One Person Company

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The Companies Act, 2013 introduced a revolutionary concept, and since then, the thought has changed the way several companies do business. The concept is that of 1 Person Company (OPC), and it had been recommended in 2005, by a committee headed by Dr JJ Irani. the concept of OPCs was genuinely groundbreaking because it helped provide investors with a superb opportunity to require power into their own hands and gave them several benefits. It gave young entrepreneurs benefits that a standard Private company could avail, while, at the identical time, providing them with added tax and HR benefits.

Here’s a glance at everything you would like to understand about Person Companies and why they’re so useful.

Concept of One Person Company

As per Section 2(62) of the businesses Act, 2013, a 1 Person Company is defined as any company with only one member. Section 3 of the Act, also clarifies that an OPC are considered a non-public Company when it involves legal matters. Hence, all rules which must be held in situ for a personal company is additionally valid for an OPC. The lone exception to the existing law is that an OPC can only be formed by a “Natural Indian” living in India.. Also, another law states that one particular individual cannot create quite 5 OPCs in his or her name.

Formation and Features of the corporate

An OPC is made the identical way as a non-public company, with the sole difference being that it’s just one member and is prohibited from inviting members from the general public to be an element of it.

Features of an OPC are as follows:

An OPC is also formed as either of the two:

1. Limited by Guarantee
2. Limited by Shares

• If shares limit the OPC, then it should have an inside capital of a minimum of Rs 1 lakh and will have the ability to limit share transfers. it’ll also not be allowed to ask people to buy it.
• An OPC must have a legally registered name, under which it operates and therefore the term; One Person Company must be mentioned wherever the name of the corporate is employed.
• An OPC member must consent to the nomination of another and file the nominee’s name with the Registrar of Companies.
• If the founding member dies or is forced to resign due to unforeseen circumstances, this nominee will lead the OPC. By contacting the Registrar of Companies, the member can change the name of the nominee whenever he or she wants. If a member dies while in office, all of the OPC’s assets and liabilities are automatically transferred to the nominee.

Exemptions Available for One Person Company

An OPC enjoys several privileges and immunities that

Private companies aren’t eligible to receive. Here’s a glance at the exemptions an OPC receives.

1. As per Section 92 of the businesses Act, 2013, states that annual returns of an OPC, must be signed by either the corporate secretary or the director.
2. According to Section 122(1) of the businesses Act, 2013, it’s stated that laws mentioned in S.98, S.100 to S.111 won’t be applicable to OPCs and hence, the laws that govern General Body Meetings and Executive Meetings needn’t be followed by them.
3. Any resolution made after a gathering needs just to be recorded by the OPC’s member in an exceedingly record or logbook and this book must be maintained and duly signed by the member as per Section U/s 118.
4. An OPC requires only one Director to function and might have a maximum of 15. this will be increased further by filing a resolution.
5. Compliance regulations for Board Meetings are met if decisions moved are registered in an exceedingly written record which is acknowledged and recorded by the member.
6. An OPC should send the Registrar copies of their financial statements with the specified documents a minimum of before 180 days have passed after the closing of a year.These statements have to be attested by the Director or Company Secretary.
7. Failure to befits the principles listed above will lead to the One Person Company getting penalized by the Registrar of Companies. it’ll be penalized for an amount between Rs 20,000 and Rs 1 Lakh and a six-month term, betting on the severity of the error.

Benefits of an OPC

• Limited Liability – Liability is treated differently in an OPC because it may be a separate entity, then shareholder liability is proscribed to the payment of subscription money. Hence, the member’s personal assets aren’t in danger.
• Smooth Succession- because the name of the nominee is created during the creation of the OPC, succession laws are simple. within the event of the death of a member, all the shares and investments of the OPC are handed right down to the nominee. there’s no need for any lengthy procedure or submission of will as is that the case with sole proprietorships.
• Easier Compliances – a 1 Person Company has more relaxed and fewer binding compliance regulations. This dramatically reduces paperwork related to running the corporate and hence, reduces the load on the HR department.
• Helps in organising the unorganised proprietorship by giving it the identical position of a non-public company. This provides better banking facilities to such companies. It also helps such companies have better status and recognition with relevance other companies.

Many successful stories and examples may be found in One Person Company.Let your company be one in every of them. Get expert advice from finaxis professionals in registering your One Person Company.

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Remuneration To LLP Partners 

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An LLP is a business entity that gives the combined benefits of partnerships and private limited companies. It includes partners who share limited liability for the enterprise.  

What are the returns? 

Since it is such an essential element of running any business, rules regarding how the remuneration is paid are mentioned in the LLP agreement itself. Each partner will, therefore, want maximum investment return for their efforts, and so, partners must know about the kinds of returns available so that they can establish the agreement in the right way. Here are the three most well-known forms of returns when dealing with an LLP. 

1. Remuneration 

2. Interest on capital  

3. Profit share 

Types of Returns Explained 

Remuneration 

This phrase contains everything from bonuses and commissions to the base income that a partner or employee receives. Generally, it is paid to partners who take an active effort in supporting the LLP  grow and expand. It is a form of payment that is proportional to the work being done and does not have much connection to the capital built by them at the onset of the partnership.  

Interest 

This is a form of income that has direct connections to the capital introduced by them at the start of building the business. It doesn’t have anything to do with their recent work. Every partner must have contributed a share of the total capital needed at the time of beginning the partnership, and their interest return is a fixed share or percentage of this amount. Hence, the interest they receive will be some proportion of this amount they have invested themselves. 

Profit Share 

This return is available when the LLP begins making a profit or turns cash positive. This form of return takes into consideration both the amount of work they have put in and the capital they have before investing. As soon as the LLP starts to make money, the profit is analyzed and split into chunks according to work done, and capital introduced and then divide amongst the partners accordingly.  

Eligibility To Receive Returns

Which partners get returns and which do not is purely decided on by the clauses registered in the  LLP agreement. Even if a partner is working, inactive, sleeping, active or non-working, if it is particularly mentioned in the LLP agreement that they are to earn a percentage of the profit or interest, then they must be given that amount irrespective of whether they deserve it or have performed any work. But, this being said, there is a max limit on remunerations given by the LLP as per the Income Tax Act. Also, the LLP agreement can not provide any remuneration retrospectively to duration before the agreement was enforced.  

Amount Deducted Table Under The Income Tax Act: 

1. The deduction is possible only if the remuneration is obtained by a working partner 

2. The expenditure of remuneration must be duly authorized and registered within the agreement or LLP. 

3. The payment due must not exceed the proportions stated below 

4. If a partner has received additional remuneration than what is detailed below, that excess  amount is not valid or legal for any deduction and tax must be paid on it 

5. The remuneration received by the members or partners is taxed as Business Income. Share or percentage of profit is not included in the similar section as remuneration 6. For both the members working and non-working members, the share or percentage of profit  returns is exempted as per Section 10(2A) of the Income Tax Act 

7. Interest received on the money invested by them is also taxed as Business Income 8. Also, for the first 3 lakhs earned, remuneration cannot exceed ₹1,50,000 or 90% of book  profit, whichever adds up to be more 

9. When in balance with profit, the remuneration cannot exceed 60% of the book profits earned by the LLP 

10. The interest achieved by the LLP on drawings from partners is charged as profits and gains of  business as far as taxation is concerned 

11. An LLP will be taxed the exact way a partnership is. This indicates their income is liable to be taxed at 30%. However, LLPs are not eligible for the advantages of section 44AD, which  authorizes firms not to keep books if their income falls below 8% of the total gross 

12. As the LLP doesn’t distribute dividends like a company, it is not eligible for any laws under the dividend distribution tax. 

Interest 

The 12% maximum interest rate is permissible under the Income Tax Act. 

Above this share, anything obtained by the partners is taxable.  

The LLP Agreement must completely specify what the exact interest rate is and how it will be paid. What incomes are not allowed any deductions? 

Not all types of income earned from an LLP are allowed tax deductions. 

Here’s a look at the types of income that do not earn any reduction. 

1. Salary and remuneration received by non-working partners 

2. Remuneration received by partners or members in cases where it goes against what is  mentioned and authorized in the LLP agreement

3. If remuneration aligns with what is mentioned in the agreement, but relates to a much older  article of the deed, and doesn’t comply with the modified deed 

4. If returns from interest surpass 12% per annum 

5. Remuneration paid exceeds the limits set by the income TAX Act.

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How To Name Your Section 8 Companies

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Introduction

The name of a corporation is the very first thing that an individual immediately connects with at the primary instance. The importance of an appropriate name increases just in case of a non-profitable organization (NGO) or a charitable organization formed under Section 8 of the corporate Act, 2013.

These Section 8 companies function solely for the aim of promoting commerce, art, science, sports, education, research, financial aid, religion, charity, protection of the environment, or any such other object meant to uplift either a fraction or the whole society as an entire. So these institutions or companies have to specialize in bringing the corporate into the spotlight and making a mark within the minds of the people so as to induce more volunteers who would work for the organizations and achieve the goals at a very faster Pace.

A Section 8 company will be named and registered as an Association, Foundation, Society, Council, Club, Charities, Institute, Academy, Organization, etc. which will be registered under the Ministry of Corporate Affairs, Government of India. Since these companies are legally registered and recognized under the corporate Act 2013, the procedure for registration and therefore the naming criteria are defined under the procedure to register an organization as per the sections of the Act. 

Registration of Section 8 Company A Section 8 

company is different from a trust or a society only in terms of registration as a piece 8 company is registered under the Ministry of Corporate Affairs, Government of India whereas the latter is registered under the authority’s regulations. a piece 8 company has better legal standing, recognition among stakeholders and donors, and high credibility as against a trust or a society. However, the procedure somehow remains identical. For registering a bit 8 company, the specified documents like PAN (Permanent Account Number), address proofs, passport size photographs, etc. of all the administrators and promoters, are to be collected and arranged within the necessary order. Next, it’s necessary to get the DSC (Digital Signature Certificate) and DIN (Directors Identification Number) of all promoters and directors of the corporate.

Now the foremost important step is naming the corporate appropriately in a way that the name denotes the explanation for the corporate. Since the name of an organization is what makes it stand out from the group, it must be unique so as to avoid copyright issues and even be easily associable with the company’s objective.

Approval Of Name 

Legally registering and approving the name of the corporate is mandatory. This helps in avoiding any quiet copyrights issues and also ensures that no previous section 8 company has been registered under the identical name. For getting approval, a form INC-1 should be filed with the Registrar of the company(Central Registration Centre – CRC of Ministry of Corporate Affairs). To avoid chances of repetition of names, the applicant will provide six different names for name approval. The name’s validity might last up to 60 days after it has been granted. As per the corporate (Incorporation) Rules, 2014, the suggested names must contain the words like foundation, association, forum, council, chambers, etc. to be considered a legitimate section 8 name.

Licensing The Corporate 

It is mandatory for an organization to be licensed once the name of the corporate gets approved. For applying for a license, a form INC 12 together with the prescribed fees must be filed together with the required documents. As for the revocation of the license, it’s going to be revoked by the Central Government anytime as per the provisions of Rule 8(6) of the businesses (Incorporation) Act, 2014, just in case of any breach of requirements of the section or violations of any conditions against the general public interest, etc.

Conclusion 

A section 8 company works for society and its upliftment, which supplies it immunity with regard to varied compliances and tax remittances. this provides these companies a new advantage as critical to other general companies. So it’s necessary that these companies make a mark legally and confirm to follow the principles and let the advantages reach society.

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What Is Section Eight Company?

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Not all businesses are focused on making money through trade and commerce. Many businesses are primarily focused on philanthropic and non-profit goals. Because they are recognized under Section 8 of the Companies Act, 2013, such entities are referred to as Section 8 Companies. These businesses spend all of their earnings and profits to achieve their goals.

The Definition Of Section 8 Company

A Section 8 company is one whose goals are to push the humanities, commerce, science, research, education, sports, charity, welfare, religion, environmental protection, or other similar goals, consistent with the Companies Act. These organizations similarly devote their profits to furthering their mission and don’t pay dividends to their shareholders.

Previously, these businesses were defined by Section 25 of the Companies Act of 1956, which contained identical provisions. On the other hand, the new Act provides that Section 8 businesses can have various goals.

The Federation of Indian Chambers of Commerce and Industry (FICCI) and therefore the Confederation of Indian Industries are two well-known Section 8 companies (CII). The goal of those businesses is to help with the expansion of trade and commerce in India.

Features Of Section 8 Company

A Section 8 company has the subsequent distinguishing characteristics that the majority of other sorts of businesses lack:

• Section 8 firms have charitable goals and don’t seek to get a profit. Their motivations are entirely benevolent. They work to further issues like science, culture, research, sports, and religion, among others.

• Section 8 corporations, unlike all other corporations, are exempt from having to possess a minimum paid-up share capital.

• Limited liability: Members of those corporations can only be held vulnerable to a specific extent. In any event, their liabilities can’t be endless.

• Government license: These businesses can only operate if they receive a license from the national. This license can even be revoked by the govt.

• Privileges: Since these companies possess charitable objectives, the businesses Act has accorded several benefits and exemptions to them.

• Firms as members: except for individuals and associations of persons, Section 8 also allows firms to be members of those companies.

Formation Of The Section 8 Company

Under Section 8 of the businesses Act, someone or a gaggle of individuals can apply to the Registrar of Companies with the mandatory forms to include a charitable corporation. If satisfied, the Central Government can accept such an application on any terms and conditions set by the license it’s granted. After the corporate has been accepted, the Registrar of Companies will register it after the applicants have paid all of the desired costs.

It’s crucial to stay in mind that such businesses can only be limited. during this circumstance, all Ltd. advantages and liabilities apply. Furthermore, unlike all other corporations, these ones don’t need to include the terms “Limited” or “Private Limited” in their names.

Since the existence of such companies is predicated on the license granted to them, they can’t even alter their memorandum or articles of association without the Central Government’s permission. They also cannot do anything that the license disallows.

Cancellation Of License

A license from the Central Government is required for Section 8 businesses. All of these licenses are also revocable for the reasons listed below:

•  When the company’s activity is fraudulent,
•  or when it breaches its own purposes and public policy, it violates Section 8 rules.

Under certain situations, the government may order that the corporation be wound up or merged with another similar company. Before making such decisions, the government must consult with the company.

Winding Up Of Section 8 Company

Section 8 companies can wind up or dissolve themselves either voluntarily or under orders given by the Central Government. If any assets remain after the satisfaction of debts and liabilities upon such winding-up, the National Company Law Tribunal can order the transfer of those assets to an identical company. It also can order that they need to be sold and also the proceeds of this sale should be credited to the Insolvency and Bankruptcy Fund.

Punishment for Disobedience

A punishment ranging from Rs. 10 lakhs to Rs. 1 crore is imposed on any corporation that violates Section 8’s stipulations. Furthermore, the company’s directors and officers face up to three years in prison and fines ranging from Rs. 25,000 to Rs. 25 lakhs. If they conduct any business with dishonest motivations, such officers may be prosecuted under the strict terms of Section 447 (dealing with fraud).

Advantages Of Forming Section 8 Company

People prefer to perform philanthropic activities through Section 8 corporations rather than traditional NGOs and groups. This is because of their limited liability, which means that their personal assets will not be utilized to cover the company’s debts. These businesses benefit from the following advantages:

• Members are only liable to a certain extent.
• There are no capital requirements. 
• They are exempt from a number of taxes.
• For registration, there are no stamp duties or expensive fees to pay.
• They exist indefinitely and have their own legal position. 
• Exemptions from a number of procedural requirements.
• Because they are recognized by the Central Government’s license, they have more credibility than NGOs, societies, and trusts.

Disadvantages Of Forming Section 8 Company

Despite their many advantages, these businesses have the following disadvantages: 

• The company’s members are not entitled to any dividends.
•  Benefits and allowances are not provided to officers and directors.
•  The revenues must only be used to further philanthropic goals and objectives. 
• The Central Government must approve any changes to the memorandum and articles.
•  The license can be revoked for a variety of reasons.

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Promoter Of A Company: The Person Behind The Processes

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Introduction

A company isn’t just founded by a person, it’s the cumulative efforts of a team that builds the empire. it’s their idea and struggle that results in the profitable success of the business and also the rise of the corporate. Individuals that labor diligently and persistently to bring ideas to life are known as promoters. The promoter of a corporation isn’t a term included within the law but is a vital part of the business. 

1. Who is the promoter of an organization in India?
2. Types of promoters of a corporation
3. Liabilities of a promoter
4. Steps involved during the promotion of an organization
5. Rights of promoters
6. Conclusion

Who is the promoter of an organization in India?

The promoter of an organization may be a personal, partner, syndicate, and not necessarily the owner. a number of them may have legal relations with the corporate, while some might not. The Indian Companies Act, 2013 defines the concept of a promoter in company law but doesn’t assign any specific legal position to them. The promoter of a corporation is in association with the corporate from the ideation process to its incorporation. Moreover, the promoter of an organization in India renders the supervision to hold out judicial decisions and sign the agreements still. 

Types of promoters of an organization

The promoter of a corporation in India includes the subsequent type:

Professional promoters:

They play a big role to ascertain the corporate, and once all the procedures are complete, they get in the corporate to the shareholders. Although there don’t seem to be plenty of professional promoters of an organization in India, it’s quite common in countries just like the UK, Germany, etc. 

Occasional promoters:

 they are doing not stay or add the corporate regularly. They bounce about from company to company, doing promotional work on the side.samples of such promoters in company law include engineers, architects, lawyers, etc. 

Financial promoters:

Some financial companies may take up the work of economic promotion of a corporation betting on the truth of the market. 

Liabilities of a promoter

The liabilities of a promoter of a corporation in India include:

• The rules don’t allow them to create secret profits in any form. Out-of-company deals, or profits for private promotion.
• The deposition of all the amounts received on behalf of the corporate should be worn out of the corporate account.
• The promoter has to take proper care while performing their tasks.
• The promoters are fully responsible for any contracts signed or pending until they are approved.
• For any investments, the promoter needs to make the compensation just in case of any issues or untrue statements.

Steps involved during the promotion of an organization

There are several steps involved during the promotion of an organization which include:

Ideation: 

the primary and most vital step is to possess a concept and the way to execute it. One must know what the business is about and appearance for opportunities within the field.

Investigation: 

The promoters create a correct well-planned structure of company management and execution. An expert opinion together with the cost structure is sought and analyzed.

Name approval and registration: 

Once completed, the promoters are liable for the appliance and registration of the corporate name with the Registration of Companies.

Appointments: 

After this, the promoters take the appointments from all the professionals to hold out various tasks and contracts.

Documents: 

The promoter in company law must essentially keep all the legal and official safe for incorporation and further activities. 

Rights of promoters

Being a component of the corporate and its incorporation, the rights of promoters include the following:

Right of indemnity: 

within the case of partnership or involvement of over one promoter in an exceeding company, one promoter can deem the opposite for any untrue statements or secret profits. 

Right of preliminary expenses: 

The promoter has the proper to receive the legitimate expenses for being an element of the corporate. Although it’s not mandatory among the rights of promoters. It depends on the individual or the group to say it. 

Right of remuneration: 

Additionally, the promoters usually receive their remuneration reckoning on the services or as per the need of the director. However, the promoter cannot sue the corporate until they need a legal contract for the identical. they supply the remuneration in several ways, including:

• Commission
• Grant amount
• Shares
• Subscription of shares
• Buying part of the company’s property

Apart from the rights of promoters, they need several other duties and liabilities they need to stick to.

Conclusion

The promoters surely play a vital role within the company’s establishment and its success. Whether or not it’s handling the professionals or employing the workers, the promoters help within the very best ways to line up the corporate.

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Difference Between LLP And Corporation

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Limited Liability Partnership (LLP) is a partnership in which some partners or all partners have limited liability. It, therefore, exhibits elements of partnerships and corporations. In an LLP, one partner is,t liable for another partner’s misconduct or negligence.

Understanding the difference between a corporation and a limited liability partnership is crucial for business holders who are deciding to register a partnership corporation as one. This article illustrates the structural, suitability, incorporation, and taxation variations in the two to aid in one of the most crucial decisions of a business.

LLP And Corporation

There are various forms of business structures, LLC and Corporation being one of them. It is essential to know the differences and benefits of several alternatives of business forms. While there may be similarities between a Limited Liability Company and a Corporation in the aspect of alienation of property and limited exposure of risks of the proprietor, limited to the percentage contributed by them, there are differences in their dynamics in India. Here, we specify the differences in structure, protection, asset base, ownership, and taxation. Structure: Members Vs Owners

In the case of Limited Liability Company(LLC), as the name suggests, there is a separation in the management and holders of the company. The members are the contributors to the equity of the company, however, their liability is ring-fenced to the amount contributed. In contrast, a corporation is a business form where a group of people in a corporate form, work as a single entity. They are the owners of the stock or commodities of the company and maybe for the day-to-day management of the company, in cases where there may be no such division of duties between contributors of capital and management.

Incorporation:

A limited liability company is a company with its registration according to Indian laws,  specifically the Indian Companies Act 2013. It is the Companies Act that attention Corporations, as a body incorporated or registered outside India. It, however, doesn’t include Cooperative societies and Government companies Thus, a Limited Liability Company would be amenable to all laws enforced in India that apply to Indian firms, such as SEBI regulations, the Indian Contract Act, etc. Some laws in India may not apply to a corporation out of India unless they specify so.

Suitability

While a Limited Liability Company is a Private Company, adequate for small businesses or manufacturing sector, or a type of business that would want to operate without governmental interference. However, large corporations having their presence over numerous continents often choose to incorporate themselves into a Corporation. It is often seen that municipal and administrative divisions constitute a corporation because of the capacity and intensity of day to day involvement in the running of the organization’s taxation:

The most crucial and defining aspect that segregates a Limited Liability Company from a Corporation is taxation. a domestic Private Limited Liability Company in India is liable to pay twenty-five percent tax on its income for a turnover up to 250 crores and 30 percent beyond that, with additional taxations also applicable if the income crosses the thresholds specified by the Finance Act, amended every year. However, when it comes to corporations, they may liable to taxation as a company – that is a company that is not registered in India and has operatives and control outside India. A foreign company, however, will be taxed only on the income earned in India or that which arises in India.

In addition, there may be differences in legal compliances, expenses, and the processes of setting up, based on where the corporation is intended to be organized. The head office address and place of management may also affect the dynamics of taxation when it comes to international taxation of corporate profits.

While an LLP is adequate for small businesses or the manufacturing sector, Corporations are ideal for bigger or larger businesses. An LLP pays only 25 to 30% tax, depending on turnover, a corporation pays tax like a foreign company.

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How To Check If A Company Is Registered In India?

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The Ministry of Corporate Affairs (MCA) operates a government portal with details of all the companies incorporated in India. This is basically a directory that you can use to access the list and details of all the limited liability companies and partnerships (LLPs) in India. The portal publishes on MCA by publishing corporate data online. In addition to validating company data, there is also pricing information and company signature details.

This portal allows citizens to easily see company details such as registration status, registration number, company type, date of establishment, company fees, company directors, and more. In addition to these important data, the company’s balance sheet and other important documents, as well as annual financial statements, are also available on the website for an appropriate fee.

Steps to Check the Registration Status of a Company 

Step 1: First, log in to the Ministry of Corporate Affairs (MCA) official website to access the portal. The official link to the MCA website can be found here:

Step 2: After logging in to the homepage of the website. In the next step, select the MCA Services tab. When you select a tab, you will be prompted to open a drop-down menu. Similarly, the entire list of services appears in the drop-down list. The next step is to click on the View Company / LLP Master Data tab. 

Step 3: You will be redirected to the form you need to fill out in your company’s CIN. After entering the CIN, enter the capture code and click Submit. If you don’t have a company CIN number, you can also find it by clicking the search icon next to the Company / LLP Name field Highlighted in red.

You Can Also Click Here To Get Your Company Registration Today.

What is CIN?

The Corporate Identification Number (CIN) is a 21 digits alphanumerical code issued to a company upon registration by the Registrar of Companies (ROCs) situated in different states across India under the Ministry of Corporate Affairs (MCA). CIN is the company’s unique identification number and must be included in all forms that the company must submit to the MCA portal.

What is DIN?

DIN or Director Identification Number is a unique Identification Number assigned to a person appointed as a director of the company. A DIN can be obtained by filling out the Simplified Proforma for Incorporating Company Electronically (SPICe) form at the establishment of the company.

What is SPICe + Form?

Electronic Company Incorporation or SPICe + Simplified Proforma helps you embed your company in a single application:

Name reservation;

Applying for DIN assignment;

Start a new business. When

Assignment of PAN and TAN.

Forms combine many steps that were previously separate forms into a single process, making the company’s formation process time-efficient.

What is ROC?

The Registrar of Companies ( ROC ) is the office under the MCA, which handles the management of Indian companies. The  Registrar of Companies (ROCs) operates in all the major states/UT’s. The ROCs register companies across the states and the UTs, maintain a register of registered company records, and make this information accessible to the general public at set rates.

If you enter all the information correctly, the results page will display the following information: 

CIN/LLPIN/1A Ref No.

Company or LLP name

State in which company is operating

Registration date

Company status

ROC information and registration number of the company

Company category, for instance, a company limited by shares or guarantee or an unlimited company

Class of company (public or private company.)

The company authorized capital and the company paid capital 

Date of incorporation

Address and email of the company

The listing status of the company

Date of last annual general meeting and the status of the company

Other services

Company Fee Index: When borrowing from a bank or other financial institution, the company bears the fee. This section can be used to see if a company is borrowing a loan from a bank or other financial institution. In addition, it can detect the state of the generated charge, the height of the charge and the holder, and the address of the charge holder.

Company Signer Details: A list of company directors or LLP partners can be found by looking at the company signer details. In addition, you can see the director’s name, DIN status, director’s address, designation, appointment date, and digital signature status. Company balance sheets and other records and tax returns can also be accessed from the website at the appropriate fee.

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Is Partnership Registration Mandatory?

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Is Partnership Registration Mandatory To Register?

There is no need to register a partnership deed, in India. It is not mandatory to register a partnership firm under the provisions of the Partnership Act, 1932. Though, it is better to register a partnership firm. If the company is not registered, you will not be able to take advantage of the legal benefits granted to the company under Partnership Act 1932.

Establishing a partnership is easy because there are no complicated business procedures. Partnership Act 1932 regulates the registration of partnership companies in India. At least two people are required to register as a partnership company.

What is a Partnership?

A partnership firm is a widespread form of business constitution for businesses that are maintained, managed, and controlled by an Association of People for profit. Partnerships are relatively easy to form and are popular with small businesses in the unorganized sector. Partnerships are one of the most preferred ways to start a business in India because of their simplicity

Why Partnership Firm Registration is Important?

Under Part VII of the Indian Partnership Act, 1932 the registration of a partnership firm is not mandatory. Though, it can be done in order to avail of the benefits of Registration. It is the choice of the partners to register the firm and there are no consequences for non – registration.

You Can Also Click Here To Get Your Partnership Firm Registration Registration Today.

The following are the disadvantages of an unregistered firm:

 

• • Only a registered partner company can claim a set-off

 

• • An unregistered partnership cannot recover any amount owed by a third party if the amount in question is more than Rs. 100 /

 

• • Partners of an unregistered company may not sue another partner of the company or the company itself

What legal benefits do registered partnerships offer?

A registered company or partner may sue a third party for breach of contract. If the company is not registered, the partnership firm cannot file a case against the third party but the third party can file a claim against the firm. In addition, if a dispute arises with a third party, the unregistered company or its partner cannot claim set-off.

How much time is required to register a partnership?

Up to about 10 business days to register your partner company in India. However, the time required for issuance of the registration certificate may vary according to the regulations of the respective state. Registrations of associate companies are subject to different government processing times from state to state.

The following documents are required to register a partnership firm:

(a) Statement in Form 1 with the required fees

(b) A notarized certified true Copy of the Partnership Deed showing the following:

The firm-name,

The nature of business of the firm;

The location or principal place of business of the firm,

The name of any other place where the company carries out its activities,

Date of joining of each partner to the company,

The full name and permanent addresses of the partners, and

The term of the firm.

(c) Proof of ownership or rental/lease of the place of your business.

The application must sign all the partners of the firm. It must also be attested by an affidavit in the prescribed manner.

All of these must be filed with the state business registry. The registrar will then issue a registration certificate and a copy must be issued to all partners. In addition, separate registration with the income tax department is required to avoid future troubles and must have a PAN card and a bank account in the name of the partnership and a bank account.

Can the Certificate of Registration be revoked?

In a sense, a partnership certification of incorporation can be cancelled, at the time of dissolution. Dissolution may occur automatically if all partners or all but partners except one partner are declared bankrupt or if the firm is engaging in illegal activities.

When do partners need to apply for partnership company registration?

A partnership firm can be registered at the time of its establishment or even subsequently at any time thereafter. However, it is recommended to get the firm registered immediately after the business start, for availing the rights that can be enjoyed only by a registered firm

Right not to be affected by refusal to register as a business partner 

1. The right of a partner to file a lawsuit for the dissolution of the firm or for the accounts of a dissolved firm or to implement any right or power to understand the property of a dissolved firm.

2. The power of an official assignee or recipients to understand the property of a bankrupt partner. 

3. The rights of the firm, or its partners, have no place in business in India.

4. Claims or offsets within which the claim doesn’t exceed rupees hundred.

5. The right of third parties to sue the unregistered firm or its partners.

6. The right to file a lawsuit against a third party for infringement of a patent right

Conclusion.

The Indian Partnership Act, 1932 guarantees the registration of a partnership firm without making it obligatory. It’s not mandatory to register a partnership firm but a firm can enjoy many advantages that the Partnership Act provides upon its registration. Therefore, the registration of a partnership firm protects the firm and its partners from the effects that it might have if it’s not registered.

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Sole Proprietorship; Features, Merits, And Demerits

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Sole Proprietorship is Said to be one of the oldest and most traditional entities in India, a sole proprietorship is very common. For e.g, grocers, chemists, etc are all sole proprietors. here, we shall take a brief look at sole proprietorship.

What Is The Meaning of Sole Proprietorship And what Are Its Characteristics? 

A sole proprietorship means a business managed and owned by one man called the only or sole proprietor, or otherwise simply put in as “one-man business organization”. The concept of the corporate or company and the owner being two distinct legal entities doesn’t hold in the case of a sole proprietorship.

The business and the man are the same, and it’s not a separate legal entity. MSME Government is the originator who is filling online Proprietorship Firm Registration in India. A sole proprietorship usually shouldn’t be incorporated or registered. Therefore, it’s considered to be the simplest form of business organization and it is commonly referred to run a small or medium scale business. It is easy to line up and also the cost is nominal. 

The  features of a sole proprietorship are as follows: 

1. Less legal formalities:

There’s no separate law to govern a sole proprietorship, therefore, not many rules and regulations are applicable. The most important plus point is that it doesn’t require incorporation or registration of any kind. All you need to have for a sole proprietorship is a license. similar to incorporation, even in the case of termination of the business, there are not any legal technicalities involved. Therefore, it is a business that is hassle-free.

2. Unlimited liability:

Because a sole proprietorship doesn’t differentiate between a business and its owner, the liability is unlimited in nature. If the business is unable to meet or satisfy its own liabilities, it’ll fall upon the proprietor to pay them. All of his personal assets (like his car, house, other properties, etc) may have to be sold to meet or satisfy the liabilities of the business. This can be often seen as a disadvantage.

3. Risk and Profit:

Because a sole proprietorship is marked by the unlimited liability of the proprietor, the owner becomes the only risk bearer within the business. Since he’s the only sole or one financially invested within the company, he must also bear all the risks. If the business suffers losses or fails he will be the one affected. On the other side, irrespective of the scale of profit, it all goes to the pocket of the sole owner of the company. There’s no obligation on him to share his profits with anyone as technically there is nobody else but himself in the managerial positions of the corporate. 

4. No separate identity:

Speaking legally, in the case of a sole proprietorship, there’s no difference between the identity of the business and the owner, it’s one and therefore the same. Therefore, the owner will be held responsible for all transactions of the business and activities. In legal terms, the company and the owner are one and the same. 

5. Continuity:

The continuity of the business is entirely dependent on the life of the owner. If the owner dies, retires, is imprisoned, or bankrupt. In most such cases, the proprietorship will cease to exist, and also the business will come to an end. 

Advantages of a sole proprietorship

1. Full control:

Complete control of the whole business, allowing for a fast decision-making process and full freedom to do business according to their own wishes

2. No legal formalities:

Legal technicalities are minimum to the extent that there’s no law that needs a sole proprietorship to publish its financial accounts or any other such documents to members of the public. This enables the business a great and excellent deal of confidentiality which is sometimes important within the business world

3. Maximum benefits:

The owner derives the max. incentive from the business. He doesn’t have to share any of his profits. That the work he puts into the business is totally reciprocated in incentives. 

4. No unnecessary procedures:

Not many people are involved and thus it cuts out the procedures of hierarchy generally present in a corporate. Single-handedly managing your business has its own advantages such as you aren’t answerable to anyone nor you are responsible to share your profit or ask someone to bear the loss for you. 

Disadvantages of Sole  proprietorship

1. On the other side of having all the profit to yourself, is that in the case of any loss suffered by the business, you are the only person who has to bear the loss of the company. In legal terms, you have got unlimited liability to make good the loss suffered by the enterprise. Therefore, if a business fails, in order to recover from the loss, you will have to keep at stake all your personal assets and wealth.

2. Moreover, because it’s a one-man company the capital investment is also low. In certain cases, the owner’s money and personal savings he can borrow may not be sufficient to expand the business. Banks and financial institutions are also wary of lending to sole-proprietorships for the risk involved and limited guarantors.

3. There is a great and excellent deal of risk attached to the life of the business entity because it is entirely attached to its owner therefore, if the owner is incapacitated in any way it has a negative effect on the business, and it may even lead to the termination of the business. A sole proprietorship cannot continue without its proprietor.

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One Person Company

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A one person company (OPC) is best suited to those who wish to be solo entrepreneurs. Sole proprietorships, interestingly, offer a similar benefit. However, unlike sole proprietorships, an OPC offers limited liability and therefore status of a separate entity, together with an improved standing within the market. One Person Company was enforced in India through the Companies Act 2013. Section 2(62) defines OPC as a Company that has just one person as a member.

He’s the shareholder and also the Director at the same time. One person company (OPC) means a company formed with just one (single) person as a member, unlike the standard manner of getting a minimum of two members. So, an OPC is effectively a company that has just one shareholder as its member. In an exceedingly Private Company, a minimum of two Directors and two Members are required whereas in a Public Company, a minimum of three Directors and a minimum of seven members.

A single person couldn’t incorporate a Company previously. Before the enforcement of the Companies Act, 2013, a single person couldn’t establish a company. If an individual wanted to establish his business, he/she could opt just for a sole proprietorship as there had to be a minimum of two directors and two members to establish a company.

You Can Also Click Here To Get Your OPC Registration Today.

Advantages Of One Person Company

Legal Status

The OPC obtains a separate legal entity status from the member. The separate legal entity of the OPC gives protection to the individual who has combined it. The liability of the member is limited to his/her shares, and he/she isn’t personally liable for the loss of the company.  Hence, the creditors can take legal action against the OPC and not the member or director. An OPC will have its own separate property because it gains its own identity and functions as a separate legal entity. The OPC will become the owner of its assets, and therefore the members won’t have any insurable rights within the assets of the company.

Transferability Of Shares:

OPC has just one shareholder. The difficulty of transferring a part of the share doesn’t arise in any respect because if it’s done, the company will cease to be a “one person” company. Transferring all the shares is also not practicable as it’ll change the complete structure of the company because the owner of the company is changing. The issue has not yet been addressed, and interpretation of the law may provide us with the reason that in an OPC, transfer of share isn’t allowed.

Easy To Obtain Funds

Since OPC is a private company, it’s easy to go for fundraising through venture capitals, angel investors, incubators, etc. The Banks and therefore the Financial Institutions prefer to grant loans to a company instead of a proprietorship firm. The legality of this sort of business, and also the perpetual succession clause, makes it popular among banks and financial institutions. Thus, it becomes easy to get funds.

Fewer Compliances

The Companies Act, 2013 provides certain exceptions to the OPC with respect to compliances. The OPC needn’t prepare the cash flow statement. The company secretary needn’t sign the books of accounts and annual returns and be signed only by the director.

Easy Incorporation

It’s easy to include OPC as just one member and one nominee are required for its incorporation. The member may be the director also. The minimum authorized capital for including OPC is Rs.one lakh but there’s no minimum paid-up capital necessity. Thus, it’s easy to incorporate as compared to the other kinds of companies.

Easy To Manage

When one person can establish and run the OPC, it becomes easy to manage its matters. It’s easy to form decisions, and also the decision-making process is quick. The standard and special resolutions will be passed by the member easily by entering them into the minute book and signed by the sole member. Thus, running and managing the company is simple as there won’t be any conflict or delay within the company.

Perpetual Succession

The OPC has the feature of perpetual succession even after there’s only 1 member. While incorporating the OPC, the single-member has to appoint a nominee. Upon the member’s death, the nominee will run the company within the member’s place. The Companies Act also provides for an individual, nominated by the stakeholder, to require over the wheels of the company in the event of the death or inability of the said stakeholder. Furthermore, this permits the OPC to own never-ending life beyond that of the founding director.

Factor	OPC	Sole Proprietorship
Distinction in ownership	Owner & business are considered as 2 separate entities	Owner & business is defined as a single entity
Liability	Limited to his/her investment	Unlimited liability
Taxation	Registered as a Private limited company & hence taxed under Income Tax Act for Private companies	Treated as owner’s individual income
Members	Only 1 member or shareholder	Only 1 proprietor
Profit/Loss	Profit/Loss belongs to the single-member	Profit/Loss to the single proprietor
Management	Easy to manage	Easy to manage

Who can be a member of an OPC?

Only an individual who is an Indian citizen and who resides in India is eligible to act as a member and a nominee of an OPC. For the purposes mentioned above, the term “resident of India” means a person who has stayed in India for a period of at least 182 days during the last fiscal year.

Who can’t form an OPC?

Minors, foreigners, citizens, Non-Resident, and contractually incompetent persons are not eligible to become a member.

Can a person be a member of multiple OPCs?

No, only one person can be a member of only one OPC.

Conclusion

The owner is completely the most important authority of OPC. Registering this type of company brings a great number of benefits to OPC. An OPC can only be registered as a Limited Liability Company. All the provisions applicable to private companies will exist on OPC unless it is excluded by relevant law or regulation. Finaxis shall be at your clearance if you want to establish/incorporate any company. If you have any queries/questions, please feel free to contact us.

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