Corporate Digest Magazine- November/2017

November 2017 INR 150/-

www.venture-care.com/magazine

Venture Care

Digest Strategy | Finance | Digital | Legal

GENERIC VS. STRATEGIC ORGANIZATION

- (Strategy)

FORMATION OF A SINGAPORE

STEP TO START A SECTION

PRIVATE LIMITED COMPANY

8 COMPANY IN INDIA

- (Special Story)

- (Legal & Compliances)

PLAN TO FUND YOUR BUSINESS - (Finance)

Index

Index 3

Editorial Special Story FORMATION OF A SINGAPORE PRIVATE LIMITED COMPANY

4

Finance

10 13

VALUING START-UPS PLAN TO FUND YOUR BUSINESS

Strategy GENERIC VS. STRATEGIC ORGANIZATION

18

Legal & Compliance COMPANY CLOSURE

21

STEP TO START A SECTION 8 COMPANY IN INDIA

29

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November 2017

2

Editorial

Companies are keen to come to India and do the business. Similarly, Indian entrepreneurs are also keen to do the business at global forum. Encouraged by the Singapore Government's liberal foreign direct investment, policies, business-friendly corporate tax policies, tax exemptions on foreign-sourced incomes and rst-world infrastructure, more and more India companies are making Singapore their incorporation destination. Strategic location, Ideal place for global trade and commerce, tax benets, exible immigration policies are some of the key benets which are attracting Indian corporate to do business in Singapore. In this article, you will come to know the basic requirements to open a company in Singapore.

Prashant Kumar

Editor

Business valuation is required for internal as well as external purposes. Valuing a running company may be easy. Valuing start-up companies LOOKS even easier; but truth is not that. There are many concerns attached with it. You will have fair idea of valuation approach of a start-up in this article.

Every business needs funds to grow. Requirements may be different. But whatever may be the purpose, there has to be a well dened/explained plan to get the fund.

For example, there should be well architected revenue model, sound business plan, feasibility report, nancial modeling (to have fair idea of sensitivity of impact of utilization of fund), selection of fund provider(s) and nally negotiation and exit plan.

The article attempts to provide complete approach to plan to fund.

Companies get open and few acquire high and sustained growth and few die slowly. In nut shell, few are generic and few are strategic organizations. This article has found 20 basic symptoms at which you can identify the organizations' character.

There are a number of companies, which are registered under the Companies Act, 1956/2013, but due to various reasons they are inoperative since incorporation or commenced business but became inoperative or defunct later on. The article focuses on the ways in which a company can be closed. It also discusses the eligibility criteria, benets, hiccups in the closure of companies. Hope you the article will be informative to you.

Happy Reading...

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November 2017

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Special Story

Formation of a Singapore Private Limited Company Singapore is known for its professional business environment and offers huge progression opportunities to the investors. Singapore is said to be one of the most politically stable economies in the world. It is estimated to be one of the few countries in the world where business can be set up with ease and at the same time, the owners can gain significant revenues. Furthermore, its strategic location makes it the perfect hub to gain access to the South East Asian markets. It is difficult to enter markets like Malaysia, Vietnam, Indonesia and Philippines without a Singapore setup, which helps ease issues like language constraints and cultural habits of people and businesses in these countries.

Encouraged by the Singapore Government's liberal foreign direct investment policies, business-friendly corporate tax policies, tax exemptions on foreignsourced incomes and first-world infrastructure, more and more India companies are making Singapore their incorporation destination.

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November 2017

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Special Story

All companies in Singapore must be registered with the Accounting & Corporate Regulatory Authority (ACRA) and abide by the Companies Act. When setting up business in Singapore, the most common legal form of foreign investor is the Private Limited by Shares (Pte Ltd).There are many advantages of a private limited company for Foreign Investor. Following are the advantages of company formation in Singapore.

Strategic Location Its strategic location ensures top-notch connectivity. Singapore's port is one of the busiest in the world, and the country is characterized as a prime International Maritime Center.

Ideal Place for Global Trade and Commerce Singapore is located at the heart of the Asia Pacific region, which makes this area an ideal destination for international companies planning to tap major Asian markets including Taiwan, India, China, Malaysia and even Australia.

Outstanding Tax Beneď€ ts Tax resident status can be enjoyed by foreign companies who set up a Singapore subsidiary company. In other words, they can avail the benefits of tax incentives and exemptions exclusive to local businesses. A newly incorporated parent Company, with at least one individual shareholder that has a minimum of 10% shareholdings, is entitled to the local tax exemption of zero tax for the first S$ 100,000 of its chargeable income.

Flexible Immigration Policies The Singapore government provides several tax incentives to certain foreign companies to attract more companies to set up their business operations from Singapore. It also offers long-lasting competitive benefits. Thus, there is an extensive list of foreign investors lined up to set up their Business in Asian Market.

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November 2017

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Special Story

Ease of Doing Business The World Bank's yearly Doing Business Report, has ranked Singapore consistently amongst the top in the world for 'Ease of Doing Business.' Singapore scored high points in areas that are important for entrepreneurs and start-ups; namely access to capital and credit, as well as how effectively insolvencies are resolved.

Better Infrastructure and Lower Corruption Start-up companies need all the assistance to achieve their maximum potential.

Even the most experienced entrepreneurs cannot operate in an environment that is hostile towards business growth. The difference between Singapore and India, with regards to fostering new businesses, is apparent.

Availability of Skilled Workforce Not having the right team is one of the key reasons why a start-up with a good idea can fail. The level of talent available in the country is directly proportional to how skilled the employees of a start-up company can be.

Basic Requirement to open a Singapore Company: Minimum 1 Shareholder (Individual/Corporate Entity) 1 Singapore Resident Director or foreigner holding valid employment pass 1 Singapore Resident Company Secretary Minimum Paid-up Capital of S$1 share capital can be held in any currency A local registered ofď€ ce address A Director or Shareholder can be the same or different person.

100% local or foreign shareholdings is also allowed Maximum 50 Shareholders for a private limited company Director must be a resident of a country or must own an Entrepreneur Pass or a Dependent / Employment Pass.

Name of the business entity

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November 2017

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Special Story

Time Requirement: Process in online and takes from several hours to several days to complete.

Before You Register Company in Singapore Keep in mind the following company information you'll need to provide for registering a business in Singapore: Company Name: Provide your company name to be registered in Singapore. This is required to check availability of the same and to get approval for your new company name before registering business in Singapore.

Brief Description of Business Activities :

Provide details of Business Activities to be done through your company in Singapore. Some business activity may require relevant permits / licence.

Directors: You must have at least one Resident Director in Singapore. This person can be a citizen, permanent resident, or someone with a valid employment pass or dependent pass. You can appoint as many directors, local and foreign, as you want Directors need not be shareholders.

Shareholders: For Private Limited Company, you can have between one and 50 shareholders.

Shareholders can be individuals or entities, local or foreign. After incorporation, you can issue or transfer shares to shareholders. Your Company is considered as an Exempt Private Company (EPC) if the private company has at most 20 shareholders, and No corporation holds (directly or indirectly) any beneď€ cial interest in the EPC's shares. EPC will enjoy audit exemption if the Company is fulď€ lled the small company requirement. A minimum of one shareholder is required. 100% foreign ownership is allowed.

Company Secretary.

Under the Singapore Companies Act, Section 171, you have six months to appoint a qualiď€ ed company secretary once you incorporate.

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November 2017

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Special Story Paid-up Capital: Your company must have at least S$1 in paid up capital, though you can increase the amount at any time after incorporation. Singapore companies do not use authorized capital. It can be Ordinary shares, preference shares or other shares.

Registered Address: You need to register a local business address. It can be residential or commercial, but can't be a post ofď€ ce box. Homeowners are allowed to conduct small-scale businesses using their residential premises.

Taxation.

Following tax exemptions and incentives are given to Singapore Companies: Pay no more than 8.5 percent tax on your ď€ rst S$300,000 of annual proď€ ts and 17 percent thereafter.

Forget about dividend or capital gains taxes.

Registration Procedure and Timeline Singapore Registrar of Companies is fully computerized. Your application is get submitted in under an hour and the Registrar can normally incorporate your business in the same day. You can reserve your company's name and register your company at the same time.

Reserve Your Company Name The Singapore Government must approve your company name before you can register it. The Company Registrar will oversee the process.

You can reserve your company name for 60 days and can get extension for another 60 days.

Register Company After the Registrar of Companies approves your company name, they will process your incorporation application and documents within a few hours.

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November 2017

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Special Story

Post-Registration Formalities Documents Issued Certicate of Incorporation The Singapore Company Registrar issues an email conrming the incorporation of th company. It includes the company's Unique Entity Number (UEM), which is the standard identication number issued by government to any entity registered in Singapore. A hard copy of the certicate of incorporation can be purchased if required.

Company Business Prole The Company Registrar will create a company business prole for your Singapore register company after the company registration process is completed.

Once you have the email notication and business prole, you can proceed with all legal and contractual tasks you need to perform in Singapore. You might need to open a corporate bank account, lease ofce space or set up your phone and Internet accounts.

Opening a Corporate Bank Account A private limited company is a separate legal entity from its directors and shareholders; therefore it will need its own bank account. Thus, a resolution by the board of directors of the company sanctioning the opening of the account and specifying the signatories to the account is required. You have to choose a bank to open your current account which does not require your physical presences.

Applying for Business Licenses Certain businesses require a special license. The companies that perform following activities will require applying for special Licenses: Restaurants Educational institutes Travel agencies Financial services Import/export of goods Employment agency Goods and Service Tax (GST) Registration If Company's annual revenue exceeds S$1 million, the company must register for GST. If your annual revenue is below S$1 million, you don't have to obtain GST registration.

Annual Filing Requirements Every company must hold its AGM every calendar year, with its nancial statements tabled at the AGM for shareholders' approval. Every company must le its annual returns within one month of its AGM date Annual Income Tax Requirements All Singapore incorporated companies must appoint an auditor within three months of incorporation; unless the company is exempted from audit requirements There are certain companies which are exempted from compulsory Audit Requirement.

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November 2017

9

Finance

Valuing Start-ups There is a famous saying “whenever there is transaction, there is valuation”. It is true. But the reverse is NOT true- “whenever there is valuation, there must have been transaction”.

Many times valuation is isolated from transaction.

A start-up has developed an idea. It has validated the idea. Business promoters would like to the value of their start-ups now and after, say, 1-3-5 years. Why so?

They need it to conrm that:Whether idea has been successful Whether business model and business plan has been successful.

The growth rate of the business Employees and other stakeholders' satisfaction Improvement in protability Strategic position in market place etc.

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November 2017

10

Finance

Start-up valuation is different from valuing any running business due to many reasons. Start-ups may not have:Business experience Operational skill set Brand name for their products/services Strong R&D base Dedicated execution team Experience of affording sudden economic shocks Required amount of fund etc.

However, the best part of is that start-up owners are not based and secondly, they can be guided and moulded on the above issues easily.

Let us discuss some techniques for the start-up valuation.

Asset approach: New businesses normally have few assets. Under this approach, market value of all the assets is assigned. Assets include current assets also. Apart from that, value of intangibles must also be assigned. The combined value will be the value of business.

All principals and employees add value.

Assigning value to all paid professionals based on their skills, knowledge, experience and their contribution to the organization may be a fair idea.

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Finance

Early customers and contracts in progress add value to the business. Existing customer relationship and contracts should be monetized.

Use of discounted cash ow is also a good idea. A reasonable number of future years for which sales seem to be visible can be forecasted. The cash prot should be capitalized at a discount rate. While estimating the discount rate care should be taken to factor the risk and uncertainty and if possible a bit conservative discount rate should be chosen.

Earnings multiple approach- earnings multiple is selected and the average earnings should be multiplied to reach valuation gure. This approach is usually applied to a more mature start-up.

To conclude, whatever may be the techniques used for start-up valuation, care should be taken that: It is unbiased It is relevant It considers all the aspects of valuation It is explanatory It serves the purpose of various stakeholders It should help in making decisions

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November 2017

12

Finance

Plan to fund your business It has been observed that many business owners start thinking about funding their business and approach to investors and ď€ nally whosoever investor is ready, if any, business owners go ahead with him. Later on the promoter-owner has to face many unnecessary problems because of it. It, sometimes, becomes self-devastating because of leakage of business idea.

Right way of getting fund starts with proper planning. Plans give insight to the owner and conď€ dence of investors in business idea and management.

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November 2017

13

Finance

From planning to Funding Get a feasibility report of your business idea We develop a business idea. We want it to give it a hard core shape of business.

We want to survive. We want to grow. We want to acquire market share and so we want to acquire another businesses. Feasibility report is the document which helps in the above all. Feasibility report, overall, says that whether the business shall be feasible at various dimensions.

Executive summary- An outlook of feasibility study Skill set of management needed to carry the business Product feasibility- It should include USP of the product also.

Price feasibility- What should be the feasible price of the product along with the associated services Market sustain ability- overall sustain ability of the product in the market Legal and environmental feasibility- Rules and regulations of central, state or local bodies& others Technical feasibility Financial Feasibility- Finance needed and whether the product is nancially viable, Start of revenue generation Limitations- During study Make Feasibility report more effective: Executive summary should be to-the-point Language of the report should be easy to understand Primary or secondary data sources, if any, should be mentioned.

All the dimensions which may affect the business positively or negatively should be considered.

Develop a business model and business plan Business Model Revenue generation model and Initial target market are its key components.

Revenue model should give fair idea of “From Where sound and consistent revenue can be generated and How”. Initial target market says “Who are the customers, How their needs can be fullled”.

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November 2017

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Finance Business Plan Business plan is very essential from company's future point of view.

Requirements are:

1. NO Bias:-It should be unbiased and disclose all the weaknesses and challenges.

2. Dynamism:- The business plan should be dynamic/exible and if possible auto-adjustable.

3. Well communicated to the managers:- Business plan should be framed in consultation of the internal managers who have responsibility to get it executed successfully.

4. Authority should match responsibility:- it is also a requirement that managers should be given required level of authority so that they can execute their responsibility.

5. Estimation of “Near to Right” amount of capital needed:- Company may plan for new product development, exploring new technology, exploring new marketing channels etc. For all these it needs capital. Company should estimate at least “Near to Right” amount of capital to achieve the above.

6. Study of trend in the industry:- Another requirement of setting growth oriented business plan is that the company should study and analyse past, present and expected future trend. Main trend parameters may beA. Product changes in the past B. Pricing of the product C. Changes in export market demand D. Entry of new competitors E. Expected variants in the products in future etc.

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November 2017

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Finance

7. Right identication of “KSF” & Triggers and possible changes in future:Identication of right KSF and trigger points is also required for setting up growth oriented business plan. Over a period of time these may change therefore, there should be proper track of it.

Designing a pitch deck A pitch deck is usually a 10-15 slide presentation designed to give a short summary of company, business plan and startup vision. Pitch decks also serve very different purposes, from trying to get a meeting with a new investor, to presenting in front of a stage, and each one of them should follow a different structure. A pitch presentation should be completely self-explanatory.

Pitch deck should be prepared as one page word document and power point presentation slides.

Identifying investors There are two types of investors- “pure nancial investors” and “Strategic investors”.

Pure nancial investors don't poke their nose into the business strategy and operation. They will be happy with small equity stake in your business but they will require much higher return and will prefer to exit from your business as early as possible after making money. Strategic investors are different. They will assist you in the business strategy and operational matters. They will be happy with relatively lower return (but more than average market return) will prefer to stay in the business for longer time period. They will prefer to exit from the business after getting signicant capital gain or will acquire the business later on at premium price.

Sorting out of investors It is not a good idea to approach all prospective investors; be it nancial investor or strategic investor. They need to be sorted out.

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Finance

Let's see what may be the general parameters on which you can sort them out: A. Are they talking about too much on nancial returns?

B. Are they discussing too much on exiting from your business?

C. Have they invested in past in related or any other business?

D. Do they want to keep their nominee director on board?

Approach, Negotiate & sign MOU It is good to approach few investors say 2-3 initially. Take a fair idea that what they want. Convince them that you need “this amount of nance at this given stage”. Negotiate on their expected return (of course they will demand higher one). Some of the investors will demand much higher dividend once your business becomes protable and on top of it higher capital appreciation while exiting from the business.

It is imperative to have and MOU signed with investors.

To conclude If sound planning is done before approaching any investor then chances of failure is close to NO. In nut shell, “plan to fund” not “fund to plan”.

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November 2017

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Strategy

Generic vs. Strategic organization Organizations differ in approaches. Approach makes them unique. Very few organizations are unique in nature. Let us discuss that what the difference between these two types of organizations are.

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Strategy Sr.

Parameters

Generic organization

Strategic Organization

Working

Traditional

Innovative

Wealth creation

No. 1

methodology 2

Focus

Profit maximization

3

Approach

Repeated

and New and unique

traditional 4

Culture

Local

Global and local both

5

Attitude

Common

Professional

6

Orientation

Cracking the deal and Identifying the actual needs of

7

Customers

getting the orders

customers and fulfilling those.

Customers’

Customers’ delight

satisfaction 8

Employees

9

Compensation

Short term asset

Long term asset

to Not assessed properly

employees 10

Corporate

Assessed

properly

and

periodically Not on priority at all

At priority

governance 11

Expansion

of Not so much

Aggressive on this aspect

business 12

13

Internal discussions Among

very

few Relatively with large number

on matters

people

of people in the organization

Communication

Communication gap is Well visible

established

communication channel and therefore no communication gap

14

Decision making

Limited to only top Extended level of management

15

Product

Traditional becomes

to

middle

level

managers.

and Modified or new products are out-dated developed

later on

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Strategy

16

Brand focus

Not or little and therefore Very high investment in little

investment

creating brand 17

Adaptation of new Reluctant

in creation

of

brand

and

brand recall Receptive

ideas 18

19

Services

Not exactly serving the Value added services are

Marketing way

need of customers

provided

Traditional

Innovative

to

reach

customers 20

Training

&

development

Skill Not visible of

Periodic as well as when required

employees

The above differences listed out may act as guide to organizations to convert themselves from generic to strategic.

Start-ups should try to create themselves as strategic organization right from the day one. Growth prospects in being strategic in nature are of course higher than those in generic.

Common steps of transformation could be: Selecting a parameter Assessing whether that falls under generic organization or strategic organization What are the changes required in the selected parameter Making time frame to make those changes Take off for changes

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November 2017

20

Legal & Compliance

COMPANY CLOSURE There are a number of companies, which are registered under the Companies Act, 1956/2013, but due to various reasons they are inoperative since incorporation or commenced business but became inoperative or defunct later on.

We all are aware the situation of Defaulting Companies as Registrar of Companies (herein after referred as ROC) the authority under Section 248 (1) of Companies Act, 2013 (hereinafter referred as Act) has issued notice against those defaulting companies and ask them to reply within 30 days from the date of receiving notice from the ROCs unless contrary provide the companies name will be struck off from the Registrar maintained at MCA portal ofď€ cial site and directors of defaulting company will be disqualiď€ ed for next ď€ ve years.

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Legal & Compliance

A company requires doing various compliances of Registrar of Companies (ROC), Income Tax (IT) and other Legal bodies like regular ling of income tax return, appointment of Auditor, balance Sheet and annual return ling with ROC and more. Failing to maintain compliance for a Company could result in nes and/or debarment of the Directors from incorporating another Company as name of director will be shown as defaulting Director in the register of Director of ROC. To enable inactive private limited companies to quickly close or wind up, the Ministry of Corporate Affairs has introduced Fast Track Exit Mode (FTE) - an easier way to close inactive companies at a cheaper cost with lesser formalities.

Venture Care can help you guide through the procedure for the closure of your company quickly and easily.

A COMPANY CAN BE CLOSED BY ADOPTING THE FOLLOWING WAYS:Strike off a company: Any defunct company desirous to strike off its name from the register of Registrar of company can apply in Form FTE for strike off its name from the register maintained by ROC. Similarly, ROC has also power to strike off any defunct company after satisfying himself of the need to strike off a defunct company and has reasonable cause.

Winding up The winding up of a company may be either – A. By the Tribunal (also known as compulsory winding up) B. Voluntary winding up C. subject to the supervision of the Court Here we will discuss striking of Company by ling Form FTE. Eligibility Criteria to File Form FTE: 1. A company has failed to commence its business within one year of its incorporation.

2. A company is not carrying on any business or operation for a period of two immediately preceding nancial years.

3. ROC data base need to be updated and the Company is free from all its legal compliances.

4. There should not be any creditor, if it is there take NOC from them that they are ready to waive off their dues and they have no objection if the company apply for strike off.

5. Bank Account of the company should be closed.

6. Fixed Asset of the company should be discharge.

7. There should not be any legal cases pending against company.

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Legal & Compliance

Situations in which Company can not apply for Strike off: The Company shall not made any application for the strike off of the Company if any time in the previous 3 month the company has done any of the below mentioned workings: A. Has Changed its name or B. Has Shifted its registered ofď€ ce from one State to another; C. has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business; D. has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement; E. has made an application to the Tribunal for the sanctioning of a Compromise Or Arrangement and the matter has not been ď€ nally concluded; or F. is being wound up under Chapter XX, whether voluntarily or by the Tribunal.

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Legal & Compliance Companies that cannot use Fast Track Exit option: A. Companies Registered Under Section 8 B. Listed companies; C. Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws; D. Vanishing companies; E. Companies where inspection or investigation is ordered and being carried out or actions on such order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the Court; F. Companies where notices have been issued by the Registrar or Inspector (under Section 234 of the Companies Act, 1956 (old Act) or section 206 or section 207 of the Act)and reply thereto is pending; G. Companies against which any prosecution for an offense is pending in any court; H. Companies whose application for compounding is pending; I. Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same; J. Companies having charges which are pending for satisfaction Benet to Close Company under FTE: Fast mode to Close Under FTE Company can be closed quickly, whereas traditional methods take longer and are more cumbersome. Hence, closing a company under fast track exit scheme is faster and easier.

Avoid Fines

A company that doesn't le its compliance on time incurs nes and penalty including debarment of the Directors from starting another Company. Hence, it is better to ofcially wind up a company that is inactive and avoid potential nes or liabilities in the future.

Low Cost When compared to maintaining compliance for a dormant company, it might actually be cheaper to wind up a company under. This is most cheapest way to wind up company in minimum budget or in minimum cost.

Easy to Close The fast track exit scheme was specically introduced by the Government to make it easy for inactive companies that have NIL assets and liabilities to close down or wind up. Hence, the formalities for winding up of a company under fast track exit scheme are easy to complete

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November 2017

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Legal & Compliance

Avoid Compliance A company is a legal entity and a juristic person established created under the Companies Act. Therefore, a company required regular maintenance of Compliance throughout its life cycle. Fast track exit used can be used close a company that is not active and avoid compliance responsibilities.

Documents Required: Application in form FTE. Copy of Board resolution authorizing the ling of this application; A statement of accounts showing the assets and liabilities of the Company made up to a day, not more than thirty days before the date of application and certied by a Chartered Accountant In the case of a company regulated by any other authority, approval of such authority shall also be required.

Indemnity bond to be given collectively by all directors on Rs. 500 Stamp paper; Afdavitto be given individually by each director on Rs. 200 Stamp paper Government ling fees: INR 5,000/-

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Legal & Compliance

Procedure for closure of company by ling Form FTE : Provide your company document as listed below so we can decide whether your company is eligible to le Form FTE for striking of name of the company.

A. Last Audited Balance sheet and prot and loss account.

B. MOA & AOA of the company.

C. Bank Statement of the Company.

D. Details of the company.

After reviewing document of your company if your company is eligible for ling Form FTE then we can proceed with documentation as listed below.

A. Board Resolution B. Statement of Account C. Indemnity Bond D. Afdavit E. Last le ITR Acknowledgment.

F. NOC from creditors, if any.

G. Sign copy of Form FTE if director does not have DSC. We will provide you all draft to be executed as listed above Once we received all documents from you we will le Form FTE with ROC. The Registrar shall, on receipt of such application Issue a public notice. Such notice shall be published in following manner A. Place copy of notice on the ofcial website of MCA on a separate link.

B. Published in the Ofcial gazette C. Publish in one English and one vernacular language newspaper, both having wide circulation in the state in which registered ofce of the Company is situated.

Intimation to Authorities for any objections: The Registrar of Companies shall, simultaneously intimate the concerned regulatory authorities regulating the Company, having jurisdiction over the Company, viz; A. Income Tax Authorities B. Central Excise Authorities C. Service Tax Authorities If the authorities have any objections, they have to furnish the same within a period of 30 days from the date of issue of the letter of intimation.

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Legal & Compliance Issue notice of Striking off and dissolution of Companies: If no objections received then ROC shall issue a notice u/s 248(5) of striking off of Company and publish the same in ofcial gazette. The copy of notice shall also be placed on the ofcial website of the MCA. Effect of Strike off: It shall on and from the date mentioned in the notice under sub-section (5) of section 248 cease to operate as a company and the Certicate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company Time Required for whole procedure : Whole procedure may take 1-2 month to get strike off status from ROC.

Frequently Ask Question: 1. What is Closure of Company?

When existence of the Company as a legal entity comes to an end it is known as the Closure of the Company.

2.What is the difference between Closure, Winding up, Dissolution of Company?

- Closure of the company is done voluntarily and is done through the fast track exit scheme.

- Winding up of the company may be voluntary or by the order of the Court by appointing an ofcial liquidator to monitor the process of winding up.

- Dissolution is initiated by the Court for ending the legal existence of the Company.

3. Why ROC ling is required for Closing a Company?

It is necessary to le Closure with the ROC as ROC or MCA data base need to be updated and the Company is free from all its legal compliances as it is ofcially closed.

Even though business of the company is closed, unless closure documents are led and approved by the ROC, company is not legally closed and the company needs to le all the regular returns.

4. What is Fast Track Exit (FTE) Scheme?

FTE is a company closure scheme initiated by MCA for easy and faster closure of Company.

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Legal & Compliance

5. Which Company is eligible to apply for Closure of Company?

Any Company which is not a Section 8 Company and has been inoperative for more than 1 year from the date of its incorporation can apply for Closure of Company under FTE scheme.

6. What are the expenses and cost involved in Closing a Company?

The ling fees for Form FTE isRs. 5000.

7. What documents are required for Closure of Company?

Application for Striking off of the Company, Board Resolution for closure, Consent of Directors, Director's Afdavit, Indemnity Bond, Statement of Assets and Liabilities.

8. What Forms to be led for Closing Company under Easy Exit Scheme of ROC? Form FTE 9. What is time limit to le Closure documents with ROC? The Form has to lled be led with ROC ofce within 30 days from the date of Signing of the Statement of Assets and Liabilities.

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Legal & Compliance

STEP TO START A SECTION 8 COMPANY IN INDIA As one of the largest markets in the world, India has a vast trade and commercial domain. However making prots through trade and commerce is not the only factor which is prominent in the Indian market. India as a huge country lacks behind in sectors like education, employment, health care, food, and safety, etc.

Our government is under a lot of pressure to ameliorate the conditions within the national legislation. The central government cannot address each and every issue simultaneously and this creates a space for specic organizations which assist the government working for the well-being of society. Such organizations are known as Non-prot organizations or non- government organizations.

A Non-prot organization can be registered as a Company under Section 8 of the Companies Act, 2013.It can also be registered as Trust or a Society. Section 8 company can be incorporated for promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object, provided it intends to apply its prots, if any, or other income in promoting its objects and intends to prohibit the payment of any dividend to its members.

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Legal & Compliance

PROS OF SECTION 8 COMPANY NO MINIMUM PAID UP CAPITAL REQUIREMENT: As per Companies Act, 2013 unlike private and public limited companies, Section 8 Company do not require any minimum capital contribution for incorporation.

They can commence there business without any share capital. The fund required for business can be brought in the form of donation and subscription from public and members of the Company.

TAX DEDUCTION: Since Section 8 Companies are non-prot making companies they are exempted from certain income tax provisions. They are also given numerous deductions and benets. Individual Donating Money in Section 8 companies also avail the benets of deduction under Section 80G of income Tax Act, 1961.

NO NEED TO USE TITLE : Unlike Private Limited company which uses 'Private Limited' as title after its name, Section 8 Company is not required to add any sufx or title to its name.

NO STAMP DUTY PAYABLE: A section 8 Company is exempted for the payment of stamp duty applicable for registration as applicable in case of other structures such as private limited or a public limited company.

CREDIBLE: A Section 8 Company has more credibility as compared to any other Non-prot organization structure be it a Trust or Society. As it is a licensed by the central government. It has more stringent regulations such as no change in MOA and AOA can be done at any stage or situation in a Section 8 Company. A section 8 company due its strict compliances as regard to functioning has a more reliable image in comparison to other legal structures.

POINT TO BE KEPT IN MIND BEFORE REGISTERING SECTION 8 COMPANIES: A. Decide regarding the proposed name to be applied, objects to be carried by the Company, authorized capital.

B. Name of Section 8 Company shall include the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral trust and the like words.

C. It should intend to apply its prots, if any or other income in promoting its objects.

D. It should intend to prohibit the payment of dividend to its members.

E. A partnership rm is allowed to be a member of the Section 8 company

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Legal & Compliance

MINIMUM REQUIREMENTS FOR SECTION-8 COMPANY: A. At least two shareholders B. Minimum two directors C. Shareholders and Directors could be same.

D. At least one Director should be Indian resident E. There is no minimum capital required.

F. Registered Ofce Address Proof (Rent agreement if the premises is not owned by the company) G. Documents claiming the ownership such as Sale Deed or House Tax receipt along with an NOC. PROCEDURE FOR INCORPORATION OF SECTION-8 COMPANY: A. B. C. D. E.

Get Digital Signature Certicate (DSC) of all members.

Get Director Identication number (DIN) of all Directors by using DSC. Suggest at least Six Company name. We will do search for name availability.

Apply to ROC for name approval.

Once name is approved by ROC File application to Central Government in Form INC -12 for grant of License to start Section 8 Company.

F. Once Central Government issues License le Incorporation document with ROC like MOA AOA Consent of Director, Afdavit and declaration from directors etc.

G. Once Incorporation form is approved by ROC, ROC shall issue Certicate of Incorporation with PAN and TAN No. Requirement to Apply for DSC: All members should have DSC 1. Pan Card Self Attested 2. Residential Proof Self Attested 3. Dully ll and sign DSC application form.

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Legal & Compliance Requirement to Apply for DIN: (Minimum Two Directors are required) 1. Photograph of the Applicant - To be Self-attested.

2. PAN - To be Self-attested 3. Mobile No. 4. Email id.

5. Educational Qualication 6. Occupation 7. Proof of residence of applicant 8. Address proofs like passport, election (voter identity) card, ration card, driving licence, electricity bill, telephone bill or bank account statement shall be attached and should be in the name of applicant ( shall not be later than 2 months).

9. DSC of Individual.

Requirement to Apply for Name Availability: 1. Six Proposed name with signicance of Name 2. Authorized Capital- Optional 3. Jurisdiction of Registrar of Companies.

4. Main Object to be pursued by Company Requirement to Apply for Central Government License of Section 8Company: 1. Draft MOA & AOA 2. INC -15 Declaration by each subscriber (On Non- judicial stamp paper of Rs. 100/- and duly notarized).

3. Afdavit by each subscriber regarding non disqualication (On Non- judicial stamp paper of Rs. 100/- and duly notarized).

4. Declaration by each subscriber regarding non acceptance of Public deposit (On Non- judicial stamp paper of Rs. 100/- and duly notarized).

5. Consent from all Directors in DIR- 2 6. Estimated statement of Income & Expenditure for Next three years and it should be signed the proposed Promoters.

7. Estimated Balance Sheet for Next three years and it should be signed the proposed Promoters.

8. List of proposed Promoters and Directors of the Company 9. Statement of ground on which application is made.

Requirement to Apply for Incorporation of Section 8Company: 1. Registered ofce address of Company.

2. Recent Address proof with NOC from Owner.

TIME PERIOD: Time Required for Incorporation of Section 8 Company Shall be 30-60 days, depending on government approval.

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Legal & Compliance

REGISTRATION OF COMPANY UNDER SECTION 12A AND 80G OF INCOME TAX ACT. Income of an organization is exempted if NGO has 12-A registration. This is one time registration.

If an organization has obtained certiď€ cation under section 80-G of Income Tax Act then donors of that NGO can claim exemption from Income Tax. Application for registration under section 12A and 80G can be applied just after registration of the NGO.It can be applied to the Commissioner of Income Tax (Exemption) having jurisdiction over the institution.

Both applications can be applied together or it can be also applied separately.

If some organization is willing to apply both applications separately, then application for registration u/s 12A will be applied ď€ rst. Getting 12A registration must for applying application for registration u/s 80G of Income Tax Act.

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About Venture Care:Venture Care is India's 1st of its kind online Business Solution Company which helps to Plan, Launch, Manage and Grow Businesses. Find More about us at www.venture-care.com

WHAT WE DO Since 2010, Venture Care (a S&F Advisory Brand) is helping businesses and enterprises to Plan a Business, start a business, run a business, Grow a Business and Close or Exit from a Business.

We at Venture Care generate ideas, spark actions and quantify time-bound results by providing tailored, practical and affordable solutions for the growth of your company. Venture-Care is dedicated to turning good ideas into measurable change Our team of Chartered Accountants, Business planner, Technocrats, Strategist, Marketers, Senior Bankers, Company Secretaries, Tax Experts and other professionals enables us to help and guide you to flourish your business aspirations.

Head Office (India) Venture Care

17 Ajinkytara, Kalaniketan Society s.no. 29, Kalanagar Near Rajrshi Shahu & Janta Bank.

Dhankawadi Pune 43. ask@venture-care.com 020 65363633

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