Friday, July 30, 2010


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Procedure of issue of shares
When company has been registered, the following procedure is adopted by the company to collect money from the public by issuing of shares:
Issue of prospectus: When a Public company intends to raise capital by issuing its shares to the public, it invites the public to make an offer to buy its shares through a document called ‘Prospectus’. According to Section 60 (1), a copy of prospectus is required to be delivered to the Registrar for registration on or before the date of publication thereof. It contains the brief information about the company, its past record and of the project for which company is issuing share. It also includes the opening date and the closing date of the issue, amount payable with application, at the time of allotment and on calls, name of the bank in which the application money will be deposited, minimum number of shares for which application will be accepted, etc.

Thursday, July 29, 2010

Procedure for change in Registered office:

Procedure for change in Registered office:
In Case The Registered Office Is Proposed To Be Changed Within The Local Limits:
1.       Hold a Board meeting to decide about the change.
2.       File the notice of change with the concerned ROC in Form No. 18 alongwith a certified copy of the Board resolution approving the change within 30 days of the decision taken in the Board. (alongwith the requisite Fees.)
In Case The Registered Office Is Proposed To Be Changed Outside The Local Limits: (But Within The State):
1.       Hold a Board Meeting to decide about the change and to fix up the date, time, place and agenda for the General Meeting to pass a Special Resolution for the same.
2.       Issue notice for the General Meeting proposing Special Resolution with suitable Explanatory Statement.
3.       Hold General Meeting & pass the Special Resolution by ¾ Majority.
4.       File the Special Resolution with ROC within 30 days in Form No. 23 with Explanatory Statement.
5.       File the notice of Change with ROC in Form No. 18 within 30 days of passing of the Special Resolution.
6.      Requisite Fees.

Mergers & Amalgamations under the Companies Act, 1956

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Mergers & Amalgamations under the Companies Act, 1956
The terms merger and amalgamation have not been defined in the Companies Act, 1956 (hereinafter referred to as the Act) though this voluminous piece of legislation contains 69 definitions in Section 2. The concept paper recently issued by the Ministry of Company Affairs, the fate of which is still unknown, contained 100 such definitions but still stopped short of defining merger or amalgamation. The terms merger and amalgamation are synonyms and the term ‘amalgamation’, as per Concise Oxford Dictionary, Tenth Edition, means, ‘to combine or unite to form one organization or structure’.
The provisions relating to merger and amalgamation are contained in sections 391 to 396A in Chapter V of Part VI of the Act. Any proposal of amalgamation or merger begins with the process of due diligence, as the proposal for merger without due diligence is like entering a tunnel with darkness growing with each step. The due diligence process makes the journey see the light at the end of the tunnel – the light of wisdom to amalgamate or not.

Transfer Pricing

Transfer Pricing

Increasing participation of multi-national groups in economic activities in the country has given rise to new and complex issues emerging from transactions entered into between two or more enterprises belonging to the same multi-national group. As these multinational groups may avoid tax by manipulating the prices charged and paid in such intra-group transactions. To check the tax avoidance by multinational groups the provisions regulating transfer pricing have been introduced in the Income Tax Act.  The Finance Act, 2001 substituted section 92 with a new section and introduced new sections 92A to 92F in the Income-tax Act, relating to computation of income from an international transaction in order to facilitate the computation of reasonable, fair and equitable profits and tax in India in the case of businesses carried on by multinational companies. The transfer pricing provisions are in line with those stipulated by OECD. However there is a difference that the Indian legislation does not permit the use of unspecified method to compute arms length price as permitted in OECD guidelines.

Inter Corporate Borrowing and its legal issues under Companies Act, 1956

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Inter Corporate Borrowing and its legal issues under Companies Act, 1956

Inter corporate borrowings are governed by section 372A of the companies Act. This section can be understood in the following ways:

Scope of Section 372A

  • When a company makes a loan to any other body corporate
  • When a company acquires the securities of any other body corporate
  • When a company gives any guarantee or provides any security to
(i) Any person who gives a loan to any body corporate or
(ii) A body corporate, which gives a loan to any other person.

Procedure for opening Branch/Project/Liaison Office

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Procedure for opening Branch/Project/Liaison Office

How can foreign companies open Liaison/Project/Branch office in India?

Foreign company can set up Liaison/Branch Offices in India after obtaining approval from Reserve Bank of India. Reserve Bank of India has given general permission to foreign companies to establish Project Offices in India subject to certain conditions.

What is the procedure to be followed for obtaining Reserve Bank's approval for opening Liaison Office/Representative Office?

Company Registration in India

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The methods of registering a company in India are as under:

Step 1 – Acquire director identification number (DIN) by filling Form DIN-1. The temporary DIN is immediately issued which must then be printed, signed and sent to RoC for its consent along with the identity and address proofs.

The Identity Proof should contain any one of the following:
• PAN Card
Driving License
• Passport
• Voter Id Card
The Residence Proof should contain any one of the following:
• Driving License
• Passport
• Voter Id Card
• Telephone Bill
• Ration Card
• Electricity Bill
• Bank Statement

Wednesday, July 28, 2010

Checklist Provident Fund ESI

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1. Registration certificate
2. Do you have contracted labour? PF applies to them also.
3. Employees earning <=6,500; PF applicable 4. Employees earning > 6,500; discretionary& Employer’s contribution to Pension Fund limited to Rs 6,500 only
5. For Workers – from Date of joining – Act applies
6. @ 12% (Basic + DA + Retaining Allowance) ; Basic means basic only, No DA, No HRA+ No overtime + No Bonus + No Commission
7. Pension fund @ 8.33% of Wages- Employer has to contribute
8. DLI @ 1%(Basic+ DA+Retaining Allowance) + Admin. Fund @ .25% of this contribution – Employer has to pay
9. Due Date of payment : 15th of next month
10. For contracted labour – contractor will recover from his employee, add his equal contribution & admin. Charges ,& give to principal employer
11. In case of default-pay damages at rates 17%, 22% , 27% , 37% + Interest @12%
12. File Form 5 within 15 days from EOM- list of new joinings in preceding month + declaration in Form 2 by new joinees, & employees leaving the Co. in the preceding month in the relevant form
13. Inspection Note book for remarks by PF Inspector visiting the Co. periodically
14. Form No. 5A in duplicate to Regional Commissioner for all other branches , departments ,directors , managers + change in such particulars within 15 days of change

Tuesday, July 27, 2010

Incorporation of Section 25 Company in India

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A non-profit company may be public or private. If the non-profit company is a private company a minimum of only two members is required to form it. However, if the non-profit from is for a public purpose, then a minimum of seven are needed. A 'Section 25 company' and is eligible for certain exemption from provisions of law and concessional rate of fees etc.