninety-five per cent of the Members entitled to vote at such Meeting

> Notice shall be accompanied, by an attendance slip and a Proxy form with clear instructions for filling, stamping, signing and/or depositing the Proxy form

4. Quorum 

> In case of Public company: -

                   Quorum

        Number of members

     5 members personally present

        Not more than 1000

    15 members personally present

    More than 1000 but upto 5000

    30 members personally present

            Exceeds 5000

> In case of Private Company, 2 members personally present shall be the quorum for the meeting

> Proxies shall be excluded for determining the Quorum

> Authorised representative of a body corporate or the representative of the President of India or the Governor of a State is deemed to be a Member personally present and enjoys all the rights of a Member present in person

5. Adjourned Meetings

> The Chairman may also adjourn a Meeting in the event of disorder or other like causes, when it becomes impossible to conduct the Meeting and complete its business

> If a Meeting is adjourned for want of a Quorum to the same day on the next week, at the same time and place or with a change of day, time or place, the company shall give not less than three days. Notice should be sent to the Members either individually or by publishing an advertisement in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and in an English newspaper in English language, both having a wide circulation in that district

> If at an adjourned Meeting, Quorum is not present within half an hour from the time appointed, the Members present, being not less than two in number, will constitute the Quorum

> If a Meeting is adjourned for a period of thirty days or more, a Notice of the adjourned Meeting shall be given in accordance with the provisions contained hereinabove relating to Notice

> If a Meeting is adjourned for a period of less than thirty days, the company shall give not less than three days’ Notice specifying the day, date, time and venue of the Meeting, to the Members either individually or by publishing an advertisement in a vernacular newspaper in the principal vernacular language of the district in which the registered office of the company is situated, and in an English newspaper in English language, both having a wide circulation in that district

6. Chairman

> The Chairman of the Board shall take the chair and conduct the Meeting

> If the Chairman is not present within fifteen minutes after the time appointed for holding the Meeting, or if he is unwilling to act as Chairman of the Meeting, or if no Director has been so designated, the Directors present at the Meeting shall elect one of themselves to be the Chairman of the Meeting

> If no Director is present within fifteen Minutes after the time appointed for holding the Meeting, or if no Director is willing to take the chair, the Members present shall elect, on a show of hands, one of themselves to be the Chairman of the Meeting

> The Chairman shall explain the objective and implications of the Resolutions before they are put to vote at the Meeting

> In case of public companies, the Chairman shall not propose any Resolution in which he is deemed to be concerned or interested nor shall he conduct the proceedings for that item of business

7. Auditors

> The Auditors, unless exempted by the company, shall, either by themselves or through their authorised representative, attend the General Meetings of the company and shall have the right to be heard at such meetings on that part of the business which concerns them as Auditors

8. Secretarial Auditor

> The Secretarial Auditor, unless exempted by the company shall, either by himself or through his authorised representative, attend the AGM and shall have the right to be heard at such Meeting on that part of the business which concerns him as Secretarial Auditor

9. Director

> Directors who attend General meetings of the company and the Company Secretary shall be seated with the Chairman

> The Chairman of the Audit committee, Nomination and Remuneration committee and the Stakeholders relationship committee, or any other member of any such committee authorised by the Chairman of the committee to attend on his behalf, shall attend the General meeting

> If any Director is unable to attend the meeting, the Chairman shall explain such absence at the meeting

10. Proxy

> A person who is appointed by a member to attend and vote at a meeting in the absence of the member at the meeting is termed as proxy

> A member is who entitled to attend and vote at a meeting shall be entitled to appoint another person as a proxy to attend and vote at the meeting on his behalf

> One or more proxies, to attend and vote instead of himself and a Proxy need not be a member

> A Proxy shall be a member in case of companies with charitable objects etc. and not for profit registered

> A Proxy can act on behalf of members not exceeding fifty and holding in the aggregate not more than ten percent of the total share capital of the company carrying Voting Rights

> A Member holding more than ten percent of the total share capital of the company carrying Voting Rights may appoint a single person as Proxy for his entire shareholding and such person shall not act as a Proxy for another person or shareholder

> If a Proxy is appointed for more than fifty Members, he shall choose any fifty members and confirm the same to the company before the commencement of specified period for inspection

> The Proxy-holder shall prove his identity at the time of attending the meeting

> An authorised representative of a body corporate or of the President of India or of the Governor of a State, holding shares in a company, may appoint a Proxy under his signature

12. Voting Rights

> The articles may provide that a member shall not exercise any voting right until and unless any calls or sums presently payable by him are not paid

> Every company shall, at the meeting, put every Resolution, except a Resolution which has been put to Remote e-voting, to vote on a show of hands at the first instance, unless a poll is validly demanded

> A Proxy cannot vote on a show of hands

13. E-Voting

> Every company having its equity shares listed on a recognized stock exchange other than companies whose equity shares are listed on SME Exchange or on the Institutional Trading Platform and other companies as prescribed shall provide e-voting facility to their members to exercise their Voting Rights

> Every company, which has provided e-voting facility to its members, shall also put every Resolution to vote through a ballot process at the meeting

13. Minutes

> Minutes shall be recorded in books maintained for that purpose

> Minutes help in understanding the decisions taken at the meeting

> A distinct Minutes Book shall be maintained for meetings of the members of the company, creditors and others

> Resolutions passed by postal ballot shall be recorded in the Minutes book of General meetings

> A company may maintain its Minutes in physical or in electronic form with Timestamp

> Minutes shall contain a fair and correct summary of the proceedings of the meeting

> Minutes shall be entered in the Minutes Book within thirty days from the date of conclusion of the meeting

 

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Appointment of KMP and its Procedure

  • By : abiZa Team
  • May 6, 2020
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KEY MANAGERIAL PERSONNEL

The Companies Act, 2013, define KMP as the executive management. The executive management of the company is responsible for the day to day management of the company. The KMP are the first point of contact between the company and its stakeholders. Chapter XIII of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 deal with legal and procedural aspects of appointment of KMP.

A Whole-time KMP shall not office in more than one company except in the subsidiary company at the same time. However, he can hold directorship in other companies with the permission of the Board

> According to section 2(51) of Companies Act, 2013, KMP is defined as in relation to a company, means

1. The Chief Executive Officer [Sec 2(18)] or the Managing Director [Sec 2(54)] or the Manager [Sec 2(53)]

2. The Company Secretary [Sec 2(24)]

3. The Whole-time Director [Sec 2(94)]

4. The Chief Financial Officer [Sec 2(19)]

5. Such other officer, not more than one level below the directors who is in whole-time employment, designated as KMP to the Board

6. Such officer as maybe prescribed                                                                                                                                                                                                                                                                                  >

Mandatory Appointment of KMP for the following  Companies [Section 203 and Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

1. All the Listed Company

2. All Public Company whose paid up capital is rupees 10 crore or more

> Appointment of Managing Director, Whole Time Director or Manager

1. No shall appoint or re-appoint any person as it MD/WTD/Manager for a term exceeding 5 years

2. No Company shall appoint or continue the employment of any person as MD/WTD/Manager who-

       a. is below the age of twenty-one years or has attained the age of seventy years

       b. is an undischarged insolvent or has at any time been adjudged as an insolvent

       c. has at any time suspended payment to his creditors or makes, or has at any time made, a composition with them

       d. has at any time been convicted by a court of an offence and sentenced for a period of more than six months.

    Steps

                                                                    Procedure

       1    

   Convene Board Meeting to approve the following matter

      > To take decision on the person to be appointed as MD/WTD/Manager

      > Approve the draft agreement for the appointment

      > Approve the notice of Board Meeting with the explanatory statement

       2

   Hold the General meeting and passed the necessary resolution for the appointment of the same

       3

   Execute the agreement as approved by the Board

       4

   Make the necessaries entries in the register of directors, other records and registers of the company

       5

   File the following e-forms with ROC

        >  e-form MR-1 within 60 days of the appointment along with other documents

        >  e-from MGT-14 within 30 days of passing of Resolution

        >  e-form DIR-12 within 30 days of the appointment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

> Company Secretary

1. A CS shall not hold office in more than one company other than in its subsidiary company at the same time

2. He must have CS as its qualification

> APPOINTMENT OF COMPANY SECRETARY

 [Rule 8A of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

1. For every Listed Company

2. All Companies whose Paid up capital is rupees 10 crore or more

    Steps

                                                                 Procedure

       1

    Convene Board Meeting to approve the following matter

          > To take decision on the person to be appointed Company Secretary

          > Approve the draft agreement for the appointment

          > Approve the notice of Board Meeting with the explanatory statement

      2

    Execute the agreement as approved by the Board

      3

    Make the necessaries entries in the register of directors and KMP under section 170 of the act

      4

    File the following e-forms with ROC

           >e-form MR-1 within 60 days of the appointment along with other documents

           >e-from MGT-14 within 30 days of passing of Resolution

           >e-form DIR-12 within 30 days of the appointment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

> Appointment of the other KMP’s procedure are same as procedure for appointment of Company secretary

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MAINTENANCE OF BOOKS OF ACCOUNTS AT PLACE OTHER THAN REGISTERED OFFICE

According to section 2(13), Companies act 2013, ‘Books of Accounts’ include

  1. All sums of money received and expended by a company and matters in relation to which the receipts and expenditure takes place;
  2. All sales and purchase of goods and services by the company;
  3. The assets and liabilities of the company;
  4. It also includes in case of company engaged in production, processing, manufacturing or other mining activities, such particulars relating to utilization of material or labour or other items of cost 

Following are the features of proper books of accounts

> It must be kept on accrual basis and double entry system of accounting [Section 128(1)]

> It gives true and fair view of the state of the affairs of the company [Section 128(1)]

> It explains the transaction effected both at registered office and its branch, if any [Section 128(1)]

> Every company shall prepare and keeps its books of accounts at its register office or at any other place as Board of Directors may decide [Section 128(1)]

> It should be preserve for atleast 8 financial years immediately preceding  financial year [section 128(5)]

Person responsible for maintenance of Books of Accounts [Section 128(6)]

  1. Managing Director,
  2. Whole-Time Director in charge of finance,
  3. Chief Financial Officer, or,
  4. Any other person of a company charged by the Board with the duty of complying with the provisions of section 128

Accounts of Branch office [Section 128(2)]

> Every company which has a branch office in India or outside India has to keep at its office the proper books of accounts relating to the transactions effected at the branch

> The branch office has to send the summarized returns periodically to its registered office or such office where the books of accounts are maintained

Procedure to keep Company Books and Records at Place other than Registered Office [Rule 2A-Companies (Accounts) Rules,2014]

1. Call Board Meeting and pass the resolution for maintaining Company Books and Records at other place than ROC

2. File eform AOC-5 within 7 days of passing of board resolution with ROC along with copy of Board Resolution as an attachment.

Penalty for Non-Compliance with Section 128

  1. Imprisonment upto one year, or,
  2. Minimum fine of INR 50,000 and maximum fine of INR 5,00,000., or,
  3. With both
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ABRIDGED POSPECTUS (SECTION 33)

> According to Section 2(1) of the Act “Abridged Prospectus” is a prospectus which means a memorandum containing salient features of prospectus as may be specified by the Securities Exchange Board of India by making regulation in this behalf.

> Section 33 of the Act provides that no form of application for the purchase of any of the securities of a company shall be issued unless such form is accompanied by an abridged prospectus shall, on a request being made by any person before the closing of the subscription list and the offer, be furnished to him.

> Nothing aforesaid shall apply if it is shown that the form of application was issued-

- In connection with a bona fide invitation to a person to enter into an underwriting agreement with respect to such securities; or

- In relation to securities which were not offered to the public.

> The penal provisions provide that a Company which makes any default in complying with the provisions shall be liable to a penalty of fifty thousand rupees for each default.

>Section 33 provides that no application form of the Company shall be issued unless it is attached / annexed with abridged prospectus.

 

RED HERRING POSPECTUS (SECTION 32)

> Red Herring Prospectus means a prospectus which does not include complete particulars of the quantum or price of the securities included therein.

> In simple terms a red herring prospectus contains most of the information pertaining to the company’s operations and prospects, but does not  include key details of the issue such as its price and the number of shares offered.

> According to section 32 a Company proposing to make an offer of securities may issue a red herring prospectus prior to the issue of a prospectus. Such Company proposing to issue a red herring prospectus shall file it with the Registrar at least three days prior to the opening of the subscription list and the offer.

> Upon closing of offer the Company shall file a prospectus which includes the total  capital raised, the closing price of securities and such offer details which ever not mentioned in the red herring prospectus.

> A red herring prospectus shall carry the same obligation as are applicable to prospectus and  any variation between the red herring prospectus and a prospectus shall be highlighted as variation in the prospectus.

 

Shelf Prospectus

(1) Any class or classes of companies, as the Securities and Exchange Board may provide by regulations in this behalf, may file a shelf prospectus with the Registrar at the stage of the first offer of securities included therein which shall indicate a period not exceeding one year as the period of validity of such prospectus which shall commence from the date of opening of the first offer of securities under that prospectus, and in respect of a second or subsequent offer of such securities issued during the period of validity of that prospectus, no further prospectus is required.

(2) A company filing a shelf prospectus shall be required to file an information memorandum containing all material facts relating to new charges created, changes in the financial position of the company as have occurred between the first offer of securities or the previous offer of securities and the succeeding offer of securities and such other changes as may be prescribed, with the Registrar within the prescribed time, prior to the issue of a second or subsequent offer of securities under the shelf prospectus:

Provided that where a company or any other person has received applications for the allotment of securities along with advance payments of subscription before the making of any such change, the company or other person shall intimate the changes to such applicants and if they express a desire to withdraw their application, the company or other person shall refund all the monies received as subscription within fifteen days thereof.

(3) Where an information memorandum then filed, every time an offer of securities thus made under sub-section (2), such memorandum together with the shelf prospectus shall deemed as prospectus.

Explanation.—For the purposes of this section, the expression “shelf prospectus” means a prospectus in respect of which the securities or class of securities included therein hence issued for subscription in one or more issues over a certain period without the issue of a further prospectus.

 

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Meaning of Shares

According to section 2(84) of the Companies Act 2013, Share means, a share in the share capital of the company and includes stock. A share is referred as a unit of ownership which represents an equal proportion of a company’s capital. A company issues shares to the public, when it needs to raise funds for various reasons. When a person buys shares of a company, he becomes an owner of a part of that company. The different types of shares given in aforesaid image

 

1) Equity shares

Equity share capital with reference to any company limited by shares, means all share capital which is not preference share capital. It is further classified into the following types:

 

a) With voting rights

These shares are the Ordinary Equity Shares. The Equity shareholders enjoy rights such as right to dividend, bonus shares, voting etc.

 

b) Voting rights/Differential voting rights

These shares come with voting rights that are not equal to ordinary equity shares. The holders of these shares enjoys all other rights such as bonus shares, rights shares etc., which the holders of equity shares are entitled to, subject to the differential rights with such shares that have been issued.

 

2) Preference Shares

The preference shares are those which have some preferential rights over the other types of shares. This shares give the right to dividends and winding up benefits ahead of equity shareholders. They get fixed dividend each year. They do not enjoy voting rights (or only have a vote only when their dividend is in arrears). It is further classified into the following types:

 

a) Cumulative preference shares

> Fixed rate of dividend

> Arrears if any will receive in subsequent year

> During inadequate profit, dividend gets accumulated to the subsequent year

 

b) Non- Cumulative preference shares

> Fixed rate of dividend

> During inadequate profit, they will not receive anything

> Dividends cannot be carried forward

 

c) Participating preference shares

> Fixed rate of dividend

> Share in surplus profit if any left after equity shareholders claim

 

d) Non-participating preference shares

> Fixed rate of dividend

> Not entitled to share in surplus profit if any left after equity shareholders claim

 

e) Convertible preference shares

> Holder has the right to convert it into equity shares after certain period

 

f) Non-convertible preference shares

>  Holder do not has the right to convert it into equity shares after certain period

 

g) Redeemable preference shares

> Issued for a fixed term and are paid off after/before the expiry of the term or during the lifetime of the company

 

h) Irredeemable preference shares

>  It can be only redeem during winding up

> There is no provision for the arrangement of redemption

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Meaning of Debentures

 

According to Section 2(30) of Companies Act,  2013, “debenture” includes debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not. Debenture constitutes a loan i.e. it is a borrowed capital. It acknowledges a debt over a company. Debenture holders acquire status of creditors. Following are the types of debentures given in the image.

 

On the Basis of Security

 

1) Secured Debentures

These instruments are secured by a charge on the fixed assets of the issuer company. So if the issuer fails on payment of the principal or interest amount, his assets can be sold to repay the liability to the investors. If company issue secured debenture then company is required to file Form CHG-1 for creating security interest.

 

2_ Unsecured Debentures

These instrument are unsecured in the sense that if the issuer defaults on payment of the interest or principal amount, the investor has to be along with other unsecured creditors of the company, they are also said to be naked debentures.

 

On the Basis of Registration

 

1) Registered Debentures

Registered debentures are made out in the name of a particular person, whose name appears on the debenture certificate and who is registered by the company as holder on the Register of debenture holders. Such debentures are transferable in the same manner as shares by means of a proper instrument of transfer duly stamped and executed and satisfying the other requirements specified in Section 56 of the Companies Act, 2013.

 

2) Bearer Debentures

Bearer debentures on the other hand, are made out to bearer, and are negotiable instruments, and so transferable by mere delivery like share warrants. The person to whom a bearer debenture is transferred become a “holder in due course” and unless contrary is shown, is entitled to receive and recover the principal and the interest accrued thereon.

 

On the Basis of Redemption

 

1) Redeemable Debentures

It refers to the debentures which are issued with a condition that the debentures will be redeemed at a fixed date or upon demand, or after notice, or under a system of periodical drawings. Debentures are generally redeemable and on redemption these can be reissued or cancelled. Debentures can be redeemed either at par or at premium.

 

2) Irredeemable Debentures

A Debenture, in which no time is fixed for the company to pay back the money, is an irredeemable debenture. The debenture holder cannot demand payment as long as the company is a going concern and does not make default in making payment of the interest.

 

On the Basis of Convertibility

 

1) Non Convertible Debentures

These instruments retain the debt character and cannot be converted into equity shares.

 

2) Partly Convertible Debentures

A part of these instruments are converted into Equity shares in the future at notice of the issuer. The issuer decides the ratio of conversion. This is normally decided at the time of subscription.

 

3) Fully Convertible Debentures

These are fully convertible into Equity shares at the issuer’s notice. The ratio of conversion is decided by the issuer. Upon conversion the investors enjoy the same status as ordinary shareholders of the company.

 

4) Optionally Convertible Debentures

The investor has the option to either convert these debentures into shares at price decided by the issuer/agreed upon at the time of issue.

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A Limited Liability Partnership (LLP) is like an ordinary partnership in that several individuals or body corporate, known as the “Members”, share in the risks, costs, responsibilities and profits of the business. The difference is that liability is limited to the amount of money they have invested in the business and to any personal guarantees they have given to raise finance. This means that members have some protection if the business runs into trouble.

 

Incorporation Procedure:

 

STEP 1: Name Approval

 

Login MCA website: http://www.mca.gov.in/mcafoportal/runLLPService.do (by creating new user id or can use the existing user id).

MCA Services >> LLP services >> RUN LLP >> (web based Form)

New Incorporation>> Propose Maximum 2 Names >> Auto Check >> Comments (Existing Trademark or Significance of Proposed name) >> attach file if any as supporting Document (only 1 file not having size more than 6 MB)>> Submit Form >> Payment Gateway Copy SRN generated (*Note: Immediate Payment No Facility of Pay later Challan).

> Only One re-submission can be availed.

> As per Register office Fees Rules, Fees shall be Rs. 200/-

> 90 days validity of reserved name in case of RUN approval.

 

STEP 2: Preparation of Documents for Incorporation of LLP

Digital Signature Certificate (DSC):

 

(To be obtained by all Designated Partners)

1) Photo

2) PAN – Self attested

3) Address proof – Aadhar/ Bank Statement/Passport – Self attested

4) Mobile number

5) Email ID

 

Name Application

1) Two Proposed name

2) Main Object Clause

3) If proposed name is resembling to existing company/ trademark then NOC in the form of Board resolution (BR) along with ID of person signing BR.

 

Registered office address Proof

1) Sale deed/Lease deed

2) Utility bill (Electricity Bill) – not older than two months

 

3) If on rented rent agreement along with rent receipt

4) If on free consent then NOC from the owner of the property

 

Designated Partners / Partners

  1. ID Proof – Passport / Driving Licence / Voting ID
  2. Address Proof – Bank Statement or Passbook/ Electricity Bill/ Telephone bill/ Mobile bill.
  3. Email ID and Mobile No of Director/Shareholders

 

DIN related Information required

DIN related Information required:

1) Whether Citizen of India

2) Whether residence of India

3) Educational Qualification

4) Place of Birth

 

STEP 3: Preparation of e-form FiLLiP

 

1) Features of FiLLiP form:

Person can apply the Name also in this form.

 

Single Window Form:

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

 

This form can be used for the following purposes:

Application of DIN

Application for Availability of Name

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

 

2) Purpose of the e-form:

a) FiLLiP deals with the single application for reservation of name, incorporation of a new LLP and/or application for allotment of DIN/DPIN.

b) This e-form is accompanied by all supporting documents including details of designated partners, partners etc. Once the e-form is processed and found complete, an LLP is registered and LLPIN is allocated.

c) Also DINs/DPINs gets issued to the proposed designated partners/nominee of body corporate designated partners who do not have a valid DIN/DPIN. Maximum 2 designated partners are allowed for using this integrated form for allotment of DIN/DPIN while incorporating an LLP.    

 

3) Attachment to the e-form

a) Subscriber Sheet including consent

b) Proof of Registered Office including consent

c) Copy of Utility Bill

 

STEP 4:  Prepare Form 3

Next Step after incorporation is to Prepare LLP Agreement having Stamp Paper Value not below 1% of Capital Contributed and to be signed by all the partners/ Designated Partner.

a) Download e-Form LLP-3 from: http://www.mca.gov.in/MinistryV2/llpformsdownload.html

b) Fill the Form and Attach LLP agreement and file the form with MCA within 30 Days from the date of LLP Incorporation.

 

If you wish to incorporate a LLP, please Click Here to avail the service, or call us on 844-844-0306 or mail us on connect@abiza.in

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The provisions for Incorporation of Private Limited Company are governed under the Section 2(68), Section 7 read with Rule 8, Rule 9 and Rule 12 of the Companies Act, 2013.

 

Ministry of Corporate Affairs (MCA) has tried to simply the process of Incorporation of Company by bringing many revolutionary changes. The MCA has vide its notification dated February 18, 2020 has amended the Companies (Incorporation) Rules, 2014 effective from February 23, 2020 has introduced a Form SPICE+ for Incorporation. The features of the form have been discussed in this article.

 

Meaning

A private limited company is a company privately held for small businesses. This type of business entity limits owner liability to their shareholdings, the number of shareholders to 200, and restricts shareholders from publicly trading shares. It is the most prevalent and popular type of corporate legal entity in India.

 

The following state the minimum requirements for setting up a Private Limited Company

DIRECTORS

> Minimum number of directors: 2

> It must be a living person

> One director must be Indian Citizen and resident of India

 

SHAREHOLDERS

> Minimum number of shareholders: 2

> Director and Shareholder can be the same person

> It can be a corporate entity/Natural person

 

CAPITAL

> Minimum capital: No Minimum Capital requirement

> Two types of capital i.e. Authorize share capital (Raised from member) and Paid up Capital (Capital which is paid by member).

> It can be increase as and when required

 

REGISTERED OFFICE

> Residential place can also be register as office or Any other place

 

Steps to be followed for Incorporation of Private Limited Company

 

Step 1. Obtain Digital Signing Certificate from Certifying Authorities

Step 2. Fill SPICe+ form (Part A – Name availability – You can submit name availability request)

Step 3. Fill SPICe+ Part B form (Company information i.e. pertaining to directors, shareholders, registered office etc.)

Step 4. Fill e-form SPICe+ MOA (INC-33) ,SPICe+ AOA (INC-34) and SPICe+ AGILE-PRO (INC-35)

Step 5. Download all the e-forms prepare online and affix DSC on all the e-forms.

Step 6. Attached the require documents with form SPICe+ and upload the e-forms using linked forms facility from the MCA portal.

Step 7. Issuance of certificate of Incorporation

 

AGILE-PRO

Meaning: Application for Goods and service tax Identification number, employees state Insurance corporation registration, Profession tax Registration and Opening of bank account. It is application for registration of the following numbers namely: -

1. GSTIN with effect from 31st March 2019

2. EPFO with effect from 8th April 2019

3. ESIC with effect from 15th April 2019

4. Profession Tax Registration (Only Maharashtra)

5. Opening of Bank Account

Note: It is mandatory to file EPFO/ ESIC/ PROFESSION TAX (for Maharashtra) and Opening of bank account through web form AGILE-PRO

 

Important points about this form

> We can directly apply for GSTIN instead of applying it separately. However, it is not mandatory to apply here

> To fill this form, help kit is given with complete details

> It is an application for GSTIN, EPFO, ESIC, Profession Tax Registration and Opening of Bank Account

 

So now using MCA SPICE+ form, a Company can get upto 5 registrations in a Single form namely;

Registration as Private Limited Company

1) GST Registration

2) EPFO Registration

3) ESIC Registration

4) Professional Tax Registration (Only Maharashtra)

 

Documents / Information Required to form a Private Limited Company

 

Digital Signature Certificate (DSC):

 

(To be obtained by all Directors as well as Subscribers if the number does not exceed 7)

1) Photo

2) PAN – Self attested

3) Address proof – Aadhar/ Bank Statement/Passport – Self attested

4) Mobile number

5) Email ID

 

Name Application

1) Two Proposed name

2) Main Object Clause

3) If proposed name is resembling to existing company/ trademark then NOC in the form of Board resolution (BR) along with ID of person signing BR.

 

Registered office address Proof

1) Sale deed/Lease deed

2) Utility bill (Electricity Bill) – not older than two months

 

3) If on rented rent agreement along with rent receipt

4) If on free consent then NOC from the owner of the property

 

Directors/Shareholders KYC

If Directors/ Shareholders does not have DIN

1) ID Proof – Passport / Driving Licence / Voting ID

2) Address Proof – Bank Statement or Passbook/ Electricity Bill/ Telephone bill/ Mobile bill.

3) Email ID and Mobile No of Director/Shareholders

 

DIN related Information required

DIN related Information required:

1) Whether Citizen of India

2) Whether residence of India

3) Educational Qualification

4) Place of Birth

 

If you wish to incorporate a Company, please click here or you can call us at 844-844-0306 or mail us on connect@abiza.in 

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Key Takeaways from Union Budget 2020

  • By : abiZa Team
  • February 06, 2020
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Finance Minister Nirmala Sitharaman presented the Union Budget 2020-21 in the Lok Sabha. This is the second budget after Narendra Modi led National Democratic Alliance returned to power for a second term. This year's Union Budget centres around three ideas - Aspirational India, Economic development, A Caring Society.

 

Infrastructure

National Logistics Policy to be launched soon

Roads: Accelerated development of Highways.

Railways: Four station redevelopment projects

150 passenger trains through PPP mode.

More Tejas type trains for tourist destinations.

Port: Corporatizing at least one major port.

Air: 100 more airports to be developed under UDAAN.

Power: Efforts to replace conventional energy Efforts to replace conventional energy meters by prepaid smart meters.

Gas Grid: Expand National Gas Grid to 27,000 km

Infrastructure Financing: Rs 103 lakh crore National infrastructure Pipeline projects announced.

An international bullion exchange to be set up at GIFT City.

 

Industry Commerce and Investment

Scheme to encourage manufacturing of mobile phones, electronic equipment and semi conductor packaging.

National Technical Textiles Mission for a period of 4 years

NIRVIK Scheme for higher export credit disbursement launched

Setting up of an Investment Clearance Cell to provide end to end facilitation.

To encourage private sector to build Data Centre Parks throughout the country India to provide Rs 273 billion (USD 3.84 billion) for promotion of industry and commerce

 

MAJOR TAX PROPOSALS

Personal Tax Slabs

 

Changes in Tax Slabs

Old Tax Slabs

Existing Tax Slabs

Rate of Tax

Upto 2,50,000

0%

From 2,50,001 to 5,00,000

5%

From 5,00,001 to 10,00,000

20%

Above 10,00,000

30%

 

New Tax Slabs

Tax Slabs

Rate of Tax

Upto 2,50,000

0%

From 2,50,001 to 5,00,000

5%

From 5,00,001 to 7,50,000

10%

From 7,50,001 to 10,00,000

15%

From 10,00,001 to 12,50,000

20%

From 12,50,001 to 15,00,000

25%

Above 15,00,000

30%

Taxpayers will now be able to avail a lower income tax rate on various slabs by foregoing certain deductions and exemptions, Sitharaman announced in the budget. The new regime will be optional and those who want to stick to claiming deductions will be allowed to do so.

 

Corporate Tax Rates

The new effective tax rate, which will apply to domestic companies availing the benefit of section 115BAA is 25.168%. The break up such tax rate is as follows:

Base tax rate

Surcharge applicable 

Cess

Effective tax rate

22%

10%

4%

22*1.1*1.04 = 25.168%

Such companies will not be required to pay minimum alternate tax (MAT) under section 115JB of the act.

The domestic companies opting for section 115BAA will not be able to claim MAT credits for taxes paid under MAT during the tax holiday period. The companies would not be able to reduce their tax liabilities under section 115BAA by claiming MAT credits.

 

Concessional corporate tax rate of 15 per cent to new domestic companies in manufacturing and power sector.

 

Dividend Distribution Tax Abolished

In a move that will offer some relief to India Inc., the Narendra Modi-led government eliminated the dividend distribution tax that’s levied on dividends issued by companies. So far, companies were required to pay DDT at 15 percent, though including surcharge and cess put the effective rate at 20.56 percent.

 

Startups

Eligible startups with a turnover of up to Rs 25 crore are permitted to deduct 100% of its profits for three continuous assessment years of seven years if the overall turnover is under Rs 25 crore. This limit is now increased to Rs 100 crore. Furthermore, the eligibility period to deduct is increased to 10 years from 7 years

In the case of startups, employees possessing Employee Stock Option Plans (ESOPs) may defer paying taxes up to five years from the time of exercise, till the time they leave the startup, or until they sell their shares, whichever is earlier.

 

Co-operative Society

Finance Minister Nirmala Sitharaman on Saturday proposed reduction of tax on cooperative societies to 22 per cent plus surcharge and cess, from 30 per cent at present.

 

Direct Taxes

Tax audit threshold has been increased from Rs 1 crore to Rs 5 crore provided turnover/ gross receipts in cash does not exceed 5% during the previous year. Also, payment made in the P.Y in cash does not exceed 5%. For such taxpayers, the due date for tax audit has been extended to the 31st of October from the 30th of September.

Under section 194J- fees for technical services, TDS has been reduced to 2% from 10%.

Under Section 80EEA, the additional deduction of Rs.1.5 lakh for interest paid on home loans will now be allowed for the loans sanctioned till the 31st of March 2021.

Section 194: Dividend paid by Indian companies, to a shareholder, who is resident in India, TDS @ 10% if the dividend amount exceeds 5000 during the FY.

Section 194K: Dividend paid by MF to a resident TDS 10% will be deducted only if the dividend amount exceeds 5000 during the FY

Section 194: Dividend on shares paid by company exceeding Rs 5000 will be subject to TDS @ 10%

Section 194-O: Any payment made by e-commerce operator to the participant, the operator will have to deduct 1% TDS only if the annual amount paid or credited exceeds Rs 5 lakh.

Section 206AA: in relation to 194O has been amended to 5% instead of 20% in case of not furnishing the PAN.

 

Agriculture

The government aims to double farmers income by 2022

Help 15 lakh farmers solarise their grid-connected pump sets

“KisanRail” and “KrishiUdaan” for seamless transport of perishable farm goods

Increasing coverage of artificial insemination to 70%

Raise fishery exports to Rs 1 lakh crore by 2024-25

 

Education

About 150 higher educational institutions will start apprenticeship embedded courses

Special bridge courses to improve skill sets of those seeking employment abroad

Ind-SAT to be conducted in Africa and Asia under study in India programme

Allocation of Rs 99,300 crore for the educational sector in 2020-21

Allocation of Rs 3,000 crore for skill development

 

Water, Wellness, and Sanitation Goals

More than 20,000 empanelled hospitals under PM Jan Arogya Yojana

“TB Harega Desh Jeetega” campaign launched to end TB by 2025

Expansion of Jan AushadhiKendra Scheme to all districts by 2024

Focus on liquid and greywater management along with waste management

 

Click here to view a brief Presentation on Budget 2020

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At a press conference held on August 23, 2019, the Union Finance Minister Nirmala Sitharaman and senior officers of the finance ministry announced a host of measures to boost the country's economy. The Finance Minister dismissed all talks about the economic slowdown. Let us take a look at the various measures introduced to revive the Indian Economy :

Surcharge on FPI’s rolled back :

The Budget proposal to hike surcharge on FPIs had spooked foreign investors, who withdrew more than $ 3.4 billion ( INR 24,500 crore) from domestic equities in July and August. The surcharge on domestic and foreign investors was revoked back. The surcharge had been announced in the Union Budget earlier. The government has proposed to increase the surcharge levied on top of the applicable income tax rate from 15% to 25% for those with taxable incomes between Rs 2 crore and Rs 5 crore, and to 37% for those earning more than Rs 5 crore, taking the effective tax rate for them to 39% and 42.74%, respectively..

 

Rollback of surcharge on LTCG and STCG :

In order to increase the investment in capital market, the enhanced surcharge on LTCG and STCG was rolled back.

 

Relief for Start-Ups:

The angle tax provisions levied on start-ups and their investors were withdrawn.

 

Cash Infusion in the Economy:

The Government will infuse upfront  INR 70,000 crore into public sector banks which will in turn enable the release of  INR 5 lakh crore in the market.

 

Measures to boost the Auto Sector :

1) BS-IV Vehicles purchased till 31/03/2020 to remain operational for the entire period of registration.

2) Revision of one time registration fees being deferred till June 2020.

3) Additional 15% depreciation on all vehicles to increase to 30%, acquired during the period form now to 31/03/2020.

4) Both EVs and ICVs will continue to be registered.

5) Removal of ban on purchase of new vehicles for replacing the old ones by Government.

6) Consideration of Scrappage Policy.

 

GST Refund for MSME :

All pending GST refund due to MSMEs will be paid within 30 days and in the future, GST refund on the new application will be paid within 60 days.

 

Cheaper Home, Auto Loans :

Banks will offer cheaper loans for purchasing vehicles, houses and consumer goods.

 

Boost in Infra Sector :

Investment of INR 100 lakh crore will be done for building modern infrastructure over the next five years.

 

CSR violation not a criminal offence :

Violations of CSR norms under the Companies Act, 2013 will not be a criminal offence; but will be treated only as a civil liability.

 

Aadhar based KYC :

Aadhar-based KYC to be permitted for opening Demat accounts and for investing in mutual funds.

 

Support to NBFCs / HFCs :

>>Additional liquidity support was provided by NHB to HFCs of  INR 20,000 crore thereby increasing it to INR 30,000 crore.

>Partial Credit Guarantee Scheme for purchase of pooled assets NBFCs or HFCs upto  INR 1 lakh crore

 

>>Timely Rate Cuts by Banks :

> Rate cuts through MCLR reduction will be passed on by banks to benefit the consumers.

 

>>Return of Loan Documents :

> Loan documents with Banks will be returned within 15 days of loan closure.

 

>>Transparent One Time Settlement Policy :

> Quick One Time Settlement Policy with checklist approach to benefit MSME and Retail Borrowers in settling their overdues.

 

>>Protecting Honest Decision Making :

> Bank Internal Advisory Committee (IAC) decision on vigilance / non-vigilance will be final.

 

Addressing complaints of harassment by certain Income Tax Authorities :

From October 01, 2019, all notices, summons, and orders of the Income Tax Department will be issued through a Centralised Computer System. It will also have a computer-generated unique Document Identification Number (DIN).Also the Government has set fiscal deficit target of 3.3 per cent of the GDP for the current fiscal year.

 

Other measures announced to boost the economy include setting up of an entity for credit enhancement for infrastructure and housing projects, a task force to finalise the pipeline of infrastructure projects and simplification of Know Your Client (KYC) procedure to improve market access for foreign investors.

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How to incorporate a Producer Company?

  • By : abiZa Team
  • August 19, 2019
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1. Definition

A producer company can be defined as a legally recognized body of farmers/ agriculturists with the aim to improve the standard of their living. Under Companies Act 1956, a Producer Company can be formed by individuals or institutions having their business objective as one of the following:

  • Procurement
  • Production
  • Harvesting
  • Grading
  • Pooling
  • Handling
  • Marketing
  • Selling, or
  • Export

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

The main objective of the producer company is to facilitate the formation of co-operative business as companies and to make it possible to convert existing co-operative business into companies.

2. Requirements

 

 

 

      MEMBERS REQUIRED

     Any Ten or more individuals who are producers

     OR

     Any Two or more Producer institutions

     OR

  A combination of Ten or more individuals and        Producer institutions

 

      DIRECTORS

 

     Minimum 5

 

     Maximum 15

 

 

      SHARE CAPITAL

     Minimum INR 5 Lakhs

 

     Equity Shares only

 

 

          Benefits to Members

 

 

      LIMITED LIABILITY

     Limited to the amount of unpaid share capital if      any.

 

 

      VALUE FOR PRODUCE

     Received by members in the form of cash/ kind/         equity shares.

 

 

      PATRONAGE BONUS

Distribution of the surplus income to the            members of the producer company in proportion to their respective patronage.

 

3. Procedure for Incorporation of a Producer Company

   Steps

 

          Procedure

 

 

 

     A Producer Company is required to be registered as a Private Limited Company.

 

1.

     Obtaining Digital Signature Certificate of the proposed Directors.

 

2.

     Reserve name of the Company using RUN (Reserve Unique Name) Service

     Name should end with PRODUCER LIMITED COMPANY.

     Attachment:

     Brief details of the objects of Company.

 

3.

     Preparation of MOA and AOA of the Company.

 

4.

     Declaration by Professional and Subscribers.

 

5.

     Director’s consent to act in form DIR-2, DIR-8 and MBP-1.

 

6.

     Preparation of E-form SPICE

     Attachments:

     Proof of Registered Office

     Copy of Utility Bill

     DIR-2 of all Directors

     Declaration by Professional in INC-8

     Declaration by Directors & Shareholders in INC-9

     Scanned Copy of signed MOA and AOA

 

7.

     Filing of SPICE Form using linked form option in MCA

 

 

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How to Incorporate a Section 8 Company?

  • By : abiZa Team
  • August 19, 2019
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Formation of Companies with Charitable Objects (Section 8 Company)

Section 8 of the Companies Act 2013 provides for the formation of the companies with charitable objects etc. Section 8 Company, (earlier Section 25 Company of the Companies Act, 1956), is a legal entity for Non-Government or Non-Profit Organizations.

Examples of Section 8 Companies

Infosys Foundation, Reliance Foundation, TATA Foundation, Reliance Research Institute, OTC- Over the Counter Exchange of India, etc

Objectives of Section 8 Company

It is a type of company which is established with the objective to promote commerce, arts, science, sports, education, research, social welfare, protection of the environment or any other such object. The main purpose of Section 8 Company is essentially to work for the welfare of society in any of the above-mentioned fields and is formed in Public Interest.

   Minimum requirements

  • Minimum Two shareholders;

  • Minimum Two Directors (Directors and shareholders can be the same person);

  • At least one of the Director shall be the  resident in India;

 

 

         Minimum capital

 

  • No requirement of Minimum capital

 

 

 

         Advantages

1) Tax benefits

2) No minimum share capital

3) No need to use title

4) Easy Transfer of ownership

5) A charitable organization or trust registered under section 12 A, allows you to avail tax exemption under section 80G.

 

 

 

 

 

 

   Documents Required

 

The essential documents are:

  • Identity Proof: Copy of the Permanent Account Number (PAN) of all the Directors and Promoters (Mandatory);

 

  • Proof of Address:  Copy of a valid Passport/Driving License/ Aadhar Card /Telephone or Electricity Bill, not older than 2 months;

  • A recent passport size photograph of the Directors/Promoters;

  • In case if the office premises are taken on rent then Rent Agreement or Leave & License Agreement is mandatory;

  • Utility Bills like Electricity Bill/ Telephone Bill of the registered office (Not older than 2 Months)

 

 

   Registration Procedure

Step 1: Application for DSC (Digital Signature Certificate)

Step 2: Fill SPICe+ form (Part A – Name availability – You can submit name availability request)

Step 3: Fill SPICe+ Part B form (Company information i.e. pertaining to directors, shareholders, registered office etc.)

Step 4: Application for incorporation in SPICe+ Part B Form and submit it. It will autognerate the AGILE-PRO Form and SPICe+ INC-9 Form

Step 5: Fill AGILE-PRO form for GSTIN (Not mandatory), EPFO, ESIC, Profession Tax Registration (Only for Maharashtra) and Opening of Bank Account

Step 6: Download all the e-forms prepare online and affix DSC on all the e-forms.

Step 7: Attached the require documents with form SPICe+ and upload the e-forms using linked forms facility from the MCA portal.

Step 8: Issuance of certificate of Incorporation

 

 

   Attachments required

  Proof of office address

  Copies of Utility Bill (Not older than 2 Months)

  Form No. INC –13- MOA and AOA

  Form No. INC –14- Declaration by advocate /      practicing CA /    CS / CWA

  Form No. INC –15- Declaration by each person    making an          application

 

     Post Incorporation

    

  This is done so as the company can raise capital for its smooth      running in the business.

  Bank Account Opening and Remittance of Subscription Money

 

 

 

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Ease of doing business in Assam

  • By : abiZa Team
  • July 30, 2019
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EASE OF DOING BUSINESS IN ASSAM

Government of Assam

1. EASE OF DOING BUSINESS:

Ease of doing business in Assam aims to create a platform for providing best support towards the prospective and existing business community in the state and drives forward the state's vision of prosperity for all - by employing technology, innovation, inclusivity and sustainability as key factors for development. It provides objective measures of business regulations.

Ease of Doing Business in Assam encourages economies to compete towards more efficient regulation; it looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Government of Assam is there to guide and help you set up your Industry in the State of Assam.

2. SINGLE WINDOW AGENCY:  

A Single Window Agency is a trade facilitator established in coordination with various relevant government departments, with an objective to increase the efficiency of the country’s economy through time and cost saving .Through this single window approach, its users can submit all the necessary data and documents at one time, in a standardized format, thereby helping in simplifying and streamlining the various formalities necessary to establish and operate any business or trade. As the entire procedure in this Single Window Agency endeavours to be time-bound and transparent, it becomes imperative for all the associated departments to operate in tandem with each other to provide swift end results. This ensures in the creation of a working environment conducive for the wholesome growth and sustainance of a competitive and thriving business culture.

Some of the benefits of the Single Window Agency are:

  • Lower administrative costs by reducing delays
  • Faster clearance and release times
  • Consistent application and explanation of regulatory requirement
  • More effective and efficient deployment of resources
  • Increased transparency and predictability of government processes.

 

3. FOLLOWING ARE THE ONLINE SERVICES AVAILABLE ON THE PORTAL OF ASSAM GOVERNMENT:

Important: Kind attention to all applicants of EoDB

The services of Inspectorate of Boilers (Labour & Welfare) and Inspectorate of Electricity (Power) will be migrated to https://eodb.assam.gov.in w.e.f 26 July 2019. Users may apply for services from the new site.

Sr. No.A.

Name of the Department

Website Link

1

Department of Industries & Commerce

https://industry.eodbassam.in/

2

Department of Labour Welfare

https://labour.eodbassam.in/

3

Department of Home and Politcal

(Fire and Emergency Services)

https://fire.eodbassam.in/

4

Department of Urban Development

https://tcp.eodbassam.in/

https://dma.eodbassam.in/

https://water.eodbassam.in/

5

Department of Guwahati Development

https://gmda.eodbassam.in/

https://gmc.eodbassam.in/

https://jal.eodbassam.in/

6

Department of Environment & Forest

https://pollution.eodbassam.in/

https://forest.eodbassam.in/

7

Department of Revenue and Disaster Management

https://revenue.eodbassam.in/

8

Department of Education

https://dee.eodbassam.in/

https://dse.eodbassam.in/

https://dhe.eodbassam.in/

9

Department of Co-operation

https://rcs.eodbassam.in/

10

Department of Finance

https://taxation.eodbassam.in/

https://rfs.eodbassam.in/

11

Department of Power

https://power.eodbassam.in/

https://cei.eodbassam.in/

12

Department of Health & Family Welfare

https://health.eodbassam.in/

https://ayush.eodbassam.in/

https://dme.eodbassam.in/

https://sdc.eodbassam.in/

https://cfs.eodbassam.in/

https://pcpndt.eodbassam.in/

13

Department of Mines and Minerals

https://mine.eodbassam.in/

14

Department of Tourism

https://tourism.eodbassam.in/

15

Department of Excise

https://excise.eodbassam.in/

16

Department of Food, Civil Supplies & Consumer Affairs

https://fcs.eodbassam.in/

https://metrology.eodbassam.in/

17

Department of Public Works

https://pwd.eodbassam.in/

18

Department of Agriculture

https://agriculture.eodbassam.in/

19

Judicial Department

https://judicial.eodbassam.in/

 

4. ORGANIZATIONAL CHART FOR SINGLE WINDOW AGENCY

Chief Secretary to the Government of Assam- Chairman

Sr most Secretary of Industries and Commerce Department – Member

Sr most Secretary of Finance Department – Member

Sr most Secretary of Revenue and Disaster Management Department – Member

Sr most Secretary of Power Department – Member

Sr most Secretary of Labour Welfare and Skill Development Department – Member

Sr most Secretary of Panchayat and Rural Development Department – Member

Sr most Secretary of Environment and Forest Department – Member

Sr most Secretary of Urban Development Department and Guwahati Development Department – Member

Sr most Secretary of Tourism Department – Member

Sr most Secretary of Health and Family Welfare Department – Member

Sr most Secretary of Information Technology Department – Member

Commissioner of Industries & Commerce cum CEO of Single Window Agency – Member Secretary

5. HELPDESK

Helpline No: +91-7086044425, +91-7086044424 (10 am to 5 pm on all working day)

Email: eodb.assam@gmail.com

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Useful Government Websites for References

  • By : abiZa Team
  • July 30, 2019
blog1

We have enlisted a few of the main government websites which can be useful to the users to view any data as per the Government websites.

 

The following are the Government website for your reference. 

 

Sl

No

Department

Weblink

1

Ministry of Corporate Affairs

http://www.mca.gov.in/

2

Make in India

http://www.makeinindia.com/home

3

National Portal of India

https://india.gov.in/

4

India in Business

http://indiainbusiness.nic.in/newdesign/index.php

5

E-Biz India’s G2B Portal

https://www.ebiz.gov.in/home/

6

Department of Industrial Policy

& Promotion (DIPP)

http://www.dipp.gov.in/English/Default.aspx

7

Foreign Investment Promotion

Board

http://www.fipbindia.com/

8

Overseas Indian Facilitation

Centre

http://www.oifc.in/

9

Securities and Exchange Board of India

http://www.sebi.gov.in/sebiweb/

10

Ministry of Finance

http://finmin.nic.in/

11

Department of Heavy Industries

http://dhi.nic.in/

12

Department of Public

Enterprises

http://dpe.nic.in/

13

EEPC (Engineering Export

Promotion Council)

https://www.eepcindia.org/

14

Insolvency and Bankruptcy

Board of India

http://ibbi.gov.in/

15

Bureau of Indian Standards:

http://www.bis.org.in/

16

Digital India

http://digitalindia.gov.in/

17

Central Board of Excise and

Customs

http://www.cbec.gov.in/index

18

GOI Web Directory

http://www.goidirectory.gov.in/index.php

19

GOI Data Portal

https://data.gov.in/

20

Ministry of Commerce and

Industry

http://commerce.gov.in/

21

Ministry of Development of

North Eastern Region

http://commerce.gov.in/

22

Ministry of Environment, Forest and Climate Change

http://www.moef.gov.in/

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Trademark Classes List

Trademark registration that works to protects your business reputation and goodwill around the world. With the trademark; one can easily make his or her business familiar to the target market. Trademark can be representing as graphic, text, words or combination of these elements. It can be use over the letter pad of the company, banners of services and products, marketing pamphlets, visiting cards and many more. Well, during the process of trademark registration there is one of the fields where you need to specify about the trademark classes like the category of products and services in respect of which the proposed trademark is being used.

Trademark Classes of Goods and Services

If we concern varied goods and services there are total of 45 classes out of which 34 classes are for products and 11 are stated for services category. The main aim of classification of trademark goods and services is to prepare a complete hierarchy which trademark is being used under which category. While following this strategy; it will be easy for the govern bodies to handle the trademark classes list at domestic and international level.

Trademark Classes List of Goods and Services:

Class 1: is for Chemicals, Resins, and Plastics.)

Class 2: is for Varnishes, Paints, and Anti-corrosion substances

Class 3: is for Cosmetics, Hair Oils and Lotions, and Cleaning Preparations

Class 4: is for Greases, Lubricants, and Fuels

Class 5: is for Pharmaceutical, Medical, and Sanitary Preparations

Class 6: is for Goods of Metals and Alloys, Ironmongery and Hardware Products

Class 7: is for Equipments and Machineries

Class 8: is for Hand-operated Devices and Tools

Class 9: is for Scientific, Electrical, and Technological Apparatus

Class 10: is for Medical and Surgical Instruments and Apparatus

Class 11: is for Heating, Cooling, Drying, and Refrigerating Apparatus

Class 12: is for Land, Air, and Water Vehicles

Class 13: is for Explosives and Firearms

Class 14: is for Precious Metals and Stones, and Jewelry Items

Class 15: is for Diverse Musical Instruments

Class 16: is for Paper Goods, Stationery Products, and Printed Materials

Class 17: is for Rubber and Plastic Goods and Products

Class 18: is for Products made of Hides and Leathers

Class 19: is for Various Non-Metallic Building Materials) 

Class 20: is for Furniture, and other precious household Articles

Class 21: is for Kitchen Utensils, Household Appliances and Glass products

Class 22: is for Ropes and Cordage, Fibers, and Stuffing materials

Class 23: is for Threads and Yarns for uses in textiles

Class 24: is for Textiles and Fabrics

Class 25: is for Apparels and Clothing

Class 26: is for Fringes and Fancy Goods and Products

Class 27: is for Floor Coverings and Wall Hangings

Class 28: is for Toys, Sporting, and Sports Goods

Class 29: is for Meats and Processed Food Items

Class 30: is for Auxiliary Food and Beverage Items

Class 31: is for Agricultural and Horticultural Products

Class 32: is for Beers, Light Beverages, and Fruit Juices

Class 33: is for Wines and Spirits

Class 34: is for Tobacco Products and Smokers' Articles

Services:

Class 35: is for Advertising and Business Services

Class 36: is for Insurance and Financial Services

Class 37: is for Building, Construction and Repair Services

Class 38: is for Telecommunication Services

Class 39: is for Transportation and Storage Services

Class 40: is for Treatment of Materials Services

Class 41: is for Education and Entertainment Services

Class 42: is for Computer, Scientific and Legal Services

Class 43: is for Hotels and Restaurants Services

Class 44: is for Medical, Beauty, and Agricultural Services

Class 45: is for Personal and Social Services Services

 

Want to file your Trademark, abiZa can provide you to register your Brand. Click here for more details

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Companies will ought to deposit their unused funds meant for corporate social responsibility [CSR] activities to a fund established by the govt. for better utilization of resources for public welfare, according to amendments to the companies Act approved by the cabinet on wednesday.

The Companies [Amendment] Bill 2019 cleared by the cabinet will replace an ordinance issued earlier to help reduce the burden on special courts and to bring down applicable penalties for little corporations. additionally, it seeks to achieve some alternative changes to the law, which includes the provisions associated with CSR. The proposed amendment requires businesses to transfer the CSR amount allocated in specific years to a dedicatedfund discovered by the govt. if the corporate could not utilize it for 3 years. this would bring accountability to the CSR activities of companies, aforementioned a government official who spoke on condition of anonymity.

Indian corporations pay around INR15,000 crore a year on CSR, according to info out there with the govt. The law mandates that corporations with a net worth of a minimum of INR 500 crore or revenue of INR 1,000 crore or net profitof INR 5 crore ought to pay a minimum of two percent of their net profit on CSR. Any failure during this regard ought to be explained within the annual budget.

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SIGNIFICANT BENEFICIAL OWNERSHIP RULES, 2019

Definition of Significant Beneficial Owner (SBO)

Any individual who alone or together,

> holds indirectly, or together with any direct holdings, not less than ten per cent. of the shares;

> holds indirectly, or together with any direct holdings, not less than ten per cent. of the voting rights in the shares;

> has right to receive or participate in not less than ten per cent. of the total distributable dividend, or any other distribution, in a financial year through indirect holdings alone, or together with any direct holdings;

> has right to exercise, or actually exercises, significant influence or control, in any manner other than through direct holdings alone:

 

SBO shall be individual depending upon the following type of members of Reporting Company (RC)

> If Member of RC is Company --> Individual holding majority stake (i.e. more than 50%) in such Company OR Individual holds majority stake in ultimate holding Company

> If Member of RC is HUF --> Karta of HUF

 > If Member of RC is Partnership Entity (LLP) --> Individual who is a Partner OR Individual holds majority stake in Body Corporate who is Partner of Partnership Entity OR Individual holds majority stake in ultimate holding company of such Body Corporate

> If Member of RC is Trust --> Trustee in case of discretionary trust or charitable trust OR Beneficiary in case of specific trust OR Author or Settlor in case of revocable trust

> If Member of RC is Pooled Investment Vehicle --> General Partner OR Investment Manager OR CEO where Body corporate is the Investment manager of such pooled investment vehicle

 

Click here for illustrations

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Highlights of the Union Budget 2019

  • By : abiZa Team
  • July 05, 2019
blog1

Highlights of Union Budget

> Pension benefits will be offered to 3 crore shopowners with annual turnover of less than Rs 1.5 crore under new scheme called Pradhan Mantri Man dhan Scheme

> We will work to make a platform for listing social enterprises and voluntary organisations to raise capital as equity, debt or units like mutual fund, Sitharaman says

> India's FDI flows in 2018-19 remained strong compared to global at $54.2 billion, 6 percent higher than last year. The government will examine options of opening up FDI in media, animation and some other sectors to improve these flows further, she says

> Nearly 1.95 crore houses are proposed to be provided to eligible beneficiaries under the Pradhan Mantri Awas Yojana, she points out.  The completion of houses that required 314 days in 2015-16, it has now come down to 114 days since 2017, she highlights

 

Transportation 

> Inter-operable One Nation One transport card: National transport card for universal travel which can used on various modes of transport (road, railways etc). The card can also be used as a ATM card for withdrawing money. 

> Govt plans to create MRO (Manufacturing, Repair and Operate) industry 

> PPP to be used to unleash faster development and the delivery of passenger freight services. 

> Comprehensive restructuring of National Highways Programme for creation of National Highways Grid. 

> A total of 1,25,000 km of roads will be upgraded under Pradhan Gram

> Sadak Yojana under Phase III at estimated cost of Rs 80,250 crore

 

Taxes

> Annual turnover limit for 25 percent corporate tax raised to Rs 400 crore from Rs 250 crore

> Taxpayers with annual turnover of less than Rs five crore to have to file only quarterly returns under GST.

> Two percent TDS on withdrawals of Rs one crore in cash in a year from bank accounts for business payments

> Direct tax revenue has increased by 78% 

> Govt waives MDR changes on cashless payment 

> Increase in surcharge on super rich: 3% surcharge on Rs 2 crore income; 7% on Rs 5 crore and above 

 

Market reforms

> Asks SEBI to evaluate hiking minimum public shareholding to 25 percent from 35 percent

> Government will work with exchanges to allow AA bonds to be used as collateral

> Proposes rationalising and streamlining of KYC (know your customer) norms for Foreign Portfolio Investors (FPIs) to make it investor-friendly

> NRI portfolio route to be merged with FPI for seamless investment in stock markets

> Credit Guarantee Enhancement Corporation will be set up in 2019-20, action plan to deepen markets for long-term bonds with specific focus on infra sector to be put in place, Sitharaman said

> The government also plans to take up measures to make RBI and SEBI depositories inter-operable

> The government will allow FPIs/NRIs to subscribe to listed debt papers of REITs and InvITs

> Local sourcing norms will be relaxed for the Single brand retail sector 

> Govt of open FDI in aviation, insurance, animation AVGC and media 

> Propose Social Stock Exchange under SEBI for listing social enterprises & voluntary organisations 
 

MSME

> The government proposes to extend pension benefit to three crore retail traders with an annual turnover less than Rs 1.5 crore under Pradhan Mantri Karam Yogi Man Dan Scheme

> Centre will create a payment platform for MSMEs for payment of bills

> Hundred new clusters will be set up in 2019-20 to enable 50,000 artisans to come into the economic value chain

> Will set up 10,000 new farmer producer organizations

> To start television programmed exclusively for startups

 

Ease of living

> Rs 3,000 pension per month for informal sector workers

> Aadhaar card under 180 days for NRIs on arrival in India

> The government to open embassies in countries where India doesn't have a resident diplomatic mission as yet

 

Startups

> Propose easing angel tax for startups 

> Angel tax: Wont require scrutiny from Income Tax department for startup 

> 2% interest subvention for GST-registered MSME on fresh or incremental loans. 

> Stand Up India' Scheme to continue till 2025 
 

Education

> Govt to launch 'Study in India' programme to attract foreign students in higher education 

> Allocate Rs 400 crore for world-class higher education institutions in FY20 . 

> To unveil new education policy. 

> National research foundation to fund, coordinate and to promote research in the country. 

> New Higher Education Commission with focus on higher autonomy 

> New national education policy to propose changes in school, higher education 

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Format Draft ECB Loan Agreement two sample

  • By : abiZa team
  • June 18, 2019
blog1

 

Below given is the draft - ECB Agreement

 SAMPLE 1

LOAN FACILITY AGREEMENT

 

This Loan Facility Agreement (“Agreement”) is made on this ____ day of______2019 by and between ____________________________ (CIN no.________________________)incorporated under the laws of the India, having its registered office (hereinafter referred to as the "Lender"); and_________________________, (CIN no._____________________________)  private company incorporated under the laws of India, having its registered office at ______________________________, Mumbai (hereinafter referred to as the "Borrower").

Whereas:

  1. Lender is the shareholder of the Borrower and holding _____  % shares in Borrower company, and Lender is eligible lender as FEMA ECB guidelines,   and Lender has passed the resolution of its Board/ members on _____________________ for approval of loan facility agreement.
  2. Borrower is engaged into a business of running a logistics technology-based platform and is eligible borrower as per FEMA ECB guidelines and Borrower is also start up registered with Government of India and Borrower has passed the resolution of its Board/members on_____________________for approval of this loan facility agreement

IT IS AGREED as follows:

  1. Definitions:

In addition to the terms defined elsewhere in this Agreement, unless otherwise specifically provided herein, the following terms shall have the following meanings for all purposes when used in this Agreement and in any notice or other document delivered in connection with this Agreement:

“Advances” shall mean any loan or advance of credit from the Lender to the Borrower pursuant to this Agreement.

“Agreement” shall mean this Loan Facility Agreement, as amended or supplemented from time to time. "

Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London.

“LIBOR” means the London Inter-Bank Offering Rate as determined by the British Banking Association

“Event of Default” shall have the meaning ascribed to it in Clause 9.

“Interest Period” shall mean with respect to each Advance

“Loan” shall mean all Advances outstanding hereunder or made to the Borrower by the Lender pursuant to Clause 2 of this Agreement.

 “Maturity Date” shall, for each Advance, mean the date falling 5 years after the date of each Advance under this Agreement or such later date as the parties may agree in writing, which shall be no later than 31 December 2024

“Maximum Credit Amount” shall mean USD _______ Million (_________ million,).

“RBI” shall mean Reserve Bank of India.

  1. The Loan Facility
    1. Subject to the terms and conditions hereof, the Lender shall make such advances of credit in INR equivalent to US Dollars to the Borrower as the Borrower may from time to time request (each, an “Advance”) by notice to the Lender provided, however, that: (a) the aggregate of all Advances outstanding and requested at any time shall not exceed the Maximum Credit Amount, (b) no Event of Default, and no event which, with the giving of notice or lapse of time, or both, would become an Event of Default, has occurred and is then continuing, (c) the proceeds of each Advance will be used for the purpose of expansion of existing facilities / working capital and corporate purpose. The Borrower has obtained all necessary regulatory approvals, if any, that may be required for the purposes of availing itself of the loan facility under this Agreement.
  2.  Requests for Advances
    1.  Each request for an Advance under Clause 2 shall be in writing or by electronic mail and executed by an authorised representative of the Borrower, specifying the amount of that Advance.
    2. Subject to the provisions of paragraph 3.3 below, each Advance shall be made as soon as possible but not later than on the second Business Day after the Lender receives a duly completed request for an Advance or such other date as the parties may agree.
    3. Each request for an Advance shall constitute a representation and warranty by the Borrower to the Lender that all representations and warranties contained herein were true and accurate when made, and are true and accurate on the date of such request, and that no Event of Default, and no event which, with the giving of notice or lapse of time, or both, would become an Event of Default, has occurred and is then continuing.
  3.  Interest
    1. The Borrower will pay interest on each Advance at a rate equal to LIBOR + 450 % bps spread, or the maximum interest rate payable under applicable law, for that Interest Period.  
    2. Interest shall be calculated on the basis of the actual number of days elapsed of a month of 30 days and a year of 360 days.  
    3. The Borrower will pay interest in respect of each Advance within seven working days from the expiry of the respective Interest Period.
  4. Use of Proceeds

5.1 Except as the Lender may otherwise agree in writing, the proceeds of the Advances shall be used by the Borrower for the purpose of expansion of existing facilities and working capital facilities, and corporate purpose. The Borrower shall not, directly or indirectly, use any part of the proceeds from any Advance for any purpose which would violate, or cause the Lender to be in violation of, any provision of any applicable statute, regulation, order or restriction.

  1. Payment and repayment and cancellation

6.1 Each outstanding Advance hereunder shall be repaid in full (including any interest which has not yet been paid and which shall be calculated on a time apportioned basis) following the giving of not less than three months written notice by the Lender to the Borrower provided the repayment is not before the respective Maturity Date for the Advance.  

6.2 The Borrower may, subject to the prior approval of the RBI and as per the provision of FEMA guidelines related to Overseas Direct Investment (ODI), make prepayments to the Lender in respect of any outstanding Advance prior to its respective Maturity Date on any Business Day without premium or penalty.

 6.3 The Borrower may, subject to notification to the RBI, cancel the whole or part of the undrawn amount under this Agreement on giving notice to the Lender.

  1. Rank of Obligations

7.1 All indebtedness under this Agreement is a direct and unsecured obligation of the Borrower and will at all times rank at least equally and rateably with all its other unsecured and unsubordinated indebtedness for borrowed money except for such indebtedness preferred by mandatory provisions of law.

  1.  Taxes and deductions

8.1 All amounts payable by the Borrower under this Agreement shall be made in INR into such bank account as shall be indicated by the Lender. All such amounts shall be paid in full without set-off, counterclaim or any suspension, restriction or condition and free and clear of any present or future deductions of any nature (except to the extent required by law or regulation).

8.2 If the Borrower is required by law to make any deduction or withholding from amounts due under this Agreement in respect of taxes, the Borrower shall pay the full amount required to be deducted or withheld to the relevant tax authority within the time limit allowed for such payment under the applicable law. The Borrower shall deliver to the Lender within 30 days after it has made such payment a certificate evidencing the amount deducted or withheld.

 8.3 If the Borrower is required by law to make any deduction or withholding from amounts due under this Agreement in respect of taxes, the Borrower shall indemnify the Lender against the deduction or withholding from amounts due under this Agreement by paying to the Lender, at the time that the payment to the Lender is due, an additional amount that ensures that, after the deduction or withholding is made, the Lender receives a net sum equal to the sum it would have received if the deduction or withholding had not been made.

  1. Events of Default

9.1  Any one of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement: (a) a petition for bankruptcy is filed concerning the Borrower, the Borrower files a request for the suspension of payments, or files for its own bankruptcy; (b) a decision to dissolve or liquidate the Borrower is taken or such dissolution is ordered by a competent court or other authority; (c) the Borrower is in breach of any obligation under this Agreement which breach, if capable of remedy, is not remedied within 10 days of receipt by the Borrower of a notice in writing to that end; (d) the Borrower compounds with its creditors or has receiver appointed for all or any of its assets, or takes or suffers any similar action in consequence of its debt.

 9.2 Subject to applicable statute, regulation, order or restriction, upon the occurrence, and during the continuance, of an Event of Default, the Lender (at its election) may declare all of the sums outstanding under this Agreement (including any outstanding Advances and interest which has not yet been paid and which shall be calculated on a time apportioned basis) immediately due and payable, whereupon such sums shall be forthwith due and payable and the right to borrow hereunder shall terminate. In the event such sums become so due and payable, the Lender may proceed to enforce payment of them in such manner as it may elect and may exercise any and all of its rights and remedies, whether hereunder or under applicable law.

  1.  Notices

10.1 Any notice under this Agreement shall be in writing. Any notice to be sent to either party shall be sufficiently served if sent to it by registered mail to the registered office address of the relevant party as set out at the beginning of this Agreement.

  1.  Entire Agreement

11.1 This Agreement and the documents and other materials contemplated hereby constitute the entire agreement of the Borrower and the Lender and express their entire understanding with respect to credit advanced or to be advanced by the Lender to the Borrower.

  1.  Counterparts

12.1 This Agreement and amendments to it may be executed in several counterparts, each of which shall be an original. The several counterparts shall constitute a single Agreement.

  1.  Invalidity

13.1 In the event that any of the provisions of this Agreement may be invalid or unenforceable, the parties hereto shall procure that such invalid or unenforceable provision shall be substituted by another provision which is valid and enforceable and which reflects to the extent possible the original intention of the parties.

  1.  Amendments

14.1 This Agreement or any provision hereof can only be amended in writing signed by each of the parties.

  1.  Costs

15.1 Each of the parties shall bear its own normal costs in connection with this Agreement.

  1.  Governing Law

16.1 This Agreement shall be governed by and construed under the laws of India.

  1.  Jurisdiction

17.1 The parties to this Agreement hereby submit in respect of any suit, action or proceeding arising out of this Agreement to the jurisdiction of the courts of  India.

 IN WITNESS WHEREOF, the Borrower and the Lender have entered into this Agreement on the date set forth at the beginning of this Agreement.

For ______________________________ (Borrower)

 

 

Director

Authorized by Resolution passed on______

Witness for Borrower

Name:

Address

For_______________________________ (Lender)

 

 

Director

Authorized by resolution passed on_________

Witness for Lender

Name

Address:

 

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The Government of India has taken a historic decision to reduce the rate of contribution under the ESIC Act from 6.5% to 4% (employers’ contribution being reduced from 4.75% to 3.25% and employees’ contribution being reduced from 1.75% to 0.75%). Reduced rates will be effective from 01.07.2019. This would benefit 3.6 crore employees and 12.85 lakh employers.

The reduced rate of contribution will bring about a substantial relief to workers and it will facilitate further enrolment of workers under the ESI scheme and bring more and more workforce into the formal sector. Similarly, reduction in the share of contribution of employers will reduce the financial liability of the establishments leading to improved viability of these establishments. It is also expected that reduction in rate of ESI contribution shall lead to improved compliance of law.

This step of Government also lead to enhanced Ease of Doing Business.

 

Read more about ESIC Circular 

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Q.1 Which Company Can Be Considered As Entity As Per RBI Norms?

> A company within the meaning of section 1(4) of the Companies Act, 2013

> A Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008

> A startup which complies with the conditions laid down in Notification No. G.S.R 180(E) dated February 17, 2016 issued by Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India

Q.2 What are the pre-requisites for getting registration as Entity master?

> A company must opened a bank account (if new) first before transfer because New business user is required to be generated through such authorized bank.

> Authority letter: The entity may issue an authority letter, in the format as given at Annex to the identified personnel authorizing him/her for registering as an Entity user for the entity.

> The Entity user may keep ready all details of foreign investment in the entity.

Q.3 Details of the company required for getting registration as Entity Master.

> Company name

> Valid CIN

> PAN/TAN number

> Registered office address

> Authority letter

Q.4 Details to be included in authority letter.

There is set format of authority letter drafted by RBI and company need to download from the site and duly signed by managing director/authorized person.

Q.5 What is the maximum attachment size?

Ans. Maximum attachment size is 1 MB for all attachments in the FIRMS applications.

Refrain from attaching bulky documents and attach only the relevant extracts as and Wherever required.

Q.5 Steps to be followed for the registration of company as Entity user

The following are the steps to be followed by the company for the registration as entity master:-

> Login to https://firms.rbi.org.in/firms/

> Fill the registration form with company details (investee)

> After submission RBI will automatically create registration as per details submitted and will email the findings to the company

> After valid registration and login the company will ask to set the password.

> After setting you will asked to create Entity master.

> Create Entity Master with company present detail.

> After successful creation of Entity master company also need to get New business user Registration

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1. What is composition levy under GST?

Ans. The  composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs. 1.5 Crore (s. 75 lakhs in case of few States). The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.

2. What is the specified rate of composition levy?

Ans: > Manufacturers, other than manufacturers of such goods as may be notified by the Government (Ice cream, Pan Masala, Tobbacco products etc.) : 1% ( .50% Central tax plus .50% State tax) of the turnover.

>  Restaurant Services: 5% (2.5% Central tax plus 2.5% SGST) of the turnover.

>  Traders or any other supplier eligible for composition levy: 1% ( 0.5% Central tax plus 0.5% State tax) of the turnover of taxable supplies.

3. What is the eligibility category for opting for composition levy? Which are the Special Category States in which the turnover limit for Composition Levy for Central tax and State tax purpose shall be Rs. 75  lakhs?

Ans : Composition scheme is a scheme for payment of GST available to small taxpayers whose aggregate turnover in the preceding financial year did not cross Rs. 1.5 Crores. In the case of the following States, the limit of turnover is Rs. 75 lakhs:-

(i) Arunachal Pradesh, (ii) Manipur, (iii) Meghalaya, (iv) Mizoram, (v) Nagaland, (vi) Sikkim, (vii) Tripura, (viii) Uttarakhand.

4. Who are the persons not eligible for composition scheme under GST?

Ans : Following persons are not allowed to opt for the composition scheme:

a) a casual taxable person or a non-resident taxable person;

b)  Suppliers whose aggregate turnover in the preceding financial year crossed Rs. 1.5 Crore ;

c) Supplier who has purchased any goods or servcies from unregistered supplier unless he has paid GST on such goods or services on reverse charge basis;

d) Supplier of services, other than restaurant service;

e) Persons supplying goods which are not taxable under GST law;

f) Persons making any inter-State outward supplies of goods;

g) Suppliers making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52; and

h) a manufacturer of following goods:

> Chapter 2105 00 00 : Ice cream and other edible ice, whether or not containing cocoa.

> Chapter 2106 90 20 : Pan masala

> Chapter 24 : Tobacco and manufactured tobacco substitutes.

5. When will a person opting for composition levy pay tax & Return Filing ?

Ans : A person opting for composition levy will have to pay tax on quarterly basis before 18th of the month succeeding the quarter during which the supplies were made.(in Form CMP-08). The said persons shall furnish a return for every financial year or, as the case may be, part thereof in FORM GSTR-4 of the Central Goods and Services Tax Rules, 2017, on or before the 30th day of April following the end of such financial year.

6. A person availing composition scheme during a financial year crosses the turnover of Rs.1.5 Crores /75lakhs during the course of the year i.e. say he crosses the turnover of Rs.1.5 Crores/75lakhs in December? Will he be allowed to pay tax under composition scheme for the remainder of the year i.e. till 31st March?

Ans.  No. The option to pay tax under composition scheme lapses from the day on which his aggregate turnover during the financial year exceeds the specified limit (Rs. 1.5 Crores/ Rs. 75 lakhs). He is required to file an intimation for withdrawal from the scheme in FORM GST CMP-04 within seven days from the day on which the threshold limit has been crossed. However, such person shall be allowed to avail the input tax credit in respect of the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him and on capital goods held by him on the date of withdrawal and furnish a statement within 30 days of withdrawal containing the details of such stock held in FORM GST ITC-01 on the common portal.

7. How will the aggregate turnover be computed for the purpose of composition?

Ans. Aggregate turnover will be computed on the basis of turnover on an all India basis and will include value of all taxable supplies, exempt supplies and exports made by all persons with same PAN, but would exclude inward supplies under reverse charge as well as central, State/Union Territory and Integrated taxes and cess.

As per Removal of Difficulty order Order-01/2017-Central Tax dated 13.10.2017,  in  computing his aggregate turnover in order to determine his eligibility for composition scheme, value of supply of any exempt services including services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account.

8. Can a person who has opted to pay tax under the composition scheme avail Input Tax Credit on his inward supplies?

Ans.  No. A taxable person opting to pay tax under the composition scheme is out of the credit chain. He cannot take credit on his input supplies. When he switch over from composition scheme to normal scheme, eligible credit on the date of transition would be allowed.

9. Can a registered person, who purchases goods from a taxable person paying tax under the composition scheme, avail credit of tax paid on purchases made from the composition dealer?

Ans. No as the composition dealer cannot collect tax paid by him on outward supplies from his customers, the registered person making purchases from a taxable person paying tax under the composition scheme cannot avail credit.

10. Can a person paying tax under the composition scheme issue a tax invoice under GST?

 Ans.  No. He can issue a bill of supply in lieu of tax invoice.

11. What is the form in which an intimation for payment of tax under composition scheme needs to be made by the taxable person?

Ans. The intimation is to be filed electronically in FORM GST CMP- 01 or FORM GST CMP- 02.

12. Can a person making application for fresh registration under GST opt for composition levy at the time of making application for registration?

Ans. Yes. Such persons can give the option to pay tax under the composition scheme in Part B of FORM GST REG-01. This will be considered as an intimation to pay tax under the composition scheme.

13. Can the option to pay tax under composition levy be exercised at any time of the year?

Ans. No. The option is required to be given electronically in FORM GST CMP-02, prior to the commencement of the relevant financial year

14. What are the compliances from ITC reversal point of view that need to be made by a person opting for composition levy?

Ans. The registered person opting to pay tax under composition scheme is required to pay an amount equal to the input tax credit in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of exercise of option. The ITC on inputs shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered taxable person on such inputs. In respect of capital goods held in stock on the day immediately preceding the date of exercise of option, the input tax credit involved in the remaining useful life in months shall be computed on pro-rata basis, taking the useful life as 5 years. Assume capital goods have been in use for 4 years, 6 months and 15 days. The useful remaining life in months will be 5 months ignoring the part of the month. If ITC on such capital goods is taken as C, ITC attributable to the remaining useful life will be C multiplied by 5/60. This would be the amount payable on capital goods. The ITC amount shall be determined separately for integrated tax, central tax and state tax/Union territory tax. The payment can be made by debiting electronic credit ledger, if there is sufficient balance in the said ledger, or by debiting electronic cash ledger. The balance , if any in the electronic credit ledger would lapse. Such persons also have to furnish the statement in FORM GST ITC-03 which is a declaration for intimation of ITC reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under Section 18(4) of the CGST Act, 2017 within a period of sixty days from the commencement of the relevant financial year.

15. In case a person has registration in multiple states? Can he opt for payment of tax under composition levy only in one state and not in other state?

Ans. The option to pay tax under composition scheme will have to be exercised for all States.

16. What are the other conditions and restrictions subject to which a person is allowed to avail of composition scheme?

Ans. The person exercising the option to pay tax under section 10 shall comply with the following other conditions , namely: –

a) he shall mention the words “composition taxable person, not eligible to collect tax on supplies” at the top of the bill of supply issued by him; and

b) he shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.

17. What is the validity of composition levy?

Ans. The option to pay tax under composition levy would remain valid so long as conditions mentioned in section 10 of the CGST Act, 2017 and Rule 3 to 5 of the CGST Rules, 2017 remain satisfied.

18. Can a person paying tax under composition levy, withdraw voluntarily from the scheme? If so, how?

 Ans. Yes. The registered person who intends to withdraw from the composition scheme can file a duly signed or verified application in FORM GST CMP-04. Every person who has filed an application for withdrawal from the composition scheme, may electronically furnish, a statement in FORM GST ITC-01 containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock by him on the date of withdrawal, within a period of thirty days of withdrawal.

19. What action can be taken by the proper officer for contravention of any provisions of composition levy and how?

Ans. Where any contravention is observed by the proper officer wherein the registered person was not eligible to pay tax under the composition scheme or has contravened the provisions of the CGST Act, 2017 or provisions of Chapter II of the CGST Rules, 2017, he may issue a notice to such person in FORM GST CMP-05 to show cause within fifteen days of the receipt of such notice as to why the option to pay tax under the composition scheme shall not be denied. Upon receipt of the reply to the said show cause notice in FORM GST CMP-06, the proper officer shall issue an order in FORM GST CMP-07 within a period of thirty days of the receipt of such reply, either accepting the reply, or denying the option to pay tax under the composition scheme from the date of the option or from the date of the event concerning such contravention, as the case may be.

20. In case the option to pay tax under composition levy is denied by the proper officer, can the person avail ITC on stock after denial?

Ans. Yes. ITC can be availed by filing, a statement in FORM GST ITC-01 (containing details of the stock of inputs and inputs contained in semi-finished or finished goods held in stock) by him on the date on which the option is denied as per order in FORM GST CMP07, within a period of thirty days from the order.

21. Will withdrawal intimation in any one place be applicable to all places of business?

Ans. Yes. Any intimation or application for withdrawal in respect of any place of business in any State or Union territory, shall be deemed to be an intimation in respect of all other places of business registered on the same Permanent Account Number.

22. Can supplier of Services opt for composition levy?

Ans.  No, the only exception being supplier of restaurant services. Recently government announces a presumptive scheme for all Service Sector.

23. What are the penal consequences if a person opts for the composition scheme in violation of the conditions?

Ans. If a taxable person has paid tax under the composition scheme though he was not eligible for the scheme then the person would be liable to penalty and the provisions of section 73 or 74 shall be applicable for determination of tax and penalty.

24. Can a person paying tax under composition scheme make supplies of goods to SEZ?

Ans.  No. Supplies to SEZ from domestic tariff area will be treated as inter-State supply. A person paying tax under composition scheme cannot make inter-State outward supply of goods. Thus, for making supplies to an SEZ unit, a person needs to take registration as a regular taxpayer. The supplies to SEZ will be zero rated and the supplier will be entitled to make supplies without payment of tax or if he pays tax, he will be entitled to refund of tax so paid.

25. Whether Composition Taxpayers can make supply of Services ?

Ans : As per CGST Amendment Act, Now a composition dealer is also allowed to make a supply of services along with goods. But it has a limit, Supply of services can be upto higher of Rs 5 lakhs or 10% of turnover in state.

26. What are the benefits of Composition Scheme?

Ans:

> Less Compliance

> Reduce tax liability

> High Liquidity

27. Will Composition Taxpayers be required to pay tax under RCM.

Ans : Yes, Composition Taxpayers will be liable to pay tax under RCM. No credit will be allowed of tax paid.

 

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A person who is a Director is one or more companies or just holding DINs need to look at the following new compliance which makes a director directly or indirectly responsible for the compliance associated with the director or the company.

Following are the compliances one should know:

1. DIR-3 KYC

Last year, directors who were holding DIN as on 31st March 2018, were required to file form DIR-3 KYC. Now, MCA has issued a clarification which says that DIR-3 KYC would be an annual compliance which means that DIN holders are required to file DIR-3 every year.

However, the DIR-3 KYC form presently available on the portal does not cater to the DINs, which were allotted post 31st March 2018. The available forms are only available for DINs which were allotted up to 31st March 2018.

The Ministry has clarified that the revised forms will be shortly deployed in the portal and DIN holders would be required to file it within 30 days of such deployment.

What needs to be done?

DIN holders need to file the KYC form once the form is updated. Also, the DIN holders, who were marked “Deactivated due to non-filing of DIR-3 KYC” would have to get their DINs activated before they could file any form.


2. ACTIVE e-form INC-22A

Earlier INC-22A was due to be filed by 25th April 2019. Now, the due date has been extended and this form can be filed up to 15th June 2019.

INC-22A is required to be filed by all the companies which were incorporated on or before 31st Dec 2017.

If a company does not file Form 22A or ACTIVE before 15th June 2019, the company would be marked as ACTIVE non-compliant. When a company is marked as ACTIVE non-compliant, it would not be able to effect any of the following changes:

a) Changes in authorized capital (Form SH-07)

b) Changes in paid-up capital (Form PAS-03)

c) Changes in Director (Form DIR-12) (cessation would be allowed).

d) Changes in Registered Office (Form INC-22)

e) Amalgamation or Merger (INC-28)

If a company files Form INC-22A or ACTIVE after 15th June 2019, a penalty of Rs. 10,000 would be charged. On payment of the penalty and filing of all overdue returns, the company would be marked again as ACTIVE compliant.

 What needs to be done?

Directors of the company, which were formed on or before 31st Dec 2017 are required to get the form 22A filed as early as possible.

3. MSME form

The companies getting supplies of goods or services from Micro, Small & Medium Enterprises (MSMEs) are required to report & file MSME form-1, if the payments for such procurements has exceeded beyond 45 days the date of acceptance of goods or services.

This form wasn’t available at the time the notification to file MSME form was issued. MCA clarified that the form has to be filed within 30 days of the deployment of form in the portal.

The form was made available in the portal on 01st May 2019. Hence, the due date to file the form would be 31st May 2019.

Not filing the form, attracts a fine of up to Rs 25,000 to the company. It also makes the directors of the company liable for an imprisonment of 6 months and a fine of minimum Rs 25,000 and up to Rs. 3,00,000.

What needs to be done?

Directors of the company need to ascertain the status of their creditors and report the balances due in the MSME form within the applicable due date.

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