Doing Business in India - RSM Austria

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2.1.2 MOA 2.1.3 AOA Companies for registration. On registration, a Certificate of Incorporation is issued which is conclusive evidence of the company having been incorporated. It usually takes 4–6 weeks to incorporate a company in India. There is an office of the Registrar of Companies in each Indian State and in some cases, for a group of adjoining States. A company needs to be registered only once with the Registrar in the State based on the location of its registered office and can then do business all across the country. The MoA sets out the constitution of the company. The MoA of every company should state the following: The name of the company with ‘Limited’ as the last word of the name in the case of a public company and with ‘Private Limited’ as the last words of the name in the case of a private company; The State in which the registered office of the company is situated; The main objects to be pursued by the company on its incorporation along with objects incidental or ancillary to attainment of the main objects; Other objects of the company; The liability of its members, The authorised share capital (i.e. the amount of share capital with which the company is to be registered) and division thereof into shares of a fixed amount. The minimum paid-up capital. The objects clause is generally comprehensive in nature but the same can be amended by a special resolution of the shareholders. There should be at least seven (7) subscribers to the MoA in case of a public company and at least two (2) subscribers to the MoA in case of a private company. The AoA contain the rules and regulations for managing the internal affairs of the company and achieving the objects set out in the MoA. This document is subordinate to the MoA. The articles of association set out the internal rules of the company. They contain provisions relating to share capital, the rights of members, procedure for the conduct of various general meetings of members, rights of members at general meetings, constitution of the Board of Directors, powers of Board and other similar matters regarding internal regulations of a company. A company need not register its own individual articles, but may adopt the model articles provided under the Companies Act, 1956. It is essential for a private company to have its own AoA, whereas there is no such essential requirement for a public company. If a public company does not register its AoA, the standard model of AoA as provided in the Companies Act, 1956 applies. 30 DOING BUSINESS IN INDIA
Draft copies of the memorandum, articles and prospectus should be submitted to the stock exchange for approval in case the company wishes to list its shares by offering the same to the members of the public. 2.1.4 Registration Fees and Stamp Duty The costs associated with incorporation of a company relate to drafting and printing of the Memorandum and Articles of Association, stamp duty and company registration fee which is linked to the quantum of authorised capital. Registration fees are calculated on a specified scale based on the company’s authorised share capital. The minimum fee of Rs. 4,800 (about US$ 107) applies to companies with authorised share capital up to Rs. 100,000 (about US$ 2,223). The maximum amount of registration fee payable is Rs. 20 million (about US$ 444,543). Stamp duty is payable on the basis of authorised share capital which varies from state to state. (1 US$ = Rs. 44.99) 2.1.5 Certificate of Incorporation The Registrar of Companies on being satisfied that all the requirements pertaining to incorporation have been met and the objectives of the company being considered are lawful, issues the Certificate of Incorporation. The Company thereafter comes into existence as a legal person distinct from its members. A private limited company can commence business upon obtaining the Certificate of Incorporation. A public limited company on the other hand has to further obtain a Certificate of Commencement of Business from the Registrar after filing the prospectus / statement in lieu of prospectus before commencing business or exercise any borrowing powers. Where a company has issued a prospectus inviting the public to subscribe to its shares, the company cannot commence business until the amount of minimum subscription stated therein has been received. 2.2 Initial Capital Requirements The minimum paid-up capital required for a private limited company is Rs. 100,000 (about US$ 2,223) and for a public limited company is Rs. 500,000 (about US$ 11,114). The minimum paid up equity capital for a public limited company to get its shares listed on the stock exchange is Rs. 100 million (about US$ 2.22 million), and at least 25% of the issued capital must be offered to the public for subscription. 10% of the issued capital can be offered to the public for subscription in case the size of the offer to the public is Rs. 1 billion (about US$ 22.23 million) or more and the offer is through book building method. However, the minimum equity capital is much lesser for listing on the Over the Counter Exchange of India. For listing on the Bombay Stock Exchange and National Stock Exchange, the minimum paid up equity capital should be Rs. 100 million and the market capitalization of the applicant’s equity shall not be less than Rs. 250 million (about US$ 5.56 million) provided however that the DOING BUSINESS IN INDIA 31
Page 1: International global excellence in
Page 4 and 5: Doing business in India
Page 6 and 7: Marine Drive, Mumbai
Page 8 and 9: Contents Hawa Mahal, Jaipur
Page 10 and 11: Education .........................
Page 12 and 13: SIGNIFICANT COMPANY LAW REGULATIONS
Page 14 and 15: ANNEXURE 1 Sectors Prohibited for F
Page 16 and 17: Chapter 1 India - A Profile Golden
Page 18 and 19: 2.2 Language India is a land of man
Page 20 and 21: 5.2 Communication The Indian teleph
Page 22 and 23: 7.5 Public Holidays The statutory p
Page 24 and 25: CHAPTER 2 INDIAN BUSINESS AND INVES
Page 26 and 27: This resulted in a fall in the Bomb
Page 28 and 29: 4.3.3 Designs After expiry of three
Page 30 and 31: non-banking finance activities viz.
Page 32 and 33: trading in derivative based on BSE
Page 34 and 35: same as those where concessional fi
Page 36 and 37: 10.3 Low Research and Development C
Page 38 and 39: CHAPTER 3 BUSINESS ENTITIES 1.0 FOR
Page 40 and 41: Sr. No. Criteria Requirements 1 Tra
Page 42 and 43: The project is funded by inward rem
Page 44 and 45: cause the disassociation of the par
Page 48 and 49: paid up equity capital can be less
Page 50 and 51: The requirements for public and pri
Page 52 and 53: 3.0. STATUTORY REQUIREMENTS FOR COM
Page 54 and 55: 3.4 Online Filing System Ministry o
Page 56 and 57: Section Nature of default 168 Defau
Page 58 and 59: 4.0 SIGNIFICANT COMPANY LAW REGULAT
Page 60 and 61: 4.7 Audit Committees For better cor
Page 62 and 63: The meetings of the board are requi
Page 64 and 65: Chapter 4 Human Resources Kathakali
Page 66 and 67: Employee benefit What is it? Applic
Page 68 and 69: Employee benefit D e p o s i t L i
Page 70 and 71: 2.5 The Equal Remuneration Act, 197
Page 72 and 73: The Factories Act safeguards agains
Page 74 and 75: CHAPTER 5 FOREIGN INVESTMENT IN IND
Page 76 and 77: 2.3 Prohibition on investments 2.3.
Page 78 and 79: ii. Subject to compliance with the
Page 80 and 81: ii. iii. iv. The NRI investor has t
Page 82 and 83: ii. On repatriation basis An NRI ca
Page 84 and 85: Indian company can issue ESOPs to e
Page 86 and 87: ii. iii. iv. The foreign equity aft
Page 88 and 89: vi. Branch Offices have to submit A
Page 90 and 91: ii. ECB up to US$ 20 million or equ
Page 92 and 93: 3.2 Approval Route 3.2.1 Eligible B
Page 94 and 95: 3.2.6 End Use not permitted i. Util
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issued by Reserve Bank from time to
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Sr. No. Sector/Activity FDI Cap / E
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Sr. No. II C POWER Sector/Activity
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Sr. No. 29. Sector/Activity Telecom
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Chapter 6 Taxation System India Gat
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Entity Domestic Company Financial y
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**** Mutual funds, other than equit
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interest deductible is restricted t
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2.4 Tax Relief In order to encourag
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Section Details of Exemption / Dedu
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Section 35 DDA 54G 54GA 54EC 10(34)
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Sr. No. Nature of activity and loca
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Sr. No. xviii Nature of activity an
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No deduction under 80IA, 80IB, 80IA
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Tax is payable in advance on income
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3.1.2 Other Non-corporate Entities
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the Finance Act 2010, 'bullion' is
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Rs. 40,00,000. The scheme is applic
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4.5 Income of Offshore Funds Income
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7.3 Advance Rulings The Indian gove
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9.0 INDIRECT TAXES 9.1 Goods and Se
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on goods manufactured and vice vers
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Annexure I Double Taxation Avoidanc
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Sr. No. Country Dividend [Note 1] T
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ANNEXURE II: TAX DEDUCTION AT SOURC
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NOTES 142 DOING BUSINESS IN INDIA
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RSM International Executive Office,
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