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What is time taken to register, when it comes to starting a business by foreigner and all Indian shareholder and directors?

  • 2 weeks – Shareholders and Directors are Indian.
  • 6 weeks – Foreign shareholders and directors.
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Why does it take extra 4 weeks in case of In case of foreign shareholders and directors?

Identity and address proof attested by Indian consulate of the home country of the foreign persons is necessary for getting digital signature and for getting Director Identification Number (DIN) for the foreign citizens.    

How much share capital should a foreign citizen contribute?

Contribution to share capital by transfer from their foreign bank account through normal banking channel. A foreigner can act as Director of an Indian company. No permissions are needed for this.

Is it possible to have a company with only foreign citizens as directors?

Yes. Note: section 149(3) of the Companies Act, 2013 makes it mandatory for every company to have a Director who has stayed in India for a total period of at least 182 days in the previous calendar year. It may be noted that such a resident Director need not be a citizen of India.

Can a foreign citizen appointed as director of an Indian Company work from abroad?

Yes. ?Note: Schedule V of the Companies Act, 2013 read with section 196 of the Act make it mandatory that a person appointed as Managing Director / Whole-time Director of a company is resident of India.

What if the MD is a non resident of India?

This requires permission of Government of India. Board of Directors is required to meet at least once in every three months. Meetings of Board of Directors can be held anywhere in the world. Under section 173(2) of the Companies Act, 2013 a Director may participate in a meeting of Board of Directors either in person or through video conferencing.

What all taxes that I should be aware of?

  • Union taxes- income tax, central excise, service tax, customs, central sales tax, wealth tax.
  • State tax-VAT, Entry tax, stamp duty, professional tax.
  • Local tax-octroi, property tax, water charges.
  Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly. For any Legal and Accounting support, Happy to help you,?let us?talk at?Wazzeer. For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+
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Top 3 questions asked by starups regarding annual returns filing:

#1: What all filings do I have to do for my startup?? 3 Types of Filing -?Audit, IT returns and?ROC Filing. Audit:?Tax Audit,?Statutory Audit. Note: a. Statutory Audit?is mandatory?for all companies (Pvt Ltd, LLP, and OPC)?incorporated?before January,?2016 and the deadline is?30th September.
  1. IT?Returns Filing is for?all companies?and the deadline is 17th October.
  2. ROC Filing is for companies that were incorporated before January, 2016 and the deadline is?30th September.
#2: Statutory Audit or Tax Audit? ?If a company has annual revenue of more than?Rs. 1cr then go for Tax audit (deadline is?17th October) and?statuary audit. Else, go ahead with only Statutory Audit. #3:?My Startup has zero revenue, should I be filing for annual returns? If?you suffer loss this year, then you can carry forward the loss to 8 years.?Doing so you can save on tax.?In case, you have zero revenue, file as Nil Returns. Remember, if you file after Sep 30th you cannot carry forward the loss.     Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly. For any Legal and Accounting support, Happy to help you,?let us?talk at?Wazzeer. For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+
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Cash is the King! Women entrepreneurs (not all) are aware about the financial assistance provided by various institutions. Consult and choose the programs that are right for your business. women entrepreneur financial support **For any Legal and Accounting support, Happy to help you, let us talk at Wazzeer For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+ Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly.
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What is Acqui-hire? What Startup should note?

An acqui-hire is a type of acquisition used to recruit coveted employees or the team rather than add a new line of business. An acqui-hire occurs when a startup fails to build a business and has run out of money. All assets, liabilities and the stock of one company will be transferred to Transferee Company in consideration of payment in the form of: (i) Equity shares in the transferee company (ii) Debentures in the transferee company (iii) Cash or (iv) A mix of the above mode n728xdn

How the payments are handled, structured and valued?

Depending on the choice of acquirer, it can be either acquisition of stock or assets, with the bulk of the purchase price being earmarked for employee packages. In cases where the acquirer is hiring only the team, sign a release agreement where the company agrees, in exchange for the deal payment, to release the acquirer for hiring the employees and a defensive license agreement of?the company?s IP. In terms of pricing, Buyers frequently express the price on a ?per head? or ?per engineer? basis, and the going rate seems to be anywhere from a few hundred thousand to two million per head. Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly.   For any Legal and Accounting support, Happy to help you,?let us?talk at?Wazzeer. For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+    
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Branch office help the parent company in:-
  1. Spreading its business to diverse locations.
  2. Bringing its product closer to the customers by increasing their accessibility to it
  3. Making the distribution and marketing of its goods and services easier and more effective.
There is a difference in the procedure of registering a branch office by a domestic company and by a foreign company. i0giuix Next comes the story of Foreign company, opening a branch in India. clgw6ct

For any Legal and Accounting support, Happy to help you,?let us?talk at?Wazzeer.

For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+

Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly

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According to RBI, a ?Foreign Currency Account? means an account held or maintained in currency other than the currency of India or Nepal or Bhutan.

A person resident in India may open, hold and maintain the following accounts options:

  1. Exchange Earner’s Foreign Currency (EEFC) Account
  2. Resident Foreign Currency (RFC) Account
  3. Resident Foreign Currency (Domestic) [RFC(D)] Account
  4. Diamond Dollar Account (DDA) – firms and companies who comply with the eligibility criteria stipulated in the Foreign Trade Policy of Government of India.
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Acceptance of deposits by Indian proprietorship concern/ firm or a company from NRIs or PIOs on non-repatriation basis:

  1. An Indian proprietorship concern/ firm or a company (including Non-Banking Finance Company) registered with Reserve Bank can accept deposits from NRIs or PIOs on non-repatriation basis subject to the terms and conditions specified in Schedule 7 to 30Foreign Exchange Management (Deposit) Regulations, 2016.
  2. Indian companies can accept deposits from NRIs or PIOs by issue of a commercial paper subject to terms and conditions specified in 31sub-Regulation (3) of Regulation 6 of Notification No FEMA 5(R)/ 2016-RB.

Acceptance of deposits by Indian companies from a person resident outside India for nomination as Director:

  Keeping deposits with an Indian company by persons resident outside India, in accordance with section 160 of the Companies Act, 2013, is a current account (payment) transaction and, as such, does not require any approval from Reserve Bank.   Startup entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly. For any Legal and Accounting support, Happy to help you,?let us?talk at?Wazzeer. For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+
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Story began with SEBI notice on August 30th ?B. UNAUTHORIZED ELECTRONIC PLATFORMS It has also come to the notice of SEBI that certain electronic platforms are facilitating fund raising on digital platforms like websites and other internet platforms, which are similar to the platforms of stock exchanges. These digital platforms are neither authorized nor recognized under any law governing the securities market. The electronic platforms are allegedly facilitating investment in the form of private placement with companies, as the offer is open to all the investors registered with the platform amounting to a contravention of the provisions of Securities Contract (Regulation) Act, 1956 (SCRA) and the Companies Act, 2013. Only recognized stock exchanges provide a platform where equity and other securities issued by companies are listed and traded in accordance with the provisions of the SCRA. The details of SEBI recognized stock exchanges are available on the SEBI website www.sebi.gov.in. Investors are hereby cautioned that all dealings on such unauthorized electronic platforms would be in contravention of the relevant securities laws.? What happened next?? Angry Online equity crowdfunding platforms- seeking clarity from India’s capital markets regulator on the extent to which its recent cautionary notice would affect their operations.  

What happened in the past?

As per SEBI ?Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project, business venture or social cause.?  

Recognition of Crowdfunding Platform:

Class I Entities:
  • Recognized Stock Exchanges with nationwide terminal presence (RSEs)
  • SEBI registered Depositories
Class II Entities:
  • Technology Business Incubators(TBIs) ?promoted by Central Government or any State Government through bodies such as NSTEDB under Department of Science & Technology ?functioning as a society registered under societies act of 1860/or as a non-profit making section 8 company,
  • At least 5 years of experience, having a minimum net worth of Rs. 10 Crores ?should have attained self-sufficiency and,
  • Should display only those companies which share a common focus thrust areas as the TBI
  • A joint venture of a Class I entity and a Class II entity is also acceptable for setting up a Crowdfunding Platform as this would bring the best of both classes.
Class III Entities:
  • Associations and Networks of PE or Angel Investors
  • Track record of a minimum of 3 years with a minimum member strength of 100 active members from the relevant industry ?which are registered as Section 8 companies under Companies Act 2013
 
  • Paid up share capital of Rs. 2 Crores 9.4.4.8 Thus the platforms launched by Class I & Class III Entities can enable the FbC.
 

??Crowdfunding Platform – To do list:

  • Conduct screening and basic due diligence of the business of the start up.
  • No amount of due diligence can provide any form of guarantee of the commercial success.
  • Conduct background and regulatory checks on the startups, whole time directors, promoters, shareholders holding more than 20% of equity shares in the company.
  • Review the information presented by the startup on the portal’s website to confirm that the information adequately sets out the general features and structure of the security, issuer-specific risks, parties involved, any identified conflicts of interest, and the intended use of funds.
  • Conduct due diligence of investors such as net worth requirement and KYC requirement, if any, while maintaining the privacy of the investors.
  • Deny access to startups if it has reason to believe that the issuer or its offering is fraudulent.
  • Maintain a record of all the issues brought by the companies and subsequently the disclosures of the issuing companies and make it easily accessible to the investors.
  • Collect and transmit information to SEBI.
 

Eligibility conditions of the platform:

  • Platform needs to own the Domain ID/website/URL and mention the same in the application for recognition with SEBI and
  • Adequate systems and procedures to manage the daily operations as well as the emergency situations.
  • Platform needs to have adequate human, technology and risk management capabilities
  • Platform needs to have fair, orderly and transparent processes
  • Procedure to address possible conflicts which may arise between issuers and the platform
  • Fund raising by subsidiaries/associates or other entities related to the Platform Owners not allowed
  • An elaborate contingency/termination plan to ensure a seamless operation in the event of closure or financial distress in the crowdfunding platform
  • Crowdfunding platforms shall not offer investment advice, solicit, manage funds or securities, and incentivize employees for such sale of securities displayed on the platform or make recommendations to investors.
  • Only accredited investors registered with a crowdfunding platform can invest through that crowdfunding platform. Only Indian start-up companies or SMEs or Crowd Funds can raise funds through these crowdfunding platforms.
  • Platform shall provide a Grievance Redressed mechanism for the investors as well as the issuers
  • The task of due diligence of the startup (issuing company)
  • Filtering mechanism to differentiate between the quality of ideas and business plans- ‘Screening Committee’ with a variety of experience from different domains and sectors.
Screening Committee of a Crowdfunding Platform:
  • At least 40% of the committee should be composed of professional with expertise in mentoring of startups and early stage ventures,
  • At least 30% of the committee should be composed of professionals with experience in banking or capital markets.
  • Not more than 30% of the committee should be composed of persons of high caliber and qualifications which are nominated by the owner of the crowdfunding portal, but not on its payrolls.
 

Process of raising funds:

  • Investors due diligence.
  • Startup due diligence
  • The task of due diligence of investors in crowdfunding could be given to the platform or some third parties which can be SEBI registered intermediaries.
  • ERIs and HNIs may be required to submit, among other things, a net worth certificate from a Chartered Accountant to Stock Broker /Investment Adviser/Portfolio Manager and also make a declaration or sign a ‘Risk Acknowledgement’ regarding the understanding of risks in their investments.
  • Crowdfunding Platforms may charge a nominal fee from the company seeking funds through the platform and the accredited investors looking for a good investment opportunity in the companies which shall be displayed on the website only after a comprehensive due diligence and screening.
  • Protection from Cybercrimes
  • Tax Treatment Taxation of funds will be in accordance with the current tax provisions applicable to the unlisted companies raising funds through equity or debt or an AIF.
   

SEBI’s role in crowdfunding:

  • Recognition of the Crowdfunding Portals
  • Oversight and regulation of the Crowdfunding market in India
  • Playing no role in vetting of the Private Placement Offer letter of the issuing companies
  • Issuance of guidelines/circular regarding information required to be disclosed in Private Placement Offer Letter or on an ongoing basis or requirements of due diligence and screening or any other matter.
  • Conduct of periodic inspections or audits of Crowdfunding Platforms and enforcement of Crowdfunding Regulations
  • Entities can raising funds even before their venture actually becomes commercially viable, is risk capital.
 

What can be expected?

SEBI is yet to propose a complete regulatory framework for equity crowdfunding like its international counterparts, that is the SEC (Securities and Exchange Commission) in the US and FSA (Financial Services Authority) in the UK. The Securities and Exchange Board of India (Sebi) has not drawn up an operations framework for electronic platforms that facilitate pooling of investments into startups  

What is the take?

This article is not only for crowdfunding platforms but also to the 3rdparties involved in it. Startups, that want to raise funds, have to ensure the necessary legal and accounting documentations are done, because these are the ones that will support you through out. Investors, ensure that you have done your due diligence about the crowdfunding platform that you are going to be involved in and yes, the startup has more than Idea that has to be validated.   Finally, Crowfunding platforms, now you know what you should be doing, tick off the remaining ?things to do? in your checklist, and do the best out your businesses legally.     For any Legal and Accounting support, Happy to help you,?let us?talk at?Wazzeer. For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+   Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly. read less
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Entrepreneurs remain Entrepreneurs! Why closing your firm, when you have other options to survive legally.   You have three options:

Plan A: ?Work on a similar business idea, with modifications in MOA

You can alter Memorandum of Association through Special Resolution & Confirmation by Central Government (Section 13)

Note: In case of failure to register within the time prescribed then all such alterations made and the orders of Central Government will become void.?

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Plan B: ?Let the firm be without any operations and file with ROC of Nil returns annually.

  As per?Companies?Act?? 2013 ? Section 92(1) every company is required to file annual return. For Companies that have had no operations nor have any transactions to file Nil Returns in annual returns with ROC. kfjlqtz  

Plan C: ?Apply for dormant status of the Company

  Section 455 of the Companies Act 2013 defines Dormant Company as a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar in such manner as may be prescribed for obtaining the status of a dormant company, without any significant accounting transactions i.e. an Inactive company (no business or operation), or has not made any significant accounting transaction during the last two financial years, or has not filed financial statements and annual returns during the last two financial years.   rodicpx For any Legal and Accounting support, Happy to help you,?let us?talk at?Wazzeer. For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+   Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly.
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Singapore is now a popular place to raise international funding. Companies leverage its operational and legal convenience to set up a base or regional headquarters. There are close to 6000 Indian companies registered in Singapore, of which 2000 are active, says George Abraham, CEO of Singapore Indian Chamber of Commerce & Industry.   Singapore with its 3.5 lakh Indian Diaspora (9.1% of the population) is far more socio-culturally accepting and geographically closer. And with 199 flights a week from India, it’s easier and cheaper to fly to Singapore from anywhere in the country.   A Singapore subsidiary can be wholly owned by a foreign parent company and is considered a separate legal entity from the parent company. It is important to note that under the FEMA Act, the intention to stay outside or inside India for an uncertain period is important. This is different from the provisions under section 6 of Income Tax Act. To be a resident under Income Tax Act, an individual has to only stay in India for a specified number of days. So, an individual may be non-resident under Income Tax Act during a year and may be resident as per the FEMA Act, during the same year. Looks like you are clear! Hey Hey we can help you out, May be we can talk? uu4ix9r For any Legal and Accounting support, ?happy to help you, let us talk
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Any company or organization receiving foreign investment must report the transaction to the Reserve Bank of India in stipulated timeline. Allocation of Shares against the investment should be completed within 180 days of receipt of fund. The company should file the FC-GPR form within 30 days of allotment of shares. p6zymna Start-up process entails complex procedures and many bureaucratic hurdles, entrepreneurs are better off using professional services. Hiring a virtual lawyer and virtual accountant can save time and help ensure that the process goes smoothly. For any Legal and Accounting support, Happy to help you,?let us?talk at?Wazzeer.   For more interesting updates follow us on?Twitter,?Facebook,?LinkedIn?and?Google+
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