Vyapaar Pundit

[compregistrationconsultants]

Ministry of Corporate Affairs: Supporting Entrepreneurship

With India being ranked 142th on Ease of Business Doing Index and 158th on Ease of Starting a Business, startups in India find it a tough task to outshine amongst the well-established corporate firms in India. However, the Ministry of Corporate Affairs have been bringing reformations in regulations over the decade. In addition to relaxations in the Companies Act of 2013, MCA further announced in June 2017 highlighting certain provisions in the act which would benefit not only the private companies but the startups as well.

The exemptions introduced in the Act would only benefit the Department for Promotion of Industries and Internal Trade, (DPIIT) recognized startups. Moreover in 2015, MCA exempted the corporate sector from obligations related to minimum paid up capital.

Entrepreneurship and its horizons

Entrepreneurship revolves around business development and management involving certain risks in order to gain profits. The Ministry of Corporate Affairs took up an intense drive in-

Government Process Re-designing (GPR) and dispatched the

Simplified Proforma for Incorporating Company Electronically (SPICe) e-Form,

on the event of Gandhi Jayanti, 2016. SPICe is a more flexible structure than INC-29 and influences on advanced innovation by disposing of the requirement for printed versions of genuinely marked archives being appended to an e-structure. SPICe is presently the sole, simplified and versatile structure accessible for incorporation of an organization in India.

The Ministry has likewise coordinated the MCA21 System with the CBDT for issue of PAN and First TAN to an organization utilizing the Simplified Proforma for Incorporating Company Electronically. Shareholders can successfully submit their applications for incorporation and PAN & TAN (allotted by Income Tax Department) altogether thus reducing the time and processes for blooming startups.

Within the MCA directive, stern decisions have been made to improve the legitimate system, work on techniques and accelerate dynamics for simplicity of working together to introduce a solid climate for venture and corporate development. Many efficient corporate dialogues and cognitive consultations have been accomplished by the Ministry of Corporate Affairs to replenish conventional business standards and ensure smooth facilitation of Companies Act, 2013. Statutory implementations to ‘remove difficulties’ have been acknowledged and appreciated in the corporate sector. Furthermore, Lok Sabha introduced encourage business friendly and growth inducing provisions as:

Bringing forth amendments for minimum capital with best foreign practices

Stern lawful processions against frauds or disagreement in set regulations for deposits identified during audits

With declaration in SPICe e-form replacing affidavit for various filings, documentation mandates for foreign nationals to be Director of Indian corporate firms has been deduced to a much greater extent.

The Ministry of Industries and Commerce have developed e-business portals for collective procession of DIN, Company Incorporation and Commencement of Business. Nominal fee is charged by authorities for small scale corporate firms. To direct the flow of Indian business towards international capital markets, IndAS i.e. new accounting standards have been implemented in accordance with IFRS (International Financial Reporting Standards).

Safeguarding Businesses

Serious Fraud Investigation Fraud (SFIO) has been quite operational to avoid corporate delinquency by taking legal course of actions against companies failing the compliance of Companies Act, 2013. Steps were taken to cause merger of NSEL Limited with its parent company Financial Technologies (India) Limited to guard the interest of investors in NSEL on account of its regulatory defaults and the failure of the holding company to exercise oversight, the first ever initiative. With respect to Investment Education Initiatives, 1380 programs were organized to educate and create awareness amongst small investors regarding highs and lows of investments.

Central Registration Centre (CRC), organized for flawless procession of incorporation of companies, works in 2 phases, former one including “application filing for accessing name through e-form INC-1 and later one being “incorporation of companies through e-form”.

Why CRC?

With reengineering in cycle and foundation of Central Registration Center which was established under section 396 of Companies Act, joining of an organization is finished in a single day. Sustaining of Directors Identification Number (DIN), Permanent Account Number (PAN) and the main Tax Deduction Account Number (TAN) are subsumed in the incorporation and there is no different interaction.

All incorporations with an approved capital of INR 15,00,000 are not charged by MCA vide notification G.S.R no.180(E) dated 06.03.2019 amending the Rule 38(2) of the Companies (Incorporation) Rules, 2014.

Rule 38A was added to Companies (Incorporation) Rules, 2014 to merge the functioning of MCA21 with registration of EPFO, ESIC, GST while filing for incorporation of the company in SPICe e-form.

For convenience in incorporation of Section 8 companies, MCA vide notification no. 411 (E) dated 07.06.2019 centralized licensing and incorporation via single form and that being SPICe.

Reforming the corporate framework

With earlier limits for paid up capitals and annual turnovers for small firms being INR 50 lakhs and INR 2 crore respectively, Finance minister renewed the mandates for small companies in Union Budget 2021 granting special provisions like exemption from statutory audits, non-requirement for cash flow statements, holding board meeting once in every 6 months ( in accordance to 90 days of gap between to consecutive board meetings), filing of Annual Returns through Form MTG-7A for the financial year 2020–21 onwards.

As per MCA, common seal under Companies Act, 2013 has been made optional since 29.05.2015. Accordingly, all Banks have been directed by the Indian Bank Association (IBA) to avoid asking for affixation of either common seal on the application form for opening of Bank Accounts by companies. With almost all of the government and corporate sector services made available online, MCA facilitated:

Deployment of common form for registration under labor related laws for EPFO and ESIC on the ‘Shram Suvidha portal’

Final registration for Delhi VAT and Maharashtra VAT within a day through online mode

One single Registration Application Form for all the Acts administered by Maharashtra Sales Tax Dept. (MSTD)

Registration of Delhi Shops and Establishment Act, 1954 and Maharashtra Shops and Establishment Act, 1948 fully online

Central Registration Center for name availability and incorporation expanded the horizons for big corporate firms as well as small companies to go through filing procedures witnessing lesser complications.

The time period for processing incorporation applications under CRC saw a drastic decline from 5–15 working days in June, 2004 to 0.6 working days in March, 2017.

Companies could be allotted with their name availability applications within 0.4 working days in 2017. 90% of applications are being authorized in a day.

Increasing the transparency for shareholders, Ministry vide notice no. GSR 309(E) dated 30.03.2017 has recommended w.r.t related party transactions, where the consideration is equivalent to over 10% assets of the organization, the equivalent will be approved by the members of the organization. This has expanded the investor rights with respect to casting a ballot and exposure of a connected gathering exchange.

National Company Law Tribunal Rules substituted Company Law Board (CLB) in June, 2016. NCLT is initially located at ten places across India, equipped with requisite infrastructure and support staff, including Delhi, Mumbai, Kolkata, Hyderabad and Chennai.

NCLT is foreseen to be a more authoritative platform for adjudication of disputes on corporate law matters through disposal of such cases in a time bound and speedy manner.

CONCLUSION

The Ministry of Corporate Affairs (MCA) has transformed the dynamics of private companies and provided the corporate sector with an entire range of budding opportunities and privileges for rising entrepreneurs mostly with e-governance initiatives.

For more blogs, visit our website.

For more updates, follow us on social media:

Facebook | Instagram | LinkedIn | Twitter

[compregistrationconsultants]

The ABCs of LLP (Limited Liability Partnership)

As our technologies advanced, a successful business structure started seeking transition from conventional methodologies. Where we saw little flexibility in Pvt. Ltd Companies and hindrance in opportunities for partnerships and proprietorships, we simultaneously witnessed the conclusive advantages of LLP as a business framework. LLPs were introduced under the LLP Act of 2008. With a blend of traditional partnerships and perks of a corporate independent entity with limited liability, LLP has garnered a full-fledged consumer base for SMEs     (Small and medium sized enterprises) in the business sector.

When was the LLP Act introduced?

Aren’t we all precise on our startup budget? Well, what would be a better alternative than LLP when you can cherish the functionalities of a corporate firm with limited liabilities and at the same time, have indefinite scope for partnerships. Totally flexible!

The dynamics of Limited Liability Partnership were first incorporated by Indian Companies when the Partnership Act was introduced in 2000. However, Rajya Sabha introduced the LLP Bill on 15th December 2006 to bring forth the refashioned model of corporate operational framework of partnership along with limited liability of partners.

Let us take you through the technicalities and functionalities of a LLP, basically the ABCs.

How to register an LLP

When we talk about an efficient business structure, the spotlight is on MCA compliances, legal formalities, corporate inventory, liability, audit and risk management, generated ROIs, strategic advisory and paid up capitals.

LLP registration is less complicated but definitely there is one. To begin a Limited Liability Partnership, one needs to adhere to the provisions of Limited Liability Partnership Act 2008. Since LLP is a separate legal entity, registration seeks documentation process for partners as well as LLP. According to the Section 11 of LLP Act 2008, partners need to provide with their ID proofs/PAN Cards, Residential and Address proof, photographs of the partners along with their passports (in case partners are foreign nationals). For LLP as a separate entity, the proof of office address where the LLP was registered along with the Digital Signature certificate.

A DSC (Digital Signature) is a must for all the partners as the MCA documentation is processed online. Moreover, it can only be accessed through a certified government agency with the cost requirements as per governing body’s convenience. DSL is granted under Section 24 included in Indian Income Tax Act, 2000.

After DSC, partners of the LLP have to apply for Digital Partner Identification Numbers (DPIN) via Form DIR-3.

This is followed by reservation of LLP Name filed through Form Reserve Unique Name-LLP which is further approved by CRC (Central Registration Centre) after the entire process of verifying the eligibility criteria for LLP’s reservation.

Eventually, Incorporation can be proceeded with. FiLLiP (Form for Incorporation of LLP) is filed through MCA portal with the designated fee along with Stamp duty.

The RoC (Registrar of Companies) issues a certificate of incorporation on successful registration in Form 16 under the Registrar’s seal.

Consequently, on receiving the approval of concerned authorities, LLP is granted with its unique name.

Filing an LLP Agreement is the next crucial step as it defines formal relations amongst partners and related rights and duties to be exercised.

LLP: A Modern Solution to Conventional Incorporation

Why was LLP introduced? The answer lies in its modern structure with absolute flexibility. The limited liability provides a legal assurance to others in case of any misconduct by one of the partners. LLP limits the liability to the share of the respective members.

Guarding personal assets of partners falling out of the business circle, LLP ensures perpetual succession.

As LLP holds its own legal identity, it is entitled to own/rent a property, hire employees, settle down contracts with other parties and can be sued in case of any fraudulent actions.

With a minimum of 2 partners required to register a LLP, there is no limit to the partnership extension. LLP should be assertively formed envisioning profits. The perks follow with the establishment of a LLP.

With prolonged partnership benefits unlike private companies, onboarding numerous partnerships for milking profits is an unsaid advantage.

When it comes to registration charges for forming a corporate entity, LLP can be government certified within nominal charges where it might take a considerable amount of money from private and public limited companies.

In accordance with MCA compliances, LLPs only have to file the Annual return & a Statement of Accounts and Solvency. Other corporate entities have to cope up with complicated procedures.

LLP also provides you the fair share of exit strategies without concerning the entire legal unit as compared to fellow business frameworks in the corporate sector.

There is no need for compulsory audits on an annual basis and unless paid up capital increases beyond 25 lakhs or if annual turnover exceeds 40 lakhs. LLPs provide a safe platform for partnerships that are conscious about liabilities.

Indian industries in the contemporary corporate setting seek to convert into LLPs to profusely exercise the advantages of flexible business structure. Meanwhile Pvt. Ltd. Companies need an elected board to execute important tasks, shareholders in LLP enjoy a handsome share of governance which directly influences the business growth. Apart from not falling into hefty fine pits, LLPs are exempted from various taxes which results in huge savings.

CONCLUSION

Limited Liability Partnerships have been far less recognized and adopted as a business model since 2008 which was the actual financial year for LLPs. Venture Capitalists find it risk-averse despite the highlighted benefits of LLP business structure. Although, Indian government has been driving the entire entrepreneurship sector towards new horizons providing much wider platforms for professional partnerships, SMEs (small to medium sized enterprises), service providers and other corporate entities altogether thus increasing visibility of Indian Business Model on a global platform.

For more blogs, visit our website.

For more updates, follow us on social media:

Facebook | Instagram | LinkedIn | Twitter

[compregistrationconsultants]

With this surge in #entrepreneurship in India, ever wondered how many new companies were incorporated in FY 2019-20? Check out the number here, published by MCA ( Ministry of Corporate Affairs ) Follow @vyapaarpundit for more. Visit the website for more.

[compregistrationconsultants]

With this surge in #entrepreneurship in India, ever wondered how many new companies were incorporated in FY 2019-20? Check out the number here, published by MCA ( Ministry of Corporate Affairs ) Follow @vyapaarpundit for more. Visit the website for more.

[compregistrationconsultants]

Company Registration | Company Incorporation | MSME | GST | Vyapaar Pundi

Vyapaar Pundit offers a large range of services for Startup's and SME's. We provide all solutions under one platform contact our business experts now for Startup recognization, copyright registration, Trademark registration, Startup India registration, and lot more

Copyright Registration: A copyright is essentially a right not to copy someone’s work. A copyright gives the owner of the subject an exclusive right over his work. If a work is protected by copyright, no one can imitate, copy or reproduce the original work in any other way. A term of copyright in India is 60 years.

Get in touch with our team of adept professionals at Vyapaar Pundit.