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Funding Compliance, Start up Lessons, Startup Funding Paperworks

At different stages of startup lifecycle, namely – startup and early-stage development, growth and expansion, and maturity, the requirement for funds inevitably comes up. As the meeting of such requirements comes to the mind, entrepreneurs tend to consider various options for sourcing funds. In this blog, we will be looking into such sources for raising funds from.

 

 

Seed Capital and Early Stage Funding stage:

Seed funding when the business is pre-revenue and it may still be developing an MVP. This funding is used by the startup to: cover the initial costs of starting, to invest on the R&D and to sustain the venture. The funding that happens is close to having or already has some revenue but remains unprofitable. Sources of funding in this stage is:

 

 

  • Personal Investment/Bootstrapping: Also, referred to as bootstrapping or self-financing or some call it having “Skin in the game” traditionally available options under this are:
    1. Investment from savings
    2. Borrowing against real estate assets
    3. Liquidating personal assets
    4. Using personal assets as collateral for a loan

 

 

  • Funding by Friends and Family: Though the personal relationship comes handy while raising funds from these parties, potential conflicts can be avoided by securing these investments after performing supporting legal compliance. We suggest you prepare funding contracts that fully discloses the terms of the financing.

 

 

  • Private or Governmental grant funding options: Grants are funds that need not be paid back. Grants usually carry stipulations as to how the grant money can be spent over a specific time period. Qualifying to become a beneficiary of grants is time-consuming and tedious.

 

 

  • Crowdfunding: This fund is raised online by the collective efforts and cooperation of a network of many individuals. There are two types of crowdfunding:
    1. Reward crowdfunding: Startup reward (by offering company’s product or services to the investor for free or at a reduced rate) their investors for making investment
    2. Securities crowdfunding: Startup sells securities in the company in exchange for capital from investors.

 

Equity Funding:

Most common source of funding for early-stage businesses wherein investor gets a partial ownership of the company for the investment made. Various options under this source are:

 

  • Angel investors: These are affluent individuals who are interested in investing privately in small businesses during early stage of growth. Angel investors fund in exchange for convertible debt or ownership equity.

 

  • Venture Capital: VC funds are typically derived from a pool of professionally managed funds contributed by an individual venture capitalist or institutional investors. Funds are invested for exchange for an interest stake in the venture, for the directorship, the right to approve the loan on behalf of the business, the authority of hiring or firing, involvement in business decisions etc.

 

Debt Funding:

Funds are borrowed with the intent to be repaid within a fixed period, with interest. Interest paid on the loan is tax deductible for the borrower.

 

Mezzanine Financing:

Mezzanine financing is a form of debt with warrants or convertible debt, which begins as a loan and later converts to equity if the loan is not repaid or a certain return on investment has not been achieved.


Note, compliance associated with each of these sources of funding is different, in case you are interested we at Wazzeer can offer a consultation on the compliance requirement -> “Get Started!”

 

 

 

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Start up Lessons

There are about 23% of aspiring entrepreneurs who shy off from starting up due to legal complexities. In fact, on Wazzeer Counsel application, we have heard many war stories of startups that had to spend hugely to compensate for ignoring compliance. And with the growing idea of “any legal problems can be solved later”, some entrepreneurs decide to take a risk by not executing compliance works duly. Most entrepreneurs who do not give enough time to fundamental stuff like accounting and bookkeeping in place, have ended up spending thousands to go back and fix the issues. To give another example, any startup would agree that finding the right co-founders for the business is extremely difficult, there are quite a number of startups that do not vest equity for a reasonable duration of time and are forced to file lawsuits against that co-founder who drops out.

Through this series of blog, we at Wazzeer are trying to comfort young and aspiring entrepreneurs with legal, accounting, and compliance ecosystem. On a voyage to help entrepreneurs understand how law is also a tool that can help one to create and capture value. In this episode, we will do our learning from the friend of farmers, happily funded, and successfully growing – BigHaat.

BigHaat (2015), a fast-growing startup that has created an online marketplace that provides a wide choice of quality inputs to farmers at their doorstep.

Raj Kancham, Cofounder of BigHaat is here with us to share his experiences in dealing with one of the tough subjects in startup career. Raj, JNU Alum ever since his graduation has been directly or indirectly contributing to the society, and BigHaat is the dedicated one. He has over 19 years of experience in Operations, Business Development, and Software development.


What inspired you to start BigHaat?

To answer that, I need to go back to my college days, it was late 80s and early 90s, I studied in the rural part of Andhra Pradesh, I can say that the worry for rain persisted then too, but farmers had other serious problems like lack of seeds, pesticides availability, and accessibility. It was in 2012, that dots started to connect. I was working for Nokia Life as a Program Manager, Nokia Life – a platform which gives information on many domains. One of the main domains is agriculture. Farmers can subscribe to this service to get information on market price for the crops or other farm commodities and weather information. If you remember, Newspapers and TV channels used to provide this information across their platforms too, the very same information was a paid service in Nokia life. We think that everybody including Farmers read Newspaper and watches TV, but it doesn’t happen that way, reason is they go to work at 5 am come back by 8-8.30pm and go to sleep, news channels broadcast news after 9 pm in the night or after 6 am in the morning, though these channels provided accurate information that went of no use to farmers. This made me realize that this is a serious problem that nobody really cares about, with that thought I left to Singapore to carry my corporate job. My last corporate job was in Singapore, 2013 Dec to 2015 May, my thought process developed persistently in my mind, In the meantime, one of my classmates, Sateesh Nukala was trying to solve a problem in irrigation aspects of agriculture, we jointly started working on the research.

Sateesh and I were convinced that we had to do an extensive research, so we decided to go to the University of Agriculture and talked to professors. By last qtr. of 2014, we inferred that there are issues in the input space, starting from sowing to harvest. I was still in Singapore and had a team of 2 people. Every 3 months I used to come to India and visit rural Karnataka and did a lot of talking to farmers. With all the experience and learning that we were gaining, we decided to take the next big leap, startup.

Then we made a list of companies to whom we can talk to, we nailed down one. We thought digital platform may not be a complete solution, so we thought we will put up a missed call CRM system. Our missed call system seemed to be a hack for us, we had customers call us and the customer support team would call back to these farmers and arrange the inputs. People can reach us through direct phone, missed call and people can go to any internet center and they can order, they can even install the Android mobile app to place the order.  


In May 2015, within 4 months of launch, we did sales of around INR 6L. Profit was approximately in the range of 10%-12%. Our very first partner was Pioneers, they are number one in maize and hybrid rice seeds, likewise, one by one I started cracking. Ankur has invested around half a million and right now we are about to close CDCA funding of 3.5 million. As far as the growth is concerned, we could actually pull out a good growth which was essential for faster business expansion, in the last financial year we made a revenue of around INR 10 Crores. 


Can you describe the challenges you faced as the company grew big?

If you see the challenges, challenges are not less, it is more about the growth. Everybody thinks that agri-business is something that anybody can do. At one point of time in 2006 – 2007, everybody wanted to become a software engineer. Everybody thought that they can do software engineering, Similarly, every startup thinks that okay I don’t have any idea so let me do something in agriculture. That culture has started which is again a dangerous thing. But one important thing luckily I can say is, venture capitalist companies are scrutinizing startups, especially when it comes to agritech. There is a good number of entrepreneurs who think that sitting in the boardroom one can see entire India, which is not true. You have to make your hands dirty and you have to go talk to people, work on the ground. Until and unless you work with farmers, nothing really happens. Recently one of my companies got rated as the best value chain agri startup in India and we received the award from Mr. Suresh Prabhu, Minister of Commerce and industry.

One of my advice to entrepreneurs planning to start up in Agriculture sector is, spend time with farmers, stay with them for 4-5 days, and then if you think you can do something, then come back and put your business plan, otherwise, don’t do anything just go back and do your job. If you want to work on issues anything related to the bottom of the pyramid, you have to stretch it out. You have to know what the farmer thinks.

Did you ever think of a plan B or was there already a plan B when you started BigHaat?

Honestly, I don’t believe in plan B. I do my risk assessment when I take up any job. If at all there was one, my plan B would have something to do in Agriculture. Maybe instead of doing it for too many people, I would have done something on a 500 acres farm because I know what is good.  I would have produced all organic and then export it.. You can say my plan B is also agriculture, nothing else.

While incorporating your business, what all legal challenges did you face?

In India, there is a misconception of single window or one day or two days kind of a thing, which is not true. I have exposure to compliance required to start companies in the US, Singapore, and Australia, in Singapore, if you have all the documents, if you apply for incorporation in the morning, by evening you’ll have all your papers. Next day you can even put up the board and start your business. In the US, it takes less than a week to have the company registered. In Australia, within 48 hours you can have the company registered. In India, there is no timeline like that, which really pinches.

Stating my own experience, a Retail wing of BigHaat is called as AgroHaat LLP. We tried to register this company in Rajasthan, the entire process took 65 days. I got fed up and moved to Bangalore, I hired a CA referred by a local friend of mine. The CA got the company registered in 4 days. On the 4th day, I had PAN number in my hand, I had paid only Rs. 4000/- extra when compared to Rajasthan, it was 14000, in fact, I paid him 2000 more because I was very happy with the professionalism he portrayed. These examples show that there is a huge difference in how same work is delivered by different people in different parts of the country. The entire ecosystem is unorganized.

People say the availability of information is abundant online, you can follow this or that and what not, but the fact is there is no reliable guidance at all. Every entrepreneur must reinvent a way. That is the bitter truth. Legality wise there are so many issues, say you can’t start a company in a day, to get a PAN card you have a hundred things to be done. Due to all the uncertainties involved, entrepreneurs are struggling to start their business as and when decided.


Do you think the CA that you hired in both the cases were very different, the approach, the way they handled the project?

Accountability is the biggest thing, which is something I observed to be missing in most cases. To give you an example, I had outsourced a work to a CA firm, the CA was a well-experienced one that had a team of interns working under him, he had given it to them. His objective was that the interns will learn out of the project, but I don’t agree with them doing at the cost of customer’s time, that’s lethargic, very lethargic. I might sound rational, maybe that’s the way things work in Rajasthan and in remote also, many things don’t work the way we thought.

I have noticed the same attitude with some lawyers, when they get a case they will enthusiastically collect take the first round of installment and they will be very happy, they will put 3-4 days effort and then their interest slowly it dilutes. I have seen the pain, every day I had to call and follow-up, most of the times I received something negative. Especially during the days of fundraising, there is a huge dependency on legal and accounting compliance part, because investors invest only if you have a legal entity to sign up with.  And if you say that I don’t have a legal entity, they reply to you saying things like ‘why did you initiate the discussion without having your compliance requirement met?’

Not just that, to give you another example, one of my very close friend, she was also my colleague in GE and went to Harvard to carry higher studies, wanted to something for the children in India. She and her husband who also holds an impeccable career – IIT, Harvard, and holds 6 patents, decided to teach people on STEM. In fact, they were the first one to think about it. In 2016, the couple came to India, leaving behind their handsome paying job and luxurious house in the US, they wanted to teach STEM to the people and because of all these legal tangles and local politics, they got fed up and gave up everything in 9 months and went back to US.


My next question is when you had all the funding flowing in did you have an idea of the list of compliances?

Over the years you generally get an idea of how things work, when it must be done and from whom it must be done.  During the first round of funding, though we were compliant with statutory compliance, we faced some big compliance hurdles due to these hurdles instead of getting funds in one month we got the money after four months. What really happened was, the way we maintained the books was different from what our investors wanted, So, we took lot of time. The due diligence needed 3 months. Finally, we could complete it the way they wanted, but it was tough.

I would advise young entrepreneurs, no matter what maintain your books, small amount or big amount, anything that’s going out from the firm and anything that’s coming into the firm, make an entry, proper entry of all the bank transactions that you do. When you are raising funding, you can’t tell investors that on 2016 November you paid 100 to somebody for whatever reason. So, you need to have a disciplined accounting entry made on a daily or weekly basis. Make sure that you update it. Don’t give a chance or room for a one-month update or two-month update, it will just not happen.

That was a lesson I learned, now, for my new company as soon as I registered first thing I did was to hire an HR and Finance personnel. So that all the statutory compliance is dealt with a continuity.


What is your message for aspiring entrepreneurs who shy off from starting due to legal hitches?

First thing is, if you believe in your idea, just go for it, it could be hundreds of things that come in the way that might demotivate you, but always remember the very reason why you started, why you are there. If you keep reminding yourself why you are there and why you started, many, many things will go off from your way.

Second thing is, always question yourself and use the theory of negation. Why can’t you? Why some other guy? When you ask these questions, you will find a way, or you’ll find a solution to yourself. Just ask yourself, the answer will be there within you and it’s like either you did a mistake and there is a systematic problem.

If there is a systematic problem, head down, try to solve it and go. If it’s your problem, you fix it fast. But find it out if it is controllable or not controllable. Say today central government comes with a rule that startups should have Aadhar card. This situation is uncontrollable, it is a compliance issue. You may think that why I need Aadhar card for my company, I am giving my directors’ card. You might crib, cry for it, because you know how much effort you had put to get your own card, waiting in a long queue, but there is no point thinking over it that’s what I want to tell. The takeaway from this example is very simple, things that you can control and what matters is only 4%. You work only on that. That 4% will account for you to be successful. And when you are working on it, keep your focus and persistence up. That’s it.

 

Thanks for your valuable time, Raj. Starting from the story, though the experiences you shared, and the advice you offered. I am sure the objective behind these interviews is justified.

Absolutely, I am with you. Let me know if you need any other details also I don’t mind contributing to this cause. I like this. I know this. As I told you, many guys who are capable are shying away for this main reason. Let me know if you need any further help or something. Sure, may the best happen to you and your startup. 

 

 

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Export Import Registration, Start up Lessons

The Foreign Trade (Development and Regulation) Act 1992, defines export as “taking out of India any goods by land, sea or air

 

Export is completed once the goods have left the territorial water of India. In order to qualify as a transaction of export, the following conditions must be satisfied:

  • Goods must go out of India
  • The foreign exchange must come into India.

 

Exports are beneficial for a country as they bring in profit; promote economic development and overall growth. For this reason, the government of a country always promotes exports.

To operate the business, an entrepreneur needs to form an organization which can be a sole proprietorship, partnership firm under the Indian Partnership Act, a public limited company or a private limited company registered under the Companies Act, 2013 or even a Limited Liability Partnership.

The most recommended course is to get registered as a private limited company since it offers many benefits such as limited liability protection for promoters, transferability, easy access to bank loans, etc. Furthermore, clients always prefer dealing with a registered corporate entity.

 

There are a few registrations that are to be done on a mandatory basis to start exporting, these are:

  1. Registration with Director General of Foreign Trade (DGFT): DGFT provides the exporter with a unique Import-Export Code (IEC), a ten digit code required for the purpose of export as well as import. No exporter is allowed to export his goods abroad without IEC number. It is a one-time registration, valid for the lifetime of the organization or proprietor.


However, if the goods are exported to Nepal or Myanmar through Indo-Myanmar border or to China through Gunji, Namgaya, Shipkila or Nathula ports then it is not necessary to obtain IEC number provided the CIF value of a single consignment does not exceed Indian amount of Rs. 25, 000 /-.


Application for IEC number can be submitted to the nearest regional authority of DGFT or “Aayaat Niryaat Form – ANF2A” can also be submitted online at the DGFT website: http://dgft.gov.in. Along with the form, the applicant is required to submit his PAN number, Current Bank Account number, and Bankers Certificate. An application fee is also required to be submitted.

 

  1. Registration with Export Promotion Council: EPC is a non-profit organization for the promotion of various goods exported from India in international market. It acts as a platform for interaction between the exporting community and the government.

An exporter must obtain a registration cum membership certificate (RCMC) from the EPC. For this, an application accompanied with a self-certified copy of the IEC number should be submitted. The RCMC certificate is valid from 1st April of the licensing year in which it is issued and shall be valid for five years ending 31st March of the licensing year, unless otherwise specified.

 

  1. Registration with Commodity Boards: Commodity Board is registered agency designated by the Ministry of Commerce, Government of India for purposes of export-promotion and has offices in India and abroad. At present, there are five statutory Commodity Boards under the Department of Commerce. These Boards are responsible for production, development and export of tea, coffee, rubber, spices and tobacco.

 

  1. Registration with Tax Authorities: Goods exported out of the country are eligible for tax exemptions. To avail this benefit, an exporter must be registered with the Tax Authorities.

 

  1. Registration with Central Excise Department: If the items are excisable goods, registration with the Central Excise department is required.

 

  1. Registration according to Route of Export: If export is going to be carried out through the sea, registration/membership with the seaport customs is required and in case of export carried out through the air, registration with airport customs is necessary.

 

In case you need any help with these compliance works, do let us know, I am sure, we could work out an attractive package for you, just for you 🙂

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Accounting, Secretarial Compliance, Start up Lessons

We all know startups, except for sole proprietorship firms and partnership firms, are considered separate legal entities, distinct and independent from the members who represent it. So, how can courts punish these startups which commit crimes? Common law has various theories which determine the liability of the corporations and the most prominent one would be the doctrine of vicarious liability which states that corporations can be held liable for the torts committed by its employees. But can corporations be charged with the crimes they have committed? Or more importantly, should they be held liable, especially since a company itself is not capable of thinking or of creating any intention of its own. In this blog, we will figure out answers.

 

Under the Indian Penal Code (IPC), corporations can be prosecuted for the crimes they have committed. Section 11of the Act defines that the ‘person’ would include “any Company or Association or body of persons, whether incorporated or not”. Incidentally, the IPC also protect companies. For instance, Section 499 (Explanation 2) makes defaming a company a criminal offense.

 

What does corporate crime involve?

According to R.C. Kramer, the corporate crime involves “criminal acts which are the result of deliberate decision making or culpable negligence by persons who occupy structural positions within the organization as corporate executives or managers. These decisions are organizational in that they are organizationally based – made in accordance with the operative goals (primarily corporate profit), standard operating procedures, and cultural norms of the organization – and are intended to benefit the corporation itself.”

 

What do theories say on Corporate criminal liability?

 

  1. Doctrine of Attribution

A corporation can be convicted of a criminal offense involving mens rea by applying the Doctrine of Attribution. According to the doctrine, criminal intention of the “alter ego” of the company, i.e., the person/ group of person in charge of the business/affairs of the company can be attributed to the corporation as well to make it liable. In other words, corporates can be held responsible for offenses committed by the persons in control of its affairs, if such are perpetrated in relation to the business of the corporation.

 

However, the question then arises whether the reverse will also hold true, i.e., whether the officials of the company can be held responsible for acts of the company? This question was recently answered by the Supreme Court of India in Sunil Bharti Mittal vs. Central Bureau of Investigation. The Apex Court, in no uncertain terms, held that the principle of attribution cannot be applied in the reverse scenario to make the directors liable for offenses committed by the company. However, the Court thereafter observed that in the following circumstances a director/person in charge of the affairs of the company can also be prosecuted, along with the company as an accused:

 

  • If there is sufficient evidence of his active role coupled with criminal intent;
  • Where the statute specifically imposes liability.

 

 

  1. Vicarious Liability

 

Originally developed in the context of tortious liability, the doctrine of vicarious liability holds a person liable to answer for the acts of another. For instance: In the case of companies, the company may be held liable for the acts of its employees, agents, or any person for whom it is responsible.

 

The concept of vicarious liability of corporate officials has evolved substantially in the recent times so much so that it has become a trend to implead the officials of the company along with the company to exert pressure on the company to settle. However, it is important to note that there is no vicarious liability unless the statute specifically provides for it. Therefore, when the company is the offender, vicarious liability of the directors cannot be imputed automatically in the absence of any statutory provision to that effect.

 

Essentials for the doctrine of vicarious liability, therefore, are as follows:

  • There must be a crime committed by the agent of the company.
  • He must commit it within the scope of his employment.
  • The act must be carried out with intent to benefit the company.

 

  1. Theory of identification

 

The theory of identification recognizes that the acts and state of mind of certain senior officials in a company are the directing minds of the corporation and thus deemed to be the acts and state of mind of the corporation. The corporation is considered to be directly liable, rather than vicariously liable under this theory. In other words, this theory contemplates an identity between the corporation and the persons who constitute its directing mind. The commission of an offense by such person constitutes an offense by the corporation as well. If a corporate employee is virtually the directing mind and will of the corporation, the employee’s action and intent are the action and intent of the company itself, provided the employee is acting within the scope of his/her authority, either express or implied. Under the doctrine of identification, the company is personally liable. It is not liable vicariously. It is deemed to have committed the offense by itself.

 

The concept of corporate criminal liability is still in its emerging stage in India. However, attempts have been made in the Companies Act, 2013 to control and reduce corporate crime, and at the same time improve corporate governance practices, making companies more responsible and answerable. With the advent of globalization, imposing criminal liability on corporations makes sense; because they are immensely powerful actors whose conduct often causes very significant harm both individuals and society as a whole. Clearly, a lot is still required to be done in this area but the steps taken so far should not be undermined. How effectively laws and regulations will be able to control corporate behavior, only time will tell.


Let us know if you need any help, we at Wazzeer would be glad that we could help you out -> Get Started!


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Accounting, Start up Lessons, Startup Funding Paperworks

What does the CA say?

Maintain Chart of Accounts right from the early stage of the venture.

 

Is Chart of Accounts really important?

A company’s Chart of Accounts is a view of all Asset, Liability, Equity, Revenue, and Expense accounts included in the company’s General Ledger. The number of accounts included in the chart of accounts varies depending on the size of the company. Designing a COA is one of the first tasks that have to be performed when setting up a budgeting and its associated accounting and financial reporting systems.

 

The Chart of Accounts (COA) although appears to be just concerned with classifying and recording financial transactions, is critical for effective budget management, including tracking and reporting on budget execution.  A mistake in designing the Chart of Accounts could have a long-lasting impact on the ability of the system to provide required financial information for key decisions. Remember, COA is also the hub of any computerized accounting and reporting system.

 

How does maintaining Chart of Accounts benefit the firm?

  • The COA specifies how the financial transactions are recorded in a series of accounts that are required to be maintained to support the needs of various users/stakeholders.
  • The COA provides a coding structure for the classification and recording of relevant financial information within the financial management and reporting system.
  • The COA provides room for planning, controlling and reporting of budgetary allocations as well as internal management needs of budget units and/or cost centers.

 

How is Chart of Accounts designed?

COA can be designed by anyone who is aware of the nuances of accounting, but the difference that an experienced professional brings in is productivity and quality. It is a known fact that startups, most of them, lack the management bandwidth and expertise to carry out COA related works. 

The development and implementation of a COA should involve the following key steps:

  • The COA can only be properly configured after a comprehensive business needs analysis has been undertaken
  • The COA segments and the hierarchical levels within each segment should be defined.
  • The COA and its segments should use basic logic and account definition
  • Creating a global or a unified COA establishes a foundation for consistency in terminology and serves to eliminate redundant accounts
  • Define clear institutional, legal and procedural frameworks to prevent the COA structure from becoming fragmented.
  • For the COA to achieve its desired impact of facilitating improved budget management and financial reporting, all users should be adequately trained.
  • An effective change management strategy also needs to be developed to implement the new COA and associated reforms in the accounting and reporting system

 

Wazzeer Professional Network is built on qualified CAs, CSs, and Lawyers who work with startups in understanding and delivering various compliance works seamlessly. We would be happy to work with you getting this organized and compliant. Let’s connect -> “Get your Wazzeer”

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Start up Lessons

Irrespective of the type of business type there are certain business laws that would be applicable to all business types. Here is the checklist of 7 Laws applicable to all business type in India:

  1. Companies 2013 Act – governs the incorporation management, restructuring, and dissolution of companies.
  2. Indian Contracts Act – governs the grounds on which contracts are valid, relating to the formation and enforceability of contracts, consideration, the various types of contracts including those of indemnity and guarantee, bailment and pledge, agency, and breach of a contract.
  3. FEMA – governs India’s foreign exchange and regulates the inflow and outflow of foreign exchange and investment into/from India.
  4. SEBI Act – governs India’s securities market regulator, public offers of securities, offers of securities by listed companies, the terms of mandatory and voluntary tender offers for shares of listed companies, and the process for delisting of a listed company);
  5. SCRA – governs listing and trading of securities on stock exchanges in India and the Listing Agreement with stock exchanges;
  6. Competition Act – governs the fair competition in the market.
  7. Income Tax Act – governs the tax treatment of dividend, capital gains, mergers, demergers and slump sales.



In addition to the top 7 laws there are sector-specific legislation (e.g. the Indian Telegraph Act, Drugs and Cosmetics Act, Press Council Act, the Banking Regulation Act, the Insurance Act, and various labor legislation (Industrial Disputes Act etc.) which are to be considered depending on the nature and type of the transaction.


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! 🙂

 

 

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Start up Lessons

Startup India stand up India is rightly called the bag of incentives because it not just makes the compliance part easy, but has compartments for a huge funding opportunity and continued support. We at Wazzeer have helped some of our clients to crack this opportunity for great good. So, in this blog, we will walk through the quick list of incentives that ventures starting up in 2018 can try their chances for. 

  1. Self –certify compliance with nine labor laws and environmental laws.
  2. Startup India hub – to enable nurturing and entrepreneurial thinking
  3. E-Portals and App – For interacting with Government and regulatory bodies, and collaborating with various other startups signed up in the platform
  4. Legal support at lower cost
  5. Patent registration and Tracking at faster rate
  6. Relaxation on Public procurement eligibility criteria for Startups
  7. Faster Exit for startups
  8. Financial support through Fund of Funds
  9. Credit Guarantee Funds for Startups
  10. Tax Exemption on capital gains
  11. Company income exempted from Income Tax for 3 years
  12. Tax exemption on investments above Fair Market Value
  13. Industry-Academia Partnership and incubation facilities

 

The procedure to register a venture under Startup India Initiative:

 

 

 

 

 

 





Wazzeer has developed a simple to use system to quickly check your eligibility for Startup India Initiative, we strongly believe entrepreneurs like you should give it a shot, let’s connect  🙂

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Business Registration, LLP, Partnership Firm, Start up Lessons, Trademark
Every business entity needs to be given some name and the functioning of the business is carried out in that name only. In the case of a company which enjoys the status of the separate legal entity, choosing business name in India is a must. Name approval from the Registrar of Companies is pre-requisite condition before incorporation of the company.

Procedure for Business Name approval in India

Application to concerned Registrar of Companies to ascertain the availability of name in eForm-INC1 need to be made. Maximum 6 suitable business or company names can be submitted in order of preference and name must indicate main objects of the company.

While choosing business name in India, make note of following:

  • The proposed business names must not be similar or resemble the name of any other already registered company, or
  • Proposed business name should not violate the provisions of emblems and names (Prevention of Improper Use Act, 1950), or
  • Proposed business or company name(s) should not constitute an offense under any law.
  • Last word Limited need to be used in the case of a public limited Company, or Private Limited, in the case of a private limited Company and LLP needs to be used for Limited liability Partnerships.
Along with government fee and complete form, the digital signature of the applicant proposing the company needs to be attached. For filling this form Digital Signature of one of the Promoters is mandatory.

The details need to be provided in eForm INC1 are:-
  • Authorized capital for the proposed company
  • Main objectives of the proposed company
  • State (location) of the proposed company
  • Personal details of all Promoter?s
  • Copy of trademark application/certificate (if applicable)
  • In case, there is a logo associated with trademark then image of logo
  • Balance sheet (if applicable) and Income tax returns for last 2 years

If the name is approved by Registrar of Companies, letter of acceptance is issued for the proposed name. If proposed name(s) are not available, fresh names can be applied through the same application.


We will be glad to help you in choosing a business name, let’s connect.

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The Government on March 6, 2017 notified a new set of trademark rules which have replaced the old rules constituted way back in the year 2002. The main idea behind the change is to help expedite the approval process and increase filings, both of which have shown positive trends over the past few months. While the examination time for an application has been brought down from 13 months to just 1 month in January 2017, official figures suggest that filings have jumped 35 per cent in 2015-16 against the previous year. Listing the top 4 changes in the new rule that you should know:
  1. Ease of doing business: One of the most important things is that the total number of forms that an applicant had to fill out has been reduced from a monumental 74 to a quite reasonable 8.

  1. Slashing of cost: The new rules have hiked fee for Trademark application to Rs. 9,000 but application fee for individuals, start-ups and small enterprises has been kept to Rs. 4,500 only (Government fee)

  1. Clarity in the approval process: To make a business doing easier, the method to determinate well-known trademarks has been clarified for the very first time. Provisions relating to the expedited processing of an application for registration of trademark have been extended up to the registration stage. Until now, they were only till the examination stage.

  1. Quick disposal: Concept of video conferencing has been introduced in the new rule and the number of adjournments in opposition proceedings has been limited to two by each party, these measures are surely going to help in disposal of cases on time.


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Contracts and Agreement, Contracts and Agreements, Contracts and Agreements, Start up Lessons
Basically, vendor is someone who provides you with a service or goods. For instance, a person providing house cleaning services is a vendor, a person supplying raw material for renovating your office is a vendor. The Vendor Agreement is therefore an agreement between you and a vendor that you have selected for the services that such vendor has to provide to you or goods that such vendor has to supply to you.

An SLA, i.e. service level agreement is a contract between a vendor and the end user that defines the standard level or quality of service expected from such a vendor. An SLA or Service Level Agreement will define the service levels that have to be achieved by a vendor and may also provide for remedies and penalties in the event of non-fulfilment of such service levels. Let me explain a bit more with a day to day example. For instance, an EduTech startup (say XYZ), that is outsourcing the textbooks production to a service provider, gets an vendor agreement with SLA included in it, then the SLA ( Service Level Agreement) related clauses would involve the following:
  • Delivery timelines
  • Minimum quantity of delivery within a mentioned duration of time
  • Critical delivery items (as in threshold meeting)
  • Meet the Standard of packaging
  • Monitoring and measurement of timelines and delivery thresholds.
  • Penalties and remedies for default items is mentioned
  • Termination right of XYZ for a continued breach/default of SLAs
With the above example, now you would be in a better position to decide whether or not you require SLAs (Service Level Agreement) to be included in your Vendor Agreement or Service Agreement.

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.

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