Incorporation of a Section 8 Company Under Companies Act, 2013

Where it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company

(a) Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object;

(b) Intends to apply its profits, if any, or other income in promoting its objects; and

(c) Intends to prohibit the payment of any dividend to its members,

the Central Government may issue licence on such conditions as it deems fit. [Section 8(1)]

Points to be kept in mind before incorporation of a Section 8 Company:

  • 8 Co. can only be incorporated as a Limited Company.
  • Decide regarding the proposed name to be applied, objects to be carried by the Company, proposed registered office address, authorized capital, number of promoters, number of directors, and number of shares to be subscribed by each promoter.
  • The name of the company should be in consonance with the principal objects of the company as set out in the memorandum of association. Every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum. [Rule 8(2)(b)(ii) of Companies (Incorporation) Rules, 2014]
  • The proposed name should not fall in the ambit of undesirable names specified in Rule 8 of Companies (Incorporation)Rules, 2014
  • Name of Section 8 Company shall include the words Foundation, Forum, Association, Federation, Chambers, Confederation, Council, Electoral trust and the like words. [Rule 8(7) of the Companies (Incorporation) Rules, 2014]
  • Objects of Section 8 Company must be the promotion of Commerce, Art, Science, Sports, Education, research, social welfare, religion, Charity, protection of environment or any such other object [Section 8(1)(a)]
  • It should intend to apply its profits, if any or other income in promoting its objects. [Section 8(1)(b)]
  • It should intend to prohibit the payment of dividend to its members. [Section 8(1)(c)]
  • No need to add the word Limited or Private Limited to its name.[Proviso to Section 4(1)(a) and Section 8(1)]
  • License from Central Government is required to be taken. (Section 8(1)
  • A partnership firm is allowed to be a member of the Section 8 company [Section 8(3)]
  • Section 8 company shall enjoy all the privileges and be subject to all the obligations of limited companies. [Section 8(2)]
  • There must be at least 2 or 3 subscribers to the memorandum in case company is proposed to be incorporated as private company or public company respectively. [Section 3(1)(a) and Section 3 (1)(b)]
  • Minimum number of Directors required is 2 Directors or 3 Directors, in case company is proposed to be incorporated as private company or public company respectively with a maximum limit of up to 15 Directors. A Company may appoint more than 15 directors after passing a special Resolution in a general Meeting. [Section 149(1)(a) (b)]
  • Section 8 company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.[(Section 149(3)]
  • All the Directors should have valid DIN. (In case the proposed directors dont have a Director Identification number (DIN) allotted to them, Pl. Ref. procedure for DIN Application.)
  • Digital Signature for any one of the Director is required to digitally sign the E-Forms to be submitted with the Registrar of Companies.

KNOW MORE PROCEDURE FOR INCORPORATION OF A SECTION 8 COMPANY :- https://lexcomply.com/3i0w

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Ease of doing business: Delhi Contract Labour

anujThe Contract Labour (Regulation and Abolition) Act, 1970 is a Central Act. However mostly all States are having their own rules. Likewise Delhi is also having its own rules namely Delhi Contract Labour (Regulation and Abolition) Rules, 1970. In the said act there are two types of approvals, one is on the part of contractor, which is called license (section 12) and second is on the part of employer, which is called registration certificate (section 7).

As Govt. of every State has been focusing on “Ease of Doing Business” and to take it forward the Labour Department Govt. of NCT of Delhi, has decided to easy the procedure for granting of registration & license in the following manner:

  1. Facility of filing of application form for license(Form IV)/registration(Form I) through online is avail.
  2. Application for license shall be supported by certificate issued by Principal Employer in form V.
  3. Application form whether for license or for registration, shall be supported by MOA & AOA or partnership deed or Proprietor’s ID proof as the case may be.
  4. Details of fee to be paid should be given in application form.
  5. Wages shall be paid to the contract workers only through A/C payee Cheque/ECS transfer.
  6. Contractor to comply all the conditions of license as provided in rule 25.
  7. License/registration certificate shall be granted by concerned officer within 7 days from the date of receiving of application.

Disclaimer : This is an effort by Lexcomply.com to contribute towards improving compliance management regime. User is advised not to construe this service as legal opinion and is advisable to take a view of subject experts. 

Impact of Revised GST Model Law

gst

With the issuance of revised model GST law, the countdown to implement much awaited Goods & Service Tax on 01.04.2017 has begun. It is required to recall here that on June 14th, this year, the aforesaid revised model was share for public feedback and now it is here with all the revisions based on the comments of public.

The major changes in the revised model include clear exclusion of securities from the definition of goods. Goods now means”every kind of movable property other than money & securities.” Another change is removal of ambiguity over taxation of supply to SEZ units, it is now clear that the same will avail all benefits available in the existing law.  Inclusion of new provisions regarding “place of supply”, “use of business assets & services for private or Non-Business use”, “supplies made by principal to agent & vice-versa” are some of the other remarkable revisions.

But the most significant one is the introduction of ANTI-PROFITEERING which ensures responsibility of companies to pass the benefits of GST to ultimate consumers. The clause is dedicated to the fair price chargeability & transparency in price mechanism.

Though all the above will surely come out with positive impacts but despite expected positive outcomes the law certainly has many complications & it will be worth watching what challenges will the current government face for  getting it pass from both houses & later by the ultimate consumers.

Disclaimer: This is an effort by Lexcomply.com to contribute towards improving compliance management regime. User is advised not to construe this service as legal opinion and is advisable to take a view of subject experts.

Incorporation of A Private limited Company

lexcomplySection 2 (68) states that a private company means a company having a minimum paid up share capital as may be prescribed, and which by its articles:

  1. restricts the right to transfer its shares;
  1. limits the number of its members to two hundred;
  1. prohibits any invitation to the public to subscribe for any securities of the Company:

Points to be kept in mind before incorporation of a Private Limited Company:

Decide regarding the proposed name to be applied, objects to be carried by the Company, proposed registered office address, authorized capital, number of promoters, number of directors, and number of shares to be subscribed by each promoter.

The name of the company should be in consonance with the principal objects of the company as set out in the memorandum of association. Every name need not be necessarily indicative of the objects of the company, but when there is some indication of objects in the name, then it shall be in conformity with the objects mentioned in the memorandum. [Rule 8(2)(b)(ii) of Companies (Incorporation) Rules, 2014]

The proposed name should not fall in the ambit of undesirable names specified in Rule 8 of Companies (Incorporation)Rules, 2014

The Company must have a minimum Paid up Share Capital as may be prescribed. [Section 2 (68)]

There must be at least 2 subscribers to the memorandum. [Section 3(1)(b)]

Maximum number of members allowed is 200 members [ section 2(68)]

Minimum number of Directors required is 2 Directors with a maximum limit of up to 15 Directors. A Company may appoint more than 15 directors after passing a special Resolution in a general Meeting. [Section 149(1)(a) (b)]

Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year.[(Section 149(3)]

Restrictive provisions given under definition of Private Company [Section 2(68)] should be taken care of and be included in the Drafting of Memorandum and Articles of Association of Company.

All the Directors should have valid DIN. (In case the proposed directors don’t have a Director Identification number (DIN) allotted to them, Pl. Ref. procedure for DIN Application.)

Digital Signature for any one of the Director is required to digitally sign the E-Forms to be submitted with the Registrar of Companies.

Know More: – Procedure for Incorporation of Private Limited Company

Companies Act Encyclopedia

encyclopedia

LexComply.com is pleased to announce launch of Act-Encyclopedia. Free access to all the custodians of compliances. Just click on the link: – Act Encyclopedia – LexComply to use the facility.

Ordinarily, a company operating in the Indian regulatory environment needs to comply with Central, State and Local legislation depending on the following:

  1. Business of the Company;
  2. Operational Process followed to do such business;
  3. Locations where such business is being carried on; and
  4. HR involved in the process.

For this it is essential that we articulate a list of applicable laws.

Further we are often faced with situations that where we need to check the applicability of an Act/Regulations may be due to notice from any government department or queries raised by clients/Auditors/Management etc.

In that case Act encyclopedia will prove to be immense value.

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  1. On click of button you can see the applicability criteria ;
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Disclaimer: This is an effort by Lexcomply.com to contribute towards improving compliance management regime. User is advised not to construe this service as legal opinion and is advisable to take a view of subject experts.