Beginning a non-profit organization and assisting people is a magnanimous gesture, however, devoid of an organized form, such benevolence will not last too long. So, the ministry of corporate affairs’ decision to give a “company-like” infrastructure to manage non profit ideals was a step in the right direction. Called Section 8 Company, it has facilitated the entry of various good samaritans to continue with their good deeds.
However, the question remains, why should you choose Section 8 Company? What are the benefits? Before getting into these things let us understand this Section 8 Company.
What do you mean by a Section 8 Company?
A Section 8 Company happens to be a kind of business entity in India whose sole aim is to popularize the arenas such as science, arts, commerce, religion, environment conversation, social welfare and other charitable matters. The profits gained by such a company cannot be meant to be distributed among the members/directors, but utilized to promote the above-mentioned domains.
Reasons to turn Non-Profit Organization into a Section 8 Company
A Section 8 Company apart from providing a proper form to a generous initiative, also provides the advantages you require to aid the number of people.
Benefits of Section 8 Company registration:
Tax benefits: The government gives various tax sops to a Section 8 Company. These are certain sections under which the company avails those:
Section 80G: As per this section, the donors pertaining to a section 8 company seek rebate of up to 50% of the donations given.
Section 11: Under this section, Section 8 Companies can gain deductions of expenses from income.
No least capital needed: In case you are not having any money (apart from the registration fees), you can establish your Section 8 Company comfortably.
A Different Person: Upon incorporation, a Section 8 Company turns an entity which is distinct from its directors.
Reliable: In case your organization has a legal standing of a Section 8 Company, it automatically turns very reliable in the eyes of people.
No Stamp duty for registration: You are not required to incur the cost of stamp duty of Section 8 Company registration.
To give a simple explanation of this legal jargon: Making a non-profit organization into a Section 8 Company turns it better and trustworthy.
The method of Registering a Section 8 Company
The Section 8 Company registration procedure is very convenient. With the procedure being largely online, majority of business registration personnel will be able to assist you in setting up your company within a week or 10 days at most:
Think about the name of your Section 8 Company: Select a different name that would strike a chord among people.
Provide the documents needed:
ID proof, address proof and photo IDs of the directors/members
Address proof of the registered office space. In case you are not having a conventional office to begin your non-profit organization, you can select your own home as the office.
Digital Signature Certificate
Director Identification Number
Draft MOA and AOA: MOA or Memorandum of Association mentions the goals of your Section 8 Company. The AOA or Article of Association explains the rules and regulations of your Section 8 Company.
File the application of Section 8 Company Registration: After providing the documents and drafting the legal articles, you must consult a business professional. They can assist you file and provide your application online at the MCA website.
Certificate of Incorporation: Once the Registrar gets your application, they will evaluate the same for perfection. In case of any issue in your application, you’ll be intimated and have to repeat the entire procedure. In case they accept your application, you’ll get a certificate of incorporation, a document substantiating that your Section 8 Company is set up.
Count on us
In case you are again having queries regarding Section 8 Companyand are pondering over starting such a company our team can help you out. Trust our expertise and experience to turn your dream into reality.
Copyright happens to be the sole right of ownership of the creator for their piece of work. In order to legalize copyright, registration is a must. While registering, if there are any objections in the claim of ownership or in the event of any discrepancies in the application, the applicant will be duly informed. To the same, the applicant needs to respond to the objection pertaining to copyright. This write up helps you in replying to such a notice.
Method of Registration
The Copyright Act, 1957 and the Copyright Rules, 2013 guide the Copyright Registration procedure in India. Any real or authentic or original artistic endeavor, be it cinematographic film or music composition or literary/dramatic work or sound recording or software, can be sought protection from violation through copyright, however, the work must be the result of your organic creation. The necessary fee has to be part of the application meant for registration. Also, the application should have the essential signatures and Power(s) of Attorney.
As for objections, 30 days waiting period applies, post filing. In case of no objections, the authority will forward the application to a scrutinizer. The registration process comes to an end with the scrutinizer not finding any hiccups in the application.
The whole process can take 8-9 months, depending on objections and discrepancies.
Objections and Inconsistencies
A copyright objection comes up if a third-party files an application saying the work resembles an old or already existing idea belonging to them. Both the parties then want a reply to copyright objection to clarify the issues raised, and get the outcomes in letters. In some cases, the Registrar may call for a hearing where the registration could either be accepted or rejected. The applicant then waits for 30 days of submission for any objection(s) regarding the work.
A copyright discrepancy occurs when the copyright department finds causes to put a query on the application in the form of letters to the applicant in exchange for an explanation during the course of the examination. An objection could be hoisted for a lot of reasons such as no uniqueness or any wrong particulars being identified by the copyright evaluator.
Replying to an Objection/Discrepancy is a must
After a detailed scrutiny, the Registrar tells the applicant about the presence of objection(s), if any, and seeks documents to confront the same. Also, it is mandated by law to file a query to the copyright objection letter. In case of no response, the Registrar could annul the copyright application and term it ‘rejected’. In order to bypass such rejections and get the legal rights to one’s work, a swift response is very essential.
The Response
The feedback to a copyright opposition or discrepancy letter happens to be a legal document. Writing the same needs fundamental legal knowledge and drafting skills. But, there are two manners, to respond – by the creator himself if requisite knowledge and skills needed to provide an explanation regarding their work are there or by getting the services of a legal team to do the same.
We suggest seeking professional help, as the response to an objection/discrepancy notice is a legal document and the ownership is at stake.
However, there is no basic structure with regard to drafting a response to a copyright objection letter, there are some things you should possess:
Attach documents with the reply
Copyright Registration Application Copy
Affidavit for the reply, if needed
Documents substantiating reply
Power of Attorney by the Applicant
Copy of discrepancy letter issued by the Registrar
Depending on whether or not the Registrar is happy with the supporting documents of the response letter, a hearing could be scheduled.
The reply warrants professionalism to the core as the result of the copyright objection can have severe consequences on your personal life. The reply given to copyright objection is only a formality and does not assure the registration of one’s copyright.
Also, while drafting the response, the creator has to check with the relevant department at the Registry to ensure that process is completed quickly. If an objection is filed, it takes up one month more to ascertain whether the copyright can be registered or not. Additionally, as getting copyright is critical to legally prove ownership, utmost caution is needed to ensure good outcome with the Copyright Application. Hence, do not hesitate to avail legal aid whenever required.
The Securities and Exchange Board of India (SEBI) has passed the SEBI (Credit Rating Agencies) Regulations, 1999 by the powers given under Section 30 read with Section 11 of the SEBI Act, 1992 on 07th July, 1999.
List of Amendments
SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001
SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2003
SEBI (Credit Rating Agencies) (Second Amendment) Regulations, 2003
SEBI India (Criteria for Fit and Proper Person) Regulations, 2004
SEBI (Intermediaries) Regulations, 2008
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2010
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2011
SEBI (Credit Rating Agencies) (Second Amendment) Regulations, 2011
SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2011
SEBI (Payment of Fees) (Amendment) Regulations, 2014
SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016
SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2018
Significant Definitions
Associate in respect of a credit rating agency that comprises a person who directly or indirectly, personally, or along with relatives, owns or possesses shares not less than 10% of the voting rights of the credit rating agency, or with regard to whom the credit rating agency, directly or indirectly, by itself, or together with other persons, owns or possesses shares having not less than ten percent of the voting rights, or most of the directors of which, own or control shares carrying not less than ten percent of the voting rights of the credit rating agency, or whose director, officer or employee is also a director, officer or employee of the credit rating agency.
Certificate means a certificate pertaining to registration given by the Board under these regulations or conditions.
Change in Control with regard to a credit rating agency as a body corporate, implying that, if its shares are listed on any authorized stock exchange, change in control as explained under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and in any other case, alteration in the controlling interest in the body corporate. Controlling interest in this context means an interest, direct or indirect, of minimum 51% of voting rights in the body corporate.
Client implies any person whose securities are rated by a credit rating agency.
Credit Rating Agency is a body corporate involved in the function of rating of securities given through public or rights issues.
Economic Offence is an offence to which the Economic Offences (Inapplicability of Limitations) Act, 1974 is applicable.
Fraud has the meaning similar to given under the Indian Contract Act, 1872.
Issuer happens to be a person whose securities are supposed to be rated by a credit rating agency.
Net Worth happens to be the total value of the paid up equity capital and free reserves (not including reserves carved out of revaluation), minus the cumulative value of accumulated losses and deferred expenditure not written off, comprising several expenses that have not been written off.
Rating is an opinion concerning securities, explained by way of standard symbols or in any other specified way, tasked by a credit rating agency and used by the issuer of such securities, to adhere to the condition mentioned by these regulations.
Rating Committee is a committee created by a credit rating agency to give rating to a security.
2. Registration of Credit Rating Agencies
2.1 Usual Process
1. Any person wanting to start any task as a credit rating agencyon or post the date of beginning of these regulations has to apply in writing to the Board for the issuance of a certificate of registration for the same.
2. The Board will not entertain an application unless the applicant is backed by a person from any of the following categories, which are a public financial institution, as mentioned under the Companies Act, 2013, a scheduled commercial bank included for the time being in the Second Schedule to the Reserve Bank of India Act, 1984, a foreign bank functioning in India with the stamp of the Reserve Bank of India, a foreign credit rating agency incorporated in a Financial Action Task Force (FATF) Member jurisdiction and recognized under their law, possessing at least 5 years experience in rating securities or any company or a body corporate, with regular total worth of at least INR 100 crores as per its audited annual accounts for the last 5 years before filing of the application with the Board for the issuance of certificate under these regulations.
Any application regarding a certificate, which is incomplete in every way or does not follow the requisite regulation or instructions given in Form A can be rejected by the Board. Prior to the rejection, the applicant should be provided a chance to do away with, within 30 days of the date of receipt of relevant communication, from the Board such objections as mentioned by the Board. The Board may, after giving adequate reason, extend the time for eliminating the objections by such further time, not exceeding 30 days, as the Board may deem fit to assist the applicant to do away with such objections.
3. The Board might want the applicant to provide such further information or clarification as the Board might consider fit, for the sake of processing the application.
4. The Board, if it feels like, might direct the applicant or its authorised representative to be present before the Board, for personal representation with regard to the grant of a certificate.
5. The Board, after finding the applicant to be eligible, needs to grant a certificate of registration in Form B and has to dispatch an intimation to the applicant. The certificate of registration granted will be in force till it is revoked or annulled by the Board.
6. The credit rating agency which has already been given certificate of registration by the Board, before the commencement of the SEBI(Change in Condition of Registration of Certain Intermediaries) (Amendment) Regulations, 2016 has to be deemed to have been granted a certificate of registration.
7. The grant of a certificate of registration totally hinges on registration fee payment as mentioned under Part A of Second Schedule in the way given in Part B.
In case, after looking into an application given, the Board feels that a certificate of registration cannot be given, it may, after providing the applicant a good chance of being heard, reject the application.
8. The Board’s decision of not giving a certificate of initial or permanent registration, as the case may be, has to be intimated by the Board to the applicant within 30 days of such decision, specifying reason for the same.
9. Any applicant unhappy with the decision of the Board to reject the application may, within a period of 30 days from the date of receipt by him of the intimation of rejection, apply to the Board in writing to consider the decision again.
10. When an application for reconsideration is given, the Board has to look at the application and inform the applicant its decision in writing, as early as possible.
2.2 Eligibility Aspects
1. The applicant is established and registered as a company under the Companies Act, 2013.
2. The applicant has, in its memorandum of association, mentioned rating activity as one of its chief objects.
3. The applicant must have at least net worth of INR 25 crores.
4. The applicant has sufficient infrastructure, to help it to offer rating services as per the provisions of the Act and these regulations.
5. The applicant and the promoters of the applicant, have professional ability, financial strength and good degree of fairness and honesty in business dealings, to the satisfaction of the Board.
6. Neither the applicant, nor its promoter, nor any director of the applicant or its promoter, should be involved in any legal proceeding regarding the securities market, which might have a negative effect on the interests of the investors.
7. Neither the applicant, nor its promoters, nor any director, of its promoter has at any time before been convicted of any offence regarding moral turpitude or any economic offence.
8.The applicant has employed persons with enough professional and other concerned experience to the contentment of the Board.
9. Neither the applicant, nor any person directly or indirectly linked with the applicant has before been rejected by the Board a certificate following these regulations or subjected to any proceedings for a contravention of the Act or of any rules or regulations made under the Act. For the sake of this clause, the expression directly or indirectly linked person implies any person who happens to be an associate, subsidiary, inter-connected or group company of the applicant or a company under the same management as the applicant.
10. The applicant, in every respect, has to be a healthy and proper person for the issuance of a certificate.
11. Certificate issued to the applicant has to be in sync with the interest of investors and the securities market.
12. The promoter of the credit rating agency, has a least shareholding of 26% in the credit rating agency.
2.3 Conditions Pertaining to Certificate of Registration
1. The credit rating agency must follow the provisions of the Act, the regulations created thereunder and the rules, directives, circulars and instructions given by the Board from time to time on the subject of credit rating.
2. Where any information or particulars given to the Board by a credit rating agency is turn out to be untrue or misleading in any material particular or has gone through a change later to its furnishing during the application for a certificate, the credit rating agency has to intimate the same to the Board in writing.
3. Where the credit rating agency seeks change in control, it should get beforehand approval of the Board for remaining to act similarly post the change.
4. The credit rating agency must, at every time keep a least cumulative worth of INR 25 crores (Given that a credit rating agency already registered with the Board under SEBI (Credit Rating Agencies) Regulations, 1999, having a collective worth of less than INR 25 crores, has to spike its net worth to the required amount within a period of 3 years from the date of notification of the SEBI (Credit Rating Agencies) (Amendment) Regulations 2018.
5. The promoter of the credit rating agency, has to have at least shareholding of 26% in the credit rating agency for a minimum period of 3 years from the date of issuance of registration by the Board.
6. A credit rating agency is not supposed to perform any activity other than the rating of securities provided via public or rights issue. Nothing in these regulations can bar a credit rating agency from involving in any other activity in so far as it may be needed by a financial sector regulator as specified under the Insolvency and Bankruptcy Code, 2016. In case a credit rating agency is into tasks other than the ones meant for a financial sector regulator, such activity has to be classified as a different entity within a period of 2 years from the date of notification of SEBI (Credit Rating Agencies) (Amendment) Regulations 2018.
3. General Obligations of Credit Rating Agencies
1. All credit rating agencies have to follow the Code of Conduct in the Third Schedule.
Every credit rating agency has to get into a written agreement with every client whose securities it seeks to rate, and all such agreements have to contain the rights and liabilities of each party with regard to the rating of securities in a specified form, the fee levied by the credit rating agency, the client must agree to a periodic review of the rating by the credit rating agency during the period of the rated instrument, the client must cooperate with the credit rating agency to enable the latter to ascertain, and upkeep, a genuine rating of the client’s securities and has to, especially provide to the latter, true, sufficient and timely information for the aim, the credit rating agency has to reveal the client, the rating given to the securities of the latter via usual procedures of dissemination, notwithstanding the acceptance of rating by the client, the client must agree to reveal, in the offer document, the rating given to the client’s listed securities by any credit rating agency in the last 3 years and any rating provided with regard to the client’s securities by any other credit rating agency, which was not accepted by the client and the client must acquire a rating for any issue of debt securities as per the concerned regulations.
2. Every credit rating agency must, during the lifetime of securities rated by it, regularly track the rating of such securities, till the rating is revoked.
3. Every credit rating agency must provide information related to freshly allotted ratings, and changes in previous rating precisely through press releases and websites, and, with regard to case of securities issued by listed companies, such information has to also be offered simultaneously to the relevantregional stock exchange and to every stock exchanges where the concerned securities are listed.
4. Every credit rating agency must perform periodic reviews of all published ratings during the validity of the securities, till the rating gets withdrawn.
If the client refuses to cooperate with the credit rating agency to enable the credit rating agency to follow its obligations, the credit rating agency must perform the review in line with the best available information or in the way as clarified by the Board from time to time. If due to lack of cooperation, a rating has been as per the best available information, the credit rating agency has to divulge the same to the investors.
5. A credit rating agency is not supposed to withdraw a rating till the obligations as per the security rated by it are outstanding, except where the company whose security is rated is closed or merged with another company, or as may be specified by the Board from time to time.
6. Every credit rating agency must draft apt procedures and systems for tracking the security trading by its employees in the securities of its clients, to avoid violating the SEBI (Insider Trading) Regulations, 1992, SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 1995 and other laws concerning trading of securities.
7. Every credit rating agency must publicize the contours of the relevant rating, along with the symbol and has to mention that the ratings do not signify suggestions to purchase, hold or sell any securities.
8. Every credit rating agency must provide to the general public, information regarding the reason of the ratings, which must encompass an evaluation of the several factors validating a favourable assessment, and factors prompting a risk.
If any information is sought for by the Board from a credit rating agency regarding these regulations, including any report related to its activities, the credit rating agency must furnish the information to the Board within a particular time mentioned by the Board or in case the period is not specified, then within a reasonable time.
9. Every credit rating agency must, at the end of each accounting period, provide to the Board copies of its balance sheet and profit and loss account.
10. Every credit rating agency must follow such guidelines, directives, circulars and instructions issued by the Board from time to time, on the subject of credit rating.
11. Every credit rating agency must elect a compliance officer who will be tasked with tracking the compliance of the Act, rules and regulations, notifications, guidelines, instructions etc. given by the Board or the Central Government.
12. The compliance officer must quickly and independently report to the Board, any violation seen by him
13. Every credit rating agency must maintain, for at least 5 years, the books of accounts, records and documents, which must have a copy of its balance sheet, as on the conclusion of each accounting period, a copy of its profit and loss account for every accounting period, a copy of the auditor’s report on its accounts for each accounting period, a copy of the agreement entered into, with each client, information provided by every client, correspondence with each client, ratings given to various securities such as upgradation and downgradation (if any) of the ratings so allotted, rating notes looked at by the rating committee, record of decisions of the rating committee, letter allotting rating and details of fees levied for rating and such other records as the Board may specify from time to time.
14. Every credit rating agency must inform the Board, the location where the books of account, records and documents needed to be kept as per these regulations are being maintained.
15. Every credit rating agency must, within 2 months from the date of the auditor’s report, take measures to correct the flaws if any, occurred in the auditor’s report, insofar as they relate to the activity pertaining to the rating of securities.
16. Every credit rating agency has to consider, as confidential, information given to it by the client and no credit rating agency should divulge the same to anyone, except in cases such disclosure is needed or allowed under or any law for the time being in force.
17. Every credit rating agency must specify the rating method, file a copy of the same with the Board for record and file with the Board any changes or inclusions made therein from time to time.
18. Every credit rating agency must, in every case, adhere to a good rating method.
19. Every credit rating agency should have professional rating committees with members, who are sufficiently qualified and aware to provide a rating.
20.All rating decisions, including the ones pertaining to changes in rating, have to be made by the rating committee.
21. Every credit rating agency must haveanalysts capable to perform a rating assignment.
22. Every credit rating agency must intimate the Board about new rating instruments or symbols brought in by it.
23. Every credit rating agency must, while rating a security, be fully aware to make sure that the rating provided by the credit rating agency is fair and apt.
24. A credit rating agency is not allowed to rate securities issued by it.
Rating definition, and the form for a particular rating product, cannot be altered by a credit rating agency, without informing the Board in advance.
25. A credit rating agency has to disclose to the concerned stock exchange through press releases and websites for general investors, the rating assigned to the securities of a client, after periodic review, including changes in rating, if any.
26. A credit rating agency is not supposed to, directly or indirectly, hold 10% or more shareholding and/ or voting rights in any other credit rating agency or represent the Board of any other credit rating agency. A credit rating agency may, with the beforehand accent of the Board, obtain shares and/ or voting rights beyond 10% in any other credit rating agency only if such procurement leads to change in control in the credit rating agency whose shares are being bought over. According to the prior approval sought by the acquirer, the Board may consent to the acquisition keeping in mind the interest of investors, market integrity and stability.
27. A shareholder with 10% or more shares and/ or voting rights in a credit rating agency is not supposed to hold 10% or more shares and/ or voting rights, directly or indirectly, in any other credit rating agency. The said limitation is not meant for holdings by Pension Funds, Insurance Schemes and Mutual Fund Schemes.
4. Limitation pertaining to Securities’ rating Given by Promoters or Certain Other Persons
No credit rating agency is allowed to rate security issued by its promoter.
If the promoter happens to be a lending institution, its Chairman, director or employee cannot be a Chairman, director or employee of the credit rating agencyor its rating committee.
No credit rating agency is permitted to rate a security issued by an enterprise, which happens to be a borrower of its promoter or a subsidiary of its promoter or an associate of its promoter, if there are similar Chairman, Directors between credit rating agency and these entities or there are common employees or common Chairman, Directors, Employees on the rating committee.
No credit rating agency is supposed to rate a security issued by its associate or subsidiary, in case the credit rating agency or its rating committee has a Chairman, director or employee who is also a Chairman, director or employee of any such entity. The credit rating agency may, rate a security issued by its associate with a usual independent director with it or rating committee only if the independent director in question is not a participant in the discussion on rating decisions and the credit rating agency reveals in the rating announcement of such associate (regarding the presence of common independent director) on its Board or of its rating committee, and that the common independent director has not participated in the rating procedure or in the meeting of its Board of Directors or in the meeting of the rating committee, when the securities rating of such associate was deliberated upon.
These prohibitions will not apply to securities whose rating has been already performed by a credit rating agency prior to the enactment of these regulations, and such securities may, depending on the provisions of these regulations, remain to be rated, without the need of following the limitations enforced by the regulations contained here.
5. Powers vested with the Board
Power to issue certificate of registration to a credit rating agency.
Power to not issue a certificate of registration to a credit rating agency.
Power to elect inspecting officers to perform enquiries and inspections.
Power to issue and give notice prior inspection or probe.
Power to take action in line with enquiry, inspection or investigation report.
Power to punish a credit rating agency for contravention.
6. Schedule I
Form A
Application for Grant of Certificate of Registration
Applicant’s Name
CONTACT NAME:
TELEPHONE NO:
FAX NO:
INSTRUCTIONS FOR FILLING UP FORM
Applicants must present to the Board, a finished application form along with relevant documents. The Supporting documents has to be duly attested by a notary public.
This application form must be filled as per the regulations.
Application for registration will be entertained, provided it is complete.
All answers must be keyed in.
Information to be given in detail may be provided on different sheets which should be attached to the application form.
All signatures on the application must be original.
All pages in the form and every additional sheet has to be signed by the authorised signatory of the applicant.
DETAILS OF THE APPLICANT
Name, address of the registered office, address for correspondence, telephone numbers, fax numbers and names of the contact person of the company. Address of branch offices, if any.
Date of incorporation of the Applicant company (enclose certificate of incorporation and memorandum and articles of association). Mention Objects (Main & Ancillary) of the Applicant company, Authorized, issued, subscribed and paid up capital.
Category regarding the Applicant company: Limited company – Private/Public or Unlimited company.
If listed, names of Stock Exchanges and latest share price to be given.
Category pertaining to the Applicant company ie.Company already in the business of performing rating activities or Company wanting to take up rating activities for the first time.
ELIGIBILITY CRITERIA
Category regarding promoters of the Applicant company.
Name of the promoters and their shareholding in the company.
Enclose a Chartered Accountant’s certificate notifying the regular net worth of INR 100 crores for 5 years, in case the promoter.
Total worth of the company according to last audited accounts not before 3 months from the date of application.
Enclose a Chartered Accountant’s certificate specifying the same.
Details OF DIRECTORS/ KEY PERSONNEL
Particulars of Directors of the company, which must have name, qualification, experience, shareholding in the company and directorship in other companies.
Particulars of Chief Personnel of the company, which must have name, designation in the company, qualification, past positions held, experience, date of appointment in the company and functional zones.
INFRASTRUCTURE
Details pertaining to infrastructure such as computing facilities, provisions for research and databases available with the company and whether the current infrastructure is sufficient to sustain the rating activities said to be undertaken by the company. Any more plan for additional/ improved infrastructure must be indicated.
MAJOR SHAREHOLDERS
List of major shareholders (holding 5% and above of applicant directly or along with associates) Shareholding as on: ______________
Name of Shareholder
Number of Shares Held
Percentage of Total Paid Up Capital of the Company
ASSOCIATE CONCERNS
Details of associate companies/concerns which must contain name, address, kind of activity tackled, kind of interest of the Applicant company in the associate, nature of inclination of promoters of the applicant in the associate.
If the Board has given/ refused registration as a credit rating agency to any associate of the applicant. Give particulars such as date of application, date of refusal/registration, reasons for refusal etc.
BUSINESS INFO REGARDING THE COMPANY
History, major events and current activities. Particulars of Exposure in Credit Rating jobs and other related activities.
If the company is planning to involve in credit rating activities for the first time, the business plan of the company with estimated volume of activities and revenue for which registration is sought to be specifically given.
Securities Rating activities handled during the last three years as per the table below-
Name of Client
Type of Security
Size of Issue
Year of Issue
Security/ Instrument Rated
Listed/ Unlisted
FINANCIAL INFORMATION ABOUT THE APPLICANT
Net Worth (INR in Lakhs)
Items
Year before the Preceding Year of the Current Year
1. Please attach audited annual accounts for the last 3 years. Where unaudited reports are given, provide reasons. If the least net worth criteria has been obliged after last audited annual accounts, audited statement of accounts of a later date has to be submitted.
Name and Address of the Principal bankers of the Applicant company.
Name and address of the Auditors.
OTHER INFORMATION
Particulars of all pending litigations against the applicant company, directors and employees.
Kind of dispute, name of the party and status.
Accusation or involvement in any fraud or economic offences by the applicant or any of its Directors, or Key Managerial Personnel, in the last 3 years.
DECLARATION
Give the following declarations signed by two directors:
I/We hereby apply for registration.
I/We warrant that I/We have sincerely and entirely answered the questions above and given all the information which might reasonably be considered relevant for the purposes of my registration. I/We declare that the information supplied in the application form is complete and correct.
For and on behalf of
(Name of Applicant)
Director Director
Name in Block Letters Name in Block Letters
Date Date
Form B
Certificate of Registration
In exercise of the powers conferred by sub-section (1) of Section 12 of the Securities and Exchange Board of India Act, 1992 made thereunder the Board hereby grants a certificate of registration to ___as a credit rating agency in accordance with and subject to the conditions in the regulations to carry out the activity of the credit rating agency.
Registration Code for the credit rating agency is CRA/ / /
This certificate of registration is valid unless it is suspended or cancelled by the Board.
Place:
Date:
By
Order
Sd/-
For and behalf of
Securities and Exchange Board of India
7. Schedule II
Fees
Part A
Amount to be Paid as Fees
1.
Application Fee for Grant of Registration
INR 50,000
2.
Registration Fee
INR 26,66,700
3.
Recurring Registration Fee (For Every 3 Years)
INR 15,00,000
PART B
A credit rating agencywhich has been given a certificate of registration, needs to pay fees, as mentioned under Part A, within 15 days from the date of receipt of intimation from the Board.
A credit rating agency which has been given certificate of registration, to maintain its registration, must pay fee as specified in Part A, for every 3 years from the sixth year of the date of grant of certificate of registration or of the date of grant of certificate of initial registration given before the commencement of the SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016, as the case be.
The fee mentioned above, must be paid by directly crediting in the bank account via NEFT/RTGS/IMPS or any other mode permitted by the Reserve Bank of India or through a bank draft in favour of Securities and Exchange Board of India payable at Mumbai.
8. Schedule III
Model of Conduct
1. A credit rating agency must go the whole hog toprotect the interests of investors.
2. A credit rating agency, while carrying out its business, must observe high standards of honesty, sincerity and fairness in the performance of its business.
3. A credit rating agency must meet its conditions promptly, ethically and professionally.
4. A credit rating agency must follow due diligence, ensure good care and portray independent professional judgment to accomplish and upkeep objectivity and independence in the rating procedure.
5. A credit rating agency must have adequate knowledge to rate. It has to also maintain records to back its calls.
6. A credit rating agency must have a rating process that meets global rating standards and should be consistent.
7. A credit rating agency cannot involve in any kind of unethical business practice or can it take away the clients of any other rating agency by promising a higher rating.
A credit rating agency must monitor all critical changes regarding the client companies and has to build efficient and responsive systems to get timely and accurate ratings. Also, a credit rating agency has to also observe closely all concerned factors that might dent the creditworthiness of the issuers.
8. A credit rating agency has to reveal its rating procedure to clients, users and the public.
9. A credit rating agency must, wherever required, divulge to the clients, possible point of conflict of duties and interests, which can damage its capacity to give fair, objective and unbiased ratings. It has to weed out any conflict of interest existing between any member of its rating committee taking part in the rating evaluation, and that of its client.
10. A credit rating agency is not allowed to give any boisterous statement, whether oral or written, to the client either regarding its qualification or its ability to provide certain services or its achievements related to the services given to other clients.
11. A credit rating agency should not provide any false statement, conceal any material fact or make any manipulations in any documents, reports, papers or information given to the Board, stock exchange or public at large.
12. A credit rating agency has to make sure that the Board is properly intimated about any action, legal proceedings etc., taken against it alleging any material breach or non-compliance of any law, rules, regulations and directions of the Board or of any other regulatory body.
13. A credit rating agency must have good knowledge and ability, and follow the provisions of the Act, regulations and circulars, which may be applicable and relating to the activities performed by the credit rating agency. The credit rating agency has to also follow the award of the Ombudsman passed under the SEBI (Ombudsman) Regulations, 2003.
14. A credit rating agency must ensure the avoidance of misuse of any classified information including advance knowledge of rating decisions or changes .
15. A credit rating agency or any of his employees cannot is not supposed to provide, directly or indirectly any investment suggestion regarding any security in the publicly accessible media. A credit rating agency should not provide fee-oriented services to the rated entities, beyond credit ratings and research.
16. A credit rating agency must make sure any modification in registration status/any penal action taken by the Board or any material change in financials which may drastically affect the interests of clients/investors is properly communicated to the clients and any business remaining outstanding is transferred to another registered person as per any instructions of the affected clients/investors.
17. A credit rating agency should detach ties between its credit rating activity and any other activity.
18. A credit rating agency must draft its own internal code of conduct for looking after its internal operations and prescribe its protocols regarding proper conduct for its employees and officers in performing their duties inside the credit rating agency and as a part of the industry. Such a code should be expanded to the upkeep of professional integrity and standards, confidentiality, objectivity, avoidance of conflict of interests, disclosure of shareholdings and interests, etc. Such a code must make provisions for procedures and guidelines regarding the set up and conduct of rating committees and duties of the officers and employees serving on such committees.
19. A credit rating agency must offer enough freedom and authority to its compliance officer to perform his duties ably.
20. A credit rating agency must ensure that the senior management, especially decision makers get all concerned information regarding the business in a timely manner.
21. A credit rating agency must enforce excellent corporate policies and governance
22. A credit rating agency should not generally usually and especially regarding issue of securities rated by it, be party to or make efforts to create fake market, price fixing or manipulation or disclosing any yet to be published price sensitive information with regard to securities which are listed and proposed to be listed in any stock exchange, unless needed, as reason for the rating provided.
Winding-up happens to be a circumstance where the life of a company has ended and property is administered so as to benefit the shareholders & creditors.
Form of Winding-Up
By court ( NCLT)/ mandatory Winding-up
Voluntary Winding-up (provisions regarding voluntary winding-up have been abrogated and has now been moved to Insolvency & Bankruptcy code).
Voluntary Winding-Up: The Insolvency and Bankruptcy Code, 2016 regarding re-organization and insolvency resolution of companies, partnership firms and individuals in a timely way.
The Insolvency and Bankruptcy Code, 2016 pertains to substances regarding the insolvency and dissolving of a company where the least amount of the defaulting is Rupees one lakh at present but it might be hiked up to Rupees one crore by the Government, via notification).
Compulsory (Tribunal) winding up
The winding up procedure is carried out by the tribunal. Also called tribunal winding up, this procedure is single-handedly performed by the tribunal and the company has minor or zilch say in the process. Hence, a company will be reduced to a mere spectator and will not follow any directions.
Conditions regarding voluntary wind up:
If the Company is not able to pay back its debts.
A special resolution will be passed by the company for closure.
If a company acts contrary to the principles/interests/sovereignty of the nation.
If the company has jeopardized ties with other nations.
If financial statements or annual returns for the last 5 years has not been filed.
If the tribunal deems it fit and fine to dissolve the company.
If the company has been involved in illegal business or illicit practices.
Any member, part of the founding committee of the firm, is found guilty of wrongdoing.
By transfer of a company’s undertaking to some other as per a scheme of reconstruction or amalgamation, in such a scenario, the transfer or entity will be dissolved by an order of the Tribunal without wind up; and
With the liquidation of the company, whereby assets of the company are liquidated and given for paying its liabilities. The rest, if any, is distributed among the members of the company, in line with their rights.
The prepaid payment wallets are also known as PPIs and they happen to be the instruments having fiscal worth against which the goods and services can be bought and funds can also be transferred. The monetary worth injected into the prepaid payment wallets turns out to be the sum that the holder has paid towards it either via cash or debit to a bank account or credit card. The prepaid payment wallets have become very well-known for the last few years as they can be used with ease in other manners for transactions. The transactions performed by them are clear, responsible, and easy to use. The prepaid payment wallets can also be called e-wallets. For the assessing and the permitting the transactions between the various prepaid payment instruments, the Reserve Bank of India has given certain recommendations.
The prepaid mechanisms can be issued in these forms:
Smart Cards
Internet Accounts
Internet Wallets
Wallet Accounts
Magnetic Strip Cards
Paper Vouchers
And any other thing that can be utilized to obtain the prepaid amount
TYPES OF PREPAID PAYMENT INSTRUMENTS
Closed Wallet or Closed Prepaid Payment Instrument –
These are the types of PPIs that are issued to its consumers by a company specifically for the purpose of purchasing goods solely of that company. This kind of PPI can be utilized for buying goods and services of that particular company which has issued it. For example – Reliance Supermarkets, etc.
Semi Closed wallet or Semi Closed Prepaid Payment Instrument –
With regard to this type of the prepaid payment instruments in which the holder
Semi Open Wallet or Semi Open Prepaid Payment Instrument –
These instruments are to be used by the holders for purchasing goods and services at merchant spots accepting cards. Cash withdrawal and redemption are not possible with such kinds of instruments.
Open Wallets –
These happen to be the prepaid payment mechanisms used to obtain goods and services at anywhere and the holders have the rights to withdraw cash from ATMs.
Cross Border Transactions –
As per the guidelines of the RBI the prepaid payment wallets do not apply to individuals who have the approval to issue the Foreign Exchange denominated prepaid payment instruments, in sync with the provisions of Foreign Exchange and Management Act. The transaction limit for cross border transactions is kept at INR 5,000.
ADVANTAGES OF E-PAYMENT WALLET
1. It is a secure mode of payment.
2. It can save time as all the bills regarding telephone, electricity, mobile etc. can be paid online.
3. It gives access for online deals from anywhere and any time.
4. These are fiscal transactions that are transparent and responsible to the issuer of e-wallet.
SUITABILITY ASPECTS FOR ISSUING PREPAID PAYMENT INSTRUMENTS
The Banks and the NBFCs can issue prepaid payment instruments only once after getting approval from the Reserve Bank of India
The entities apart from banks or NBFCs should have at least confirmed total worth of Rs. Fifteen crores, according to its last audited balance sheet.
For seeking approval, these entities need to make an application to the Reserve Bank of India.
A newly incorporated company has to submit a certificate regarding the present net worth along with its temporary balance sheet from its Chartered Accountant.
if any entity other than Banks and NBFCs is having the license for providing prepaid payment instrument prior to the Reserve Bank of India making it essential to have total worth of INR fifteen crores, such entity will have no option but to hike its net-worth legitimately to this limit before the end of September, 2020.
It is essential for the entity to be registered under the Company Act, 2013 or the Companies Act, 1956 to obtain the license from the RBI.
It is pertinent that the activity to function as a prepaid payment instrument the issuer is specified in the Object Clause of the Memorandum of Association of the company.
FACTORS SURROUNDING CAPITAL FOR ISSUE OF PREPAID PAYMENT INSTRUMENTS
While calculating the net worth of a company, the following things have to be a part of the net worth:
The Paid-up equity share capital
The Free Reserves
The Preference shares
The Share Premium Account
The Capital Reserves representing surplus
DOCUMENTS REQUIRED FOR GETTING THE PREPAID WALLET LICENSE
The Name of the entity
The Address Proof of entity’s registered office
The Constitution of the entity
The Entity’s certificate of incorporation
The chief business of the entity
The Information of the management
The Particular of Statutory Auditor of the entity
The latest authorized balance sheet of the company
The Names and Addresses of the Bankers of the Company
Any other crucial documents that may be required from time to time.
THE APPROVAL METHOD FOR APPLICATIONS GIVEN BY NON-BANKING ENTITIES
Step 1: A non-banking entity wanting the approval of RBI has to make an application in Form A according to the Regulation 3(2) of the Payment and Settlement System Regulations, 2008.
Step 2: The RBI will consider the suitability of the entity during the screening process.
Step 3: Post the eligibility, it is evaluated whether the company is sound financially and the assessment of the management of the company is performed for which opinion from regulators, government authorities, etc. is taken.
Step 4: Following this the applicant is examined on other factors that includes the potency of its customer service, overall capability, technical proficiency and other related requirements.
Step 5: If the company fails the suitability criteria, then the application will be rejected. The fee given by the company during the making of application shall not be refunded.
Step 6: If every essential condition is met by the company, it will be given the in-principle nod by the Reserve Bank of India, which shall be important for six months.
During the six months of the in-principle approval, the entity has to submit a proper System Audit Report. If the company is unable to furnish this report, its in-principle nod will automatically fade away.
Step 7: Post the approval, the company gets a Certificate of Authorization, which would remain in force for five years from the day it has been given a nod.
If the certificate of authorization has to be renewed, an application needs to be put in to the RBI three months before the expiry of the certificate. If there happens to be a problem in giving the application promptly, then the RBI reserves the rights to accept or reject the application of renewal.
Step 8: If an entity obtains the final approval, then it has to initiate its business operations within six months of obtaining the nod. If it cannot, then the approval will peter out.
However, a one time extra duration of six months is availed from the RBI by giving a written request beforehand mentioning a convincing reason obstructing the launch of business operations. The RBI has the right to accept or reject such requests for providing additional time.
Step 9: Those issuing prepaid payment instruments must document all the dealings undertaken via Prepaid Payment Instruments for a minimum of ten years. According to the suggestion of the RBI, this data has to be given either to the RBI or any other agencies, as required. The issuers of prepaid payment instruments also need to file Suspicious Transaction Reports (STRs) to FIU-IND (Financial Intelligence Unit-India).
EXTRA CONSENT REQUIRED BY THE NON-BANKING COMPANIES
If a non-banking company is given the Certificate of Authorization for providing prepaid payment instruments, then a written approval is needed of the RBI in following conditions:
If there has been any takeover or acquirement of authority of the company and the same has effected any change in management or not;
If due to an alteration in the management there has been a change in thirty percent directors of the company, excluding the independent directors. But beforehand written consent of the RBI will not be required for those directors re-elected on retirement via alternation.
LEGALITY OF THE PREPAID WALLET LICENSE
The prepaid payment instruments license is valid for at least one year from the day it is issued to the concerned holder. The PPI issuer is duty-bound to inform the holders regarding the expiry of the PPIs through either SMS or e-mail or post or any other means inside a reasonable time duration. The intimation pertaining to the expiry of the PPI has to be made in the holder’s chosen language as specified by him or her at the time of obtaining the PPI. In case the PPI lapses and the holder does not provide a renewal application for a new PPI, he or she can get a grace period of sixty days.
The Essential Commodities Act got amended by the Government of India in September 2020. The amendment in question took down the Essential Commodities Ordinance, 2020 (EC Ordinance) enacted in June 2020. The EC ordinance was initiated for the purpose of effecting certain changes in the Essential Commodities Act, 1955. The amendment pertaining to September 2020 has done away with the EC ordinance brought out in June. This write up strives to highlight crucial attributes regarding this amendment.
What is the meaning of Essential Commodities?
According to the dictionary, an essential commodity happens to be a need that is vital for any kind of a living being. This would be normal food grains and other kinds of supplements which can be an essential aspect of the lives of individuals.
As per the Essential Commodities Act, 1955, a clear definition for Essential Commodity is missing. But, Section 2(A) of the Act explains essential commodities as “a kind of item included under the list of the Schedule which is mentioned under the Act”. This is merely a usual meaning of essential commodity.
Also, the government wields the authority to enhance or reduce the list of essential commodities under this Act.
Items in the list of essential commodities
Any kind of medical equipment or drugs.
Food items for day to day intake like any kind of edible oil.
Fertilizers (both liquid and solid) – These could be organic or inorganic.
Cotton Yarn or any other hank yarn.
Petroleum-Based Products.
Textiles such as Raw Jute and Other Products.
Cattle Food.
Seeds of Fruits, Vegetables and other forms of edible plants.
Face Masks.
Hand- Sanitizers.
The afore-mentioned list contains several forms of essential commodities. Face Masks and Sanitizers also got added in the list from 13 March 2020, due to the surge of Coronavirus across the country. In the above list, the government has got the right to control and regulate the supply of all the items. Control implies that the government can also add or exclude any items in the list of EC.
The bill repealed by the Amendment?
Big modifications were made in the September amendment in the EC bill pertaining to the essential commodities act. It took down the Essential Commodities Ordinance 2020 brought on in June. Diverse views are circulating regarding the changes effected by the amendment.
Features of the Amendment to the Bill
The present amendment transformed the function of the Essential Communities Act 1955. This has a wholesome backing as it benefits farmer’s right to livelihood. This apart, farmers can also sell directly to private companies.
The government reserves the right to cap stock holding on essential commodities. The stock-Holding limit pertains to the extent of control the government has over the commodities. According to the amendment, stock holding ceiling on essential commodities is possible only during extreme circumstances. These circumstances are the Act of God, natural calamities, war, external aggression, famine, and other circumstances.
The government has the right to regulate commodities such as pulses, cereals, potatoes, and onion and edible items during the above-mentioned circumstances. This amendment exists under section 1A of the amendment bill.
The government has the right to implement any kind of ceiling only if the following obligations are met:
In case of a 100% price surge in agricultural or horticulture produce. This price rise has to be in the retail price of the agricultural or horticulture produce.
In case of a 50% spike in the retail rate of non-perishable agricultural produces.
This kind of imposition will be arrived at on the basis of the price of the agriculture or horticulture produces in the existing 12 months or the average retail price being charged. The lower of the above value will be considered.
The ordinance is not valid for any processor, or any kind of value chain participant of the agriculture or horticulture produce. For this, the stock held by a person or a company should not be over:
The entire processing ability of the installed system; or
Demand for the exporter in the event of any kind of exports.
Value chain participant happens to be any kind of individual or entity involved in enhancing value to the agricultural production chain. This participant could be in any level of the process, including storage, production, packaging, transport, and distribution to the agricultural produce.
The features of this ordinance are not applicable to any kind of government order pertaining to the public distribution system or any form of the target public distribution systems. Under these systems, the government disburses pulses and food grains at subsidized rates to certain people.
Does this amendment hold any merits?
Several experts have clarified that his amendment can be good going forward.
Farmers can deal with companies and other private organizations devoid of any intermediaries for the purpose of selling agricultural produce.
The livelihood of farmers would go up in the future.
Farmers do not require any middlemen for using this system.
Overall farmer’s income will intensify as the products created by farmers can be sold anywhere. This will not just be applicable in any local mandi or Kirana stores.
Large organizations would put in money in villages by dealing with farmers directly, thus augmenting their revenue.
Demerits pertaining to the Amendment
Many have hailed the amendment, but there have been many criticisms as well.
With private organizations dealing with produce, hoarding will intensify. Prior to the amendment, hoarding wasn’t permitted. But, this amendment can result in indirect hoarding also. These amendments take away the states’ rights to create rules on Essential Commodities, because this amendment was enacted across the nation.
Goods’ prices under the Essential Commodities act may go up if large procurement orders are performed by various organizations. This will permit the government to control the products under the amendment via the ‘exceptional circumstances’ clause in the bill.
Hoarding can also hike the rates of essential commodities such as onion and potato, which is quite common in the kitchens of Indian households.
Conclusion
The government effected a change in the essential commodities act, 1955. The amendment regarding the bill abandoned the EC (Ordinance), 2020 brought out by the government to control commodities. Having said that, the amendment permitted the government only to regulate the stock holding limit regarding essential commodities under extreme circumstances. Yet, this amendment can benefit the farmers. Farmers would be able to transact with organisations directly. This can boost their revenues from agricultural produce. But, the amendment could increase the prospect of hoarding. So, it can be safely surmised that the amendment has both positive and negative aspects.
It is no child’s play to start a business. You are always in a dilemma whether to take the legal way or not. But, the Modi government has come up with a fresh proposal after which, you will run out of excuses to begin a business. This initiative is known as Udyam registration.
“All you need is the Aadhaar card” goes the new slogan for entrepreneurs seeking to start a business. This write up will focus on the new initiative and reason for government to take this step.
The new declaration
Come July 1, the MSME registration method will be totally paperless and on the basis of self-declaration. According to the MSME notification, sole document needed to register your company would be Aadhar number. As part of the minimalist process, the government wants a sole window system across India.
Reason to initiate the process
MSMEs encountered a lot of issues while uploading documents. “The requisite documents are too many and the time required is less. I could hardly find time to receive Udyog Aadhar registration” – said Rahul Bharagava, partner at a small tech-firm.
According to the government, Udyam registration is purely paperless and it could be a boon for those grappling with bureaucratic Red-tapism.
Other objectives of starting the move:
Spotting the beneficiaries of several schemes launched by the government due to COVID-19 pandemic.
Saving time and money for small businesses.
What to expect from Udyam registration?
Udyam registration will give you the following:
An Udyam registration certificate.
An embedded QR code with which info about the new enterprises can be obtained.
For MSMEs with Udyog Aadhar registration, they should get Udyam registration so as to be governed by a unified code of conduct. In case an MSME is occupied with several or manufacturing services, they need to put them under one MSME but there will be no multiple registrations.
Conclusion
At present when everyone is going digital, it’s time to abolish paper work. In case you have an MSME or need to register as one, Udyam registration facilitates a paperless environment. If you need more info about Udyam registration, then get in touch with our experts.
The issue of Adjusted Gross Revenue (AGR) is literally giving sleepless nights to some of the telecom majors. The matter has generated enough heat in India with some like Vodafone threatening to quit its operations in the country. However, things are finally showing semblance of normalcy with some flexibility being given to telecom operators with regard to AGR. The Telecom majors such as Vodafone-Idea and Bharti Airtel have plans to provide license, spectrum, tangible net assets and tax refundsas security to assure the honoring of AGR dues.
The problem persists
As part of the hearing process with regard to the AGR a week before, the Supreme Court has stringently sought a reply from the telecom operators, regarding the roadmap, timeline and security related to the AGR payment. This was part of the response regarding the plea that the Department of Telecommunication or DOT filed, permitting telecom players to pay the AGR dues in a flexible way over the next 20 years. However, the apex court was of the view that staggered payment can only happen if there is a clarity over schedule or security on the part of the telecom players. According to a reliable source, “Telecom operators are presently evaluating the net worth of their tangible assets. This is very critical in getting clarity over the security aspect the Supreme Court had sought from them.” But the woes regarding the AGR are only exacerbating despite having a clear idea with regard to the way forward concerning the AGR dues. The problem began when the National Company Law Appellate Tribunal accepted spectrum within the ambit of asset in a hearing, but the Department of telecommunication disagreed with it. So, the whole matter of whether spectrum qualifies as assets lies with the Supreme Court.
Security clearance through assets sans spectrum
For the telecom major duo, Vodafone Idea and Bharati Airtel, the privilege of the tax refunds is there and the same amounts to INR 35,000 Crore. Also, there is a provision of some funds from the pending public sector units and the same comes to INR 20 thousand Crore. With such sources of revenue, the two telecom operators can breathe a little easy regarding the issue of AGR.
Guarantee is proving to be a thorn in the flesh for telecos
Despite Supreme Court asking the telecom players to furnish guarantee acting on the plea of DoT, things don’t look very promising for the telecom operators. According to a source, “ the banks have already been stretched a lot by the telecom operators that providing more guarantee would be out of the question. Also,there exists another problem wherein one has to furnish the security of 70%-90% of the loan dues to obtain the loan amount. This is very much impossible considering the situation that the pandemic had on the businesses and economy as a whole. This prompted Vodafone-Idea to say that it can’t provide a guarantee.
Finally,
The signs are not too favourable for telecom companies with regard to the AGR with an obstinate Department of Telecommunication breathing down their necks. As of now, the situations the telcos are in turn out to be a bit ominous as they are looking at projecting spectrum, license and tax refunds as guarantees related to AGR. It is very difficult to pin the blame on anyone for this matter. In reality, it is the DoT that grants the telecom operators the OSP License. So, it is in the best interest of telecom players to file the tax returns appropriately and on time. In case, the telecom businesses find the task to challenging then they should take the help of tax experts. Had these operators filed the returns properly things would not have reached this stage. This proves that filing tax returns is important otherwise a headache like AGR would always crop up to take away your peace and happiness.
The LLP stands for limited liability partnership which can be defined as a corporate entity registered under the limited liability partnership act ,2008.
It can also be defined as a hybrid form of partnership that enjoys limited liabilities and also includes features of a company.One should note that the compliances for a company are applicable to limited liability partnership.
BUSINESS WHERE LLP NEED APPROVAL FOR REGULATORY AUTHORITIES –
There are certain business activities where the limited liability partnership companies need prior authority of regulatory authorities before the beginning and usch business activities are venture capital ,banking , stock exchange ,merchant banking ,architecture , chit fund ,reconstruction , NBFC ,mutual fund etc.
All the activities marked above need the prior approval for concerned authorities and bodies before starting the business as per terms and conditions of the companies act ,2013.
FOREIGNER CAN BECOME A PARTNER IN LLP –
According to new companies act ,2013 , the foreigner can also become a partner in the limited liability company keeping in mind that there should be at least one member or partner in the company who is an indian citizen and resident of India in the previous calendar year.
CONVERSION OF PARTNERSHIP FIRM INTO LLP –
A partnership firm can be easily converted into the limited liability partnership firm according to rules defined below –
A form 17 is needed to be filed along with the form 2 for the conversion of the partnership firm into the limited liability partnership company.
One should note that an existing partnership firm by complying with the provisions of clause 58 and schedule 2 of Limited liability partnership act can be easily converted into a limited liability partnership company.
MINIMUM PARTNERS REQUIRED TO FORM LLP –
As per the Limited Liability Partnership act,2008, The minimum partners required to incorporate a limited liability partnership firm is two and there is no limit for the maximum number of partners.
A FOREIGN LLP CAN ESTABLISH BUSINESS IN INDIA –
According to the new companies act,2013 a foreign limited liability partnership company can easily establish a business in India.The process involves filing of form 27 with the ROC.
The form includes various details such as foreign LLP incorporation , two authorized representatives ,designated partners for compliances under the act.
ADVANTAGES OF FORMING LIMITED LIABILITY PARTNERSHIP COMPANY –
The basic and foremost advantage is that LLP includes features of both partnership firm as well as the company.Therefore both the types of feature are available here.
2] INCORPORATION COST INVOLVED –
The cost involved in the incorporation of the limited liability partnership company is very low.
3] MINIMUM TWO AND MAXIMUM PARTNERS EXEMPT –
In LLP there is no limit for the maximum number of the partners and minimum required partners for the incorporation is two.
4] AUDIT NOT MANDATORY –
There is no mandatory audit to be done in LLP unless the turnover exceeds Rs. 40 lac. And the capital contribution exceeds rs.25 lac.
5]MAINTAIN ONLY ACCOUNT BOOKS-
There are very few records to be maintained i,e only the books of account are needed to be maintained.
6] LIMITED LIABILITY OF PARTNERS –
In the case of LLP , the partners’ liability is limited to his shares and therefore the personal assets of every partner is safe and secured.
There are lots of benefits which are there of registering a business in India and they are as follows-
It gives you a structure- By forming a new company, it gives you a better structure of business, like suppose if you want to open a one man company then you can go for One person company formation, or if there are Partners in your company then you must opt for a Partnership Firm and by forming a company, it helps in smoothly running of a firm.
Without structure there is no order in the company and therefore it affects the profit margin of the company. Therefore when we talk about business then we must focus on how must give a properly organized structure to your business idea.
By opting for a registration of company, it gives a separate entity to your business, as you get certificate of incorporation which can be called as a Birth Certificate of your newly formed company.
There is perpetual existence of a company, like when we open a startup , then everyone one only wants to make money but also they want to establish a legacy. When a business is registered it gives a separate entity. If and when the owner of the business dies the business can continue to exist. Its ownership can be transferred to another Director, or it can lie dormant.
Registered business are more trustworthy, basically unregistered business is worthless as before doing any business, anyone wants to have safe business and they do not want to lose in their services, therefore registered business are termed as more understandable as compared to the unregistered one.
Limited liability partnership is probably the most overused terms when it comes to “ benefits of Business Registration”, however people are still fuzzy about its meaning. So Limited Liability means that a company is a separate legal entity and it has to bear its own losses.
Conclusion
When it comes to business registration, there are many but when we talk about its benefits, there we lack, I hope that through this blog we have enlightened you with the understanding of what the benefit actually means.
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