BUSINESS  ORGANIZATION Indian Institute of Foreign Trade NEW DELHI 12 TH  FEBRUARY 2005   by SAMEER   RASTOGI  Advocate In...
Business Organisation  <ul><ul><ul><li>Sole Proprietorship  </li></ul></ul></ul><ul><ul><ul><li>Partnership </li></ul></ul...
Sole Proprietorship  No registration required Unlimited liability  Used for small business or by Professionals  No Separat...
Partnership  <ul><li>Section 11 of Companies Act, 1956 </li></ul><ul><li>No partnership consisting of more than 20 persons...
Company  <ul><li>Governing Act – Companies Act, 1956 </li></ul>Business Organisation  <ul><li>Special Features of Company ...
Types of Companies in India  Business Organisation  DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY Definition Which by its ar...
Types of Companies in India   Business Organisation  DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY Incorporation Time   22 t...
Types of Companies in India   Business Organisation  DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY Whether a Foreigner can b...
Types of Companies in India   Business Organisation  DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY Loan to Director etc.  YY...
Charitable Organization  Business Organisation  - Trust - Society  - Section 25 Company  It can do business and earn any a...
Regulatory Bodies in India <ul><li>Foreign Investment Promotion Board  (FIPB)   </li></ul><ul><li>Reserve Bank of India (R...
Law relating to JV & Foreign Cos. in India -  FDI In India  TELECOM  – 49%  (  74%) INSURANCE  – 26%  (Proposed  49%) POWE...
FDI in India Automatic Route for FDI is not available for Domestic Airlines Petroleum Sector (except for private sector oi...
FDI in India <ul><li>FDI is Prohibited in   </li></ul><ul><li>Retail Trading </li></ul><ul><li>Atomic Energy </li></ul><ul...
How a Foreign Company can enter into India? <ul><li>Liaison Office </li></ul><ul><li>Branch Office </li></ul><ul><li>Proje...
Liaison Office <ul><li>Permitted activities for a Liaison Office in India  </li></ul><ul><li>Representing in India the par...
<ul><li>  Procedure for setting up  Liaison Office </li></ul><ul><li>Apply in Form FNC-1 in quadruplicate to RBI </li></ul...
Liaison Office <ul><li>Conditions Imposed While Granting Permission </li></ul><ul><li>No commission / fee will be charged ...
Branch Office <ul><li>Permitted activities   </li></ul><ul><li>Export/Import of goods </li></ul><ul><li>Rendering professi...
Joint Ventures <ul><li>Joint Ventures are of two types </li></ul><ul><li>Incorporated Joint Ventures  </li></ul><ul><li>Co...
Joint Ventures <ul><li>Verify Limit of FDI permitted in proposed JV </li></ul><ul><li>Drafting  of Moa & Aoa in accordance...
100% Wholly Owned Subsidiary <ul><li>Verify FDI for 100% WOS </li></ul><ul><li>Incorporation of WOS </li></ul><ul><li>Priv...
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Businiss organisation

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Businiss organisation

  1. 1. BUSINESS ORGANIZATION Indian Institute of Foreign Trade NEW DELHI 12 TH FEBRUARY 2005 by SAMEER RASTOGI Advocate International Corporate Legal Consultant
  2. 2. Business Organisation <ul><ul><ul><li>Sole Proprietorship </li></ul></ul></ul><ul><ul><ul><li>Partnership </li></ul></ul></ul><ul><ul><ul><li>Private Limited Company </li></ul></ul></ul><ul><ul><ul><li>Public Limited Company </li></ul></ul></ul><ul><ul><ul><li>Charitable Organization </li></ul></ul></ul>Types of Business Entities
  3. 3. Sole Proprietorship No registration required Unlimited liability Used for small business or by Professionals No Separate Legal Entity Business Organisation
  4. 4. Partnership <ul><li>Section 11 of Companies Act, 1956 </li></ul><ul><li>No partnership consisting of more than 20 persons shall be formed </li></ul>Business Organisation <ul><li>Indian Partnership Act, 1932 </li></ul><ul><li>Section 4 – Partnership is the relation between persons who have agreed to share profits of business carried on by all or any of them acting for all </li></ul><ul><li>Unlimited Liability </li></ul><ul><li>Registration not Compulsory </li></ul>
  5. 5. Company <ul><li>Governing Act – Companies Act, 1956 </li></ul>Business Organisation <ul><li>Special Features of Company </li></ul><ul><ul><li>Company is a Separate Legal Entity </li></ul></ul><ul><ul><li>It can sue and be sued in its own name </li></ul></ul><ul><ul><li>The liability of the shareholders are limited to the extent of their shareholdings </li></ul></ul><ul><ul><li>Company is distinct from its shareholders </li></ul></ul><ul><ul><li>It can hold property in its own name </li></ul></ul>
  6. 6. Types of Companies in India Business Organisation DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY Definition Which by its article restricts: Numbers of members to 50 Transfer of shares Invitation of public to subscribe its debenture, shares etc. Acceptance of deposits from person other than its shareholders and directors   Which is not * private Governing Laws Companies Act, 1956 Companies Act, 1956 SEBI Act, 1992 and allied laws.  
  7. 7. Types of Companies in India Business Organisation DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY Incorporation Time 22 to 3 weeks   2 to 3 weeks Minimum Paid up Capital INR 1,00,000/- INR 5,00,000/-   Maximum No. of shareholders 50 (Fifty)   No limit Minimum No. of Shareholders 2 (Two) 7 (Seven)   Transferability of Shares Restricted Freely. If company is listed then through stock exchange(s)   Minimum No. of Directors 2 3  
  8. 8. Types of Companies in India Business Organisation DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY Whether a Foreigner can be Director YYes Yes Whole Time Director (WTD) / Managing Director (WTMD): Appointment Appointment not compulsory and No restriction on appointment   Appointment : Not compulsory, If paid up capital < Rs. 5 Cr. Compulsory. If paid up capital => Rs.5 Crs WTD / WTMD: Remuneration No restriction As per schedule XIII, otherwise permission of Central Government . Foreigner as WTM D / WTD No restriction With the approval of Central Government  
  9. 9. Types of Companies in India Business Organisation DESCRIPTIONS PRIVATE COMPANY PUBLIC COMPANY Loan to Director etc. YYes With the previous approval of Central Government Contracts with Director etc. Yes With the consent of Board, If paid up capital of the company is (One) 1 Cr. or more, approval of Central Govt. is necessary Loan, Investment & Guarantee by the company No restriction Some restrictions
  10. 10. Charitable Organization Business Organisation - Trust - Society - Section 25 Company It can do business and earn any amount of profits, but the distribution of profits cannot be made to Shareholders / trustee
  11. 11. Regulatory Bodies in India <ul><li>Foreign Investment Promotion Board (FIPB) </li></ul><ul><li>Reserve Bank of India (RBI) </li></ul><ul><li>Security Exchange Board of India (SEBI) </li></ul><ul><li>Registrar of Companies (RoC) </li></ul><ul><li>Trade Mark Registry (TMR) </li></ul><ul><li>Director General of Foreign Trade (DGFT) </li></ul>Business Organisation
  12. 12. Law relating to JV & Foreign Cos. in India - FDI In India TELECOM – 49% ( 74%) INSURANCE – 26% (Proposed 49%) POWER – 100% PETROLEUM REFINING – 100% DRUGS & PHARMA – 100% HOTELS – 100% ROADS – 100% Business Organisation
  13. 13. FDI in India Automatic Route for FDI is not available for Domestic Airlines Petroleum Sector (except for private sector oil refining) Investing companies in Infrastructure & Services Sector Defence and Strategic Industries Atomic Minerals Print Media Broadcasting Postal services Courier Services Establishment and Operation of satellite Development of Integrated Township Tea Sector
  14. 14. FDI in India <ul><li>FDI is Prohibited in </li></ul><ul><li>Retail Trading </li></ul><ul><li>Atomic Energy </li></ul><ul><li>Lottery Business </li></ul><ul><li>Gambling and Betting </li></ul><ul><li>Housing and Real Estate business </li></ul><ul><li>Agriculture ( excluding Floriculture, Horticulture, Development of seeds, Animal Husbandry, Pisiculture and Cultivation of vegetables, mushrooms etc. under controlled conditions and services related to agro and allied sectors) and Plantations (Other than Tea plantations) </li></ul>Business Organisation
  15. 15. How a Foreign Company can enter into India? <ul><li>Liaison Office </li></ul><ul><li>Branch Office </li></ul><ul><li>Project / Site Office </li></ul><ul><li>Joint Venture </li></ul><ul><li>100 % Wholly Owned Subsidiary </li></ul>Business Organisation
  16. 16. Liaison Office <ul><li>Permitted activities for a Liaison Office in India </li></ul><ul><li>Representing in India the parent company/group companies. </li></ul><ul><li>Promoting export import from/to India. </li></ul><ul><li>Promoting technical / financial collaborations between parent / group companies and companies in India. </li></ul><ul><li>Acting as a communication channel between the parent company and Indian companies . </li></ul>Business Organisation
  17. 17. <ul><li>  Procedure for setting up Liaison Office </li></ul><ul><li>Apply in Form FNC-1 in quadruplicate to RBI </li></ul><ul><li>English version of the certificate of incorporation / registration attested by Indian Embassy / Notary public in the country of registration. </li></ul><ul><li>Latest balance sheet of the applicant company / firm. </li></ul><ul><li>Certified photo-copy of the agency Agreement, if any, with parties in India. </li></ul><ul><li>Photo-copy of the Agreement / draft- Agreement / correspondence indicating the terms of appointment of the proposed representative duly authenticated by the applicant. </li></ul><ul><li>Where applicable, certified photocopy of Government of India’s approval for undertaking projects in India. </li></ul><ul><li>Where applicable, certified photocopy of the contract / Agreement for undertaking activities / rendering services. </li></ul>Business Organisation
  18. 18. Liaison Office <ul><li>Conditions Imposed While Granting Permission </li></ul><ul><li>No commission / fee will be charged or any other remuneration received by the Indian office of the foreign company for its liaison activities in India. </li></ul><ul><li>Except the liaison work, the office will not undertake any activity of a trading, commercial or industrial nature without the prior permission of RBI </li></ul><ul><li>The entire expenses of the Indian office will be met exclusively by remittance from abroad through normal banking channels. </li></ul>Business Organisation
  19. 19. Branch Office <ul><li>Permitted activities </li></ul><ul><li>Export/Import of goods </li></ul><ul><li>Rendering professional or consultancy services. </li></ul><ul><li>Carrying out research work, in which the parent company is engaged. </li></ul><ul><li>Promoting technical or financial collaborations between Indian companies and parent or overseas group company. </li></ul><ul><li>Representing the parent company in India and acting as buying/selling agent in India. </li></ul><ul><li>Rendering services in Information Technology and development of software in India. </li></ul><ul><li>Rendering technical support to the products supplied by parent/group companies. </li></ul>  Procedure for setting up Branch Office – Same as Liaison Office Business Organisation
  20. 20. Joint Ventures <ul><li>Joint Ventures are of two types </li></ul><ul><li>Incorporated Joint Ventures </li></ul><ul><li>Contractual Joint Ventures </li></ul><ul><li>a) Financial Joint Venture </li></ul><ul><li>b) Technical Joint Venture </li></ul><ul><li>Essentials for Joint Ventures </li></ul><ul><li>Name of the JV </li></ul><ul><li>Shareholding Pattern </li></ul><ul><li>Funding and Financing of JV </li></ul><ul><li>Constitution of Board of Directors, Powers of Directors, Meeting </li></ul><ul><li>Transfer of shares, right of refusal, buy out provisions </li></ul><ul><li>Non disclosure, non competition, IPR’s </li></ul><ul><li>Governing laws, Dispute resolution </li></ul>Business Organisation
  21. 21. Joint Ventures <ul><li>Verify Limit of FDI permitted in proposed JV </li></ul><ul><li>Drafting of Moa & Aoa in accordance with JV Agreement </li></ul><ul><li>Incorporation of JV company </li></ul><ul><li>Private & Public JV Company </li></ul>Business Organisation
  22. 22. 100% Wholly Owned Subsidiary <ul><li>Verify FDI for 100% WOS </li></ul><ul><li>Incorporation of WOS </li></ul><ul><li>Private & Public WOS </li></ul>Business Organisation

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