Section 8 Company Formation

In India, a non-profit organization can be registered as a Trust, by making a Trust deed or as a Section 8 Company, under the Companies Act, 2013. According Indian Companies Act, 2013, a section-8 company can be established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object, provided the profits, if any, or other income is applied for promoting only the objectives of the company and no dividend is paid to its members.

Procedure for formation of section 8 company is listed below:

1. Digital Signature Certificate (DSC) & Directors Identification Number (DIN): The only secure and authentic way that a document can be submitted electronically is DSC. All filings of e-forms on MCA Portal are required to be filed with the use of DSC of the authorized signatory. Further, DIN for all the proposed Directors of the Company must be obtained. For obtaining DIN an application in Form No. DIR – 3 should be filed on MCA Portal with documents attested by a practicing professional.

2. Name approval: By submitting an application in Form – INC 1, applicant can obtain approval for selected names from the Registrar of Companies (RoC). The Applicant can give maximum six names in order of preference. The name once approved by the authority is valid for sixty days. The name once approved by the authority is valid for 3 months. Name approval generally takes 1-2 business days.

3. Main instrument: After obtaining name approval, constitutional documents i.e. Memorandum of Association (MOA) and Articles of Association (AOA) is to be drafted and subsequently filed with the RoC along with the forms and other necessary documents stated below:

• Affidavits
• Consent Letters
• Certificate of Compliance from a practicing professionals
• Subscription pages of MOA & AOA– Both documents shall be signed by each subscriber who shall mention his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, description and occupation, if any. The witness shall be a practicing professional

4. Issuance of license with registration fee: For Section 8 company license, promoter has to file E-Form INC 12 accompanied by:

• MOA and AOA
• A declaration confirming the application by a practicing Company Secretary
• Names, addresses, occupation and descriptions of the promoters as well as Board Members
• A statement showing details of assets & liabilities as on date with the application
• Estimated future annual income and expenditure, specifying the source of income and object of expenditure
• A statement giving brief description of work, if any, already done by the association
• A statement specifying briefly the grounds on which the application is made
• A declaration in prescribed form on non – judicial stamp paper by each person making an application
• A letter of authority with payment of prescribed fee

5. Other requirement: Following forms are to be filed with the RoC after issuance of license:

• Form INC – 7 for declaration of compliance with the requirements of the Act on application for registration of a company;
• Form INC – 22 for notice of situation of registered office;
• Form DIR – 12 for appointment of directors of the company; and
• Subscribers and proposed directors may delegate their authority to a person(s) to carry out appropriate change(s) as suggested by the RoC in any of the incorporation papers that have been filed.

6. Clarifications / additional Information required by ROC: Documents submitted for the purpose of incorporation are thoroughly reviewed by the RoC. RoC may require certain clarifications, if required. The person authorized shall present clarifications with Roc as needed.

7. Certificate of Incorporation: After providing clarifications, the Certificate of Incorporation is issued by the RoC along with a unique Company Identification Number (CIN) and the Company is deemed to be incorporated from the date of certificate issued. Consecutively, company may apply for other tax and regulatory registration as may be required to run the business smoothly like PAN, TAN, Bank account, etc.

8. Subscription money: A new bank account solely at the name of the company newly incorporated shall be opened by the Board of Directors and the Subscribers. Further to that, they shall deposit their subscription money in bank account to help the company raise initial capital to start its business.

Minimum Requirements for Section 8 Company:

1. At least 2 shareholder and 2 Director (both can be the same person)
2. At least one Director shall be resident in India
3. No Minimum capital required
4. PAN is a mandatory requirement in case of Indian nationals
5. Identity Proof (Voter ID/Aadhar Card/Driving License/Passport); Passport is mandatory requirement for proof of identity in case of foreign nationals
6. Proof of Residence
7. Registered utility proof that is any office address proof
8. Any documents establishing the ownership such as sale deed / house tax receipt along with no objection certificate, in case the premises are owned by a Director and Promoters

We, a Chartered Accountant firm, serve a number of clients who need assistance for various regulatory compliances including setting up business in India, company formation in India, income tax return filling, bookkeeping, accounting, GST and auditing. If you require any guidance for the any professional service, please contact Company Registration India

The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017

On Nov 23, 2017, the President of India promulgated the Insolvency and Bankruptcy Code (Amendment) Code, 2016 (IBC) to strengthen the insolvency resolution process. The Ordinance amends the Insolvency and Bankruptcy Code, 2016 to prohibit certain people from submitting a resolution plan (specifying details of restructuring a defaulter’s debt). These persons include: (i) willful defaulters, (ii) disqualified directors, (iii) promoters or management of the defaulting company, and (iv) any person who has committed these activities abroad. Below mentioned are some key amendments as per the Ordinance:

1. Responsibilities of resolution professional
   While inviting prospective resolution applicants to submit a resolution plan, the insolvency professional is required to ensure that such applicant fulfills the requisite criteria laid by committee of creditors about the complexity and business operational scale of the corporate debtor.
2. Non- eligible resolution applicants
   In order to eliminate possibility of default promoters of ailing entities from submitting resolution plans that leads to acquire the concerned entities assets at low valuations, henceforth any person whether acting alone or jointly with any person, who is a promoter or in the management or control of such person will not be eligible to submit a resolution plan.
3. Position of personal guarantor
   The Ordinance clarifies the position of personal guarantor of the corporate debtor also. The Ordinance amends section 2 of the Code which deals with the applicability of the Code. The Ordinance inserted “personal guarantors to corporate debtor” in section 2 clause (e), meaning by the Code is now applicable to the personal guarantor of the corporate debtor. In consequence, it can be interpreted that now during the insolvency process, the moratorium under section14 of the Code will be applicable to the properties of the personal guarantor of the corporate guarantor also.
4. Submission of resolution plan
   While considering an approval of a resolution plan, the Ordinance mandates the committee of creditors in order to consider the feasibility and validity of the plan. Moreover, a resolution plan submitted before the commencement of the present Ordinance by a resolution applicant who is otherwise ineligible under the IBC, unapproved by the committee of creditors, therefore requiring invitation of fresh resolution plans.

It would be important to mention that prior to the Ordinance, the Insolvency and Bankruptcy Board of India had vide its notification dated 7th November 2017 inserted new regulation after sub-regulation (2) under Regulation 38 in Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate persons) Regulation, 2017. Under the New Regulation, the Board has made mandatory that the resolution plan should contain details of the resolution applicant and other connected persons. The ‘details’ includes identity, conviction of any offence, if any, during the preceding five years, identification as willful defaulter, if any, by any bank or financial institution or consortium, etc. Now, after the present amendment in the Code by way of the Ordinance both the Code and Regulations are harmonious. The outcome of this will be that the probability of successful resolution of the corporate debtor will be on higher side as the corporate debtor will be handed to person/entity with clean background. The Ordinance prohibits certain persons from submitting resolution plans as it may be considered undesirable to let them take charge of the company. However, this may reduce competition among applicants seeking to resolve the company and result in lower recoveries for creditors.
If you have any questions or would like to discuss more about the Code, our experts can ensure right business insights and best practices for you.
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Company formation in India | Company registration in India

New Initiatives for making company incorporation process easier

Incorporation means to get file your esteem company under the registry of the govern bodies. It is not only necessary but mandatory for all types of companies ranging from small enterprises to big entrepreneur to compile their companies under the respective company act. Different acts have been confined and stated for varied companies in India including LLP or LLC, private or public companies have varied concepts of business incorporation. Here we bring you with company incorporation services for all available types of firms.

Business incorporation enables the company to boost its reputation and goodwill in the target market. One can easily apply for any of the legal benefits under the specific act. Besides these; business incorporation firms can easily find the varied alternatives for company funds or outside finance assistance. The same process will also support the company to get the level of authorative where the business can easily explore its potential ways.

Key takeaways from the initiatives taken by the MCA towards ease of doing business in India on the occasion of 69thRepublic Day.

1. No incorporation fee: Companies with authorized share capital up to Rs. 10 lakh can be incorporated in India with Zero registration Fee.
2. Introduction of ‘RUN’: New web service for reservation of name has been launched for name reservation called “Reserve Unique Name”. It is a one pager e-form into which one name of proposed company can be reserved without obtaining DIN and Digital Signature
3. Reduction of time limit for reservation of Name: MCA has reduced the time period from 60 days to 20 days for reservation of name
4. No resubmission for reservation of Name: It can be either rejected or approved in one go.
5. Simplified process for incorporation of company: by removing the requirement of affidavit with declaration from the proposed directors and promotors.
6. New process for obtaining DIN: The process of allotment of DIN has been re-designed by allotting it through the combined SPICe form only at the time of an individual’s appointment as Director.

E-commerce firms may get 6-month tax breather
The provision of tax collected at source (TCS) imposed on suppliers selling products on e-commerce websites like Flipkart and Amazon in the goods and services tax (GST) regime is likely to be deferred by six months. The recommendation by the law review committee may come as a breather for e-commerce players, which have been strongly opposing the additional levy. The TCS of 1 per cent to be charged collectively by the Centre and states was kept in abeyance till April 1, 2018, by the GST Council in October along with the reverse charge mechanism and the e-way bill. However, in light of revenue leakage concerns, the e-way bill to track the movement of inter-state supply of goods will be implemented from February 1, while reverse charge mechanism on composition dealers may be implemented any time now. “The provision pertaining to TDS and TCS can be kept in abeyance for at least six more months, is the view taken by the law committee,” said an official. A final decision on deferring the TCS further will be taken by the GST Council in its next meeting.

Single GST Registration for Airlines, Banks on the Anvil
The government is considering a nationwide single GST registration process for the aviation, banking and insurance sectors, people in the know of the matter said.
A single registration will potentially solve a majority of the compliance problems that services companies have been complaining about. They now have to register themselves and file GST returns in every state or union territory (UT) they operate in.
But the change will require the approval of the GST Council, the top decision-making body under the new tax system, where states are expected to oppose it fearing revenue loss as they have done when the proposal had come up before, tax experts said.
While goods-producing industries were used to making multiple state-wise returns for value-added tax under the previous regime, this is a new requirement for services companies, which complain it as a cumbersome process involving lot of paperwork and manpower.

Company formations Procedure in India | New Company Registration in India

New business setup in India

Director Identification Number
The first step is printing the DIN kind from the Ministry of company Affairs web site. Fill the shape and viably submit it for obtaining your director number. This number provides you a symptom of identity and residence proof likewise. you’ll need to pay the appliance fee and may check the process standing of your application on-line.

Registering the Name of your Company
The next step to registering the name of your company/organization with the registrar of corporations here, the business created consultants can punctually guide you in submitting the documents for company registration in conjunction with the registration fees. Once the method is complete you will receive the certificate of approving the name of your new company.

Navigating through Government Procedures
Your employed consultants can currently assist you sale through succeeding step for business setup in Asian Nation. With their nice power, They are going to swimmingly navigate through the procedures of the government and may even work as among a matter of few days or weeks. You will be prepared to start out your new business.

Permanent Account Number
If you are doing not presently own a permanent account range, tumble licensed from a franchise approved by the United Trust of Asian nation Investors services or National Securities repository. it’s crucial after you apply for a loan, open a business account or for tax functions.

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The Insolvency and Bankruptcy Code (Amendment Bill), 2017

Insolvency is a situation where a company is unable to repay its outstanding debt.  The Insolvency and Bankruptcy Code (Amendment Bill) (“Bill”), 2017 was introduced on December 28, 2017 amending the Insolvency and Bankruptcy Code, 2016 (“Code”) which replaces an ordinance promulgated in November 2017.

Resolution Applicant
A resolution plan explains the details that how the debt of a defaulting debtor can be restructured. This code defines a resolution in which applicant as a person submitting a resolution plan to insolvency professional. The bill amends to define a resolution applicant as a person submitting a resolution plan after receiving an invite by the insolvency professional to do so.

Eligibility for resolution applicants
The Code specifically defines that an insolvency professional will take control of the defaulting company inviting applicants to submit resolution plans. The Bill states that insolvency professional will only invite those resolution applicants to submit a plan, who fulfill certain criteria laid down by him (with the approval of the committee of creditors), and other conditions which may be specified by the Insolvency and Bankruptcy Board.

Ineligibility to be a resolution applicant
The Bill includes a provision prohibiting certain persons from submitting a resolution plan.  A person will be ineligible to submit a plan if:

• he is a not discharged insolvent;
• he is a willful defaulter;
• his account has been identified as a non-performing asset for more than a year and he has not repaid the amount before submitting a plan;
• he has been convicted of an offence punishable with two or more years of imprisonment;
• he has been disqualified as a director under the Companies Act, 2013;
• he has been prohibited from trading in securities by SEBI;
• he is the promoter or in the management of a company which has indulged in undervalued, preferential, or fraudulent transactions;
• he has given guarantee on a liability of the defaulting company undergoing resolution or liquidation and has not honored the guarantee;
• he has indulged in these specified activities abroad ; or
• he is connected to any person mentioned above.

Approving the resolution plan
This Code specifies that the committee of creditors shall approve a resolution plan with 75% majority.  The Bill amends this provision to state that the committee will approve this plan by a 75% majority subject to any conditions specified by the Insolvency and Bankruptcy Board. The Bill prohibits the committee of creditors from approving a resolution plan submitted before the promulgation of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017, where the plan has been submitted by a person ineligible to be a resolution applicant.

Liquidation
The Code allows the insolvency professional to sell the movable or immovable property of the debtor in case of liquidation.  The Bill prohibits the insolvency professional to sell this property to any person who is ineligible to be a resolution applicant.

Penalties
The Bill includes a provision to specify that a person contravening any provisions of the Code, for which no penalty has been specified, will be punishable with a fine ranging between one lakh rupees to two crore rupees.

Code provides a time-bound process to resolve insolvency of companies and individuals. In conclusion, the Insolvency and Bankruptcy Code, 2016, is a progressive legislation that is intended to improve the efficiency of insolvency and bankruptcy proceedings in India. The new legislation provides for the early detection of financial distress and a time bound process for resolution. However, many details on the IBC’s implementation need to be worked out in the regulations, and its success will depend to a large extent on how quickly a high quality cadre of insolvency resolution professionals will emerge and on whether the time bound process for insolvency resolution will be adhered to in practice.

If you have any questions or would like to discuss more about the Code, our experts can ensure right business insights and best practices for you.

We can also assist you in setting up your business in India, accounting, bookkeeping, payroll, auditing, taxation, secretarial compliances, and trademark registration, business structuring and advisory services. If you require any assistance in this regard, kindly click her

COMPANY FORMATION IN INDIA

A guide for company name approval – RUN

In order to simplify the Company name approval process and changing the name of an existing company, the Ministry of Corporate Affairs introduced a new simple web-based application called RUN (Reserve Unique Name) for registering any organization. Before RUN, all applications were to be made in the Form INC-1 accompanying with a minimum of 2 Director Identification Number and 1 Digital Signature. Any applicant seeking to reserve a proposed company or a change in an existing company should apply for reservation through the RUN service. The application will then be processed by the Central Registration Centre (CRC) and the proposed name applied should not be undesirable as per the relevant provisions of the Act and the rules mentioned in it.

Names which can be reserved under RUN
Below table gives a brief description regarding the type of companies names that can be reserved along with their respective suffixes:

Company Type
Suffix Required
1.

• Private Limited Company
• Limited / Company

2.

• Section 8 company
• Private Limited

3.

• IFSC Company
• IFSC Limited / IFSC Private Limited

4.

• Unlimited Company
• Unlimited Company

5.

• Nidhi Company
• Nidhi Limited

6.

• Producer Company
• Producer Company Limited

7.

• One Person Company
• (OPC) Private Limited

Validity for reserved company names
The CRC on the basis of information and documents provided, reserve the name for a period of 20 days from the date of approving in case of new company name registration. Similarly, it is 60 days from the date of approval in case of change in the name of an existing company.

Rules regarding the proposed names
Certain regulations pertaining to the reservation of the names are to be followed according to the laws governing the RUN form which are as below:

1. Name stated should be different from the name of an existing company registered.
2. The name should not constitute any offence under any law and also should not be undesirable in the opinion of the Central Government.
3. The company name should not have any word or expression which likely gives the impression that the company is connected to the central or state government or any other local authority unless the approval from the respective government authority has been attained.

Requirements to reserve a unique name via RUN
Below is the list of things required for RUN:

1. An MCA (Ministry of Corporate affairs) account
2. Corporate Identification Number (CIN)
3. The proposed name
4. Documents required with the proposed name

Process for using RUN
Below is the process for using RUN with an MCA account:

1. Firstly, creating an MCA account is important before you access this service. Login the account and enter the name you wish to use and check against the MCA database of the company and LLP names for its availability.
2. For an existing company who wishes to change its name, a CIN will be required for the RUN e-form
3. The applicant is required to enter the name in the form, he wants to reserve for the incorporation of a new company or change the name of the existing company.
4. The user is then supposed to enter the objects of the proposed company and other relevant comments or documents supporting the proposed name.

Upon successful submission of the proposed name in the RUN form, a SRN (Service request number) is generated. Also, a challan serving the proof of the payment, email conveying the proposed name acceptance or rejection status, an approval / rejection letter, and finally a resubmission of the e-form is generated.

Concluding this document, the RUN is an easy web form to fill in with no complications. There is no need to provide other details about incorporation like proposed capital, shareholding or promoter details etc. This as a result waived off inherent limitation of e-form filing which included uploading errors or DSC (Digital Signature Certificate) registration.

If you are looking forward to establish your business in India, we can offer a comprehensive range of professional services including approval for company name, DIN application, incorporation certificate, Digital signature certificate, business structuring, advisory services, tax planning and statutory compliances along with other post-incorporation services as per your business requirements.
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Company formation in India

Annual corporate filings

According to the requirements of the Companies Act 2013 and other applicable laws, every company including subsidiaries of foreign companies, joint venture companies while incorporating business in India has to file certain documents with the government authorities. Following are the required documents along with the e-forms with the Registrar of Companies (RoC) with proper jurisdiction over the company:

• Balance Sheet: All companies have to file Form 23AC
• Profit and Loss account: All companies have to file Form 23ACA
• Annual Return: Companies with share capital have to file Form 20B
• Annual Return: Companies without share capital have to file Form 21A
• Compliance certificate: Companies with paid up capital between Rs. 10 lakh to Rs. 2 crore have to file Form 66.

How to do corporate filings?
There are 3 ways for annual corporate filing which a company can follow:

• The most convenient way is that a company can upload the above listed e-forms from the MCA21 portal through the annual filing process link at his convenience from his office/ home.
• Prepare an e-form following the guidelines, copying them in a compact disk (“CD”) and visit nearest temporary facilitation offices. For normal days, staff will help to upload the form and generate a challan but during last 10 days, CDs will be collected and only acknowledgment will be provided. After all the files are being uploaded into the system, the company can download the challan from the link provided at the annual filing corner after 2 working days of the submission.
• Connecting with any certified filing centers by paying the service charges is also a method that a company representative can follow for filing an annual return.

What to remember while doing an annual filing?

• Balance Sheet and the Profit & Loss Accounts are to be filed as two separate documents with different e-forms.
• e-Form along with the relevant attachment should be less than 2.5 MB.
• The Annual Return, the balance sheet and the profit & loss account are filed as attachments to the respective e-Forms
• The MCA21 database in respect of authorized capital and paid-up capital may not be correct. The companies have been requested to apply for correction of master data in this respect. Since this is a time taking process, the ministry will be accepting the authorized capital and paid-up capital figures as declared by the companies in the respective forms pertaining to annual filings.

What are the mandates while annual filing?
As a part of annual filing in India, the below forms are mandatory to be filed with the RoC:

• Form AOC-4 (Financial Statements): Every private limited company is required to file its balance sheet along with profit and loss account statement and director report within 30 days of holding of annual general meeting.
• Form MGT-7 (Annual Return): Every private limited organization is required to file its annual return within 60 days of holding of annual general meeting.

If an organization results in failure to comply with the rules and regulations of the Companies Act, then the company and every officer who is in default shall be punishable with fine for the period which default continues. However, if there is any delay in filing, an additional fee is charged, which keeps increasing as per the time period of non-compliance. Moreover, some of the annual filing forms can also be revised but the fees for subsequently revised filing shall be charged, assuming it as a new filing.

If you are looking up for incorporating any business in India, you need to comply with the annual filing requirement to be filed also with the Roc irrespective of your turnover. Our experts can also provide you assistance for filing your personal income tax returns, corporate tax returns, income tax assessments and a quick response to income tax notices.
Further, we can assist you in setting up your business in India, accounting, bookkeeping, payroll, auditing, taxation, secretarial compliances, and trademark registration, business structuring and advisory services. If you require any assistance in this regard, kindly click here