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.

If you have any query Click Here

The Companies (Second Amendment) Ordinance, 2019

The Companies (Second Amendment) Ordinance, 2019 was introduced as a replacement of the 2018 Ordinance. It has been formed on the basis of the recommendations of the Committee so as to fill crucial gaps in the corporate governance and compliance framework as enshrined in the Companies Act while extending greater Ease of Doing Business to law-abiding corporates. Prior to its promulgation on February 21, 2019, two similar ordinances were enacted. This particular Ordinance with added provisions is considered to be effective from the date of release of the first Ordinance, i.e. November 2, 2018.

Key features
Below mentioned are the key features for the Companies Ordinance, 2019

1. Re-categorization of certain offencesThe 2013 Act contains 81 compoundable offences punishable with fine or fine or imprisonment, or both. These offences are heard by courts. The Ordinance re-categorizes 16 of these offences as civil defaults, where adjudicating officers (appointed by the central government) may now levy penalties. These offences include issuance of shares at a discount and failure to file annual return.

2. Commencement of businessThe Ordinance states that a company may not commence business, unless it files a declaration within 180 days of incorporation, confirming that every subscriber to the Memorandum of the company has paid the value of shares agreed to be taken by him, and files a verification of its registered office address with the Registrar of Companies within 30 days of incorporation.  If a company fails to comply with these provisions and is found not to be carrying out any business, the name of the Company may be removed from the Register of Companies.

3. Registration of chargesThe Act requires companies to register charges (such as mortgages) on their property within 30 days of creation of charge. The Registrar may permit the registration within 300 days of creation.  If the registration is not completed within 300 days, the company is required to seek extension of time from the central government.

4. Issue of shares at a discountThe Act prohibits a company from issuing shares at a discount, except in certain cases.  On failure to comply, the company is liable to pay a fine between INR 1 Lakh and INR 5 Lakh every officer in default may be punished with imprisonment up to 6 months or fine between INR 1 Lakh and INR 5 Lakh. The Ordinance changes this to remove imprisonment for officers as a punishment. Further, the company and every officer in default will be liable to pay a penalty equal to the amount raised by the issue of shares at a discount or INR 5 Lakh, whichever is lower. The company will also be liable to refund the money received with interest at 12% per annum from the date of issue of the shares.

5. Change in approving authorityUnder the Act, change in period of financial year for a company associated with a foreign company, has to be approved by the National Company Law Tribunal.  Similarly, any alteration in the incorporation document of a public company which has the effect of converting it to a private company has to be approved by the Tribunal.  Under the Ordinance, these powers have been transferred to central government.

6. Declaration of beneficial ownershipIf a person holds beneficial interest of at least 25% shares in a company or exercises significant influence or control over the company, he is required to make a declaration of his interest. Under the Act, failure to declare this interest is punishable with a fine between INR 1 Lakh and INR 10 Lakh, along with a continuing fine for every day of default. The Ordinance provides that such person may either be fined, or imprisoned for up to one year, or both.

7. CompoundingUnder the Act, a regional director can compound offences with a penalty of up to five lakh rupees.  The Ordinance increases this ceiling to INR 25 lakh.

The Ordinance changes this to permit registration of charges within 300 days if the charge is created before the Ordinance or within 60 days if the charge is created after the Ordinance. If the charge under the first category is not registered within 300 days, it must be completed within six months from the date of the Ordinance.  If the charge under the second category is not registered within 60 days, the registrar may grant another 60 days for registration.

If you have any questions or would like to discuss more about the company amendment bills, 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 here

Company formation in India

The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018

The Lok Sabha passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018 that recognizes homebuyers as financial creditors to real estate developers. The bill also proposes a special dispensation for small sector enterprises. The Second Amendment Bill amends the Insolvency and Bankruptcy Code, 2016 to clarify that allottees under a real estate project should be treated as financial creditors. The threshold voting routine decisions taken by the committee of creditors has been reduced from 75% to 51%. For certain key decisions, this threshold has been reduced to 66%. This Bill also allowed withdrawing a resolution application submitted to the National Company Law Tribunal (NCLT) under the Code where this decision is taken with the approval of 90 % of the committee of creditors.
Key features of the Second Amendment bill are as below:

1. Status of allottees
   The Code defines a financial creditor as anyone who has extended any kind of loan or financial credit to the debtor. The Ordinance clarifies that an allottee under a real estate project (a buyer of an under-construction residential or commercial property) will be considered as a financial creditor, as the amount raised from allottees for financing a real estate project has the commercial effect of a borrowing.
2. Representative of financial creditors
   During the insolvency resolution process, a committee consisting of financial creditors will be constituted for taking decisions (by voting) on the resolution process. The Ordinance specifies that, in certain cases, such as when the debt is owed to a class of creditors, the financial creditors will be represented on the committee of creditors by an authorized representative. These representatives will vote on behalf of the financial creditors as per the prior instructions received from them.
3. Voting threshold of committee of creditors
   The voting threshold for decisions of the committee of creditors has been lowered from 75% to 51%. For certain key decisions of the committee, the threshold has been reduced from 75% to 66%. These include appointment of the resolution professional, approval of the resolution plan and increasing the time limit for the insolvency resolution process.
4. Ineligibility to be a resolution applicant
   The Ordinance amends the criteria which prohibits certain persons from submitting a resolution plan. For example, the Code prohibits a person from being a resolution applicant if his account has been identified as a non-performing asset (NPA) for more than a year. The Ordinance provides that this criterion will not apply if such applicant is a financial entity, and is not a related party to the debtor (with certain exceptions). Secondly, the Code also bars a guarantor of a defaulter from being an applicant. The Ordinance specifies that such a bar will apply if such guarantee has been invoked by the creditor and remains unpaid.
5. Applicability of the Code to Micro, Small, and Medium Enterprises (MSMEs)
   The Ordinance states that the ineligibility criteria for resolution applicants regarding NPAs and guarantors will not be applicable to persons applying for resolution of MSMEs. The central government may, in public interest, modify or remove other provisions of the Code while applying them to MSMEs.
6. Withdrawal of submitted applications
   A resolution applicant may withdraw a resolution application, from the National Company Law Tribunal (NCLT), after such process has been initiated. Such withdrawal will have to be approved by a 90% vote of the committee of creditors

Classification of allottees under a real estate project as financial creditors
With regard to corporate debtors, the Code defines two types of creditors: (i) financial creditors, who have extended a loan or financial credit to the debtor, and (ii) operational creditors, who have provided goods or services to the debtor, the payment for which is due. Financial creditors could be secured or unsecured. Secured creditors are those whose loans are backed by collateral (security). The Ordinance clarifies that allottees under a real estate project will be considered as financial creditors. This would give the allottees

• the power to initiate a resolution process,
• representation on the committee of creditors, and
• the guarantee of receiving a certain amount in case of liquidation.

The Insolvency Law Committee (2017) had noted that the amount paid by allottees under a real estate project is a means of raising finance for the project, and hence would classify as financial debt. It had also noted that, in certain cases, allottees provide more money towards a real estate project than banks. The Ordinance provides that the amount raised from allottees during the sale of a real estate project would have the commercial effect of a borrowing, and therefore be considered as a financial debt for the real estate company (or the debtor). However, it could be argued that the money raised from allottees under a real estate project is an advance payment for a future asset (or the property allotted to them). It is not an explicit loan given to the developer against receipt of interest, or similar consideration for the time value of money, and therefore may not qualify as financial debt.
During a corporate insolvency resolution process, a committee consisting of all financial creditors is constituted to take decisions regarding the resolution process. This committee may choose to resolve the debtor company or liquidate the debtor’s assets to repay loans. If no decision is made by the committee within the tentative time period, the debtor’s assets are liquidated to repay the debt. In case of liquidation, secured creditors are paid first after payment of the resolution fees and other resolution costs. This is followed by payment of employee wages and then payment to all the unsecured creditors.

While the Ordinance classifies allottees as financial creditors, it does not specify whether they would be treated as secured or unsecured creditors. Therefore, their position in the order of priority is not clear.

If you have any questions or would like to discuss more about the Code or amendment bills, 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 here

Company incorporation in India | Company formation in India

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.
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 here
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.

Having any Query? Please Click Here