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Case Laws, Company Law, Insurance, Others

Import Export Code

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Introduction In this age of cut-throat competition, everyone wants to grow their business beyond the limits of the domestic market. However, doing business globally isn’t just a cup of tea for everyone. Before going global, you need to follow several procedures and laws in place and get different registration and license. IEC (Import Export Code) license is one of such prerequisites when you’re thinking of importing or exporting from India. It is also known as Importer- Exporter Code.  IEC (Import Export Code) is required by anyone who is looking to kick-start his/her import/export business in the country. It is issued by the DGFT (Director General of Foreign Trade). IEC is a 10-digit code which has lifetime validity. Predominantly importers merchant cannot import goods without the Import Export Code and similarly, the exporter merchant cannot avail benefits from DGFT for the export scheme, etc. without IEC. Situations Where IEC is required When an importer has to clear his shipments from the customs then it’s needed by the customs authorities. When an importer sends money abroad through banks then it’s needed by the bank. When an exporter has to send his shipments then it’s needed by the customs port. When an exporter receives money in foreign currency directly into his bank account then it’s required by the bank. Steps Involved in IEC (Import/Export Code) Registration Step 1: Application Form First, you need to prepare an application form in the specified format – Aayaat Niryaat Form ANF-2A format and file it with the respective Regional office of DGFT. Step 2: Documents Secondly, you need to prepare the required documents with respect to your identity & legal entity and address proof with your bank details & the certificate in respect of ANF2A. Step 3: Filing Application Once your application is completed, you need to file with DGFT via DSC (Digital Signature Certificate) and pay the required fee for the IEC Registration. Step 4: IEC Code Finally, once your application is approved then you would receive the IEC Code in a soft copy from the government. Documents required by different entities for IEC (Import Export Code) Registration Sole Proprietorship: Digital photograph (3*3) of proprietor Copy of pan card of the proprietor Copy of passport/voter id/driving license/UID If the business is self-owned, then sale-deed If the business is rented, then rental/lease agreement Partnership Firm: Digital photograph (3*3) of the managing partner Copy of partnership deed Copy of passport/voter id UID/driving license/PAN of the managing partner signing the application Sale-deed, in the case of self-owned business If the business is rented, then rental/lease agreement Bank certificate as per ANF 2A/ Cancelled cheque bearing blueprinted name of the applicant entity and A/c no. LLP: Digital photograph (3*3) of the designated partner/director of the company signing the application Applicant’s copy of pan card Copy of passport/voter id UID/driving license/PAN of the managing partner/director signing the application Sale-deed, in the case of self-owned business If the business is rented, then rental/lease agreement Bank certificate as per ANF 2A/ Cancelled cheque bearing blueprinted name of the applicant entity and A/c no. Trust: Digital photograph (3*3) of the secretary/chief executive/signatory applicant Registration certificate of society/copy of the trust deed Copy of passport/voter id UID/driving license/PAN of the managing trustee/chief executive signing the application Sale-deed, in the case of self-owned business If the business is rented, then rental/lease agreement Bank certificate as per ANF 2A/ Cancelled cheque bearing blueprinted name of the applicant entity and A/c no. HUF: Digital photograph (3*3) of the Karta Copy of pan of Karta Copy of passport/voter id UID/driving license/PAN of Karta Sale-deed, in the case of self-owned business If the business is rented, then rental/lease agreement Bank certificate as per ANF 2A/ Cancelled cheque bearing blueprinted name of the applicant entity and A/c no. Advantages of IEC Registration Expansion of Business – IEC assists you in taking your services or product to the global market and growing your businesses. Availing Several Benefits – The Companies could avail several benefits of their imports/ exports from the DGFT, Export Promotion Council, Customs, etc., on the basis of their IEC registration. No Filing of returns – IEC does not require the filing of any returns. Once allotted, there isn’t any requirement to follow any sort of processes for sustaining its validity. Even for export transactions, there isn’t any requirement for filing any returns with DGFT. Easy Processing – It is fairly easy to obtain IEC code from the DGFT within a period of 10 to 15 days after submitting the application. There isn’t any need to provide proof of any export or import for getting IEC code. No Need For renewal – IEC code is effective for the lifetime of an entity and requires no renewal. After it is obtained, it could be used by an entity against all export and import transactions. Cases Where Export Import Code (EIC) is not mandatory According to the latest circular issued by the government, IEC is not mandatory for all traders who are registered under GST. In all such cases, the PAN of the trader shall be construed as new IEC code for the purpose of import and export. Import Export Code (IEC) isn’t required to be taken in case the goods exported or imported is for personal purposes and isn’t used for any commercial purpose. Export/ Import done by the Government of India Departments and Ministries, Notified Charitable institutions need not require getting Import Export Code. Frequently Asked Questions (FAQs) What is IEC code registration? Ans. Import Export Code or IEC is a 10-digit code that a business or a person needs to import/export goods/services. This code is issued by DGFT (Director General of Foreign trade), Ministry of Commerce and Industries, Government of India. The validity of this code is for lifetime, that is, there is no need to renew it. This code is generated within 5-15 working days after the documents are submitted and all the corrections required are made. What is the process of getting IEC code registered? Ans.

Case Laws, Marketing, Others

Establishment of Branch/Liaison Office in India by Foreign entities

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Every business, as it grows, wants to expand its business globally, for this, it need to establish a subsidiary or branch or liaison office in other country/countries.  It is also required to obtain prior permissions from the respective authorities of other country in which it is willing to operate its business. (Known as Host Country). India is one of the fastest growing market compare to other countries, and also provides ample opportunities to foreign entities to operate their business from India. Let’s understand in detail: What is Foreign Company, Branch Office/ Liaison Office Permitted and Prohibited areas  Rules and regulations for establishment of branch/liaison offices Tax Implications Meaning of Foreign CompanyAs per the legislative provisions, a foreign company means –  company or a body corporate incorporated outside India and Which has a place of business Whether by itself or through an agent,  physically or through electronic mode, and  Conducts any business activity in India. Note: This definition includes a Branch Office; all the provisions of the Companies Act applying to the company will also be applicable for BO. Meaning of Branch Office (BO) A Branch office is an extension of foreign entity for carrying out the permissible activities in any other country/countries. The role of BO is to undertake the permissible activities in India. Permissible Activities: Export / Import of goods. Rendering professional or consultancy services Carrying out research work, in areas in which the parent company is engaged. Promoting technical or financial collaborations between Indian companies and parent or overseas group company. Representing the parent company in India and acting as buying / selling agent in India. Rendering services in information technology and development of software in India. Rendering technical support to the products supplied by parent/group companies. Foreign airline / shipping company. Normally, the Branch Office should be engaged in the activity in which the parent company is engaged. Prohibited areas: Retail trading activities of any nature is not allowed for a Branch Office in India. A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly Meaning of Liaison Office (LO) A Liaison office is a representative office of foreign entity which act as a channel of communication between Head Office abroad and parties in India. The role of LO is notundertaking any commercial activities but limited to collecting information and providing information about the company to the prospective Indian Customers. The Permission to set up such offices is initially granted for a period of 3 years and this may be extended from the date of expiry of the original approval/ extension granted by the RBI, if the applicant has complied with the conditions as prescribed by RBI. Permissible Activities: Representing in India the parent company / group companies Promoting export / import from / to India. Promoting technical/financial collaborations between parent/group companies and companies in India. Acting as a communication channel between the parent company and Indian companies. Note: However, no foreign law firm shall be permitted to open any LO as per recently passed order by the Supreme Court of India. Compliances for establishment of branch/liaison offices A body corporate incorporated outside India (including a firm or other associations of individuals), desirous of opening a Liaison office/Branch office have to obtain permission from the RBI under provisions of FEMA 1999. The application for establishing BO / LO in India should be forwarded by the foreign entity through a designated AD Category – I Bank to the address of – Foreign Exchange Department, Reserve Bank of India. The application should be forwarded along with prescribed documents which includes – English version of the Certificate of Incorporation / Registration or Memorandum & Articles of Association attested by Indian Embassy / Notary Public in the Country of Registration. Latest Audited Balance Sheet of the applicant entity The applications from such entities in Form FNC (Annex-1) will be considered by Reserve Bank under two routes: Reserve Bank Route Government Route Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible. Note: – Applications from entities falling under this category and those from Non – Government Organizations / Non – Profit Organizations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, GOI. Criteria which are considered by the RBI while sanctioning Branch office/Liaison Office of foreign entities: Requirements For Liaison Office For Branch Office Profit making track record Immediately 3 FY in the home country. Immediately 5 FY in the home country. Net Worth >USD 50,000 or its equivalent. >USD 100,000 or its equivalent. The application in Form FNC shall be filed to an Authorized Dealer Category – I along with prescribed documents viz., Copy of Certificate of Incorporation/Registration attested by the Notary Public in the country of registration. AOA/MOA attested by the Notary Public  Audited Balance Sheet  Bankers’ Report from the applicant’s banker in the country of registration showing the number of years the applicant has had banking relations with that bank. Bankers’ Report from the applicant’s banker in the country of registration showing the number of years the applicant has had banking relations with that bank. Note: Applicants who do not satisfy the eligibility criteria and are subsidiaries of other companies can submit a Letter of Comfort from their parent company as per Annex-2, subject to the condition that the parent company satisfies the eligibility criteria as prescribed above. Compliance under Companies Act, 2013 Such foreign companies shall be governed by the provisions of: (i) Chapter XXII of the Companies Act, 2013 (ii) Companies (Registration of Foreign Companies) Rules, 2014 Rule 3(3) of the Companies (Registration of Foreign Companies) Rules, 2014 requires every foreign to file e-Form FC-1 to the Ministry of Corporate Affairs within 30 days of the establishment of its place of business in India.  And Rule 3(4) provides that in case of any alteration in the aforesaid documents the Foreign Company is require to submit a return in e-Form FC-2 containing the particulars of alteration as

Others

Digital Signature Certificate (DSC)

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Introduction Digital Signature (DSC) is a signature in an electronic format. Digital Signatures are used in India for online transactions such as Filing Annual Return, Company or LLP Incorporation, Income Tax E-Filing, E-Tenders, etc. There are 3 types of Digital Signatures – Class I, Class II and Class III. Class I digital signature is used for securing email communications. Class II digital signature is utilized for company registrations, IT Return, E-filing, obtaining DIN, DPIN, etc. Class III digital signature is used for E-tendering and participating in E-auctions. Documents required Passport size photographs Copy of PAN card Copy of Aadhaar Card/ Voter ID Card Steps to apply for a DSC Log on and select your type of entity – Log on to the website of a Certifying Authority licensed to issue Digital Certificates in India. Having accessed the page, you will be guided to the Digital Certification Services’ section. Now under the ‘Digital Certification Services’ section, click on the type of entity for which you want to obtain the DSC:’ individual or organization’, etc. Fill the necessary details – Once you have downloaded the form, fill in all the necessary details as required in the form: Class of the DSC. Validity. Type: Only Sign or Sign & Encrypt. Applicant Name & Contact Details. Residential Address. GST Number & Identity Details of Proof Documents. Declaration. Document as proof of identity. Document as proof of address. Attestation Officer. Payment Details. On filling up all the necessary details you must affix your recent photograph and put your signature under the declaration. Check thoroughly for completion of the form. Take a print of the completed form and preserve it. Proof of identity and address – The supporting document provided as proof of identity and address must be attested by an attesting officer. Ensure the sign and seal of the attesting officer is visibly clear on the supporting proof documents.  Payment for DSC – A demand draft or cheque must be obtained towards payment for application of DSC in the name of the Local Registration Authority where you are going to submit your application for verification. You can find the details of the Local Registration Authority according to your city of residence by searching for a Certifying Authority licensed to issue Digital Certificates online. Post the documents required – Enclose the following in an envelope: DSC Registration Form duly completed – Supporting document for Proof of Identity and proof of address attested by the attesting officer. Demand Draft/Cheque for payment. Address the enclosed envelope to the Local Registration Authority (LRA) and post it to the designated address of the LRA for further processing. On completion of the above-mentioned steps by filling in the DSC Form and providing necessary documents and payment, you have successfully completed the application process for your Digital Signature Certificate. Rectifying Mistake in Digital Signature Certificate To change the details or rectify mistakes in the Digital Signature Certificate (DSC), an organization needs to follow the following procedure: Log in with the existing user-id. Go to ‘Change DSC details’ option. Fill the requisite details of the DSC. Select the renewed/Changed DSC. Benefits of DSC Validity-Digital Signatures usually comes with validity of one or two years and they can be easily renewed once validity expires. E-token-Digital signature certificate are stored in a secure USB Flash Drive called E-Token. Quick Processing-One can get DSC in very quick time of 1-3 days from date of submitting the application along with required documents. Class II Digital Signatures-It is used for company, LLP registrations, IT Return E-filing etc. Class III Digital Signatures-It is used mainly for E-Tendering and Participation in E-Auctions. Frequently Asked Questions (FAQs) What is a Digital Signature? Ans. Digital Signature Certificates (DSC) are the digital equivalent (that is electronic format) of physical or paper certificates. Few Examples of physical certificates are drivers’ licenses, passports or membership cards. Certificates serve as proof of identity of an individual for a certain purpose; for example, a driver’s license identifies someone who can legally drive in a particular country. Likewise, a digital certificate can be presented electronically to prove one’s identity, to access information or services on the Internet or to sign certain documents digitally. Who can obtain a Digital Signature? Ans. A Digital Signature can be obtained by any person (Indian Citizen and Foreign Nationals) and any type of business entity (Partnership, LLP, Company, Trust and others). How long does it take to obtain a Digital Signature? Ans. Digital signature can be obtained within 1-3 working days from date of submitting the application along with the required documents. Is physical verification required before issuing DSC? Ans. No, physical verification is not required for issuing a Digital Signature. What are the documents required to register DSC? Ans. To obtain a Digital Signature, application form for the Digital Signature must be submitted along with a self-attested copy of the applicant’s identity proof and address proof and also along with photograph of applicant. Who needs to apply for a Digital Signature Certificate? Ans. With the e-commerce boom, government agencies have adopted digital signature, and it is also a statutory requirement for many e-forms to be digitally signed by the authorised signatory. So individuals and entities need to obtain the digital signature. A digital signature certificate establishes the identity of the holder. It is like a PAN card or a passport and enables the holder to prove his identity. Where can I use the digital signature certificate? Ans, A digital signature certificate is a valid legal instrument and can be used for digitally signing various documents. It can be used for filing income tax returns, e-tenders, for various regulatory company filings. What are the different classes of Digital Signature Certificate? Ans. While applying for the certificate, the individual or company must purposely select the class. The different classes of digital signature certificates are as follows: Class 1: This cannot be used by companies. It only verifies the name and email address of individuals. Class 2: This is needed by companies and other entities. It

Uncategorized

TDS Filings

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What is TDS? TDS (Tax Deducted at Source) is an indirect system of deduction of tax according to the Income Tax Act, 1961 at the point of generation of income. Tax is deducted by the payer and is remitted to the government by him on behalf of the payee. A TDS Return is a quarterly statement which has to be submitted to the Income Tax Department of India. Submitting TDS Return is mandatory if you are a deductor. It has details of TDS deducted and deposited by you. How to file TDS? Step 1: Go to http://incometaxindiaefiling.gov.in/ and click on ‘Login Here’. Step 2: Enter your login credentials and click on ‘Login’. Your user ID will be your TAN. Step 3: Once you’ve logged in, click on the ‘Upload TDS’ option under the TDS tab. Step 4: You will be provided with a form where you will need to select the correct details. Once the details are selected, click on Validate. Note that TDS statements can be uploaded only from FY 2010-11 and only regular statements can be uploaded on the income tax website. Step 5: The returns can be validated through the following modes: Step 5a: Validate using DSC or Digital Signature Certificate. The TDS statements can be uploaded using DSC. To upload using DSC, first upload the TDS zip file and also attach the digital signature file. Then, click on Upload. Once the TDS statement is uploaded, a success message will appear on the screen and a confirmation mail will be sent to your registered email ID. Step 5b: Validate using EVC or Electronic Verification Code. After step 4, if you haven’t generated a DSC, you will be able to validate the TDS statements using an electronic verification code (EVC). Upload the TDS zip file and click on ‘Click here to E-verify’. The next screen will give you the option to use an EVC already generated or generate a new EVC. Select the relevant option, enter the EVC and click on ‘Submit’.   Frequently Asked Questions (FAQs) What is TDS? Ans. TDS means Tax Deducted at Source. It is the amount deducted from payments of various kinds such as salary, contract payment, commission etc. This deducted amount can be adjusted against the tax due of the deductee. Who is required to file TDS return? Ans. It is the duty of the person who is making payment to someone for specified goods or services to deduct TDS and file TDS return. The specified payment includes salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. The person who deducts TDS is called deductor and the person whose tax is being deducted is called deductee.TDS is not required to be deducted by Individuals and HUF except for those whose accounts are required to be audited u/s 44AB i.e. whose gross receipts in preceding financial year in case of business is more than 2 crore (AY 2017-2018) or 1 crore ( AY 2016-2017) and in case of profession 50 lakhs ( AY 2017-2018) or 25 lakhs (AY 2016-2017). What is TAN and is it required to file TDS return? Ans. TAN is an alphanumeric 10 digit number required by a person who is liable to deduct TDS and file TDS return. Thus such person must make an application within a month of deducting TDS for allotment of Tax Deduction and Collection Number (TAN) in Form 49B. This number allotted is mandatory to mention in all TDS Certificates issued, returns, challans etc. If a person fails to apply for TAN he may be penalised up to Rs. 10,000/-. What are different types of TDS forms? Ans. Different types of TDS forms are as follows:-Form 24Q -TDS on SalariesForm 26Q – TDS on payments other than SalariesForm 27Q – TDS on payments made to Non-ResidentsForm 27EQ – TCS Is PAN mandatory for deductors and employees/deductees? Ans. PAN of the deductor has to be given by Non-Government deductors. It is essential to quote PAN of all deductees. What are the due dates of submission of quarterly TDS returns? Ans. Due dates of submission of quarterly TDS Return is 31st July for Q1, 31st October for Q2, 31st January for Q3, and 31st May for last quarter. What are the rates at which TDS is to be deducted for TDS returns? Ans. Following table gives the types of payments, threshold limits and the rates at which TDS is to be deducted. Section Particulars TDS Rates in % Threshold limits 192 Salary As per the rates of Income Slab As per the rates of Income Slab 192A Payment of accumulated balance of provident fund which is taxable in the hands of an employee 10 Rs. 50,000 193 Interest on securitiesInterest on SecuritiesInterest on Debentures; 1010 Interest on 7.75% GOI saving bonds – Rs. 10,000Others – Rs. 2,500Interest on debentures – Rs. 5,000 194 Dividend(other than the listed companies) 10 Senior citizen – Rs. 50,000Others – Rs. 40,000 194A Income by way of interest other than interest on securities 10 Rs. 5,000 194B Winnings from lotteries/ puzzles/card games. 30 Rs. 10,000 194BB Income by way of Winnings from horse races 30 Rs. 5,000 194C Payment to contractor/sub- contractorHUF/IndividualsOthers 12 Single payment – Rs. 30,000Aggregate payment – Rs. 1,00,000 194D Insurance commission 5 Rs. 15,000 194DA Payment in respect of life insurance policy 1 Rs. 1,00,000 194EE Payment of NSS Deposits 10 Rs. 2,500 194F Payment on account of repurchase of unit by Mutual Fund or Unit trust of India 20 Nil 194G Commission on sale of lottery tickets 5 Rs. 15,000 194H Commission or brokerage 5 Rs. 15,000 194-I Renta) Plant & Machineryb) Land or building or furniture or fitting 210 Rs. 2.4 lakhs 194-IA Payment on transfer of certain immovable property other than agricultural land 1 Rs. 50 lakhs 194-IB Payment of rent by individual or HUF not liable to tax audit 5 Rs. 50,000 per month 194-IC Payment of monetary consideration under Joint Development Agreements 10 – 194J Any sum paid by way ofFee for professional servicesFee for technical servicesRoyalty,Remuneration/fee/commission to a director orFor not

Investment(Savings), Market Research & Analysis, Marketing, Others, Stock Market

Chit Fund Company

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Introduction A chit fund is a type of rotating savings and credit association system practiced in Pakistan, India, Bangladesh, Sri Lanka and other Asian countries. Chit fund schemes may be organized by financial institutions, or informally among friends, relatives, or neighbours. In some variations of chit funds, the savings are for a specific purpose. Chit funds are often microfinance organizations. Organised chit fund schemes are required to register with the Registrar of Firms, Societies and Chits. A chit fund company is a company that manages, conducts, or supervises such a chit fund, as defined in Section of the Chit Funds Act, 1982.  According to Section 2(b) of the Chit Funds Act, 1982: “Chit means a transaction whether called chit, chit fund, chitty, kuree or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount” Though they are not required to be registered under the RBI Act, chit funds are regulated as Miscellaneous Non-Banking Companies (MNBCs). Their activities relating to soliciting deposits are governed by the Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules (1977) framed by the Government of India under Section 58A of the Companies Act 1956. Other Names for Chit Funds Chit funds are known by a number of names.  Internationally, chit funds are known as Rotating Savings and Credit Associations (ROSCA), this is because they provide a facility of saving and borrowing simultaneously. In India, they are called, chit, chitty, or Kuree.  After the amendment of the Chit Funds Act in 2019, the following names have also been added. These are,  Fraternity Fund, or  Rotating Savings, or  Credit Institutions. Features of Chit Funds Chit funds have the following features: They have a predetermined value and duration.  They work like microfinance institutions. They combine both, credits and savings in a single scheme. They cater to the financial needs of low income households. They allow the deposits made by the contributors to be turned into a lump sum. This is done by three mechanisms.  Safe Deposits: A person can deposit the money in the present and enjoy the lump sum in future.  Loans: A person can take a loan in the preset and continue to make payments in the future.  Insurance: Allows the depositor to enjoy the lump sum in case of an emergency. They offer loan at a lower interest rate than moneylenders. How does Chit Funds work? Let us assume, a chit fund with 12 members, operating for 12 months with a monthly member contribution of Rs.10,000.  The chit company would then collect Rs.120,000 every month and offer the amount in an auction, less the chit company fee and a discount.  Thus, every month, the members receive the chit amount at Rs. 96,000 (10% chit company fee and 10% discount).  If any one member would like to receive the auction, then he/she can receive the entire chit auction amount. If more than one person would like to receive the chit auction, then it selects the lucky member randomly. If no member wants to receive the chit auction, then if offering the chit amount without any discount at Rs.120,000 and it causes a reverse auction. The person offering the lowest amount will get the award of chit auction amount. In any case, every member of the chit receives the chit auction once, the chit discount is spread evenly amongst the members, and the chit company only earns a fee for operating the chit fund. Risk Involved Although there is a law governing the chit funds but still there are a lot of ‘kitty’ and ‘committees’ who operate on the chit fund model but are not regulated. This is the unorganised sector of chit fund. They can have their own modification in the model. Be it in depositing of installments or withdrawal method, unorganized chit funds customize according to their convenience. Then again there is an organised sector which is operated and regulated according to the law and are regulated by the Chit Funds Act, 1982. There are very few companies who operate in the organised sector such a Shriram Chit Funds. After the Saradha Scam in 2013, many people have lost faith in the chit fund scheme. Since even after the regulations there is a huge inherent risk of defaulters and organizer’s authenticity. The Act came into force in 1982 but the scam was exposed in 2013, which clearly reflects that even with the law in place, it is not stringent or regulated enough making chit funds a highly risky affair. Nevertheless it is still popular in the southern states. Tax on Income from Chit Funds The dividend income earned per month is neither tax deductible nor taxable. The overall income is taxable as income from other sources. The overall loss can be claimed as business loss. How to start a Chit Fund Company? To start a chit fund business in India, it is recommended that the promoters of the chit fund company first start a Private Limited Company with the objective of operating a chit fund business. After the incorporation of a private limited company, the company can apply with the relevant Chit Fund Registrar of the State to obtain registration. A chit fund business can commence only after obtaining chit fund business registration from the relevant State Registrar. The documents required to register a Private Limited Company is:- Share capital amount and proposed ratio for holding shares. Two identity proof documents of Directors and Shareholders – Copy of Aadhaar Card/ Voter ID Card/ PAN Card (compulsory). Address proof of the Director or the Shareholder (Voter ID, Passport, Driving license, etc.) Ownership and sale deed (In case your own premise) and one address proof document of registered office (like water,

Marketing, Others

Copyrights

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Introduction Copyright is an intellectual property that gives exclusive right to reproduce or authorize another to reproduce artistic, dramatic, literary, or musical works. It also extends to sound broadcasting and cinematographic films. Copyright protection is limited to author’s particular expression of idea, process and concept in a tangible medium. However, law permits fair use. To be copyrighted, a work must show certain minimum levels of creativity and originality. Copyright protection is not granted for an abstract idea nor can facts be copyrighted. Only author’s manner of expressing the idea or compiling the facts can be copyrighted. Things that are protected under Copyright Cinematography film Sound recording Musical work & Sound recording Artistic work like paintings, photographs Original literary others Books Computer programs Website  Broadcasts on Radio and Television Published editions Definition of Copyright Section 14 of the Act defines the term “Copyright” as to mean the exclusive right to do or authorize the doing of the following acts in respect of a work or any substantial part thereof, namely- In case of literary, dramatic, or musical work: Reproducing the work in any material form which includes storing of it in any medium by electronic means; Issuing copies of the work to the public which are not already in circulation; Performing the work in public or communicating it to the public; Making any cinematographic film or sound recording in respect of the work; Making any translation or adaptation of the work. Further, any of the above-mentioned acts in relation to work can be done in the case of translation or adaptation of the work. In case of a computer programme: To do any of the acts specified in respect of a literary, dramatic or musical work; and To sell or give on commercial rental or offer for sale or for commercial rental any copy of the computer programme. However, such commercial rental does not apply in respect of computer programmes where the programme itself is not the essential object of the rental. In case of an artistic work: Reproducing the work in any material including depiction  in three dimensions of a two dimensional work or in two dimensions of a three dimensional work; Communicating the work to the public; Issuing the copies of work to the public which are not already in existence; Including work in any cinematographic film; Making adaptation of the work, and to do any of the above acts in relation to an adaptation of the work. In case of cinematographic film and sound recording: Making  a copy of the film including a photograph of any image or making any other sound recording embodying it; Selling or giving on hire or offer for sale or hire any copy of the film/sound recording even if such copy has been sold or given on hire on earlier occasions; and Communicating the film/sound recording to the public. Documents Required Name, Address & Nationality of the Candidate – ID proof NOC from the publisher if work published and publisher is different from the applicant. Search Certificate from Trade Mark Office (TM -60) if any NOC from a person whose photograph appears on the work. Power of Attorney 2 Copies of work KYC of author DD/IPO of Rs. per work ((as applicable) NOC from the author if the candidate is different from the author. Procedure for Copyright Registration An application (including all the particulars and the statement of the particulars) in the format of FORM IV has to be sent to the registrar along with the requisite fees (mentioned in the Schedule 2 of the Act). A separate application has to be made for separate works. Every application has to be signed by the applicant as well as Advocate in whose favour a Vakalatnama or a POA has been executed. The registrar will issue a Dairy number and then there is a mandatory waiting time for a period of 30 days for any objections to be received. If there are no objections received within 30 days, the scrutinizer will check the application for any discrepancy and if no discrepancy is there, the registration will be done and an extract will be sent to the registrar for the entry in the Register of Copyright. If any objection is received, the examiner will send a letter to both the parties about the objections and will give them both a hearing. After the hearing, if the objections are resolved the scrutinizer will scrutinize the application and approve or reject the application as the case may be. Assignment of Copyright The owner of a copyright in an existing work or a prospective owner of a future work may assign to any person the copyright, either wholly or partly and either generally or subject to limitations and either for the lifetime of the copyright or any thereof. However in the case of future work, the assignment shall take effect only when the work comes into existence. It may noted that after assignment, the rights of the assignor in the copyright shall be diluted to the extent of the rights so assigned to the assignee and in respect of the rights so assigned, the assignee shall be considered to be the owner during the period of assignment. The assignment of copyright in any work shall be valid only when it is in writing and signed by the assignor of his duly authorized agent. Advantages of Copyright registration Legal Protection – Helps as prima facie evidence in the court of law over ownership of the work. Along with this, it offers Infringement Protection. It gives the creator the right way to get to people who are copying their work and making a living out of the efforts of the hard created things. Branding or Goodwill – Registered copyright can be applied for marketing and building a sense of goodwill along with quality in the minds of your customers. Registered copyright tells others that you care about want you invented.  After The Creators Death – After the creator’s death, protection

Company Law, Others

Annual Compliances of all types of business entities

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mum 4 Board Meetings every year – A meeting of board of directors of the company should be held within 30 days of its incorporation. For this, a 7 days’ prior notice shall be given to the board of directors specifying the date, time, venue and agenda matters of the meeting. Thereafter, next every meeting should be conducted within 120 days. Company will send to the members of the Company approved Financial Statement, Directors’ Report and Auditors’ Report at least 21 c;ear days before the Annual General Meeting. A bank account should be opened in the name of the company. Statutory audit by a Chartered Accountant. Appointment of Statutory Auditor with 30 days of incorporation. The subscriber to the shares of the company will have to infuse the subscription amount in the bank account opened in the name of the company. Once the subscription amount is credited, the company shall allot the shares to the shareholders of the company After the allotment of shares, the company shall issue the share certificates in the name of the shareholders within 60 days of incorporation of the company. The share certificates shall be adequately stamped and signed. The stamp duty to be paid on share certificates will depend on the state in which the company is incorporated. A company having a share capital must file a declaration for commencement of business within 180 days of its incorporation in e-Form INC-20A. A company is restricted from commencing any business activities unless it has filed such declaration with the Registrar of Companies. A director in every first board meeting of the relevant financial year must declare in writing that he is not disqualified to act as a director of a company. The declaration shall be made in Form DIR-8, as specified under the Companies Act, 2013. A director must disclose his concerns or interest in any other entity at the first board meeting in which he participates at the director. The disclosure shall be made in Form MBP-1 as specified under the Companies Act, 2013. A Company has to file half yearly return in respect of pending payments of more than 45 days to MSME vendors in the Form MSME – 1. For the period of April to September, return must be filed by 30th October and for the period of October to March; return must be filed by 30th April. Director KYC (DIR-3 KYC and Web KYC) must be done on or before 30th September every year of all directors of the company. Return of deposits must be filed on or before 30th June to furnish information about deposits and/or outstanding receipt of loan or money other than deposits in the Form – DPT -3. Directors’ Report shall be prepared by mentioning all the information required for Company under Section 134 read with relevant rules and relevant provisions of other Act. It should be signed by the “Chairperson” authorized by the Board, where he is not so authorized by at least 2 Directors one of them MD if there is any. Annual filings to the ROC. (e.g. AOC-4 for Financial Statement, MGT-7/MGT-7A for Annual return) Private Company having Paid-up Share Capital of Rs. 10 crore or more or Turnover of Rs. 50 crore or more shall be certified by a Company Secretary in Practice. Filing requires with Annual Return MGT – 7 and certificate MGT – 8 with UDIN number. Maintaining minutes and statutory registers. Public Limited Company (Unlisted) Holding of minimum 4 Board Meetings every year – A meeting of board of directors of the company should be held within 30 days of its incorporation. For this, a 7 days’ prior notice shall be given to the board of directors specifying the date, time, venue and agenda matters of the meeting. Thereafter, next every meeting should be conducted within 120 days. Cost auditor is required to be appointed as per Section 148(3) along with Rule 6(2) and Rule 6(3A) of the Companies (Cost Records and Audit) Rules, 2014. For this, Form CRA-2 has to be filed. Return of Deposits has to be filed with the ROC under whose jurisdiction the company falls via Form DPT-3, in compliance with Rule 16 of Companies (Acceptance or Deposit) Rules, 2014. Section 203 read with Rule 8 & 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 requires appointment of CFO or CS or CEO within 30 days of AGM or within 6 months in case of casual vacancy. For this, Form MGT-14 and Form DIR-12 are filed. AGM for declaration of dividend has to be conducted in compliance with Section 96 of the Companies Act, 2013. CSR Committee (If exists) has to hold four meeting with a gap of not less than 120 days between two meetings for discussion and approval of CSR activities. This is done in compliance with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 and Secretarial Standard-1. Director’s are required to disclose any financial interest in the company via Form MBP-1in compliance with Section 184(1) of the Companies Act, 2013 read with Rule 9(1) of the Companies (Meetings of Board and its Powers) Rules, 2014. Statutory audit by a Chartered Accountant whose appointment of should be done within 30 days of incorporation. The subscriber to the shares of the company will have to infuse the subscription amount in the bank account opened in the name of the company. Once the subscription amount is credited, the company shall allot the shares to the shareholders of the company. After the allotment of shares, the company shall issue the share certificates in the name of the shareholders within 60 days of incorporation of the company. The share certificates shall be adequately stamped and signed. The stamp duty to be paid on share certificates will depend on the state in which the company is incorporated. A company having a share capital must file a declaration for commencement of business within 180 days of its incorporation

Company Law, Others

Trademarks

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Introduction A trademark is a type of intellectual property consisting of a recognizable sign, design, or expression which identifies products or services of a particular source from those of others, although trademarks used to identify services are usually called service marks. Customers identify a product by its trademark. Value and importance of trademark increases as the business grows. Trademark is a valuable property of any business. Sometimes trademarks like Coca-cola, Pepsi, IBM, Philips, etc. get worldwide recognition. It is necessary for a business that a trademark is not used by an unauthorized person. The Trademarks Act, 1999 has been enacted with an intention to protect rights of trademarks of business. The foundation behind right to restrain the use of a similar name is the principle that no one is entitled to represent his business or goods as being the business or goods of another. A trademark may consist of a device depicting the picture of animals, human beings, etc., words, letters, numerals, signatures or any combination thereof. Since a trademark indicates relationship in the course of trade, between trader and goods, it serves as a useful medium of advertisement for the goods and their quality. Definition of Trademark Trademark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging, and combination of colours. A trademark is any word, symbol, phrase or logo design adopted and placed on a product offered for sale or on a container to identify its source. In this way, the connection between the product and the manufacturer/trader is bought to the notice of the public at large. Trademarks are an integral part of a firm’s strategy to differentiate its products and services from other competitors and to establish consumer brand loyalty. Trademark Search Trademark search must be completed before trademark registration application to find any faults in existing trademarks. This can be done through government website. Trademarks registration is controlled by Comptroller general of patent designs and trademarks.  Procedure of Trademark Search Navigate to website of the Comptroller General of Patent Designs and Trademarks and follow these steps:- Select “Wordmark” as the Search type at the top of the page Enter the wordmark you would like to search on the trademark database. The trademark database can be compared against the search query with three conditions- ‘start with,’ ‘contains’ and ‘match with.’ The class of the Trademark that is applicable should be entered. Trademarks are divided into 45 classes wherein each class represents a distinct group of goods and services. A registered trademark or trademark application will only be pertinent to the class under which it is applied for With the final step, you can click on search to begin the Trademark search. Selecting the option “show details” would display information pertaining to the trademark. Trademark must not be registered same as any existing one. If the results show no results found then there’s no registered trademark same as searched ones.  Trademark Consultation Trademarks are those marks which helps business to get identified in market. It is very easy to get trademark registered but it is preferred by most of the business to get it done professionally in order to avoid any unwanted consequences.  Trademark consultation with professional is very much convenient. It has following benefits-  Helps in the systematic filing of the application. Registration is done in a manner as prescribed by the rules and regulations governing Trademark law.  Helps in removing ambiguities.  An application not filed in a manner prescribed can be rejected and applicant will get no legal right on the trademarks. That’s why it is good to get trademarks registered professionally. Trademark Registration Trademarks are those marks which helps business to get identified in market. Trademark registration India is under Controller General of Patents Designs and Trademarks, Ministry of Commerce and Industry, Government of India. Trademarks are registered under the Trademark Act, 1999. Trademarks are intellectual property.  Types of Trademarks Name Symbol Music Image Logo Number Word Packaging Shape Slogan Graphic content 3D image/content Who can apply for trademark registration? Private firms Individuals Companies – LLP, OPC, Private Company, Public Company, Partnership, etc. NGO’s Process of Trademark registration Trademark search to ensure that there are no issues & there are minimal chances of an objection being raised in the future. After choosing name or design, prepare the authorization letter duly signed, to a registered lawyer or agent to apply for trademark registration. Once the application gets approved, we can start using ™ symbol. Once a trademark application is complete, the application will be verified by the trademark office. The government can also object if your name similar to some other trademark in the same class, or the name is deemed obscene and hurts religious sentiments. In case no objection is raised, the trademark registrar will publish an advertisement in the trademarks journal. If no opposition is filed by any party within 4 months, the trademark should be registered within the next 6 months. If the objection has been filed on your trademark and the opposition doesn’t agree with your response, then hearing is held before the registrar. Documents required for registration Address proof of applicant. Identity proof of applicant. Trademark material.  Registration certificate.  User affidavit.  Proof of use of ™.  Signed form 48.  MSME recognition.  Advantages of Trademark Registration Helps in differentiating products/services.  Protection from infringement.  Helps in building goodwill.  Gives legal protection.  Helps in promotion.  Opens up better opportunity. Gives unique identity to the business. Creation of intangible asset. Trademark objection After the scrutiny and verification, registrar issues an examination report for trademark. In that report registrar can come up with an objection. A response to this must be filed within a month otherwise registrar will abandon the application.  Reply to objection Assess the examination report. You must get it done professionally. Get assessment of implications of notice. Get drafted objection reply and review it. Submit the response.  Trademark Renewal The trademark remains valid just for 10 years after that

Company Law

Subsidiary Company – Indian & Foreign

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Introduction  A subsidiary, subsidiary company or daughter company is a company owned or controlled by another company, which is called the parent company or holding company. Two subsidiaries that belong to the same parent company are called sister companies. The subsidiary can be a company, corporation or limited liability company, and in some cases a government- or state-owned enterprise. They are a common feature of modern business life and most multinational corporations organize their operations in this way. Examples include holding companies such as The Walt Disney Company, Warner Media, or Citigroup; as well as more focused companies such as IBM, Xerox, or Microsoft. These, and others, organize their businesses into national and functional subsidiaries, often with multiple levels of subsidiaries. Subsidiaries are separate, distinct legal entities for the purposes of taxation, regulation and liability. For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it. In other words, a subsidiary can sue and be sued separately from its parent and its obligations will not normally be the obligations of its parent. However, creditors of an insolvent subsidiary may be able to obtain a judgment against the parent if they can pierce the corporate veil and prove that the parent and subsidiary are mere alter egos of one another, therefore any copyrights, trademarks, and patents remain with the subsidiary until the parent shuts down the subsidiary. Tiered Subsidiaries In descriptions of larger corporate structures, the terms “first-tier subsidiary”, “second-tier subsidiary”, “third-tier subsidiary”, etc., are often used to describe multiple levels of subsidiaries. A first-tier subsidiary means a subsidiary/daughter company of the ultimate parent company, while a second-tier subsidiary is a subsidiary of a first-tier subsidiary: a “granddaughter” of the main parent company. Consequently, a third-tier subsidiary is a subsidiary of a second-tier subsidiary—a “great-granddaughter” of the main parent company. Definition as per The Companies Act, 2013 As per Section 2 (87) of the Companies Act 2013, a subsidiary company” or “subsidiary”, in relation to any other company (that is to say the holding company), means a company in which the holding company: (i) controls the composition of the Board of Directors; or(ii) exercises or controls more than one-half of the total share capitalEither at its own or together with one or more of its subsidiary companies:Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed. Explanation-For the purposes of this clause— a company shall be deemed to be a subsidiary company of the holding company even if the control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding company;  the composition of a company’s Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors;  the expression “company” includes any body corporate;  “layer” in relation to a holding company means its subsidiary or subsidiaries. The above definition includes all the below mentioned types of holdings: Company A holds more than 50% of the share capital in Company B. Company A holds the power to appoint or remove the majority of the directors of Company B. Company A holds more than 50 % share capital in Company B; Company B holds more than 50% share capital in Company C, then Company A is Holding company to both B and C. Company X holds rights to modify the structure of directorship of Company Y; Company Y holds similar rights in company Z, then company X is the parent company to both Y and Z. Minimum Requirement To Incorporate Indian Subsidiary Company At least 2 Directors 2 Shareholders Procedure of Incorporation of a Indian Subsidiary Company Application in the prescribed form: Step 1: SPICe+ Form, which is an integrated form for the reservation of name and other services, is to be filled for the registration of subsidiary companies. SPICe+ form has two parts: – Part A – Name Reservation (New Companies)Part B:1. Incorporation of Company2. Application For DIN3. PAN and TAN Application4. EPFO and ESIC Registration5. GSTIN Application6. Bank Account Opening7. Professional Tax Registration(Applicable to Companies in Maharashtra) Step 2: After successfully approval of name from ROC (Registrar of Companies) of Ministry Of Corporate Affairs, an applicant is required to file: Form INC-7 which means application for incorporation of company other than one-person company. Form DIR-12 Which Means particulars of appointment of directors and key managerial personal. Form INC-22 which means MOA of the company along with notice of situation clause.  Step 3: Document upload The following are the documents that will be required for the filing of the application. The documents are the same as required for the incorporation of the company: Company Related– Memorandum of Association and Articles of Association– Proof of Address of registered place of Business that is if the rented property, then rent agreement and if the owned property then copy of ownership documents– Copy of Utility Bills– Copy of resolution passed by the promoter company – Capital Layout of company – Copy of certificate of incorporation in case of foreign corporate Directors and Shareholders Related– Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the directors and designated shareholders– Proof of identity and address for Directors and Shareholders– Photographs of Directors and Shareholders– The interest of first directors in other entities.– Declaration by Directors and Shareholders Step 4: After the related determined fees paid to ROC verifies all filed documents which was upload in application. Forms which were given above INC-22 and DIR-12 are approved via the Straight- Through-Process (STP) and then the ROC verifies Form INC-7 Means application of incorporation of companies in detail manner. The ROC may be suggest some changes in the form or attachment wherever its required. Finally, the changes have been affected and the ROC is satisfied on the full application and documents requirement, then the Certificate of Incorporation is sent to the applicant via email in detailed manner. If the above mentioned procedure of documents are available and the proper procedure

Start-Ups

Startup India Registration

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Introduction In India, population of youngsters is very high and maximum of youngsters have a dream to become entrepreneur. Some of them have a workable business idea in their mind and on paper but due to shortage of funds they face challenges in converting that business idea into reality. To help these entrepreneurs, the Government of India has launched a scheme known as Startup India and if you meet the criteria prescribed by Startup India Registration then your organisation will be approved by DPIIT and your organisation will be eligible for getting all benefits prescribed under this scheme. Eligibility criteria for recognition from DPIIT Your startup must be incorporated as Private Limited Company or a registered Partnership Firm or a Limited Partnership Firm Its period of existence and operations should not be exceeding 10 years from the date of Incorporation This organisation must not be formed by splitting up or reconstructing an already existing business After the date of incorporation, its Annual turnover should not be exceeded Rs.100 Crore for any of the financial years The idea of business should work towards development or improvement of a product, process or service and/or have scalable business model with high potential for creation of wealth & Employment The firms should have obtained the approval from the Department of Industrial Policy and Promotion (DIPP). To get approval from DIPP, the firm should be funded by an Incubation fund, Angel Fund or Private Equity Fund. The firm should have obtained a patron guarantee from the Indian patent and Trademark Office. Capital gain is exempted from income tax under the startup India campaign. Angel fund, Incubation fund, Accelerators, Private Equity Fund, Angel network must be registered with SEBI ( Securities and Exchange Board of India). It has a recommendation letter from an incubator Steps to Register Your Startup with Startup India Step 1: Incorporate your Business You must first incorporate your business as a Private Limited Company or a Partnership firm or a Limited Liability Partnership. You have to follow all the normal procedures for registration of any business like obtaining the Certificate of Incorporation/Partnership registration, PAN, and other required compliances. Step 2: Register with Startup India Then the business must be registered as a startup. The entire process is simple and online. All you need to do is log on to the Startup India website and fill-up the form with details of your business. Next, enter the OTP which is sent to your e-mail and other details like, startup as the type of user, name and stage of the startup, etc. After entering these details, the Startup India profile is created. Once, your profile is created on the website, startups can apply for various acceleration, incubator/mentorship programmes and other challenges on the website along with getting access to resources like Learning and Development Program, Government Schemes, State Polices for Startups and pro-bono services. Step 3: Get DPIIT Recognition The next step after creating the profile on the Startup India Website is to avail Department for Promotion of Industry and Internal Trade (DPIIT) Recognition. This recognition helps the startups to avail benefits like access to high-quality intellectual property services and resources, relaxation in public procurement norms, self-certification under labour and environment laws, easy winding of company, access to Fund of Funds, tax exemption for 3 consecutive years and tax exemption on investment above fair market value. For getting DPIIT Recognition, click on the ‘Get Recognised’ button if you are a new user. If you are an existing user click on the ‘Dashboard button’ and then ‘DPIIT Recognition’. Step 4: Recognition Application The ‘Recognition Application Detail’ page opens. On this page click on ‘View Details’ under the Registration Details section. Fill up the ‘Startup Recognition Form’ and click on ‘Submit’. Step 5: Documents for Registration Incorporation/Registration Certificate of your startup Details of the Directors Proof of concept like pitch deck/website link/video (in case of a validation/ early traction/scaling stage startup) Patent and trademark details (Optional) PAN Number Step 6: Recognition Number That’s it! On applying you will immediately get a recognition number for your startup. The certificate of recognition will be issued after the examination of all your documents which is usually done in 2 days after submitting the details online. However, be careful while uploading the documents. If on subsequent verification, it is found to be obtained that the required document is not uploaded/wrong document uploaded or a forged document has been uploaded then you shall be liable to a fine of 50% of your paid-up capital of the startup with a minimum fine of Rs. 25,000. Step 7: Other Areas Patents, trademarks and/or design registration: If you need a patent for your innovation or a trademark for your business, you can easily approach any from the list of facilitators issued by the government. You will need to bear only the statutory fees thus getting an 80% reduction in fees. Funding: One of the key challenges faced by many startups has been accessing finance. Due to lack of experience, security or existing cash flows, entrepreneurs fail to attract investors. Besides, the high-risk nature of startups, as a significant percentage fail to take off, puts off many investors. In order to provide funding support, the Government has set up a fund with an initial corpus of INR 2,500 crore and a total corpus of INR 10,000 crore over a period of 4 years (i.e. INR 2,500 crore per year). The Fund is in the nature of Fund of Funds, which means that it will not invest directly into Startups, but shall participate in the capital of SEBI registered Venture Funds. Self Certification Under Employment and Labour Laws: Startups can self certify under labour laws and environment laws so that their compliance costs are reduced. Self-certification is provided to reduce regulatory burden thereby allowing them to focus on their core business. Startups are allowed to self-certify their compliances under six labour laws and three environment laws for a period of 3 to 5 years from the date of incorporation. Units operating under 36 white

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