8/4/2019 Ppt 0000071

1/35

FINANCIAL INSTITUTIONS INENTREPRENEURIAL

DEVELOPMENT ANDRegistration For A Company and

License Permit For A Business

8/4/2019 Ppt 0000071

2/35

Entrepreneurship Development- Roles OfFinancial Institutions

Industrial growth and economic development ofdeveloping nations depend to a great extent on the roleplayed by entrepreneurs. There are many instances ofindividual entrepreneurs whose creativity has led to

industrialization of many nations.However in India the economic and industrial growth

was slow due to lack of efficient entrepreneurs, industrialenvironment, technical know- how.

Government and financial institutions have played a veryimportant role in the entrepreneurship development.

8/4/2019 Ppt 0000071

3/35

Efforts To Foster Entrepreneurship In India

Many of Indias leaders have perceived the need for thedevelopment of entrepreneurship in their country,anda number of programs have emerged to meet this need.

Various agencies participate in entrepreneurial

development across India. Such as-The National Institute for Entrepreneurship And Small

Business Development (NIESBUD).The Entrepreneurship Development Institute Of India

(EDII).Industrial Development Bank Of India (IDBI).Small Industries Development Bank Of India (SIDBI).North Eastern Development Finance Corporation

Limited (NEDFi).

8/4/2019 Ppt 0000071

4/35

The Entrepreneurship Development Institute OfIndia

Sponsored by several financial institutions, namely(ICICI), (IDBI), Industrial Finance Corporation OfIndia (IFCI), and The State Bank Of India.

One of the institute that focuses on creatingentrepreneurial personalities among youth.

EDII launched a variety of programs to do just that.The Rural Entrepreneurship development,for

instance,concentrates on ruraldevelopment,employment generation,povertyalleviation through the promotion of micro-enterprises.

8/4/2019 Ppt 0000071

5/35

ContdEDIIs entrepreneurship camp involves teenagers from

across India coming to the EDII campus for a ten-day

period.The program is designed to increase the self-

confidence and thereby to develop their concern forenterprise and for achievement. Methodology includesrole playing and simulation exercises,with the following

objectives in mind-enabling participants to realize their latent potential;developing by sharpening skills;motivating individuals to seek independent,innovative

and challenging careers;fostering entrepreneurial traits including

creativity,concern for excellence,leadership andproblem solving;

Providing an opportunity to interact with achievers.

8/4/2019 Ppt 0000071

6/35

India (SIDBI)

SIDBI was established in April 1990 under an Act OfParliament as a wholly owned subsidiary of IndustrialDevelopment Bank Of India and as the principal

financial institution for the following three-foldactivities:

1.Financing the small scale sector.

2.Promoting small industries through development andsupport services.

3.Coordinating the functions of other institutionsengaged in similar activities.

8/4/2019 Ppt 0000071

7/35

Role And Steps Taken By RBI For TheDevelopment Of SSI Sector.

Credit to SSI sector is monitored periodically by ReserveBank Of India, Department Of SSI and National AdvisoryCommittee Of SIDBI, State Level Bankers Committee,District Level Coordination Committees Of The Bank

The Central Government on the recommendation of RBI hasraised the investment limit for SSIs from Rs.60 lakhs to Rs.300 lakhs and for tiny units from Rs. 5 lakhs to Rs.25 lakhs.

Public Sector Banks have been advised to make it

operational more specialized by SSI branches at centreswhere there is potential for financing many SSI borrowers.

To extend Single Widow Scheme of SIDBI to all districts tomeet the financial requirements (both term loan and

working capital) of SSIs.

8/4/2019 Ppt 0000071

8/35

Contd

With a view to moderating the cost of credit to SSIunits , banks are advised to accord SSI units with a

good track record the benefits of lower spread overthe prime lending rate.In order to take the expeditious decision on credit

proposals of SSI units, banks have been advised todelegate enhanced powers to the branch managers

of the specialized SSI branch so that most of thecredit proposals are decided at the branch level.Initiatives announced-a).Launching of a new credit insurance scheme.

b).Enhancement of Limit Of Composite LoanScheme.

c).Enhancement of Limit Of Working Capital

8/4/2019 Ppt 0000071

9/35

The National Institute For Entrepreneurship andSmall Business development

The institute organises:

Entrepreneurship development programs.

Prepares manuals,and products educational videos;

Its training activities are stimulating, supporting andsustaining entrepreneurship.

8/4/2019 Ppt 0000071

10/35

Industrial Development Bank Of India (IDBI)

IDBI is the tenth largest bank in the world in terms ofdevelopment.

The National Stock Exchange, The National SecuritiesDepository Services Ltd.(NSDL) , Stock HoldingCorporation Of India(SHCIL) are some of the institutions

which has been build by IDBI.

IDBI is a strategic investor in a plethora of institutionswhich have revolutionized the Indian Financial Markets.

IDBI Bank, promoted by IDBI Group started inNovember 1995 with a branch at Indore with an equitycapital base of Rs. 1000 million

8/4/2019 Ppt 0000071

11/35

Main Functions Of IDBI

IDBI is vested with the responsibility of coordinatingthe working of institutions engaged in financing,promoting and developing industries. It has evolvedan appropriate mechanism for this purpose.

Developmental Activities of IDBI:-1.Promotional Activities- the bank continues to perform

a wide range of promotional activities relating todevelopmental programs for new entrepreneurs ,

consultancy services for small and mediumenterprises and programs designed for accredited

voluntary agencies for the upliftment of theunderprivileged.

8/4/2019 Ppt 0000071

12/35

Technical Consultancy Organizations- With a view tomaking available at a reasonable cost, consultancy andadvisory services to entrepreneurs, IDBI incollaboration with other All-India Financial

Institutions, has set up a network of TechnicalConsultancy Organizations(TCOs) covering the entirecountry.

Entrepreneurship Development Institute- Realizingthat entrepreneurship development is the key to

industrial development, IDBI played a prime role insetting up of the Entrepreneurship DevelopmentInstitute Of India for fostering entrepreneurship in thecountry.

It has also established similar institutes in Bihar,

Orissa, Madhya Pradesh, Uttar Pradesh. IDBI alsoextends financial support to various organizations inconducting studies or survey of relevance to industrialdevelopment.

8/4/2019 Ppt 0000071

13/35

Registration For ACompany and

License Permit For A

Business.

8/4/2019 Ppt 0000071

14/35

Introduction - Forming A Company In IndiaThe Companies Act of 1956 sets down rules for the establishment

of both public and private companies. The most commonly usedcorporate form is the limited company, unlimited companies

being relatively uncommon. A company is formed by registeringthe Memorandum and Articles of Association with the StateRegistrar of Companies of the state in which the main office is to

be located.Foreign companies engaged in manufacturing and trading

activities abroad are permitted by the Reserve Bank of India toopen branch offices in India for the purpose of carrying on thefollowing activities in India:# To represent the parent company or other foreign companies in

various matters in India, for example, acting as buying/sellingagents in India, etc.

# To conduct research work in which the parent company isengaged provided the results of the research work are madeavailable to Indian companies

# to undertake export and import trading activities# to promote possible technical and financial collaboration

between Indian companies and overseas companies.

8/4/2019 Ppt 0000071

15/35

Incorporating a Company - Approval ofName

The first step in the formation of a company is theapproval of the name by the Registrar of Companies(ROC) in the State/Union Territory in which thecompany will maintain its Registered Office. This

approval is provided subject to certain conditions: forinstance, there should not be an existing company by thesame name. Further, the last words in the name arerequired to be "Private Ltd." in the case of a privatecompany and "Limited" in the case of a Public Company.

The application should mention at least four suitablenames of the proposed company, in order of preferencenames ..

8/4/2019 Ppt 0000071

16/35

. In the case of a private limited company, the name ofthe company should end with the words "PrivateLimited" as the last words. In case of a public limitedcompany, the name of the company should end withthe word "Limited" as the last word. The ROCgenerally informs the applicant within seven daysfrom the date of submission of the application,

whether or not any of the names applied for isavailable.

8/4/2019 Ppt 0000071

17/35

Once a name is approved, it is valid for a period of sixmonths, within which time Memorandum of

Association and Articles of Association together withmiscellaneous documents should be filed. If one isunable to do so, an application may be made forrenewal of name by paying additional fees. Afterobtaining the name approval, it normally takes

approximately two to three weeks to incorporate acompany depending on where the company isregistered

8/4/2019 Ppt 0000071

18/35

Memorandum and Articles OfAssociation

The Memorandum of Association and Articles of Associationare the most important documents to be submitted to theROC for the purpose of incorporation of a company. TheMemorandum of Association is a document that sets out theconstitution of the company. It contains, amongst others, theobjectives and the scope of activity of the company besidesalso defining the relationship of the company with theoutside world.

The Articles of Association contain the rules and regulations

of the company for the management of its internal affairs.While the Memorandum specifies the objectives andpurposes for which the Company has been formed, the

Articles lay down the rules and regulations for achievingthose objectives and purposes.

8/4/2019 Ppt 0000071

19/35

The ROC will give the certificate of incorporationafter the required documents are presented along

with the requisite registration fee, which is scaled

according to the share capital of the company, asstated in its Memorandum. A private company cancommence business on receipt of its certificate ofincorporation.

A public company has the option of inviting thepublic for subscription to its share capital.

Accordingly, the company has to issue a prospectus,which provides information about the company to

potential investors. The Companies Act specifies theinformation to be contained in the prospectus.

8/4/2019 Ppt 0000071

20/35

The prospectus has to be filed with the ROC beforeit can be issued to the public. In case the companydecides not to approach the public for the necessarycapital and obtains it privately, it can file a"Statement in Lieu of Prospectus" with the ROC.On fulfillment of these requirements, the ROCissues a Certificate of Commencement of Businessto the public company. The company can commence

business immediately after it receives thiscertificate.

8/4/2019 Ppt 0000071

21/35

Certificate of Incorporation

After the duly stamped Memorandum of Association andArticles of Association, documents and forms are filedand the filing fees are paid, the ROC scrutinizes thedocuments and, if necessary, instructs the authorisedperson to make necessary corrections. Thereafter, a

Certificate of Incorporation is issued by the ROC, fromwhich date the company comes in to existence. It takesone to two weeks from the date of filing Memorandum of

Association and Articles of Association to receive aCertificate of Incorporation. Although a private company

can commence business immediately after receiving thecertificate of incorporation, a public company cannot doso until it obtains a Certificate of Commencement ofBusiness from the ROC.

8/4/2019 Ppt 0000071

22/35

Miscellaneous Documents

The documents/forms stated below are filed along withMemorandum of Association and Articles of Association onpayment of filing fees (depending on the authorised capital ofthe company):

# Declaration of compliance, duly stamped

# Notice of the situation of the registered office of thecompany# Particulars of Directors, Manager or Secretary#Authority executed on a non-judicial stamp paper, in favourof one of the subscribers to the Memorandum of Association orany other person authorizing him to file the documents and

papers for registration and to make necessary corrections, ifany# The ROCs letter (in original) indicating the availability of thename.

8/4/2019 Ppt 0000071

23/35

Tax Registration

Businesses liable for income tax must obtain a taxidentification card and number [known as Permanent

Account Number (PAN)] from the Revenue Department.In addition to this, businesses liable to withhold tax mustnecessarily obtain a Tax Deduction Account Number

(TAN). Both the PAN and the TAN must be indicated onall the returns, documents and correspondence filed withthe Revenue Department. The PAN is also required to bestated in various other documents such as the documentspertaining to sale or purchase of any immovable property

(exceeding Rs. five lakh), sale or purchase of a motorvehicle, time deposit (exceeding Rs. 5 lakh), contract forsale or purchase of securities (exceeding Rs. 10 lakh), toname a few.

8/4/2019 Ppt 0000071

24/35

Rules Applicable :-

Companies (Central Governments') General Rulesand Forms,1956

Filing Registering/Approving Authority :-

One copy has to be submitted along with a

forwarding letter addressed to the concernedRegistrar of Companies.

8/4/2019 Ppt 0000071

25/35

Enclosures :-

The declaration must be submitted with thefollowing annexures

# Document evidencing payment of fee# Memorandum and Articles of Association# Copy of agreement if any, which the proposedcompany wishes to enter into with any individual forappointment as its managing or whole-time director or

manager# Form 18# Form 32 (except for section 25 company)# Form 29 (only in case of public companies)# Power of Attorney from subscribers# Letter from Registrar of Companies making namesavailable# No objection letters from directors/promoters# Requisite fees either in cash or demand draft

8/4/2019 Ppt 0000071

26/35

Fees :-

Fee payable depends on the nominal capital of thecompany to be registered and may be paid in one of

the following modes. Cash/postal order (uptoRs.501-), demand draft favouring Registrar ofCompanies/Treasury Challan should be payableinto specified branches of Punjab National Bank for

credit

Time-Limit :-

It should be submitted before incorporation or

within 6 months of the name being made available.

8/4/2019 Ppt 0000071

27/35

Practice Notes :-

The declaration has to be signed by an advocate ofSupreme Court or High Court or an attorney or

pleader entitled to appear before the High Court ora secretary or chartered accountant in whole-timepractice in India who is engaged in the formation ofthe proposed company or person named in the

articles as director, manager or secretary.The Registrar of Companies has to be satisfied thatnot only the requirements of section 33(1) and (2)have been complied with but be also satisfied thatprovisions relating to number of subscribers, lawfulnature of objects and name are complied with.

The Registrar will check whether the documents have

8/4/2019 Ppt 0000071

28/35

The Registrar will check whether the documents havebeen duly stamped and also whether the requirementsof other laws are met.

Any defect in any of the documents filed has to be

rectified either by all the subscribers or their attorney,or by any one subscriber holding the power of attorneyon behalf of other subscribers.

This form is to be presented to the Registrar of

Companies within three months from the date of letterof Registrar allowing the name.This declaration is to be given on a non-judicial stamp

paper of the requisite value . The stamp paper shouldbe purchased in the name of the person signing the

declaration.This declaration is to be given by all the companies at,

the time of registration, public or private.The place of Registration No. of the company should be

filled up by mentioning New Company therein.

8/4/2019 Ppt 0000071

29/35

The Registrar of Companies will now acceptcomputer laser printed documents for purposes ofregistration provided the documents are neatly and

legibly printed and comply with the otherrequirements of the Act. This will be an additionaloption available to the public to use laser print

besides offset printing for submitting the

memorandum and articles for the registration ofcompanies.

Where the executant of a memorandum ofassociation is illiterate, he shall give his thumbimpression or marks which should be described assuch by the subscriber or person writing for him.

8/4/2019 Ppt 0000071

30/35

An agent may sign a memorandum on behalf of asubscriber if he is authorized by a power-of-attorneyto do so. In the case of an illiterate subscriber to the

memorandum and articles of association, the thumbimpression or mark duly attested by the person

writing for him should be given. The personattesting the thumb mark should make an

endorsement on the document to the effect that ithas been read and explained to the subscriber. TheRegistrar of Companies will not accept zerox copiesof the memorandum and articles of association for

the purposes of registration of companies.

8/4/2019 Ppt 0000071

31/35

Presented by :-

This declaration is to be presented by the personsigning the declaration or by his bearer at the

counter of the Registrar of Companies office.Managerial Remuneration :-

#Any person in order to be appointed as theManaging Director of the company should be a

resident of India. Any person, being a non-residentin India, must obtain an Employment Visa from theconcerned Indian mission abroad at the time oftheir appointment as the Managing Director.

#Whereas private companies are free to pay anyremuneration to its directors, public companies canremunerate their directors only within the specifiedlimits.

f bli i i h f b

8/4/2019 Ppt 0000071

32/35

In case of public companies, in the event of absenceor inadequacy of net profits in any financial year,managerial remuneration is limited to amounts

varying from Rs 75,000 to Rs 2,00,000 per month,depending on the effective capital of the company.In case of an expatriate managerial person,perquisites in the form of childrens educationallowance, holiday passage money and leave travel

concession provided to him would not form part ofthe said ceiling of remuneration.# In case of a managerial position in two

companies, remuneration can be drawn from one or

both companies provided that the totalremuneration drawn from the companies does notexceed the higher maximum limit admissible fromany one of the companies of which he is a

managerial person.

8/4/2019 Ppt 0000071

33/35

With whom to be filed

With the Registrar of Companies of the State inwhich the company is to be registered.

Documents required to be submitted# A printed copy each of the Memorandum and

Articles of Association of the proposed company

filed along with the declaration duly stamped withthe requisite value of adhesive stamps from theState/ Union Territory Treasury .

8/4/2019 Ppt 0000071

34/35

Fee payable :-Cash or a bank draft/ pay order treasury challanshould be drawn in the name of the Registrar of

Companies of the State in which the Company isproposed to be registered as per Schedule X.

Annual Return :-Every company having a share capital is required to

file an annual return with the ROC within 60 daysfrom the date on which the AGM of the company

was held or where the AGM is not held, then within60 days of the last date on which the AGM wasrequired to be held.

8/4/2019 Ppt 0000071

35/35

THANK YOU