Description
The presentation describes various business entities like sole proprietorship, partnership etc along with laws which are applicable to them.
BUSINESS
ORGANIZATION
Types of Business Entities
? Sole Proprietorship
? Partnership
? Private Limited Company
? Public Limited Company
? Charitable Organization
Sole Proprietorship
No registration required
Unlimited liability
Used for small business or by Professionals
No Separate Legal Entity
Partnership
• • Section 11 of Companies Act, 1956
No partnership consisting of more than 20 persons shall be formed
Indian Partnership Act, 1932
Section 4 – Partnership is the relation between persons who have agreed to share profits of business carried on by all or any of them acting for all
• •
Unlimited Liability Registration not Compulsory
Company
• Governing Act – Companies Act, 1956
Special Features of Company
a) Company is a Separate Legal Entity b) It can sue and be sued in its own name c) The liability of the shareholders are limited to the extent of their shareholdings d) Company is distinct from its shareholders e) It can hold property in its own name
Types of Companies in India
DESCRIPTIONS
Definition
PRIVATE COMPANY
Which by its article restricts:
Numbers of members to 50 Transfer of shares Invitation of public to subscribe its debenture, shares etc. Acceptance of deposits from person other than its shareholders and directors
PUBLIC COMPANY
Which is not * private
Governing Laws
Companies Act, 1956
Companies Act, 1956 SEBI Act, 1992 and allied laws.
Types of Companies in India
DESCRIPTIONS Incorporation Time Minimum No. of Shareholders Maximum No. of shareholders Minimum Paid up Capital Transferability of Shares Minimum No. of Directors PRIVATE COMPANY
22 to 3 weeks 2 (Two) 50 (Fifty) INR 1,00,000/Restricted
PUBLIC COMPANY
2 to 3 weeks 7 (Seven) No limit INR 5,00,000/Freely. If company is listed then through stock exchange(s) 3
2
Types of Companies in India
DESCRIPTIONS Whether a Foreigner can be Director Whole Time Director (WTD) / Managing Director (WTMD): Appointment WTD / WTMD: Remuneration Foreigner as WTM D / WTD PRIVATE COMPANY
YYes Yes Appointment not compulsory and No restriction on appointment Appointment : Not compulsory, If paid up capital < Rs. 5 Cr. Compulsory. If paid up capital => Rs.5 Crs As per schedule XIII, otherwise permission of Central Government. With the approval of Central Government
PUBLIC COMPANY
No restriction
No restriction
Types of Companies in India
DESCRIPTIONS Loan to Director etc. Contracts with Director etc. PRIVATE COMPANY
YYes
PUBLIC COMPANY
With the previous approval of Central Government With the consent of Board, If paid up capital of the company is (One) 1 Cr. or more, approval of Central Govt. is necessary Some restrictions
Yes
Loan, Investment & Guarantee by the company
No restriction
Charitable Organization Trust Society Section 25 Company
It can do business and earn any amount of profits, but the distribution of profits cannot be made to Shareholders / trustee
Regulatory Bodies in India
Foreign Investment Promotion Board (FIPB) ? Reserve Bank of India (RBI) ? Security Exchange Board of India (SEBI) ? Registrar of Companies (RoC) ? Trade Mark Registry (TMR) ? Director General of Foreign Trade (DGFT)
?
Law relating to JV & Foreign Cos. in India - FDI In India
TELECOM – 49% ( 74%) 49%)
INSURANCE – 26% POWER – 100%
(Proposed
PETROLEUM REFINING DRUGS & PHARMA HOTELS ROADS
– 100% – 100% – 100% – 100%
FDI in India
Automatic Route for FDI is not available for
Domestic Airlines Petroleum Sector (except for private sector oil refining) Investing companies in Infrastructure & Services Sector Defence and Strategic Industries Atomic Minerals Print Media Broadcasting Postal services Courier Services Establishment and Operation of satellite Development of Integrated Township Tea Sector
FDI in India
FDI is Prohibited in
• • • • • • Retail Trading Atomic Energy Lottery Business Gambling and Betting Housing and Real Estate business Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisiculture and Cultivation of vegetables, mushrooms etc. under controlled conditions and services related to agro and allied sectors) and Plantations (Other than Tea plantations)
How a Foreign Company can enter into India?
Liaison Office ? Branch Office ? Project / Site Office ? Joint Venture ? 100 % Wholly Owned Subsidiary
?
Liaison Office
Permitted activities for a Liaison Office in India 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.
?
Procedure for setting up Liaison Office
? ?
? ? ?
?
?
Apply in Form FNC-1 in quadruplicate to RBI English version of the certificate of incorporation / registration attested by Indian Embassy / Notary public in the country of registration. Latest balance sheet of the applicant company / firm. Certified photo-copy of the agency Agreement, if any, with parties in India. Photo-copy of the Agreement / draft- Agreement / correspondence indicating the terms of appointment of the proposed representative duly authenticated by the applicant. Where applicable, certified photocopy of Government of India’s approval for undertaking projects in India. Where applicable, certified photocopy of the contract / Agreement for undertaking activities / rendering services.
Conditions Imposed While Granting Permission
Liaison Office
? No
commission / fee will be charged or any other remuneration received by the Indian office of the foreign company for its liaison activities in India.
the liaison work, the office will not undertake any activity of a trading, commercial or industrial nature without the prior permission of RBI entire expenses of the Indian office will be met exclusively by remittance from abroad through normal banking channels.
? Except
? The
Branch Office
Permitted activities
?
?
? ? ? ?
?
Export/Import of goods Rendering professional or consultancy services. Carrying out research work, 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. Procedure for setting up Branch Office – Same as Liaison Office
Joint Ventures
?
a)
Joint Ventures are of two types
Incorporated Joint Ventures Contractual Joint Ventures a) Financial Joint Venture b) Technical Joint Venture
b)
?
-
Essentials for Joint Ventures
Name of the JV Shareholding Pattern Funding and Financing of JV Constitution of Board of Directors, Powers of Directors, Meeting Transfer of shares, right of refusal, buy out provisions Non disclosure, non competition, IPR’s Governing laws, Dispute resolution
-
Joint Ventures
Verify Limit of FDI permitted in proposed JV ? Drafting of Moa & Aoa in accordance with JV Agreement ? Incorporation of JV company ? Private & Public JV Company
?
100% Wholly Owned Subsidiary
?
Verify FDI for 100% WOS
?
Incorporation of WOS Private & Public WOS
?
doc_336220345.pptx
The presentation describes various business entities like sole proprietorship, partnership etc along with laws which are applicable to them.
BUSINESS
ORGANIZATION
Types of Business Entities
? Sole Proprietorship
? Partnership
? Private Limited Company
? Public Limited Company
? Charitable Organization
Sole Proprietorship
No registration required
Unlimited liability
Used for small business or by Professionals
No Separate Legal Entity
Partnership
• • Section 11 of Companies Act, 1956
No partnership consisting of more than 20 persons shall be formed
Indian Partnership Act, 1932
Section 4 – Partnership is the relation between persons who have agreed to share profits of business carried on by all or any of them acting for all
• •
Unlimited Liability Registration not Compulsory
Company
• Governing Act – Companies Act, 1956
Special Features of Company
a) Company is a Separate Legal Entity b) It can sue and be sued in its own name c) The liability of the shareholders are limited to the extent of their shareholdings d) Company is distinct from its shareholders e) It can hold property in its own name
Types of Companies in India
DESCRIPTIONS
Definition
PRIVATE COMPANY
Which by its article restricts:
Numbers of members to 50 Transfer of shares Invitation of public to subscribe its debenture, shares etc. Acceptance of deposits from person other than its shareholders and directors
PUBLIC COMPANY
Which is not * private
Governing Laws
Companies Act, 1956
Companies Act, 1956 SEBI Act, 1992 and allied laws.
Types of Companies in India
DESCRIPTIONS Incorporation Time Minimum No. of Shareholders Maximum No. of shareholders Minimum Paid up Capital Transferability of Shares Minimum No. of Directors PRIVATE COMPANY
22 to 3 weeks 2 (Two) 50 (Fifty) INR 1,00,000/Restricted
PUBLIC COMPANY
2 to 3 weeks 7 (Seven) No limit INR 5,00,000/Freely. If company is listed then through stock exchange(s) 3
2
Types of Companies in India
DESCRIPTIONS Whether a Foreigner can be Director Whole Time Director (WTD) / Managing Director (WTMD): Appointment WTD / WTMD: Remuneration Foreigner as WTM D / WTD PRIVATE COMPANY
YYes Yes Appointment not compulsory and No restriction on appointment Appointment : Not compulsory, If paid up capital < Rs. 5 Cr. Compulsory. If paid up capital => Rs.5 Crs As per schedule XIII, otherwise permission of Central Government. With the approval of Central Government
PUBLIC COMPANY
No restriction
No restriction
Types of Companies in India
DESCRIPTIONS Loan to Director etc. Contracts with Director etc. PRIVATE COMPANY
YYes
PUBLIC COMPANY
With the previous approval of Central Government With the consent of Board, If paid up capital of the company is (One) 1 Cr. or more, approval of Central Govt. is necessary Some restrictions
Yes
Loan, Investment & Guarantee by the company
No restriction
Charitable Organization Trust Society Section 25 Company
It can do business and earn any amount of profits, but the distribution of profits cannot be made to Shareholders / trustee
Regulatory Bodies in India
Foreign Investment Promotion Board (FIPB) ? Reserve Bank of India (RBI) ? Security Exchange Board of India (SEBI) ? Registrar of Companies (RoC) ? Trade Mark Registry (TMR) ? Director General of Foreign Trade (DGFT)
?
Law relating to JV & Foreign Cos. in India - FDI In India
TELECOM – 49% ( 74%) 49%)
INSURANCE – 26% POWER – 100%
(Proposed
PETROLEUM REFINING DRUGS & PHARMA HOTELS ROADS
– 100% – 100% – 100% – 100%
FDI in India
Automatic Route for FDI is not available for
Domestic Airlines Petroleum Sector (except for private sector oil refining) Investing companies in Infrastructure & Services Sector Defence and Strategic Industries Atomic Minerals Print Media Broadcasting Postal services Courier Services Establishment and Operation of satellite Development of Integrated Township Tea Sector
FDI in India
FDI is Prohibited in
• • • • • • Retail Trading Atomic Energy Lottery Business Gambling and Betting Housing and Real Estate business Agriculture (excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisiculture and Cultivation of vegetables, mushrooms etc. under controlled conditions and services related to agro and allied sectors) and Plantations (Other than Tea plantations)
How a Foreign Company can enter into India?
Liaison Office ? Branch Office ? Project / Site Office ? Joint Venture ? 100 % Wholly Owned Subsidiary
?
Liaison Office
Permitted activities for a Liaison Office in India 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.
?
Procedure for setting up Liaison Office
? ?
? ? ?
?
?
Apply in Form FNC-1 in quadruplicate to RBI English version of the certificate of incorporation / registration attested by Indian Embassy / Notary public in the country of registration. Latest balance sheet of the applicant company / firm. Certified photo-copy of the agency Agreement, if any, with parties in India. Photo-copy of the Agreement / draft- Agreement / correspondence indicating the terms of appointment of the proposed representative duly authenticated by the applicant. Where applicable, certified photocopy of Government of India’s approval for undertaking projects in India. Where applicable, certified photocopy of the contract / Agreement for undertaking activities / rendering services.
Conditions Imposed While Granting Permission
Liaison Office
? No
commission / fee will be charged or any other remuneration received by the Indian office of the foreign company for its liaison activities in India.
the liaison work, the office will not undertake any activity of a trading, commercial or industrial nature without the prior permission of RBI entire expenses of the Indian office will be met exclusively by remittance from abroad through normal banking channels.
? Except
? The
Branch Office
Permitted activities
?
?
? ? ? ?
?
Export/Import of goods Rendering professional or consultancy services. Carrying out research work, 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. Procedure for setting up Branch Office – Same as Liaison Office
Joint Ventures
?
a)
Joint Ventures are of two types
Incorporated Joint Ventures Contractual Joint Ventures a) Financial Joint Venture b) Technical Joint Venture
b)
?
-
Essentials for Joint Ventures
Name of the JV Shareholding Pattern Funding and Financing of JV Constitution of Board of Directors, Powers of Directors, Meeting Transfer of shares, right of refusal, buy out provisions Non disclosure, non competition, IPR’s Governing laws, Dispute resolution
-
Joint Ventures
Verify Limit of FDI permitted in proposed JV ? Drafting of Moa & Aoa in accordance with JV Agreement ? Incorporation of JV company ? Private & Public JV Company
?
100% Wholly Owned Subsidiary
?
Verify FDI for 100% WOS
?
Incorporation of WOS Private & Public WOS
?
doc_336220345.pptx