Biz Resources

Any two individuals or body corporates can form Company or LLP in India. Formation of new company or LLP is managed by Ministry of Corporate Affairs (MCA). Formation rules & requirements are provided in the Companies Act/ LLP Act. There are no minimum capital requirements for formation. Under the ease of doing business process, MCA has simplified the formation process. Formation process normally starts with checking eligibility of promoters/ directors/ partners & with selection & verification of desired type & name for company/ LLP. At next stage very important process of finalizing & drafting of the objects & internal rules of management needs to be done. This leads to Preparation of Memorandum of Association (MOA), Articles of Association (AOA)/ LLP agreement. Thereafter all documents are required to be uploaded on the website of MCA in the prescribed forms under the digital signatures of promoters & with certification by Company Secretary.  On satisfying the queries & requirements of MCA, it issues incorporation certificate. Date of certificate will be a date of formation of the Company/ LLP.

The entire process of formation of Company or LLP on paper looks very simplified & user friendly, it has various intricacies & dimension.  Since formation &drafting of MOA, AOA, LLP agreement is fundamental to business, it is advisable to take proper professional advice before & during formation process. We at Bizfirst provide proper professional advice on dos & don’ts of formation, on verification of promoters, Drafting of MOA, AOA, LLP agreement. Bizfirst ensures that process of formation of Company or LLP is Executive Experience for you.  Bizfirst has range of smart solutions on offer around formation, post formation, other registration etc.

To know more, connect to our Biz Smart Executive.

After successful business affairs of few years & in order to grow to next level, it would always be advisable to convert your proprietary or partnership entity into One Person Company (OPC) or Limited Company or LLP or Producer/ Agriculture Company or Charitable Company (Section 8 Company).  There are distinct advantages of moving to corporate form of business. As a Promoter/ Director you will also benefit from inherent protection of Limited Liability & Perpetual Succession & have advantage of Corporate Designation. We at Bizfirst do in-depth study & provide you analysis of your existing structure & advice you on moving to the right corporate structure.

For all your conversion related queries, corporate & tax understanding, connect to our Biz Smart Executive

If you have a business idea & want to convert the idea into scalable business, you would be required to form a Start-up entity. It would be advisable to choose a Company or LLP form of business to undertake start-up venture. Recognition of your entity is as Start-up entity by DIPP is an important process post formation. Start-up entity on recognition enjoys certain distinct benefits for 10 years under corporate laws & tax laws. We at Bizfirst provide end to end solutions for formation of entity, Start-up registration & its post registration compliances to successfully convert your idea into business venture.

To know more & avail these services connect to our Biz Smart Executive

Usually on incorporation of a Company under MCA system, you will get the integrated facility of applying for income tax Permanent Account Number   (PAN), Tax Deduction Account No (TAN), and with another specified Form Professional Tax Registration Number (PT), Goods & Service Tax Number (GST), ESIC and EPFO registration .  It also provides you facility of opening of banking account with select banks.  You need to check if you have received the certificate of incorporation of a company & whether all these registrations applied for. Thereafter Company is required to ensure registrations under Environmental, Industrial, other applicable Labour registrations and other State laws like Shop Act, Pollution Laws, MSME laws etc.

For all your post incorporation registration needs, Bizfirst offers comprehensive solutions & act as facilitator for quick starting of your business. To know more, connect to our Biz Smart Executive

Post formation of LLP, you will receive the Registration Certificate from MCA via email. Within 30 days of formation of LLP, partners are required to prepare, execute & file LLP agreement defining the terms & conditions between themselves in respect of LLP & its Business. Drafting of LLP agreement is very vital & needs in-depth understanding of terms between partners & provisions of applicable laws. Good LLP agreement always saves future hassles & complications in relationships.  Delay or Non-compliance of said requirements leads to fine of Rs. 100/- per day, plus it has some serious consequences to business, LLP & partners of LLP. The LLP needs to obtain PAN, TAN, Professional Tax, State laws like shop act, applicable labour laws, pollution laws.

To ensure perfect drafting of LLP Agreement & its stamping, filing & other compliances, connect to our Biz Smart Executive

Within 6 months of formation & before commencement of business, every Company is required to undertake & complete compliances relating to commencement of business.  COB compliances are about establishment of registered office for the company & opening, activation of Banking Account & deposit of subscription money by the promoters in the said account & allotment of shares by the company. All these compliances involve various corporate actions. Promoters needs to provide affidavit of all compliances & hence there emerges a needs to take professional support for COB activities. The Company needs to complete this activity within the prescribed time period and non-compliance might lead to serious consequence like striking off name of the Company by the ROC. The companies are also under restriction to complete COB before any borrowing.

To ensure proper & perfect COB compliances to start the business, connect to our Biz Smart Executive

While formation of a Company, promoters subscribe to Memorandum of Association & agrees to take up number of equity shares stated therein. Similarly in LLP, promoter/ partners agree to bring in capital contribution. Such commitment is mandatory to fulfil post formation of entity. Upon opening of banking account of the Company, promoters are required to deposit the agreed subscription in it. Timing & mode of such payment is very crucial. Post receipt of subscription money, company has to allot the shares to subscribers. In case of LLP, it has to make allocation of capital by doing necessary accounting entries in the capital accounts of the partners. Company post allotment needs to issue duly stamped share certificates to subscribers within the prescribed time frame. Company is required to make necessary entries in the register of members. Stamping of share certificate is also a critical task.

If the promoter is non-resident or foreign national, then company is required to undertake additional compliances under FEMA by submitting couple of returns to RBI through its bankers. KYC compliance for such non-resident or foreign national is mandatory. This entire process of deposit of subscription money and allotment of shares and issue of certificates is complicated and needs proper professional care. We at Bizfirst guide the company & the LLP to timely & correctly complete the process of issuing shares to subscribers or to allocate capital to partners. To know more details and our service offerings, connect to our Biz Smart Executive

Every Company and LLP needs to have registered office in the jurisdiction of registrar, where it was registered.  Registered office could be a rented or owned place. In order to maintain registered office for a company, documents of ownership of place, no objection letter of owner, rent agreement is required. Company may at the time of formation or within 30 days of formation submit details of its registered office to MCA. Any change in registered office address is required to be communicated to MCA within 30 days. Address of registered office needs to be printed on letter head and all documents.  Board containing name, address and other details of the entity is required to be placed outside the registered office and every other office for e.g. branch office etc.

LLP needs to maintain RO, the details of the same are required to inform at the stage of formation.

Registered office address is the only legal address for entity for all government & non-government communications.

Proper maintenance of registered office is required to be confirmed to MCA by filing ACTIVE Form. Any non-maintenance of RO may lead to consequences like penalty, fine & striking of name from the records of MCA.

In order to property setup & maintain registered office of your Company or LLP, connect to our Biz Smart Executive

Minimum 2 directors for Private Company & 3 for Public Company & minimum 2 Designated Partners for LLP are required.  One Person Company can have only 1 Director. Companies Act & LLP Act has specified qualifications/ disqualifications for appointment as Director/ Partner. There is also a provision for vacation of office on happening of certain event or attracting any disqualification by the Director/ Partner. Non maintenance of minimum directors leads to serious consonances consequence of shifting corporate liability to personal liability.

Every Director/ Designated Partner needs valid Director Identification Number (DIN) & digital signature (DSC) before getting inducted as such.

Proposal for appointment of Director/ Designated Partner is usually considered in the Board/ Partners Meeting and then confirmed by Shareholders in case of Company.  Unless otherwise stated by resolution or articles, 1/3 rd of directors in company are retired by rotation at every annual general meeting.

Under the Companies Act, director could be Whole time or Part Time or could be MD/ Executive/Non-executive. In the LLP Partner could be Executive or Non-executive or could be Designated Partner (DP) or otherwise. Appointing authority could decide the remuneration of Director/ Partner.

In the Company, a person could be appointed as Director without being Shareholder. In the LLP Designated Partner needs to be a partner with some % of sharing in profit/ loss.

Companies Act has specified certain mandatory duties for Directors to observe and LLP Act has specified liabilities of Partner.  Non adherence of duties leads to issues of serious non-compliances.

While Companies Act requires filing of specified returns by the Company to communicate appointment or changes in Directors, LLP Act requires amendment in LLP Agreement & its filing with MCA.

In order to understand in detail the process of induction of Director/ Designated Partner/Partner, his duties, rights & responsibilities and to design strategy for management of Company through Board of Directors or LLP through partners connect to our Biz Smart Executive

Independent director (ID) is a symbol of best corporate governance practices in the Company.

Certain Listed & other specified Companies are required to appoint number of ID’s corresponding to their board’s strength. ID is a person carrying good standing & reputation, having specified qualification, eligibility and experience.  ID needs to be a non- related independent person, appointed to protect the interest of Stakeholders in the Company. MCA has provided list of ID available for induction on its website. Any eligible person having prescribed qualifications is required to complete online examination can enrol as ID on MCA.

ID is usually invited by the promoters on the Board of the Company to occupy the position as such. Shareholders are required to approve the appointment of ID. Initial appointment is for maximum period of 5 years with facility of consecutive renewal for one more term.  ID has specified functions, duties & powers in the Board process & in stakeholder’s related decision making function of the Company.

ID is usually remunerated through payment of sitting fees for attending meetings. ID reviews the performance of the Board and Executive Chairman of the Company.

Companies (not required to appoint ID) in order to achieve excellence in governance & compliances can think of inducting ID’s on their Board. ID could extend greater guidance for business management, if has domain knowledge about the Company.

If you wish to become an independent director or wish to get guidance & support for functioning as Independent director or if you wish to induct ID in your company, please check our smart solutions by connecting to our Biz Smart Executive

DIN is a unique director identification number issued to each individual who wishes to become a director in the Company or Designated Partner in LLP.  After introduction of MCA system for Company & LLP registry, all exiting directors and Designated partners were provided DIN on application. Currently facility of direct application for getting the DIN is not available at MCA.

At the time of new incorporation of Company or LLP under integrated application form, facility of allotment of DIN to maximum 2 persons is provided. For getting inducted as director or designated partner in existing Company or LLP, individual is required to be provide Company resolution/ LLP confirming its intention to induct him as a director/ designated partner. Thereafter MCA issues DIN to said individual.

For getting DIN, address proof, id proof, photo, mobile number, email id and educational details are required. Individual is required to have digital signature for making application for allotment of DIN.

DIN once allocated will be permanent. Individual can by application make changes in the details of DIN or can revoke the DIN. On death of Individual, DIN needs to be de-activated by application. For defaulting companies, MCA makes specific tagging for their director’s DIN and mark them as defaulting or disqualified Directors. The said marked directors have certain restrictions as to taking up new directorships. However they are certain other options available, please get in touch with us for the details.  

Every DIN holder is required to comply annual KYC compliance at MCA.

Every DIN holder is expected to protect his/ her DIN form getting marked by MCA & also need to update it by complying KYC process.

To understand the intricacies of DIN or if you wish to apply for DIN or if you wish to be KYC compliant for the DIN and to protect your DIN, get connected to our Biz Smart Executive

Every company (including OPC) needs to appoint a Chartered Accountant or Firm of Chartered Accountant as its Statutory Auditors & get the books of the Company Audited every year. On formation of the Company, auditor needs to be appointed within 1 month by the Board. Every company is required to prepare the Financial Statements (FS) every year and need to present it to the Auditors for issuing Audit Report. Even if there is no activity or turnover in the company, preparation of FS & its audit is mandatory.  The appointment of auditor is to be done for 5 years.  Act specifies eligibility criterias for selection of auditors or firm of Auditors. Auditors in the appointment process needs to confirm their eligibility and needs to provide their consent.

Listed Company & certain specified Companies are required follow the governance principal of rotation of Auditors after a period of 10 years.

Auditor could resign before completion of his tenure. Company could also with shareholders’ approval and by following a process and approval of MCA Regional Director can remove auditors and appoint new auditors in their place.  Companies Act casts specific duties and responsibilities on the Auditors. Auditors have specified powers and rights in respect of books of accounts, records, accounting policies, disclosures etc.  Auditors have duty to report incidences of Frauds in the Company. 

Placing of Audited FS in the AGM for shareholders’ approval is mandatory requirement.   

Appointment/ ceasing/ removal of auditors needs filing of returns/ intimation with MCA in specified forms.

Company is required to provide invitation to auditors for attending every annual general meeting. For Listed & specified companies Auditors usually interact with Audit Committee headed by ID.

To access solutions to your auditor related questions or compliances around the Auditors appointment/ resignation/ ceasing, connect to our Biz Smart Executive

LLP is a special vehicle introduced for SME size of activities. LLP compliances are less complicated and less burdensome. LLP is a great combination of corporate benefits, limited liability and ease of compliances. For income tax purpose LLP is treated at par with partnership firm. LLP act provides for turnover threshold for mandatory applicability of Statutory Audit. LLP not hitting that turnover threshold in a particular year is not required to engage Chartered Accountant for carrying out Statutory Audit.

However all LLP are required to file annual declaration of solvency to MCA. Non filing of such returns in time leads to fine of Rs. 100/- per day.

Connect to our Biz Smart Executive to understand LLP thresholds, audit requirements & annual compliances & secure compliance comfort.

MSMED Act regulating MSME/ SME in India has undergone a change with effect from 1.7.2020. New criterias for classification of Micro, Small & Medium Enterprise are based on combined criteria of turnover & investment in plant & machinery has been introduced. 

Every type of business entity (proprietary, partnership firm, company, LLP) is eligible to register as MSME. Trading business entities are not entitled to register as MSME. 

Government of India from time to time extends several benefits & scheme to businesses on its recognition as MSME. The major benefit is to have the debtors recovery within 45 days of invoicing.

Though MSME registration is not mandatory but considering the benefits & schemes available it is highly recommended for every eligible business entity to get register as MSME. For registration of existing & new business entities, free of cost Udyam Registration facility is available.

Our Biz Smart Executive is just a connect away to support you in MSME Udyam Registration & also to facilitate strategy on availing various scheme & benefits.

Joint venture is a process of coming together of two or more entities for common cause or goal. It is designed usually around technology, market, finance, resources, manpower etc. Joint venture partners usually share the capital & management in the JV entity as per mutual understanding. Pre requisite of good joint venture are existence of object, plan, strategy & desire.  Consulting Professionals like Bizfirst plays a vital role in transforming objectives & goals of partners into reality. Negotiations & finalisation of terms of JV is a foundation for future.

Due diligence, valuation, business plan, swap ratio, capital & financial structure, IPR protection, resource management, change over process are vital areas needs careful handling.  Good joint venture transaction concludes on inking of comprehensive transaction deed and post transaction compliances & corporate actions.

If you are planning Joint venture, collaboration, restructuring, merger or any other structuring & re-structuring exercise for you organisation, then Bizfirstoffers youcomprehensive solutions for successful negotiations, transaction structuring, document drafting, compliance etc.  To understand more about structuring & restructuring transactions connect to our Biz Smart Executive

Any company, llp, firm or any other entity if owned and managed by same group of people, then it is usually a common group entities. Commercially such common group entities enjoys the benefits of pulling of resources, economy of scale, sharing of knowledge, technology & resources & flexi inter entity fund management. Reputation & Branding of group also extends benefits to each group entity.

Transaction & dealings between group entities is regulated by Companies Act, LLP Act, Securities Laws, Listing regulations. All laws have different parameters & thresholds.  Direct or Indirect Control on ownership & Management are the fundamentals. Good governance norms expects promoters/ managers to follow fairness & transparency in transaction between group entities.  Market Price & Arm’s Length are deciding factors for the group entity transactions.

Creation & management of vertical or horizontal group entity structure, regulation of inter entity dealings, compliances & disclosures are some of the key areas needs professional care & support. Bizfirst Smart Team has excellent knowledgebase & experience to extend professional advice & support on Group entity matters. To know more connect to our Biz Smart Executive

In corporate group structuring to achieve certain tax benefits, ownership is controlled indirectly through investment entities, trusts, special purpose vehicles (SPV). Many a times the location of said investment entities are in different countries. With the objective to reach to a last point of ownership beneficiaries, declaration of Beneficial Ownership (BO) in companies is introduced even for unlisted companies. The said transparency was in existence for several years under securities & listing laws applicable to listed entities where public stake is involved. BO declarations also enables the government to ensure that there is no indirect control of banned & regulated countries on Indian businesses and benefits of Indian Market & resources are not driven to those banned & regulated countries.

Under the governing provisions of Companies Act & Securities Laws every listed & unlisted entity is required to disclose indirect Beneficial Ownership in the Company and subsequently upon any change therein. The law has identified the definition of BO & provided ownership thresholds for making such declarations.

BO structuring, identification, understanding & disclosure is crucial professional activity since it has direct impact on owners & their ownership in the Company. Bizfirst is equipped to serve you on all BO professional needs. For more details connect to our Biz Smart Executive

Shareholding in the listed company is to be held in demat form. Few years back MCA has issued a notification for all unlisted public companies to transfer their physical shareholding into dematerialized form. For this, company is required to approach to RTA for taking demat connectivity with depositories (NSDL/ CDSL). Once company’s securities are dematerialised with NSDL/CDSL, shareholders of the Company through their respective depository accounts, convert their physical securities certificates into demat form.  The said conversion for individual shareholder is usually with minor cost and for company yearly demat connectivity fees needs to be paid to RTA & depository.

Dematerialization of securities provides in-build protection to investor from fake issue of share certificates. It provides easy transferability without approaching to Company/ RTA and making request for transfer and waiting for endorsement on share certificates. Recently Indian Stamp Act has started charging prescribed % of stamp duty on off market transfer of securities in demat form. Earlier demat transfer was totally exempted from payment of stamp duty.

Dematerialization of securities by unlisted & private company requires amendment in their Articles of Association plus completion of several documentation & compliances. It also needs to execute demat agreement with depository. Fundamental feature of Private Company is restriction on transferability of shares & demat transfer does not require any Board approval & is automatic. Hence while moving to demat format of shareholding, Private Company needs to take necessary precautions & needs to give standing instructions to not to register transfers without the approval of the Company’s Board.

Company is required to procure six-monthly certificate regarding demat shareholding form professionals for onward submission to MCA.

If you are looking forward to EASY & SWIFT dematerialization & related compliances connect to our Biz Smart Executive

Any company, firm, LLP, branch, business formed or registered outside India by the Indian promoter or Indian entity in common parlance is known as foreign entity. India’s foreign trade policy & FEMA regulations allows Indian promoter & entities to setup foreign entity or business almost in all countries. They can also purchase shares, buy properties, make investment etc. in foreign countries.  Indian promoter or company is required to follow overseas direct investment regulations & may avail Liberalized Remittance Scheme (LRS) for such activities. Usual eligibility for business entity is 400% of net-worth of Indian investor entity & for individual as per prevailing LRS per financial year. 

There is a general permission for Indian nationals to acquire directorship in foreign entities. If the Indian investor is a company or LLP, then it needs some additional prior compliances like passing of resolutions etc. Detailed documentation is also required to be created between investor & foreign entity.

Your banker is expected to play a crucial role for swift remittance of funds outside India & for other foreign exchange & money transaction compliances. Hence selection of experienced banker is the key.  Before making such investments & creation of entity, valuation, KYC & other pre-requisites needs to be ensured. During & post transaction, documentation & compliances with your bankers, RBI & MCA needs to be observed.

For structuring & management or creation of a foreign entity, investment in it, acquisition of foreign entity or directorship & related FEMA, Co law,

To understand intricacies of this topic & Bizfirst facilitation connect to our Biz Smart Executive

ECB is external commercial borrowing. ECB is the cheapest form of Loan made available by foreign collaborator or foreign bank or foreign entity to Indian business. ECB is governed by RBI/ FEMA regulations. Currently majority of ECB options are under automatic route & required lesser & post transaction compliances. ECB is flexible form of foreign loan. Tenure, moratorium, loan amount, repayment schedule, interest could be flexibly agreed between foreign lender & Indian borrower. 

ECB could be taken for various purposes including project, fulfilling general working capital requirements etc. ECB is usually not permitted for further lending or investment or infrastructure activities.

ECB if compared with Equity Contribution and has a mandatory loan repayment & interest payment requirement. Repayment before average maturity period is not allowed. Revision of instalment payments & conversion of ECB is permitted. Under RBI approval route, flexibility in standard conditions is allowed.

Eligibility of Lender & Borrower needs to be ascertained before initiating ECB activity.

For Company or LLP resolution for borrowing is to be passed.  Proper structuring & drafting of loan agreement is essential after analyzing the requirements of the parties.

Borrower is required to obtain loan registration number (LRN) from RBI before drawing down the ECB in its bank account.  ECB transaction require periodical return submission compliances to RBI till its final repayment.  Monthly monitoring & reporting of utilization of proceeds of ECB is the duty of the lender.

For achieving 100% success in structuring & management of ECB transaction & for hassle-free compliances, connect to our Biz Smart Executive