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Section 8 Company

It is not that all the companies Registered are for making Profit, there are certain companies which are created to promote a public cause such as promotion of art, science, commerce etc. Normally charitable activities would be carried out by Trust or Society, in the same way even a company can be formed as per Section 8 of the Indian companies Act. 

What does section 8 of Indian Companies Act says

Section 8- Formation of companies with charitable objects, etc

(1) 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;

Characteristics of Section 8 company

Charitable purpose

A company with the objection of promoting commerce, art, science, education, research, sports, charity, social welfare, religion, protection of environment or any such other object. The investors cannot take any dividend out of the profit.

License Required

A section 8 company is obligated to obtain a license from the central government under section 8 of the companies act 2013 and by that this company can receive donations from other general public for the purpose, which it is formed for. 

Non profit

The Company must intend to utilise the profit or any other income in promoting the social objects of the company. It must intend to prohibit the payment of any dividend to its members.

All the benefits of a private limited company 

Section 8 company, which is registered under Indian Companies Act, can enjoy all the benefits as like a private limited company, such as Limited Liability, independent legal entity and many more. 

Minimum Requirements

1. Members: as like a private limited company, sevn a section 8 company requires minimum 2 members. Even a NRI or a foreign citizen can be a member. 

2. Director: Minim it requires 2 directors to form a Section 8 company registration India. And one director should compulsorily be an Indian resident. 

3. Office Space: The company should hold an office space within Indian Territory. Proof the same to be submitted during the registration process

4. Capital: There is no minimum requirement of capital as per the companies act. 

Documents required 

Aadhar card of all the members

PAN Card of all the members 

Passport size photo of all the members

Residencial proof of all the members

Rental agreement for the office premises

Utility bill for the office premises 

Registration Process 

Company Name Approval 

DSC

DIN

INC 12 - Central Government Licence

Issuance of Licence

Issuance of Certification of Incorporation

Advantages of being a Section 8 Company

Tax Benefit: Section 8 companies are granted Tax benefits as per Income Tax Act

Eligibility for Receiving Donation: As like a NGO, even Section 8 Companies can collect donation from individuals or from Organisations

Credibility: Stakeholders and others will have more credibility 

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How to draft a Franchise Agreement

We may try to expand our business at some point of time by way of introducing new products, launching a new branch office and in many other ways. Onc such way of expanding your business is Franchising. Converting your business as a Franchise business is the smart way of making money.

Normally plenty of our people get confused between Franchise and Partnership. Partnership is where two people agreest to start a New business for the object of making profit. But here in Franchise, the Franchisor agrees to license only his Brand name and for that, the franchisee accepts to share the revenue by way of Royalty.

Franchisor: The person who agrees to license the brand

Franchisee: The person who agrees to start the franchise outlet of the franchisor in his area

Franchise Agreement: The agreement which is signed between the Franchisor and Franchisee

Franchisor’s Commitments

Franchisee’s Commitments

As the franchisor franchisee relationship involves many commitments and responsibilities, there may be plenty of issues too, to avoid any issues between the franchisor and franchisee, the best option is to sign a franchise agreement.

This is a legal document which creates the relationship between the franchisor and franchisee. Only through this Agreement a Franchisor grants the license to the Franchisee to use his brand and start the outlet in a specific location. This agreement speaks about the terms and conditions between the Franchisor and Franchisee.

How to draft a Distributor Agreement

The major duty of a Manufacturer ends when a product is manufactured and ready for distribution. From that moment it is the duty of the Distributor to take the product till it reaches the end user. This distributor acts as a bridge between the customer and the manufacturer.

The distributor is the one who is appointed by the Manufacturer to distribute to products that are manufactured. There is a very big supply chain involved in carrying the product from manufacturer to the end user and the distributor is at the frist position in the supply chain.

In these situations, the Manufacturer may face a big difficulty and loss because of the act of the Distributor. To avoid any such loss, it is advisable to enter into a distributor agreement.

While appointing a Distributor, the manufacturer might have communicated plenty of conditions to the Distributor and when these conditions are written as a piece of contract, it is called a Distributor Agreement.

Patent registration process in Tamil Nadu

In India, the India Patent Office which is located in Chennai, Ahmedabad, New Delhi, Mumbai and Kolkata grants Patent Registration for new and innovative Inventions. On the grant of Patent, the Owner of the Patent gets a monopoly right on his Invention for a particular time period.

Patent registration process

1. Patentability Check:

Before we file any patent application, the Initial step is to do a detailed analysis to understand whether a patent can be granted or not. As already said, to qualify for a patent grant, our invention to be a novel scientific invention with innovative step. To ensure its novelty, we need to conduct a patent prior art search, which says is there any similar or identical invention.

2. Submission of Patent Application:

The owner of the invention, can submit a patent application before the patent office with the appropriate forms and necessary documents. For this purpose, the applicant needs to submit Form 1 along with provisional specification. Inorder to lock the priority days, the applicant need to submit a soon as possible. The applicant can elaborately explain the outline of the invention and can submit the application

3. Submission of complete specification:

The applicant has 12 months of time to submit the complete specification. A complete specification should include the following elements -  Title of the invention, Background of the invention, a short Summary, drawings, Description of the invention, Claim statement and abstract.

4. Publication:

Once we submit the complete specification, our application would be listed for

Form No. 9 for early Publication

5. Request for Examination

Form 18

6. FER

7. Grant

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Digitalization, online business, e-freelancing, and many other online forums have created a curiosity among many of the people to start their own business. Here the question is a bit crucial, can you start a full-time or part-time business when you are on employment?

The basic types of employment are

While joining in any company you would have signed some contracts or agreement such as

If the terms in that contact expressly restrict you from doing any business during the course of employment, it would not be possible for you to start any new business activity during employment.

What would be the consequences

Legal action: The employer may take legal action against you to stop the business activity by way of filing litigation before the court of law. The court may order the damages as mentioned in the contract or a reasonable amount as compensation against you.

If the contact doesn't say anything or is silent about the employee doing any private business, then there is no bar for you to start a part-time business. But while doing so, you must be very careful in doing so.

Consequences

Termination from the job: the private job is not like a Government job. In a private job, the employer can terminate you at any time by giving a proper termination note and can remove you after the notice period.

Don'ts

While joining in employment, if you have not signed any contract or agreement, the situation is very same as that of the previous case.

http://leintelligensia.com/can-an-employee-start-his-own-business/

https://youtu.be/lLe5JTa65jA

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What is a Trust

Trust is defined in section 3 of the Indian Trust Act, 1882 as “an obligation annexed to the ownership of property and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another or of another and the owner.

In other words, an asset is created by the founder of the trust and managed by the trustees for the benefit of certain People. A trust is legally formed by way of a Trust deed duly executed by the founder and registered before the Registrar office.

Public Trust:

The most common type of trust found in India is Public Trust. Public trust is the one that is created for the benefit of a class or the general public. The general object may be for charity, education, religion, or even scientific purposes.

Private Trust:

Private trusts in India are governed by the Indian Trusts Act, 1882. Private trusts are constituted for the benefit of one or more individuals. The individuals are definite, which means the individuals can be ascertained.

According to Section 7 of the Indian Trusts Act, 1882, a trust may be created by the following persons:

1. An individual who is competent to contract (given in Section 11 of the Indian Contract Act, 1872)

2. By a minor, with the help of a guardian, can create a trust with the permission of a principal civil court

3. HUF (Hindu Undivided Family) can also create a trust

4. Association of Persons together can also create a trust

5. Company registered under the companies act can also form a trust

As per Section 4, all purposes are said to be lawful unless it:

Is forbidden by law

Defeats the provisions of law

Is fraudulent

Involves injury to another person or his property

Immoral or against public policy

Section 2(15)​ of the Income Tax Act defines “charitable purpose" to include relief of the poor, education, medical relief, preservation of the environment (including watersheds, forests, and wildlife), and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility.

Settlor:

The settlor or the founder of the Trust is the one who creates the trust and he is the one who invests his Assets into the trust. A settlor is also called as Author of the trust who executes the trust deed and assigns the assets to the trust.

Trustee:

When the founder of the trust transfers the property, there should be someone to manage and hold the trust and he is called as Trustee.

The trustee has to accept the role of the administrator after fully understanding the terms and contained in the trust deed. A trustee must be at least 18 years old, of sound mind and should not be bankrupt.

Role of the trustee

The Trustee cannot use trust property for his own benefit.

The trustee must consider and treat all the beneficiaries the same.

The trustee must invest the trust property in a proper manner.

The Trustee is responsible for maintaining the accounts and records properly.

Beneficiary:

The beneficiary is the one who is called as the beneficial owner of the property. The trust is created for the complete benefit of the Beneficiary.

http://leintelligensia.com/trust-registration/

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Difference between Director and Shareholder  Minimum Requirement to Form a Private Limited Company The basic requirement to form any private Limited Company is that it requires a minimum of Two Shareholders, a minimum of two Directors, authorized share capital of Minimum 1 lakh, and at last an office space in India. So these are the basic requirements of a Private Limited Company. But plenty of people had a doubt about the difference between Shareholders and Directors. And plenty of people believe Directors are the owners of the company!! Are they? So this article will help to understand more about Shareholders and Directorship.

Shareholder  Who is a Shareholder Shareholders are called members of the company in other words they are the owners.  The shareholders own a part of the business by way of investing in the company and holding the respective shares.  Yes, they are the owners of the company but they do not run the company. But if you ask me, how do they get to benefit from the company, here is the answer. The primary monetary benefit is through dividend which is reaped from the profit of the company. The secondary monetary benefit is by share value which they can sell at any point in time with the approval of all other shareholders.  The shareholder who owns more than 50% of the share is called a major shareholder. And the shareholders who own below 50% of the shares are called minor shareholders  Minimum and Maximum number of shareholders As per the Companies act, to form a private limited company, it needs a minimum number of 2 members/shareholders and there can be a maximum of 200 members. The shareholders could be natural persons or companies, including foreign companies.  Roles and Responsibilities of Shareholders  The primary responsibility of a shareholder is to appoint the right Directors for the company The shareholder has the responsibility to draft the policy of the company It is the responsibility of Shareholders to appoint the company’s auditors. Duty to be in touch with other members of the company so that they can see the work progress of the company. Their main role is to attend meetings and discuss whatever is on the agenda to ensure the directors do not go beyond their powers – and provide shareholders’ consent where required.

Rights and powers of a shareholder  The shareholder has the right not only to appointing the shareholder but also to remove them from office The right to inspect the company's books and records The other primary right is to attend the annual meetings The right to vote on key matters shareholders shall have the right to receive dividends. To change the company name or to initiate the winding off process   Directors  Who is a director?  Directors are the supreme executive authority who controls the management of a company, and the directors are collectively known as the Board of Directors of the company.  A Director is elected by the shareholders for the purpose of managing the affairs of the company.  As the Private Limited company is an artificial judicial person but it cannot act on its own, so it acts through the agent called the director who is a natural person.  Are directors owners of the Company?  Unless the articles say so (and most do not) a director does not need to be a shareholder and a shareholder has no right to be a director.

Difference between Director and Shareholder Ownership: shareholders own stock in a company so they are considered as owners, whereas the directors are the officers of the company The shareholder doesn't have any role to play in the day by day activity of the company, whereas the directors are responsible to run the business

https://www.youtube.com/watch?v=xZy8yB1pLGQ

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What are the legal requirements to start a Small Home-based food business

1. Form a Company

2. Get FSSAI registration 

3. GST Registration

4. Fire License 

5. Trademark Registration

Call 9941993399 for any Private Limited Clarification

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Partnership business is when two or more people Join together to carry-out a business to achieve their common business goals.

In India, we have a definite law that covers all the aspects of a partnership business, The Indian Partnership Act 1932.

The act defines a partnership as “the relation between two or more persons who have agreed to share the profits from a business carried on by either all of them or any of them on behalf of/acting for all”

1. Minimum 2 Partners are required for a partnership business

2. The formation based on written agreement & it’s called partnership deed

3. Profit shared as agreed upon through Partnership deed

Website: https://leintelligensia.com/partnership-firm-registration/

youtube: https://www.youtube.com/watch?v=83gvFUKjCP0&t=115s

Arivazhagan

Advocate

Le intelligensia

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