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FAQs
             I )  Company Law
  • Forms for starting business in India? +

    • Ans. .The following are the ways to start business in India:

      1)  Company form of Business

      i) Puplic limited company

      ii) Private Limited Company

      iii) Unlimited Company

      iv) Non-Profit Oriented Company

      v) Foreign Company

      2)  Partnership form of Business

      i) Conventional Partnership

      ii) Limited Liability Partnership (LLP)

      3)  Sole Proprietorship form of Business

      A balanced decision regarding capital commitment, control, risk and responsibilities can help in choice or selection of form business. The formThe form of Business and its decision is also dependent on following various aspects:

      a)  Scale of activity to be undertaken
      a)  Governing Law for the activity
      a)  Tax Structure

      Foreign nationals are allowed to invest under sole proprietorship or partnership subject to prior permission of Reserve Bank of India.


  • What are the requirements to incorporate a Company in India? +

    • Particulars In case of Private Ltd Company In case of Public Ltd Company
      Minimum Directors 2 3
      Minimum Subscribers/shareholders 2 7
      Minimum Paid-up Capital Rs.100,000/- Rs.500,000/-
      Director Identification Number (DIN) For all the proposed Directors For all the proposed Directors
      Digital Signature Certificate (DSC) At-least for one Director At-least for one Director
      Name of the State where the proposed company is required to be registered

  • What is a Private Limited Company? +

    • Ans.Private form of company is association having not less than two and not more than fifty members, whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to invite the general public to subscribe to its shares or debentures of a Company.

      Hence, private from of company is preferable who wish to restrict its liability limited and wish control over the business within a limited circle and maintain the privacy of their business.

  • What is a Public Limited Company? +

    • Ans. Public form of company is association having not less than seven members without any restriction on number of member, whose liability is limited, subjected to stringent rules and regulation of Company Law.

      As per section 3(1)(iv)(c) of the Companies Act, 1956, the status of private Company, which is subsidiary of Public Limited Company, is also be treated as public limited company.

      Hence, Public form of company is preferable who wish to accumulate larger amount of Capital.
  • What is a Foreign Company? +

    • Ans.Companies / body corporate incorporated / registered outside India under the statute of that foreign company.
  • How many times board Directors of a company is required to meet in a year? +

    • Ans.The Board of Directors of every company is required to meet at least once in every three months & at least four times in every year.
  • When Annual General Meeting (AGM) of the shareholders is required to be held ?

    • Ans.Every Company in each year hold in addition to any other meeting a general meeting as its annual general meeting within a period of six months from close of financial year or not more than gap of fifteen months between two annual general meetings.
  • Can a company buyback its shares without passing shareholders’ resolution? +

    • Ans.Yes, A company may buy-back its shares without shareholders’ resolution, to the extent of 10% of its paid up equity capital and reserves. However, if a company intends to buy-back its shares to the extent of 25% of its paid up capital and free reserves/ then the same has to be approved by Shareholders Resolution as specified in Section 77 A of Companies Act, 1956.

  • what is the manner in which the company can buy back its own shares? +

    • Ans. The Company can buy back its shares in any of the following manners:

      1)  From the existing shareholders on a proportionate basis through the tender offer.

      1)  From open market through:

      A)Book building process

      B)Stock exchange,

      1)  From odd lot holders.


  • whether a company can utilize its revaluation reserve for issue of bonus shares?

    • Ans. A Listed Company cannot utilize its revaluation reserve for issue of bonus shares as per the provisions of Chapter IX of (ICDR) Regulations, 2009. In case of unlisted public companies where provisions of Table A apply, as per provisions of regulation 96(3) of Table A, revaluation reserve cannot be utilized for the purpose of issue of bonus shares & in case of private limited companies – where provisions of Table A is not applicable, revaluation reserve can be utilized for the purpose of issue of bonus shares; however bonus shares should be fully paid-up.d.
  • What is XBRL and in to whom it will be applicable in the first phase? +

    • Ans. XBRL stands for eXtensible Business Reporting Language. XBRL is a language for the electronic communication of business and financial data which is revolutionizing business reporting around the world.It provides major benefits in the preparation, analysis and communication of business information. It offers cost savings, greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data. It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world. All Companies Listed in India and their subsidiaries having paid-up capital of Rs. 5 Crore and above or turnover of Rs. 100 crore and above, excluding banking companies, insurance companies, power companies, NBFC Companies and overseas subsidiaries
  • Who create companies statement in XBRL? +

    • Ans. Data from accounting databases can be extracted in XBRL format. It is not strictly necessary for an accounting software vendor to use XBRL ; third party products can achieve the transformation of the data of XBRL.
  • Which taxonomies developed for Indian reporting requirements? +

    • Ans. Taxonomies for Indian companies are developed based on the requirements of

      •  Schedule VI of Companies Act,
      •  Accounting Standards, issued by ICAI
      •  SEBI Listing requirements.

  • What is Taxonomy? +

    • Ans. Taxonomy can be referred as an electronic dictionary of the reporting concepts. Taxonomy consists of all the data definitions, the basic XBRL properties and the interrelationships amongst the concepts. It includes terms such as net income, EPS, cash, etc. Each term has specific attributes that help define it, including label and definition and potentially references. Taxonomies may represent hundreds or even thousands of individual business reporting concepts, mathematical and definitional relationships among them, along with text labels in multiple languages, references to authoritative literature, and information about how to display each concept to a user.
  • What is required to be converted into XBRL for the purpose of filing with mca? +

    • Ans. Entire annual report is required to be converted using tools into XBRL i.e. notice of AGM ,Directors Report ,Auditors Report,Balance Sheet, Profit &Loss Account its annexures, notes on accounts, cash flow ststement etc.

    ii) Foreign Exchange Management Act (FEMA)

  • Describe the various kind of entry mode are available to Foreign Investor? +

    • Ans. Following kinds of entry mode are available to Foreign Investor:

      •  May set up Liaison Office/ Representative Office
      •  May set up Project Office
      •  May incorporate a Wholly owned Subsidiary Company
      •  May incorporate a Joint Venture Company

  • What is Liaison Office? +

    • Ans. Liaison Office' means a place of business to act as a channel of communication between the Principal place of business or Head Office by whatever name called and entities in India but which does not undertake any commercial / trading/ industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channels. Approval for establishing a liaison office in India approval is granted by Reserve Bank of India (RBI).

      •  Liaison Office can carry following activities:
      •  Representing in india the parent company/group companies.
      •  Promoting export/import from/to India;
      •  Promoting technical/financial collaboration between parent/group companies and companies in India; and
      •  Acting as a communication channel between the parent company and Indian companies.
  • What is Project Office? +

    • Ans. Project Office' means a place of business to represent the interests of the foreign company executing a project in India but excludes a Liaison Office. Foreign Companies planning to execute specific projects in India can set up temporary project/site offices in India. RBI has now granted general permission to foreign entities to establish Project Offices subject to specified conditions. Such offices cannot undertake or carry on any activity other than the activity relating and incidental to execution of the project. Project Offices may remit outside India the surplus of the project on its completion, general permission for which has been granted by the RBI.
  • What is Branch Office? +

    • Ans. Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes:
      •  Export & Import of goods
      •  Carrying out research work, in which the parent company is engaged.
      •  Representing the parent company in India and acting as buying/selling agents in India.
      •  Rendering services in Information Technology and development of software in India.
      •  Rendering technical support to the products supplied by the parent/ group companies.
      •  Foreign airline/shipping Company.
      A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Branch Offices established with the approval of RBI.
  • What the procedure for receiving Foreign Investment in an Indian company? +

    • Ans. A Foreign Company planning to set –up business operations in India can do so under two following routes:

      1)  Automatic Route:

      FDI up to 100 per cent is allowed under the automatic route in almost all the activities/sector. FDI in sectors /activities to the extent permitted under the automatic route does not require any prior approval either of the Government or the Reserve Bank of India. Sectors /Activities not permitted under automatic route have to take approval from FIPB (Government Route) for investing in India

      1)  Government Route
      FDI in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance.Indian companies having foreign investment approval through FIPB route do not require any further clearance from the Reserve Bank of India for receiving inward remittance and for the issue of shares to the non-resident investors.

      The Indian company having received FDI either under the Automatic route or the Government route is required to report in the Form FC-GPR, Annexure II, the details of the receipt of the amount of consideration for issue of equity instrument viz. shares / fully and mandatorily convertible debentures / fully and mandatorily convertible preference shares through an AD Category –I Bank, together with copy/( ies) of the FIRC evidencing the receipt of inward remittances along with the Know Your Customer (KYC) report on the non-resident investors from the overseas bank remitting the amount, to the Regional Office concerned of the Reserve Bank of India within 30 days from the date of receipt of inward remittances. Further, the Indian company is required to issue the equity instrument within 180 days, from the date of receipt of inward remittance or debit to NRE/FCNR (B) account in case of NRI/ PIO.

    iii) Security Law

  • What are kinds of issues which can be made by an Indian company in India? +

    • Ans. Issues that can be made by an Indian company in India can be classified as Public Issue, Rights Issue, Bonus Issue and Private Placement. While right issues by a listed company and public issues involve a detailed procedure, bonus issues and private placements are relatively simpler. The classification of issues is as illustrated below:

      •  Public issue
      •  Initial Public Offer (IPO)
      •  Further Public Offer (FPO)
      •  Rights Issue
      •  Bonus Issue
      •  Private Placement
      •  Preferential Issuet
      •  Qualified Institutional Placement (QIP)

  • What is an offer document? +

    • Ans. Offer document’ is a document which contains all the relevant information about the company, promoters, projects, financial details, objects of raising the money, terms of the issue etc and is used for inviting subscription to the issue being made by the issuer.

  • Whether a foreign company access Indian securities market for raising funds? +

    • Ans. Yes, a foreign company can access Indian securities market for raising funds through issue of Indian Depository Receipts (IDRs)

  • Whether draft prospectus for IDR, has filled with SEBI case of domestic issues? +

    • Ans. Yes, Foreign issuer is required to file the draft prospectus with SEBI. Any changes specified by SEBI shall be incorporated in the final prospectus and that to be filled with Registrar of Companies (ROC).

    IV. LIMITED LIABILITY PARTNERSHIP (LLP)

  • What is “limited liability partnership”? +

    • Ans. limited liability partnership:-

      •  The LLP can continue its existence irrespective of changes in partners. It is entering into contracts and holding property in its own name.
      •  The LLP is separate legal entity, is liable to the full extent of its assets but liability of partners is limited to their agreed contribution in tLLP.
      •  Further, no partner is liable on account of the independent or un-authorized actions of other partners
      •  LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership.

      Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm structure’ LLP is called a hybrid between a company and a partnership.

  • What are the advantages of forming LLP? +

    • Ans.Advantages of LLP form are given below:

      LLP form is a form of business model which:
      •  is organized and operates on the basis of an agreement.
      •  provides flexibility without imposing detailed legal and procedural requirements
      •  enables professional/technical expertise and initiative to combine with financial risk taking capacity in an innovative and efficient manner
  • Who can be a “Designated Partner”? +

    • Ans.Every LLP shall be required to have at least two Designated Partners who shall be individuals and at least one of the Designated Partner shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

    V. LABOUR LAWS & Intellectual Property Right (IPR)

  • Who will be covered by the Pension Scheme? +

    • Ans. Every member of the ceased Family Pension Scheme 1971 and anyone who joins any covered establishment on or after 16-11-95 is compulsorily to join this scheme, provided his/her salary/wage is less than Rs. 6500/- per month at the date of appointment.

  • How many years service is required to be eligible to receive member pension? +

    • Ans.Minimum 10 years eligible service will entitle for member pension.
  • What is Intellectual Property? +

    • Ans. Intellectual property (IP) refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce for which a set of exclusive rights are recognized

  • What is a trademark? +

    • Ans.A trademark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or services from those of other entities.

  • What is copyright? +

    • Ans.Copyright is a set of exclusive rights granted to the author or creator of an original work, including the right to copy, distribute and adapt the work.

  • What is patent? +

    • Ans.A patent is a set of exclusive rights granted by a state (national government) to an inventor or their assignee for a limited period of time in exchange for a public disclosure of an invention.

  • How many classes in Forth Schedule of Trade Mark Rules, 2002 under trade mark can be registered? +

    • Ans. 45 Classes

  • Can a Trade Mark be registered under more than one clause? +

    • Ans. Yes, it can be registered for more than one clause. If the user claim trade mark for more than one clause of goods, it can be registered for more than one clause..

  • What is an offer document? +

    • Ans. Offer document’ is a document which contains all the relevant information about the company, promoters, projects, financial details, objects of raising the money, terms of the issue etc and is used for inviting subscription to the issue being made by the issuer.

 
   
 
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