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Monday, 4 January 2016

TYPE OF BUSINESS ENTITIES IN INDIA






BUSINESS ENTITIES IN INDIA:

Indian business sector is basically divided into organized and unorganized business entities. Organized sector is one which is under the direct control of Reserve Bank of India (RBI) though the unorganized sector is not governed by RBI. 

ORGANIZED SECTOR:
The organized sector comes under the direct control of the Indian Government and RBI through formation of different Act, rules and polices this sector is being directly and indirectly controlled by the government. Organized sector consists of the followings:  

1. Company: Company is a separate business entity from its owners. Which means the owner of the Company are the Shareholders/ Members of the Company though the liabilities of the Company are not the personal liabilities of its shareholders. With enactment of the Companies Act, 2013 there are three types of Companies in india:

1. One Person Company (OPC): This is a new entity introduced by the Companies Act, 2013. OPC is a private company having only one member, one nominee and minimum one director. An OPC has to add the word “OPC” with its name.

2. Private Company: Private company is a company incorporated under the Companies Act, 2013 or any earlier act, having minimum 2 and maximum 200 members, minimum 2 directors and by its articles restricts the right to transfer its share and any invitation to public to subscribe for any securities of the Company. 

3. Public Company: Public company is a company which is not a private company, having minimum 7 members and 3 directors. Public company can be further divided into listed and unlisted public companies.

2. Partnership: Partnership is one of the oldest business entity existing world-wide. In India the Partnership form of business entity was given a legal purview by enactment of the Partnership Act, 1932. In it there must be minimum two persons willing to work together for their common benefits. This sector is not a completely organized sector as the registration of partnership is optional but to avail the tax benefits businessmen get their partnership registered. The Partnership is being governed by the agreement between its partners, which can either be oral or in writing. For getting the partnership registered the formalities of the registration shall be fulfilled with the sub-registrar of the area in which the Partnership Firm’s office is situated. The main disadvantage of this form of entity is unlimited liability i.e. to pay off the liabilities of the firm the personal assets of the partners could be attached.

3. Limited Liability Partnership (LLP): LLP was introduced in India by the Indian Government in the year 2008 by way of Limited Liability Act, 2008. LLP is a form of partnership in which the liabilities of its partners are limited unlike partnership. This concept has became very popular among the working professionals of the country specially Chartered Accounts. LLP is an entity which has features of both Company as well as the partnership. Like a company it is managed by the Designated Partners (Directors n case of Companies) and like partnership it is governed by the LLP Agreement.

4. Joint Hindu Family Business (HUF): Joint Hindu Family or Hindu Undivided Family (HUF) is the oldest form of business in India, which is prevalent throughout the Country. In this form of business entity person becomes a part of business by birth in the subjective family. It is governed by the Hindu Law. There are two forms of HUF Dayabhaga & Mitakshara. Dyabhaga are the HUF of Bangal and Assam where Mitakshara is the kind of HUF applicable to rest of India. The basic difference between Dayabhaga & Mitakshara is in Dayabhaga both male as well as femal members of the family inherit the property and becomes a part of it by birth whereas in Mitakshara only male members become part of the HUF with birth and can demand part in its properties.

5. Cooperatives: As the name suggests the cooperatives are the organizations formed by the co-operation of the people for their mutual benefits. The best example of cooperative society in india is “Amul”. Mr. Verghese Kurien is the man behind Diary Co-operative Society which is now well known in the country as “Amul”. There are different kinds of cooperatives working in India as:

1. Cooperative Housing Society
2. Cooperative Agricultural Society
3. Cooperative Banking Society
4. Cooperative Diary Society
5. Consumer Cooperatives\
6. Cooperative Retailers
7. Cooperative Whole Sale Society etc.

6. Others: The other form of business entities are Joint Ventures, Liasion Office, Branch Office etc. When a foreign entity decides to start their business in India they took these routes. They invest either by wholly owned subsidiary company or by way of Joint Ventures. Some of the foreign entities have not directly invested in any Company but they have opened their Liason office or Branch Office in India.

UNORGANIZED SECTOR: 

The unorganized sector is basically the organizations which are not organized with respect to the working hours, conditions, reporting of income or expenditures etc. Proprietorship is a fine example of the unorganized sector where a sole person does any business to earn profit but he doesn’t have any standards set and doesn’t not comply any of the labour or other laws of the Country. A fruit hawker is an unorganized sector businessman.
 
By Nikita Singh

Friday, 29 May 2015

PRIVILEGES AVAILABLE TO OPC

 
Section  PRIVILEGES
Section 149 The Company can have a minimum one and maximum 15 directors
Section 3 The Company can be formed with a single member
Section 2(40) Cash flow statement is not mandatory part of financial statements
Section 48 The resolution required to be passed at the general meetings of the company shall be deemed to have been passed if the resolution is agreed upon by the sole member and communicated to the company and entered in the minutes book
Section 96 Holding of Annual General Meeting is not applicable on OPC
Section 98 and 100 to 111 not applicable on OPC
Section 98 Power of Tribunal to call meetings of members, etc
Section 100 Calling of extraordinary general meeting
Section 101 Notice of the Meeting
Section 102 Explanatory Statement
Section 103 Quorum for Meeting
Section 104 Chairman of the Meeting
Section 105  Proxies
Section 106 Restriction of Voting Rights
Section 107 Voting by Show of Hands
Section 108 Voting through electronic means
Section 109 Demand for Poll
Section 110 Postal Ballot
Section 111 Circulation of Member's Resolution
Section 173 Only 2 Board Meeting in a calender year, one in each half year and at least 90 days  gap between 2 Board Meetings 
Section 134(4) Board Report may contain only the  explanations or comments by directors on reservation/ qualifications by the auditors
Section 137 The OPC is required file a copy of its financial statement along with other documents within 180 days of end of the financial year duly adopted by its member


By Nikita Singh

Wednesday, 11 March 2015

MCA CLARIFICATION ON LOANS TO EMPLOYEES

MCA has clarified that loans and/or advances made by the companies to their employees, other than the managing or whole time directors (which is governed by section 185) are not governed by the requirements of section 186 of the Companies Act, 2013. This clarification will, however, be applicable if such loans/advances to employees are in accordance with the conditions of service applicable to employees and are also in accordance with the remuneration policy, in cases where such policy is required to be formulated.

http://www.mca.gov.in/Ministry/pdf/Circular_04_10032015.pdf

Tuesday, 17 February 2015

CONVERSION OF PUBLIC COMPANY INTO PRIVATE COMPANY UNDER COMPANIES ACT, 2013

Sr. No
Purpose
Attachments
Remarks
       
 1.




Hold a meeting of its Board of directors to consider and approve the proposal for:

·         Conversion of public company into private company.
·         Alteration of Main Object Clause

The following resolutions must be passed at the meeting:

·         To approve the proposal for conversion of the company into private company.

·         To fix time, date and venue for holding an extraordinary general meeting of the company.

·         To approve notice for the general meeting along with the explanatory statement as required under Section 102 of the Act.

·         To authorize the Director to issue the notice of the general meeting on behalf of the Board.

·         The notice for the general meeting must contain text of the following special resolutions, which will be required to be passed at the general meeting.

(a)     Special resolution for altering the articles of the company, as required under Section 14 of the Companies Act, 2013.

(b)    Special resolution for changing the name of the company as required under proviso to Section 13 of the Act.

(c)     Special resolution for altering the memorandum of association (name clause) of the company in accordance with Section 16 of the Act.

(d)    Special Resolution for Alteration of Object Clause

        2.
Hold general meeting and have the aforementioned special resolutions passed.



File Form MGT 14:

Within thirty days of passing of the special resolutions.

Attachments:

·         Copy of resolution along with explanatory statement under Section 102;

·         Amended copy of AOA & MOA.

·         Copy of Resolution for alteration of Object Clause

File e-form No. INC-27:

·         For effecting the conversion of a public company into a private company.

Attachments:

·         Minutes of the members' meeting;

·         Altered MOA & AOA;

·         Order of competent authority;

·         Order for condonation of delay;

·         Optional attachment(s) (if any).
·       Any alteration having the effect of conversion of a public company into a private company shall not take effect except with the approval of the Central Government* which shall make such order as it may deem fit.

·       Every alteration of the articles under this section and a copy of the order of the Central Government* approving the alteration as per sub-section (1) shall be filed with the Registrar, together with a printed copy of the altered articles, within a period of 15 days in such manner as may be prescribed, who shall register the same.

* This is to clarify that as section 14(1) second proviso of the Companies Act, 2013 has not been enforced as on the date, Thus order of tribunal is not applicable as on date of this article.
Notice in Newspaper:

·       If the Registrar of Companies so directs, publish a notice in newspaper(s) as per his direction.
Surrender to the Registrar, the Certificate of Incorporation of the company in order to obtain fresh Certificate of Incorporation consequent upon change of name on conversion of the company into a private Company.

·       It is important to note that the company becomes a private company with effect from the date of approval of the Central Government under the proviso to Section 14 of the Companies Act, 2013, however the change in the name of the company shall be effective from the date of issue of fresh Certificate of Incorporation consequent upon conversion into a private company, by the Registrar of Companies.

Thursday, 12 February 2015

Monday, 2 February 2015

CONVERSION OF PRIVATE COMPANY INTO ONE PERSON COMPANY

To avail the advantages of One Person Company, many of the Corporates are willing to convert their small Private companies into One Person Company (OPC). The conversion will reduce the compliance manifold, this is one of the key reasons of such a conversion. 

Which Private Company can convert into OPC:

Any private company other than a Company registered under section 8 of the Companies Act, 2013 (or section 25 of the Companies Act, 1956) having a paid-up capital of less than Rs. 50 Lac and an average turnover of less than Rs. 2 Crore, in the specified period, can convert itself into OPC.


Laws governing conversion of Private Company Into OPC:
  • Section 18 of Companies Act, 2013
  • Rule 7(4) of the Companies (Incorporation) Rules, 2014
Procedure :

  1. Board Meeting: 
  • Approve the conversion subject to approval of members;
  • Authorise Directors for providing Affidavit that the conforming that all members and creditors of the company have given their consent for conversion, the paid up capital company is rupees 50 lakhs or less or turnover is less than rupees 2 crores as the case may be;
  • Authorise Directors for taking NOC from all the members & Creditors of the Company on the Conversion.
  • Calling of General Meeting
     2. General Meeting:
  • Pass Special Resolution for conversion of company into OPC
    3. E-filing & Attachments:
        
  • MGT - 14: Withing 30 days of passing of the Special Resolution
  • INC-6: With NOC received from members & Creditors, Affidavit by Directors, Special Resolution, List of Members & Creditors, Latest Audited Balance Sheet & Profit & Loss Account.INC-6 shall be filed after MGT-14 has been filed and approved. 
  • INC-3: The Consent of Nominee in INC - 3 alongwith his/her PAN card and residential proof shall also be attached with INC-6.

~By Nikita Singh~