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SETTING UP OF BUSINESS ENTITIES AND CLOSURE - ICSI

ISTUDY MATERIAL EXECUTIVE PROGRAMMESETTING UP OF BUSINESS ENTITIES AND CLOSUREMODULE 1 PAPER 3 RELEVANT FOR DECEMBER, 2019 SESSION ONWARDSii THE INSTITUTE OF COMPANY SECRETARIES OF INDIATIMING OF HEADQUARTERSM onday to FridayOffice Timings to Dealing TimingsWithout financial transactions to financial transactions to Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, and Printed at M P Printers/June 2019iiiiiEXECUTIVE PROGRAMMESETTING UP OF BUSINESS ENTITIES AND CLOSURET here are various BUSINESS structures such as Companies, LLP, Trusts, and Societies etc. which one can choose to start a BUSINESS . Choosing a form of BUSINESS entity is crucial to a successful organization. The choice of a BUSINESS entity will depend on an object, benefits, size of the BUSINESS of such entity and many other factors. The main types of BUSINESS ENTITIES in India are Sole Proprietorship, Partnership, Hindu Undivided Family (HUF) BUSINESS , Limited Liability Partnership (LLP), Co-operative Societies, Branch Office and Company which may be any kind of company including one person company (OPC), private limited company, public limited company, company limited by guarantee, subsidiary company, statutory company, insurance company or unlimited company, company formed under section 8 of

vi l Limited Liability Partnership Act, 2008 l Limestone and Dolomite Mines Labour Welfare Fund Act, 1972 l Maternity Benefit (Amendment) Act, 2017 l Mica Mines Labour Welfare Fund Act, 1946 l Micro, Small and Medium Enterprises Development Act, 2006 l Mines Act, 1952 l Minimum Wages Act, 1948 l Motor Transport Workers Act, 1961 l National Green Tribunal Act, 2010

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Transcription of SETTING UP OF BUSINESS ENTITIES AND CLOSURE - ICSI

1 ISTUDY MATERIAL EXECUTIVE PROGRAMMESETTING UP OF BUSINESS ENTITIES AND CLOSUREMODULE 1 PAPER 3 RELEVANT FOR DECEMBER, 2019 SESSION ONWARDSii THE INSTITUTE OF COMPANY SECRETARIES OF INDIATIMING OF HEADQUARTERSM onday to FridayOffice Timings to Dealing TimingsWithout financial transactions to financial transactions to Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, and Printed at M P Printers/June 2019iiiiiEXECUTIVE PROGRAMMESETTING UP OF BUSINESS ENTITIES AND CLOSURET here are various BUSINESS structures such as Companies, LLP, Trusts, and Societies etc. which one can choose to start a BUSINESS . Choosing a form of BUSINESS entity is crucial to a successful organization. The choice of a BUSINESS entity will depend on an object, benefits, size of the BUSINESS of such entity and many other factors. The main types of BUSINESS ENTITIES in India are Sole Proprietorship, Partnership, Hindu Undivided Family (HUF) BUSINESS , Limited Liability Partnership (LLP), Co-operative Societies, Branch Office and Company which may be any kind of company including one person company (OPC), private limited company, public limited company, company limited by guarantee, subsidiary company, statutory company, insurance company or unlimited company, company formed under section 8 of the Companies Act, 2013 or under section 25 of the earlier Companies Act, laws are applicable for proceeding to incorporate a BUSINESS entity.

2 Initial Registrations like Shops & Establishment, FSSAI, ISO, MSME, copyright, patent etc. and licences from the regulatory authorities like RBI, IRDA, GST, Income Tax, IPR etc. need to be this scenario of various options for the kind of BUSINESS entity and the plethora of laws applicable to the businesses, it becomes quite crucial to know and understand the laws associated with a particular form of the BUSINESS in order to initiate successful SETTING up of the BUSINESS and prolific CLOSURE , whenpreferred to serve the best end of all the , with the objective to provide the working knowledge and understanding of the various procedural requirements involved in the SETTING up of BUSINESS ENTITIES and overview of procedures involved in CLOSURE of ENTITIES to the students, this study material is published to cover the entire subject into three parts. Part A discusses the SETTING up of BUSINESS and its various aspects, Part B is devoted to the exhaustive list and detailed procedures related to Registration, Licenses and Compliances applicable for SETTING up the businesses successfully and Part C deliberates upon Insolvency, Winding up and CLOSURE of this, the study material to this subject becomes a One Spot Source of knowledge and understanding for efficaciously SETTING up BUSINESS in India while subsuming compliance with all requirements of Registration and Licences, along with overview of the procedures related to Insolvency, Winding Up and going through this study material and the practical training, the student should be able to - Assist in formation of various kinds of Companies (Certification part would be at Professional Programme); SETTING of trust, societies, LLP.

3 SETTING up of other various ENTITIES at small level: Sole Proprietorship, Partnership, HUF etc.; Assist in post formation activities like - PAN; TAN;Open bank account; Assist in post formation registration including MSME registration; GST registration; IPR registration; Registration under shop & establishment law; Compliance under various pollution & environmental laws; Registration under various labour laws; Assist in regular compliances under various labour laws; Assist in closing up of BUSINESS and this objective in mind, a number of procedures have also been included at relevant , as per the Company Secretaries Regulations, 1982, students are expected to conversant with the amendments to the law made up to six months preceding the date of legislative changes made upto April 01, 2019 have been incorporated in the study material. However, on hand, where the subject of SETTING up of BUSINESS ENTITIES and CLOSURE is inherently fundamental to start any kind of BUSINESS in India, on the similar end it is subject to the refinement of Legislation, Rules and Regulations.

4 IvHenceforth, it becomes necessary for every student to constantly update with legislative changes made as well as judicial pronouncements rendered from time to time by referring to the Institute s monthly journal Chartered Secretary , E-Bulletin Student Company Secretary as well as other legal and professional journals along with the aid of reference books related to the the event of any doubt, students may write to the Directorate of Academics of the Institute for due care has been taken in publishing this study material, the possibility of errors, omissions and /or discrepancies cannot be rules out. This publication is released with an understanding that the Institute shall not be responsible for any errors, omissions and /or discrepancies or any action taken in that there be any discrepancies, errors or omissions noted in the study material, the Institute shall be obliged, if the same is brought to its notice for issue of corrigendum in the e-Bulletin Student Company Secretary.

5 VTHE LIST OF LAWS COVERED UNDER THE STUDY l Air (Prevention and Control of Pollution) Act, 1981 l Banking Regulation Act, 1949 l Beedi Workers Welfare Fund Act, 1976 l Biodiversity Act, 2002 l Building & Other Construction Workers (Regulation of Employment & Conditions of Service) Act, 1996 l Child and Adolescent labour (Prohibition and Regulation) Act, 1986 l Chit Funds Act, 1982 l Companies Act, 2013 l Contract labour (Regulation and Abolition) Act, 1970 l Copyright Act, 1957 l Cine Workers Welfare Fund Act, 1981 l Design Act, 2000 l Drugs and Cosmetics Act, 1940 l Employees Provident Funds and Miscellaneous Provisions Act, 1952 l Employee s State Insurance Act, 1948 l Environment (Protection) Act, 1986 l Factories Act, 1948 l FEMA, 1999 l Foreign Contribution Regulation Act, 2010 l Geographical Indication of Goods (Regulations and Protection) Act, 1999 l Goods and Services Act, 2017 l Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 l Income Tax Act, 1961 l Industrial (Development and Regulations) Act 1951 l Industrial Disputes Act, 1947 l Industrial Employment (Standing Orders) Act, 1946 l Information Technology Act, 2000 l Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 l Iron Ore Mines, Manganese Ore Mines & Chrome Ore Mines labour Welfare Fund Act, 1976 l Insolvency & Bankruptcy Code, 2016 l Insurance Act, 1938 l Insurance Regulatory and Development Authority Act, 1999 l Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979vi l Limited Liability Partnership Act, 2008 l Limestone and Dolomite Mines labour Welfare Fund Act, 1972 l Maternity Benefit ( amendment )

6 Act, 2017 l Mica Mines labour Welfare Fund Act, 1946 l Micro, Small and Medium Enterprises Development Act, 2006 l Mines Act, 1952 l Minimum Wages Act, 1948 l Motor Transport Workers Act, 1961 l National Green Tribunal Act, 2010 l Partnership Act, 1932 l Patent Act, 1970 l Payment of Bonus Act, 1965 l Payment of Gratuity Act, 1972 l Payment of Wages Act, 1936 l Plantation labour Act, 1951 l Press Council Act, 1978 l Press & Registration of Books Act 1867 l Prevention of Sexual Harassment of Women at Workplace (Prevention;Prohibition and Redressal) Act, 2013 l Public Liability Insurance Act, 1991 l RBI Act, 1934 l Rights of Persons with Disabilities Act, 2016 l Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SRFAESI) Act, 2002 l Shop and Establishment Act, 1948 l Societies Registration Act, 1860 l Telecom Regulatory Authority of India Act, 1997 l Trade Marks Act, 1999 l Trade Unions Act, 1926 l The Industrial Disputes Act, 1947 l Water (Prevention and Control of Pollution) Act, 1974 l Water (Prevention and Control of Pollution) Cess Act, 1977viiEXECUTIVE PROGRAMME Module 1 Paper 3 SETTING up of BUSINESS ENTITIES and CLOSURE (Max Marks 100)SYLLABUSOBJECTIVESTo provide working knowledge and understanding of SETTING up of BUSINESS ENTITIES and their Contents:Part A : SETTING up of BUSINESS (40 Marks)1.

7 Choice of BUSINESS Organization l Key features of various structures and issues in choosing between BUSINESS structures including identification of location; tax implications Company l Private Company; l Public Company; l One Person Company; l Nidhi Company; l Producer Company; l Foreign Company- Liaison Offices; Branch Office & Project Office; l Formation and Registration3. Part I: Charter documents of Companies l Memorandum of Association and Articles of Association; l Doctrine of ultra-vires; l Doctrine of indoor management; Doctrine of constructive notice; l Incorporation Contracts;Part II: Alteration of Charter Documents l Alteration in MOA & AOA- Change of name;registered office address; objects clause; alteration in share capital and alteration in articles of association. viii4. Legal status of Registered Companies l Small Company; l Holding Company; l Subsidiary Company & Associate Company; l Inactive Company; l Dormant Company; l Government Limited Liability Partnership l Concept of LLP; l Formation and Registration; l LLP Agreement; l Alteration in LLP Agreement; l Annual and Event Based Other forms of BUSINESS organizations l Partnership; l Hindu Undivided Family; l Sole Proprietorship; l Multi State Co-operative Society; l Formation; Partnership Agreement and its Institutions Not For Profit & NGOs l Section 8 Company; Trust and Society- Formation and Financial Services Organization l NBFCs; l Housing Finance Company; l Asset Reconstruction Company; l Micro Finance Institutions (MFIs); l Nidhi Companies; l Payment Banks; l Start-ups l Start-up India Policy; l Registration Process.

8 L Benefits under the Companies Act and other Government Policies;ix l Different types of capital- Seed Capital; Venture Capital; Private Equity; Angel Investor; Mudra Joint Ventures; Special Purpose Vehicles l Purpose and SETTING up of BUSINESS outside India l Issues in choosing location; Structure and the processes Conversion of existing BUSINESS entity l Conversion of private company into public company and vice versa; l Conversion of Section 8 company into other kind of Company; l Conversion of Company into LLP and vice versa; l Conversion of OPC to other type of company and vice versa; l Company uthorized to be registered under the Act (Part XXI Companies); and other types of B : Registration; Licenses & Compliances (35 Marks)13. Various Initial Registrations and Licenses l Mandatory Registration - PAN; TAN; GST Registration; Shops & Establishments; SSI/MSME; l Additional Registration/License - ESI/PF; FCRA; Pollution; Other registration as per requirement of sector; IE Code; Drug License; FSSAI; Trademark; Copyright; Patent; Design; RBI; Banking; IRDA; Telecom; I MSME Registration; Udyog Aadhar Memorandum; Industrial License, Industrial Entrepreneurs Memorandum (IEM); l State Level Approval from the respective State Industrial Maintenance of Registers and Records l Register and Records required to be maintained by an Identifying laws applicable to various Industries and their initial compliances l Compliance of industry specific laws applicable to an entity at the time of SETTING up of the Intellectual Property laws (Provisions applicable for SETTING up of BUSINESS ) l Copyright Act, 1957.

9 L Patents Act, 1970; l Trade Mark Act, 1999; l Geographical Indication of Goods (Registration and Protection) Act, 1999; l Designs Act, Compliances under labour Laws (Provisions applicable for SETTING up of BUSINESS ) l Factories Act, 1948; l Minimum Wages Act, 1948;x l Payment of Wages Act,1936; l Equal Remuneration Act, 1976; l Employees State Insurance Act,1948; l Employees Provident Funds and Miscellaneous Provisions Act, 1952; l Payment of Bonus Act, 1965; l Payment of Gratuity Act, 1972; l Employees Compensation Act, 1923; l Contract labour (Regulation and Abolition) Act, 1970; l Industrial Disputes Act, 1947; l Trade Unions Act, 1926; l Maternity Relief Act, 196; l Child and Adolescent labour (Prohibition and Regulation) Act, 1986; l [Persons with Disabilities (Equal Opportunities; Protection of Rights and Full Participation) Act,1995]* replaced with Right of Persons with Disabilities Act, 2016 l Prevention of Sexual Harassment of Women at Workplace (Prevention; Prohibition and Redressal) Act, Compliances relating to Environmental laws (Provisions applicable for SETTING up of BUSINESS ) l Water (Prevention and Control of Pollution) Act, 1974; l Air (Prevention and Control of Pollution) Act, 1981; l Environment Protection Act, 1986; l Public Liability Insurance Act, 1991; l National Green Tribunal Act, C : Insolvency; Winding up & CLOSURE of BUSINESS (25 Marks)19.

10 Dormant Company l Obtaining dormant status and dormant to active Strike off and restoration of name of the company and LLP21. Insolvency Resolution process, Liquidation and Winding-upxiLESSON WISE SUMMARYSETTING UP OF BUSINESS ENTITIES AND CLOSUREL esson 1 - Choice of BUSINESS OrganizationThe choice of a busi


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