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18
Aug
17
Restoration of the Expired Trademark

A Trademark is a “brand” or “logo” associated with the product. A properly used and promoted trademark helps the product to establish a brand image in the minds of the people.

It is very crucial to obtain trademark registration as it gives protection to the business entity against the other companies who might commence their activities using identical or similar marks. Trademark registration can also be obtained for a business name, distinctive catch phrases, taglines or captions.

The trademark once issued is valid for the time period of 10 years and after the completion of 10 years, the trademark issued get expired thus the trademark owner is required to get it renewed.

Following steps shall be taken to renew the trademark when it gets expired-

  1. Initially, the owner of the trademark is required to file TM-10 within 6months from the expiration and pay a specified amount of charges for renewal of the trademark.
  2. As soon the application made is accepted, the owner of the trademark is required to advertise the trademark in the trademark journal in order to inform the concerned about its restoration and invite objections from the people.
  3. In case there are no objections received within the specific timeframe, then the trademark is re-registered and enclosed within the trademark information. The trademark reregistered will again be valid just for the tenure of ten years.

Procedure for Trademark Renewal of Associate in Nursing terminated Trademark in India:

  1. In case the owner of the trademark does not make any application regarding the renewal of the trademark, minimum 1 month and maximum 3 months before the expiration of the last registration of the trademark, the Registrar himself could inform the businessman or his agent about the approaching expiration of the mark.
  2. In case the trademark owner or his agent fails to pay the prescribed trademark renewal fee before the expiration of the last registration of the trademark, then the Registrar is empowered to take away the mark from the register and advertise it within the official journal. However, the Registrar cannot take remove the mark from the register, if Associate in a Nursing application is filed by the trademark owner for payment of the renewal fee within six months of the expiration of the last registration of the trademark.
  3. In case no application regarding the renewal of trademark is filed within six months of the expiration of the last registration of the trademark, then the trademark expires.
  4. An application for the renewal of the trademark shall be filed within one year from the expiration of the last registration of the trademark. Further, the Registrar will consider the request for restoration of the terminated trademark scrutinizes the interest of differently affected persons.
  5. In case the terminated trademark is restored by the trademark owner, a notice will be sent by the Registrar to businessman concerning such restoration and therefore the same will be publicized within the Official Journal.
  6. Through the advertisement published in the journal regarding the restoration of the trademark, the Registrar invites the objection against restoration. In case no such objection is detected then the trademark is rehabilitated within the register for successive ten years.
  7. If any objection is raised, then the Registrar conducts the hearing and after hearing each the parties it passes a call on whether or not to revive the trademark or not.
  8. If someone else applies for registration of the terminated trademark, then the businessman needs to file Associate in nursing objection against the third party who has applied for registration of the terminated trademark.

Getting the trademark renewed helps the businessman to protect itself from duplicity and help them to maintain the exclusivity of their brand.

17
Aug
17
Penalty for Late Filing of Annual Return of Company

As per the Companies (Management and Administration) Rules, 2014 all companies are required to prepare and file an annual return. The annual return of the company shall be filed in MGT-7 containing the annual information about the Company’s general compliances. Further, it is mandatory for every company to file the annual return within 60 days of holding the annual general meeting or within 60 days from the last date on or before which an annual general meeting must have been held by the Company.

Applicability of Annual Return Filing

The following companies incorporated in India are required to file annual return at the end of each financial year.-

  1. Private Limited Company
  2. One Person Company
  3. Limited Company
  4. Section 8 Company
  5. Producer Company
  6. Nidhi Company

Further, even the companies which no longer exist are required to file annual returns till the name of the company is struck off from the Register of Companies by the Registrar. Moreover, nonfunctioning companies or companies with no activity are also required to file the annual return at the end of each financial year. Thus the fact that a company has not been functioning does not exempt the company from its requirement for filing of the annual return.

Penalty for Failure to File Annual Return

A penalty would be levied in case a there is a failure in filing the annual returns of the company or the returns are not filed within the due dates.

Section 9(25) specifies the penalty provision in this regard. As per this section, the company will be punishable with a fine shall not be less than Rs.50000 but which may extend to Rs.5 lakhs. Further, every Officer (Director) of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than Rs.50,000 but which may extend to Rs.5 lakhs, or both.

In addition to this if the company secretary in practice certifies the annual returns, which is not in conformity with the rules made in this regard than he shall be punishable with the fine which shall not be less than Rs 50,000 but which may extend to Rs 5 Lakhs.

Disqualification of Director

To make directors accountable for filing the annual returns of the company properly the provision for disqualification of directors in this regard has been made. Any director of the company will be disqualified, in case the annual return of a company is not filed continuously for three financial years. Further, he would not be eligible for appointment as a Director of any other company for a period of five years from the date on which the defaulting company failed to file annual returns.

Miscellaneous Provisions for punishment regarding failure to file annual returns by company

To ensure proper Corporate Governance and Proper Compliance of provisions of Companies Act, the following action would be implemented by ROC:

  1. The ROC would not accept any other e-filing of the company from Directors of defaulting companies for any other company also.
  2. No certificates will be issued to such defaulting company by the members of ICAI, ICSI and ICWAI.
  3. A strict action will be taken against defaulting companies and their Director in default in coordination with RBI and SEBI.
  4. The Company Secretaries and Auditors of defaulting companies would not be allowed to sign and certify the filing with the MCA-21 system, till the defect is rectified.
16
Aug
17
LLP Compliance Post Incorporation

Limited liability partnership is a corporate structure that contains the features of both partnership firms as well Company. Limited liability Partnership (LLP) was introduced in India under the Limited Liability Partnership Act (2008). The main objective behind the introduction of limited liability partnership was to provide the flexibility of a partnership with the benefit of limited liability of a company.

There are certain compliances and procedural matters that are required to be fulfilled prior to the incorporation of a Limited Liability Partnership (LLP). Mnay other forms of companies like the private company are also required to fulfill certain compliances requirements before their incorporation. However, the overall compliance requirement for an LLP is less cumbersome, as compared to the post incorporation compliances required for a company. 

The LLP must fulfill the compliances requirement to ensure the smooth incorporation of the proposed LLP.

  1. LLP Stationary
  • LLP Seal: LLP is a separate legal entity from its members. Thus, LLP seal would be required for the opening of the bank account of the company and for applying for PAN. Every LLP is required to purchase two rubber seals – round type with LLP name and LLP name with the designation.
  • Letterhead: LLP stationary like letterhead, invoice, official documents, etc., shall be prepared containing the LLP name and registered office of the LLP.
  1. Filing LLP Agreement

The LLP agreement is an agreement between the members of LLP just as the partnership agreement. It plays a very crucial role in an LLP as it states the rights and duties of partner. It is mandatory for every LLP to file LLP agreement within 30 days after incorporation of an LLP. Further, LLP agreement is mandatory for all LLPs and even in the absence of a specific LLP Agreement, an LLP Agreement must be executed, specifically excluding applicability of any or all paragraphs of Schedule I (default LLP agreement).

In case any LLP fails to file LLP Agreement within 30 days of incorporation of an LLP, a heavy penalty of Rs.100 per day of default with no ceiling on the maximum fine will be levied on the LLP. Hence utmost care must be taken to ensure that the LLP agreement is properly executed and filed within the due-date.

  1. LLP PAN Application

Every LLP is required to make an application for obtaining a valid PAN card prior to its incorporation. An applicant can make a PAN application in form 49A. As soon as an application is submitted online, the PAN acknowledgment must be signed and sealed by a Designated Partner of the LLP. The signed application must then be couriered to the NSDL office for issue of PAN card. Within 10-20 days the PAN card of the LLP will be sent to the registered office address of the LLP.

LLP Bank Account Opening

By submitting the documents mentioned below the bank account for an LLP should be opened-

  • Copy of the LLP agreement
  • Copy of the Incorporation document and DPIN of the designated partners
  • Copy of the LLP Registration Certificate issued by the ROC
  • Copy of LLP-IN issued by the ROC
  • Copy of the Resolution to open a bank account
  • List of authorized person/s with the specimen signatures to operate the account duly attested by Designated Partners
  • Copy of PAN allotment letter

An important point to be noted here is that all the above documents must be signed by a Designated Partner and must have the seal of the LLP.

 

14
Aug
17
Difference between Trademark Objection and Trademark Opposition in India

Trademark examination and Trademark opposition are the two terms we often hear when we deal trademark. Both the terms sound similar but both are separate proceedings. People often get confused between trademark objection and trademark opposition. Here are some fundamental difference between Trademark objection and Trademark opposition.

Trademark Examiner does Trademark objection whereas Trademark opposition is initiated by third (person in public having objection) and his/her has doubt in acceptance of your mark.

Trademark Objection is the part of Trademark examination process. In this process Trademark examiner examines your application and issues the Trademark examination report against your mark.  In most cases Trademark applications are objected and the objection should be responded within a month calculated from the date of issuance of the report. Whereas, third party opposes trademark. This is mainly done after the advertisement of the acceptance of your mark, from the Trademark registry in Trademark journal.

What is Trademark Objection?

Trademark objection is a form of preliminary negation issued by the trademark examiner after examination of your application. Trademark are objected for lack of distinctiveness some similarity with pending or registered marks. According to the trademark law and there are some other reasons as well like international proprietary names, geographical names, offensive or obscene words as a part of or as a trademark. It is the formality in most that can be overcome by proper representation before the registrar. In some cases one should approach the appellate board to appeal against the decision. It is mandatory to have periodical checking on trademark application. Trademark objection raised by examiner will lead to abandonment. It is similar to the fact like you’ve lost your money spent on Trademark Filing.  

Points to remember

  • Get in touch with a ‘reputed’ trademark attorney to represent your case. Unless you know what you are doing.
  • It is advised not to use sample or format available online. 
  • In case you are use the sample, the trademark office would not consider your reply and post your case for hearing.
  • Respond to trademark objection within 30 days.

What is Trademark Opposition?

Trademark opposition is a legal proceeding instituted by third parties. Opposition is similar to the activity like some body’s has stolen your exclusive right or idea. It is mainly accepted soon after its publication in the trademark journal, generally within 3 months from the date of publication. Opposition is third party action done by people having genuine interests in the trademark or by a person who feels that trademark registration of that trademark would be the decorum, market or any affect related to business of that person.

Opposition is an activity that is becoming increasingly common and easier than ever before. In case you applied for a trademark, even though the trademark examiner reviewed and approved it. Trade mark opposition is a serious matter should be kept in mind while registering a trademark. Opposition can sometimes lead to accusations and claims of infringement and monetary damages.

In case any applicant’s trademark has been opposed then he/she need to respond to the opposition within 2 months of the receipt of communication from the registrar of trademarks. Here are some of the difference between Trademark objection and opposition. 

Trademark objection

Trademark opposition 

Objection is issued by examiner

Opposed by the third party

Need to be responded within 1 month

Need to be responded within 2 months

No fee involved

Applicant need to reply with fee

Process under Trademark Registration

Separate process from Trademark Registration

No response will lead to removal

No response will lead to removal

Appeal lies against Rejection

Appeal lies against judgement

Acceptance is published in Journal

Judgement is communicated to the parties.

 

12
Aug
17
Procedure for ISI Mark Registration

ISI mark on a product aims at providing a guarantee of the quality, reliability and safety of the products to the end consumers. The ISI mark is issued by the Bureau of Indian Standards. Further, obtaining an ISI certificate is voluntary in nature thus it is not mandatory to obtain ISI certificate for every product. However, taking public health into consideration the government of India has made ISI certification mandatory for certain classes of products.    

BIS Product Certification Scheme

Through BIS Product Certification Scheme an ISI mark certification is provided to the manufacturer of the product. It is one of the largest schemes in the world, with over 26500 licensees covering more than 900 products. With BIS Certification the licensees are empowered to use the popular ISI mark on their product, which is synonymous with quality products. As per Government notification, 90 products are mandatorily required to have BIS certification. BIS also operates Foreign Manufacturers Certification Scheme through which license to use the BIS Standard Mark is granted to overseas manufacturers. At present, over 350 licenses have been granted for over 50 Indian Standards in 40 distinct countries.

Products for which BIS Certification is mandatory

The government of India has made BIS certification mandatory for certain products by keeping in mind the health and the safety of the people. These products cannot be sold without obtaining a BIS certification. The products for which BIS certification is mandatory are as follows- 

  • Cement
  • Household electrical goods
  • Food and related products
  • Diesel engines
  • Oil pressure stoves
  • Automobile accessories
  • Cylinders, Valves and Regulators
  • Medical Equipment
  • Steel Products
  • Electrical Transformers

Types of BIS Certification Schemes

The distinct types of BIS certification scheme are as follows:

  1. Normal Procedure for Domestic Manufacturers – Initially the applicant is required to submit the BIS Certification application with required documents and requisite fee. As soon as the application is submitted to the BIS, the BIS officer will conduct a preliminary factory evaluation. To check the capability of the manufacturer to produce the goods according to the standard lay down by the government for that category the samples are tested in the factory. Also, the samples are drawn for independent testing. When the BIS officer is satisfied with the sample of the product then BIS certification is provided. Under this method, BIS Certification is expected to be granted within 4 months of submission of application.
  2. Simplified Procedure for Domestic Manufacturers – To facilitate ease in the procedure of obtaining ISI certification the simplified procedure was introduced. Under this scheme, the applicant submits a test report of the sample from a BIS approved lab along with the application for BIS Certification. In case the test report is satisfactory, then a verification of the factory premises is carried out by a BIS Officer. If the BIS officer is satisfied then a BIS certification is issued. Under this method, the license is expected to be granted within 30 days of submission of BIS Certification application with the required documents and test report.
  3. Tatkal Scheme- Every manufacturer who requires BIS standard mark mandatorily as per Government notification can obtain BIS license under the tatkal scheme. The application filed through tatkal Scheme will be processed on the priority basis and will be adhered to the strict time norms. The total time for processing is specified as 30 days.
  4. ECO Mark Scheme – Through this scheme, the BIS License for eco-friendly products are granted. The procedure for granting ISI certificate under this scheme is similar to that of the Domestic manufacturer scheme. Eco-friendly products are required to fulfill the additional requirements specified in the Indian Standards to qualify for the ECO mark.
  5. Foreign Manufacturers Certification Scheme – The Overseas applicants/foreign manufacturers can make an application for BSI certification under this scheme. Obtaining ISI certification will provide them the conformity of their products to applicable Indian standards. The BIS certificate under this scheme is issued within 6 months period.
05
Aug
17
How to Get PAN Card for Company?

Permanent account number (PAN) is a 10 digit alphanumeric number that is issued by the Income tax department to every person who filed an application in this regard.  Through PAN card number the taxpayer is connected with the tax department. It is a mandatory requirement for the incorporation of various forms of the company like the private limited company, public limited company and one person company etc. 

Why is it important to have a PAN card number?

As per the Income Tax Act, 1961 it is mandatory for individuals and any form of entity to generate a PAN number while the payment of counterpart in India. Any person that fail to do so will be charged with the concealing tax which can be at the rate of more than 30% of the total invoiced payment i.e. the government will deduct tax at the highest rate possible.

Also, having a valid PAN number will grant benefits while paying the invoices, income tax returns and remittances to the holders.

Documents required

Following documents are required for obtaining a PAN card number-

  1. Any one of the following documents shall be submitted as the Proof of identity
  • A valid copy of the certificate of incorporation
  • A valid copy of the business registration certificate
  • An authentic copy of articles of association
  1. For the proof of address a valid copy of the company’s bank statement bearing the company’s name and full current address for any kind communication. The PAN card will be delivered to this address.

How to apply for PAN card?

Following steps shall be undertaken to acquire a PAN card-

  1. To begin the process of acquiring PAN number an application form 49A shall be downloaded.
  2. In the form, downloaded the applicant is required to fill all the necessary details.
  3. The applicant is required to acquire a bank draft for the payment of the pan card fees.
  4. The Column of name and the details of accessing officer can be left blank
  5. As soon as the form has been filled by the applicant he can download it and take a printout of it.
  6. The downloaded form shall be signed by the authorized director on behalf of the company and should be sent to any PAN agent or broker
  7. The applicant can send the form directly to any NSDL processing centers in India in case he does not prefer online services.
  8. The applicant is required to note down the PAN card number in order to track down the status of his application.
  9. A PAN number will be provided in around 15 days to 5 weeks to the applicant.
04
Aug
17
How to Get a TAN Number for a Company?

The tax deduction account number is a 10 digit alpha numeric number that is allotted to all the Persons/Employers who are responsible for deducting tax at source or collect tax at source on the behalf of income tax department.  The TAN number is allotted by the income tax authorities to the applicant. As per section 203 A of the Income Tax Act 1961 it is mandatory for every tax deductor to quote the tax deduction number in all TDS returns and all other communication with the tax authorities and failure to do so will attract a penalty of Rs 10,000.

Structure of TAN number

TAN number is a 10 digit number. In which first 3 alphabets represent the jurisdiction code, the 4th alphabet is the initial of the name of the TAN holder who can be a company, firm, individual, etc further five numbers and the last digit makes the TAN number of every person unique.

Who can apply for TAN Registration?

The following legal bodies collecting TDS are responsible for obtaining TAN Number

  • Central/state government or local authority.
  • Statuary/ Autonomous body.
  • Company
  • Branch/Division of a company
  • Individual/Hindu undivided family
  • Branches of the individual business.
  • Firm/ Association of persons.

Documents required for obtaining a TAN number

Following documents are required obtaining a TAN number-

  • Applicant proof of identity.
  • Applicant proof of identity.
  • Form 49-B for filing application

How to apply for TAN

An application for TAN can be filed through online mode or offline mode.

Offline

Form 49B in duplicate shall be submitted to any TIN-FC to file an application for allotment of TAN. Addresses of TIN-FCs are available at NSDL-TIN website.

In the case of an applicant, being a company which has not been registered under the Companies Act, 2013, the application for allotment of Tax Deduction Account Number may be made in Form No INC-7.

Online

To initialize the process of obtaining TAN through online mode form-49B shall be filed.

  1. The applicant is required to pay the fees of Rs 62 for filing the TAN application. The payment can be made by cash, cheque, demand draft or net banking.
  2. After the successful payment, a 14 digit acknowledgment number will get generated. The applicant shall submit the duly signed acknowledgment along with the required documents to the NSDL within 15 days from the date of the online application.
  3. After the documents and application are verified by NSDL, the TAN number will be communicated to the applicant.
04
Aug
17
Subsidiary Company Registration

A subsidiary company is a company in which more than 50% of the stock is held by a company known as the parent company or the holding company. Parent company substantially holds the controlling interest in the subsidiary company. Partial or complete control can be exercised by the parent company over the subsidiary company. The subsidiary company controlled completely by the holding company is called the wholly owned subsidiary company. In cases a foreign subsidiary is held by the principal company, the subsidiary must follow the laws of the country where it is incorporated and operates, and the parent company carries the foreign subsidiary's financials on its consolidated financial statements.

Documents required for registering a Subsidiary Company

Following documents are required for registering a subsidiary company-

  1. Proof of address
  • Electricity bill or rent agreement and latest electricity bill in case of rented accommodation.
  1. Indian National
  • PAN Card (mandatory)
  • Address proof
  • Photo ID Proof
  1. Foreign National
  • Passport (mandatory)
  • Address Proof (Document must be certified by the Indian Consulate)
  • Photo ID Proof (Document must be certified by Indian Consulate)

Minimum Requirements to Register Subsidiary Company

  1. Two directors
  2. Two shareholders

Procedure of obtaining registration for subsidiary company is as follows-

Step-1

To initialize the procedure of subsidiary company registration, any of the two directors are required to apply for DSC (Digital Signature Certificate)

Step-2

Then all the directors must apply for DIN (Director’s Identification No.)

Step-3

Through form INC-1 applicant shall apply for the name approval of the proposed subsidiary company.

Step-4

Once a name approval is obtained from ROC (Registrar of Companies), an applicant is required to file the following forms –

  • Form INC-7- Containing the Application for Incorporation of subsidiary Company of any private limited company or public company etc except one person company.
  • Form DIR-12- Containing the particulars of appointment of directors and the key managerial personnel and the changes among them.
  • Form INC-22- Containing the notice of change of situation or change of address of the registered company along with the Memorandum and Articles of Association of the Company.

Step-5

Once the incorporation documents are filed, the applicant is required to make an online payment ROC fees and Stamp duty. The fees paid shall be based on the authorized capital of the company.

Step-6

After receiving the fees and stamp duty, ROC verifies the filed documents. Form INC-22 and DIR-12 are approved through the Straight-Through-Process (STP) and the ROC Form INC-7 is verified in detail. The ROC may suggest some changes in the form or attachment submitted.

Step-7

Once the changes have been affected and the ROC is satisfied, Certificate of Incorporation is sent to the applicant through email.

01
Aug
17
Annual Compliance Checklist for Startups

In today’s time, many people aspire to become an entrepreneur. Thus the concept of the startup is becoming very popular amongst people. Every person who is aiming at setting up a startup should keep in mind that there are certain mandatory annual compliances which all the companies are required to fulfill.

Every form of a company like Private Limited Company, Public Company and Government Company is required to fulfill certain annual compliances requirements. Likewise, startups are also required to fulfill these annual compliance requirements.

Some of the annual compliances to be followed by every startup are as follows-

  1. Appointment of Auditor- Every start up is required to appoint a statuary auditor and file ADT-1 within 30 days of its incorporation in the first board meeting held. Further, subsequent auditors shall be appointed for 5 years in annual general meeting.
  2. Holding Boards Meeting- First board meeting shall be conducted within 30 days of incorporation and minimum 2 meetings shall be conducted in a calendar year. Also, a minimum gap of 90 days should be there between two meetings.
  3. Holding Annual General Meeting- Every startup is required to one annual general meeting in one year and the maximum gap between 2 annual general meetings shall not exceed 15 months.
  4. Filing electronic forms- Every startup is required to file following electronic forms annually-
  • MGT 7- Every startup is required to fill this form electronically within 60 days of holding of Annual general meeting for the period from 1st April to 31st March.
  • AOC 4- Within 30 days from the conclusion of annual general meeting form AOC-4 containing the financial statement that is Balance Sheet along with Statement of Profit and Loss Account and Directors’ Report shall be filed by every startup.
  • Form MBP 1- Through MBP-1 every director of the company in the first meeting of the Board of Director in each Financial Year needs to disclose his interest in other entities. Further, fresh MBP-1 shall be filed whenever there is a change in his interest from the earlier given MBP-1.
  • Form DIR 8- Through form DIR-8 the director of the startups in each financial year are required to file with the company disclosure of non- disqualification.
  1. Directors’ Report- A Directors report signed by the chairperson and authorized by the board shall be filed by every startup.
  2. Statuary registers and books of accounts- Every start up is required to maintain certain statuary registers. Also, it is required to maintain the minute book of the board meeting and annual general meeting. In addition to this, books of accounts and register of directors attendance shall be submitted to the registrar.
  3. Other statuary compliances like maintaining of books under income tax act and statutes applicable.

Further, the compliance requirement for start-ups differs from case to case based upon the nature of the business, size etc. 

29
Jul
17
NRI shareholders incorporating in a Private Limited Company in India

Non Resident Indian abbreviated as NRI are the people with Indian origin but live in Foreign Countries. They have their and professional and personal relation with people living in India. Let’s make it more clear by making things classified as two types of Non Resident Indian    

  • Person do not live in India but have an Indian passport
  • Non-resident Indians holding foreign passport but Person of Indian Origin (PIO)

Private Limited Company is a popular mode for the NRI or Foreign Investors to start on with business in India., This classification is done by FEMA Act, 1999.

 Are NRI's allowed to establish any Company type they want in India?

Private Limited Company and other Limited Company is the only type of company that can be incorporated by NRI and Foreigners. Any NRI or Foreigner is not allowed to form One Person Company, Sole proprietorship or Partnership type of business unless its limited Company.

Registration of Business Type

Foreign Direct Investment (FDI) is allowed in Private Limited Company in India under Automatic route. It can be possible in Limited liability Partnership but there is a need of prior approval from the Reserve Bank of India for the same.

Shareholding

According to the Companies Act, 2013 NRI or foreigners can be Directors and Shareholders of the Private Limited Company. As you know private limited company need minimum of two shareholders and can have a maximum of 200 shareholders. As per certain FDI norms in India NRIs are subjected to the process of shareholding making things simpler as the Reserve Bank of India allows 100% FDI in many sectors in India under the automatic route.

Procedure of Incorporation

There is no difference in the process of registration of the Company for the NRIs as compare to the Indian Directors and Shareholders. There is a need of at least one Director and one shareholder of Indian Origin. The documents are same as of the Indian Shareholders, but all must be notarized. The ID-proof, Address Proof and other documents of foreign documents need to be Notarized by a licensed professional.

Purchase & Transfer of Shares by NRIs in a Private Limited Company

There are several conditions on which the purchase of the shares of NRI depends, a person staying out of India can purchase share/equity/stock/preference shares/convertible debentures that are offered by an Indian Company based on the following conditions:

  • It is permitted under FDI Scheme should not increase with the purchase of shares by the NRI or the percentage of the Foreign Equity which is already approved.
  • Sectored cap of FDI for the share should not be exceeded.
  • Stock Purchase should be by a person who is already staying out of India
  • Indian shareholders should not amount of share more than NRI or Foreigner.

Transfer of shares depends on who is transferring the share to whom. It can be the following situations

NRI to another NRI

The Reserve Bank of India has given permission to carry forward this transfer of shares of a Company from one NRI to another NRI/PIO.

NRI to Person Resident in India

This needs prior permission from the Reserve Bank of India as the shares are being transferred to person resident outside India to a person resident in India.

 NRI to Indian Resident

The transfer of share by NRI to an Indian Resident is permissible by the Reserve Bank of India, and can be done by way of gift to a resident of India.

28
Jul
17
Foreigners as Shareholders in Private Limited Company

Foreign Direct Investment (FDI)

Foreign direct investment (FDI) is the controlling ownership in a business enterprise in one country by a share based in another country. FDI is either in the form of business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.

Private Equity Capital

Value which implies shares issued by an organization and Private Equity is the load of capital that is not insinuated on an open trade rather it is the immediate interest in the venture. The private value capital originates from the retail and organization financial specialists.

Since India has constantly kept up the budgetary development and the decent variety in India pulls in outside nationals to put resources into the Indian Market. There are certain facilities for Private Limited Companies as Foreign Direct investment upto 100% into this sector is under automatic route and there is no need for the approval of Government. Therefore,Private Limited Company Incorporation is the best form of company recommended for foreign nationals Since, its quickest and easiest way to enter into Indian Market.

There are certain restrictions on Foreign Direct Investment in Private Limited Company that needs government approval. 

Petroleum sector, Natural gas/LNG pipelines (this excludes private sector oil refining)

Investing in Companies infrastructure.

Defence and strategic industries, Broadcasting, Print Media, Tea Sector

Asset Reconstruction Companies, Courier Services, Postal Services, Atomic Minerals

There are certain steps associated with the incorporation of an Indian Private Limited Company for foreign nationals.

Company need to have a minimum of two shareholders and two directors and the shareholder can be a person or a corporate entity but the director needs to be a person.

A foreign national is permitted to be the director of the company. Among the directors, it is must to have at least one director of Indian origin i.e. both citizen and resident of India.

There can be a combination of Foreign Nationals or Foreign Companies holding 100% shares of the Indian Company. Hence one corporate entity cannot hold all the shares of the Indian Private Limited Company.

DSC for Foreign National Directors

This is a very important and fundamental application form in the process of Registration, hence it is needed for all the directors associated with the Company.

Documents to be attached for Foreign Nationals are:

  • Copy of Passport is mandatory as an ID Proof.
  • Address Proof :It should not be older than one year from the date of filing the form.
  • Rest of the documents are all same as for the Indian National.

For a foreign national all the documents are to be notarized.

For the foreigners residing in India, the documents required are:

  • Passport
  • Visa
  • Application form
  • Passport photograph

Resident Permit: All the above documents from the single embassy

DIN and Name Approval

 Director Identification Number (DIN) should be obtained for the directors of the Company. As per the Companies Act, 2013, Once the DSC (Digital Signature Certificate) is obtained it is easy to get the DIN for the Directors.

There must be a minimum of two DIN numbers

Filing for Incorporation of a Private Limited Company

Another important step is name approval and once it is done documents can be filed with the Ministry of Corporate Affairs (MCA) for Company Incorporation.

Following documents are required:

  • Affidavits & declaration from the Directors.
  • Memorandum of Association and Article of association
  • Address Proof of Registered Office.

Finally, the company will receive the incorporation certificate after noticing all the documents have been notarized by both the Indian and Foreign Directors. An Indian Company can finally apply for the Company PAN Card and also open a Bank Account in India.

26
Jun
17
SPICe -Easy way to register a Company in One Day

Ministry of Corporate Affairs introduced an electronic form called Simplified Performa for Incorporating Company electronically (SPICe) vide the notification October, 2016 in order to simplify the procedure of incorporation. SPICe or e- form INC-32 can be filed along with memorandum of association INC-33 and article of association INC-34.It helps in incorporating the company with the single application for reservation of name, incorporation of a new company or allotment of Director Identification Number. It integrates many processes into one process resulting in fast track incorporation of company.

Prior to May, 2015 for incorporating the company needs to file five forms which includes DIR-3 for acquiring the directors identification number, INC-1 for approving a name, INC-7 for registering a company with memorandum of association and articles of association, INC-22 for details regarding registered office and form DIR-12 for appointing directors. Filing these documents was a very hectic and time consuming process. In order to facilitate the smooth and fast track procedure of incorporation MCA introduced INC-29 on May, 2015. It was a major reform brought by government as only one integrated form INC-29 has to be filed as against five forms. But one shortcoming of INC-29 was that there was no procedure for entering a previously approved name due to which there were chances of rejection of application.

SPICe contained all the features of INC-29 in addition to this it provide the option to the company for entering the previously approved name. So it can be filed with memorandum of association INC-33 and article of association to facilitate the incorporation of company in 1-2 days.

Key benefits of SPICe or INC-32

  • Application of name- In form INC-29 there was no provision for entering previously approved name that is we cannot file INC-1 prior to INC-29. But in form INC-32 or SPICe there are provision for entering a previously approved name.
  • More Information- The information contained in INC-32 is more than the information in INC-29. Thus it helps the user to fill form with more ease.
  • Electronic filing of memorandum of association and article of association- INC-33 for memorandum of association and INC-34 for article of association has been provided electronically. The applicant is only required to fill the objects of the company and the clauses for article of association. Hence, the task of drafting the memorandum of association and article of association has become much simpler.
  • Provision for Pan and Tan- SPICe or INC-32 enables the applicant to apply and permanent account number and tax deduction number electronically.

Process for filing SPICe –Form INC-32

  • Submit supporting Documents like Memorandum of association, Article of association, identity proof, details of subscribers and directors along with INC-32.
  • Declaration by professional should be attached to form INC-32 declaring that all the information presented in the form is correct.
  • After filing it will be processed by central processing Center.
  • If all the documents are complete a company identity number (CIN) will be allotted along with DIN.

Under form INC -32 the following types of companies can be register in India.

Private Limited Company

One Person Company (OPC)

Nidhi Company

Producer Company

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