HK Prabhu & Co.

The concept of One Person Company in India was introduced through the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity. One of the biggest advantages of a One Person Company (OPC) is that there can be only one member in a OPC. One Person Company is a separate legal entity from its promoter, offering limited liability protection to its sole shareholder, while having continuity of business and being easy to incorporate.

Private Limited Company is the most common and popular type of legal entity in India. Private limited company registration is governed by the Companies Act, 2013. It's is the most simplest & easiest form of legal entity formation in India, with least statutory rules & regulations applicability.

A public limited company under companies act, 2013 is a company that has limited liability & offers shares to the public. Its shares can be acquired by anyone. A public limited company has strict regulations than private limited company & is strictly regulated by the government regulators in India.

LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP can continue its existence irrespective of changes in partners. It is capable of entering into contracts and holding property in its own name. The LLP is a separate legal entity, is liable to the full extent of its assets but liability of the partners is limited to their agreed contribution in the LLP.

A partnership is formed when two or more individuals come together to start a business with a set of terms and conditions. These terms and conditions govern the relationship between the partners who have a motive of making profit. The partners have unlimited liability. The partners bear the risk equally and decisions regarding the business are taken with mutual consent. A partnership may be continued if the rest of the partners deem well to do so. In a partnership, the partners are responsible for each other's act. This means that the decision of one partner over the business will affect the other partner as well.

A wholly owned subsidiary is a company whose common stock is 100% owned by another company, the parent company. Whereas a company can become a wholly owned subsidiary through an acquisition by the parent company or having been spun off from the parent company, a regular subsidiary is 51 to 99% owned by the parent company.

Section 8 Company is named Section 8 of the Companies Act, 2013, which pertains to a established 'for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object', provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members. Therefore, Section 8 Company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes.

A Nidhi company, is one that belongs to the non-banking Indian finance sector and is recognized under section 406 of the Companies Act, 2013. Their core business is borrowing and lending money between their members. They are also known as Permanent Fund, Benefit Funds, Mutual Benefit Funds and Mutual Benefit Company. They are regulated by Ministry of Corporate Affairs.

The Chit Fund Company is a financial institution engaged in the principal business of managing, conducting and supervising the chit scheme. The "Chit" is the financial arrangement wherein a certain number of persons/subscribers enter into an agreement that subscribes to a certain sum of money by way of installments over a definite period of time. Each subscriber shall in his turn, be entitled to a prize amount as determined by the lot, or tender or auction or in such other manner as specified in the chit agreement.

A Trust is one of the common form of not-for-profit entity in India. Trusts can be established for various charitable purposes, including the relief of poverty, education, medical relief, provision of facilities for recreation, and any other object of general public utility. A, trust must be register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption. In the metro city of India, Trust can be registered in the office of Sub-Registrar. Societies are membership organizations that may be registered for charitable purposes. While only two individuals are required to form a trust, a minimum of seven individuals are required to form a society. The applicants must register the society with the state Registrar of Societies having jurisdiction in order to be eligible to apply for tax-exempt status. Societies are usually managed by a governing council or a managing committee.

A Producer Company is thus a body corporate having an object that is one or all of the following: Production, Harvesting, Procurement, Grading, Pooling, Handling, Marketing, Selling, Export of primary produce of the Members or import of goods or services for their benefit. Further, the Producer Company must deal primarily with the produce of its active Members and is allowed to carry on any of the following activities by itself or through other entities - on behalf of the members.

A Non Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 of India, engaged in the business of loans and advances, acquisition of shares, stock, bonds, hire-purchase insurance business or chit-fund business but does not include any institution whose principal business includes agriculture, industrial activity or the sale, purchase or construction of immovable property.

1. Proprietorship to Company: Many business people start their businesses as a Sole Proprietorship due to the low compliance requirements. As the business and the incomes grow, there is a need to separate the bank accounts and the tax filings of the Sole Proprietor and that of the business. To accomplish this separation a possible solution is to convert the Sole Proprietorship into a Pvt. Ltd. Company & to do so, an agreement has to be executed between the Proprietorship and the Pvt. Ltd. Company (once it is incorporated) for the sale of the business. Further, such Pvt. Ltd. Company so incorporated must have "The takeover of a Sole Proprietorship Concern" as one of the objectives in its Memorandum of Association.
2. One Person Company (OPC) to Company: The conversion of an OPC into Pvt. Ltd. Company as per Section 18 of the Companies Act, 2013 and the provisions of Companies (Incorporation) Rules of 2014 should be discharged by a newly formed Pvt. Ltd. Company. These rules will not affect the existing debts, liabilities, obligations or contracts of the OPC. There are two ways of converting an OPC into a Pvt. Ltd. company either voluntarily or mandatorily. Under both these type of conversions, the requirements are necessary alterations in the MOA and AOA of the OPC. The section says to obtain no objection in written form, from the concerned members and creditors; passing a resolution in support of conversion; For incorporating a private limited company the minimum paid capital is done away with. two members and two directors at a minimum is only needed for forming a private limited company.
3. Limited Liability Partnership to Company - Several businesses started in India as LLP, may now wish to convert into a Pvt. Ltd. Company for more growth in business or for infusing equity capital. An LLP can be converted into a Pvt. Ltd. company as per the provisions contained in Section 366 of the Companies Act, 2013 and Company (Authorized to Register) Rules, 2014. However, there are various requirements which need to be satisfied for converting an LLP into a Pvt. Ltd. Company, for instance, an LLP must have at least 7 partners, approval from all the partners is required, advertisement in newspaper is to be done in a local and a national newspaper, a No Objection Certificate (NOC) is required from the ROC where such LLP is registered and then all the incorporation process has to be undertaken.

A Foreign Subsidiary company is any company, where 50% or more of its equity shares are owned by a company that is incorporated in another foreign nation. The said foreign company in such a case is called the holding company or the parent company. Or a company to be a Foreign Subsidiary company in India, the company itself must be incorporated in India. It does not matter which country the parent company is incorporated in.

Every company is required to file the Audited financial statement and annual return as per The Companies Act, 2013 within 30 days and 60 days respectively from the conclusion of the Annual General Meeting date. Filing of Audited financial statement is governed under Section 129 and 137 of The Companies Act, 2013 read with Rule 12 of the Company (Accounts) Rules, 2014 and annual return is governed under Section 92 of the Companies Act, 2013 read with Rule 11 of the Companies (Management and Administration) Rules, 2014. Every company has to attach some important documents while filing accounts with the ROC and it includes:
Balance-Sheet: Form AOC-4 to be filed by all companies while ROC filing
Profit & Loss Account: Form AOC-4 to be filed while ROC filing by all companies
Annual Return: MGT 7 to be filed by companies
Cost Audit Report: Form CRA 4 to be filed by certain classified companies

'Secretarial Audit' is introduced by recently enacted Companies Act, 2013. It is a process to check compliances made by the Company under Corporate Law & other laws, rules, regulations, procedures etc. It is a mechanism to monitor compliance with the requirements of stated laws and processes. Periodically examination of work is necessary to point out errors & mistakes and to make a robust compliance mechanism system in an organization. Following companies are required to obtain 'Secretarial Audit Report' form independent practicing company secretary:
(1) Every listed company.
(2) Every public company having a paid-up share capital of Fifty Crore rupees or more.
(3) Every public company having a turnover of Two Hundred Fifty Crore rupees or more.

As per Companies Act, every company is required to maintain certain records and registers to comply with the various sections and rules of companies act. Further these records must be kept at the registered office of the company if it is required to be accessed by any stakeholder. Also it is required to conduct various meetings of directors, shareholders, committees (if any), etc at regular intervals. The minutes of such meetings have to be recorded and also kept the registered office of the company.

XBRL is the acronym for Extensible Business Reporting Language. As the name itself suggests, it is a language for presentation of data which permits easy analysis and interpretation thereby reducing cost, time and effort. XBRL is only a method of presentation or reporting. It does not attempt to make any changes in the content to be reported. The idea behind XBRL is simple. Instead of treating financial information as a block of text - as in a standard internet page or a printed document - it provides an identifying label (tag) for each individual line item of data. This data then becomes computer readable. Following companies are required to file their financial statements via XBRL only -
(i) Companies listed with stock exchanges in India and their Indian subsidiaries;
(ii) Companies having paid up capital of five crore rupees or above;
(iii) Companies having turnover of one hundred crore rupees or above;

A trademark is a type of intellectual property consisting of a recognizable sign, design, or expression which identifies products or services of a particular source from those of others, although trademarks used to identify services are usually called service marks. Trademark registration provides the legal right of exclusivity for use of the mark to the owner of the trademark.

A Search & Status Report traces the history of a company or the property held by the company - i.e. who is the original owner of the property and how it has mortgaged with various banks over a period of time before reaching the present Bank who has demanded the Search Report. This is an important part of a loan process by Banks to the Companies. The need for Search & Status Reports arises to keep Banks safe and to ensure that the company is not the defaulting one or having not the defaulting directors and to know the complete history and information about the company.

Import Export (IE) Code is a registration required for persons importing or exporting goods and services from India. IE Code is issued by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industries, Government of India. IE Code application must be made to the Directorate General of Foreign Trade along with the necessary supporting documents. Once, the application is submitted, DGFT will issue the IE Code for the entity in 15 - 20 working days or less. However, the following category of persons are exempted from obtaining an IE Code:
1. Importer and export by central Government or agencies or undertakings for defence purpose or other specified lists under Foreign Trade (exemption from the application of Rules in certain cases) Order, 1993.
2. Import or Export of Goods for personal use.