SETTING UP BUSINESS IN INDIA BY FOREIGN COMPANIESA foreign company planning to set up business operations in India has the following TWO options:

1. AS AN INDIAN COMPANY

A foreign company can commence operations in India by incorporating a company under the Companies Act, 1956 through:a. Joint Ventures; orb. Wholly Owned SubsidiariesForeign equity in such Indian companies can be up to 100% depending on the requirements of the investor, subject to equity caps in respect of the area of activities under the Foreign Direct Investment (FDI) policy. Details of the FDI policy, sectoral equity caps & procedures can be obtained on a specific request.(Click here for making a specific request).

1. a) Joint Venture With An Indian PartnerForeign Companies can set up their operations in India by forging strategic alliances with Indian partners.Joint Venture may entail the following advantages for a foreign investor: Established distribution/ marketing set up of the Indian partner Available financial resource of the Indian partners Established contacts of the Indian partners which help smoothen the process of setting up of operations

1. b) Wholly Owned Subsidiary CompanyForeign companies can also set up wholly owned subsidiary in sectors where 100% foreign direct investment is permitted under the FDI policy.

Incorporation of CompanyFor registration and incorporation, set of applications have to be filed with Registrar of Companies (ROC). Once a company has been duly registered and incorporated as an Indian company, it is subject to Indian laws and regulations as applicable to other domestic Indian companies.Click here for a flow chart of steps involved in formation of a companyClick here for Company Formation in India

2. AS A FOREIGN COMPANY

Foreign Companies can set up their operations in India through: Liaison Office/Representative Office Project Office Branch OfficeSuch offices can undertake any permitted activities. Companies have to register themselves with Registrar of Companies (ROC) within 30 days of setting up a place of business in India.

2. a) Liaison Office/ Representative OfficeLiaison office acts as a channel of communication between the principal place of business or head office and entities in India. Liaison office cannot undertake any commercial activity directly or indirectly and cannot, therefore, earn any income in India. Its role is limited to collecting information about possible market opportunities and providing information about the company and its products to prospective Indian customers. It can promote export/import from/to India and also facilitate technical/financial collaboration between parent company and companies in India.Approval for establishing a liaison office in India is granted by Reserve Bank of India (RBI).

2. b) Project OfficeForeign Companies planning to execute specific projects in India can set up temporary project/site offices in India. RBI has now granted general permission to foreign entities to establish Project Offices subject to specified conditions. Such offices cannot undertake or carry on any activity other than the activity relating and incidental to execution of the project. Project Offices may remit outside India the surplus of the project on its completion, general permission for which has been granted by the RBI.

2. c) Branch OfficeForeign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes:i. Export/Import of goodsii. Rendering professional or consultancy servicesiii. Carrying out research work, in which the parent company is engaged.iv. Promoting technical or financial collaborations between Indian companies and parent or overseas group company.v. Representing the parent company in India and acting as buying/selling agents in India.vi. Rendering services in Information Technology and development of software in India.vii. Rendering technical support to the products supplied by the parent/ group companies.viii. Foreign airline/shipping company.A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).

Company Formation in IndiaCompanies ActCompanies incorporated or registered in India are governed by the Companies Act 1956.Shareholders and DirectorsA. There is no need to appoint local director or shareholder to incorporate a company in India.B. Foreign nationals can incorporate company in India and hold foreign equity to the extent of 100% which is dependent upon sector in which company will operate and is subject to approval from either Reserve Bank of India(RBI) or Foreign Investment Promotion Board (FIPB).Memorandum & Articles of AssociationThe memorandum and articles are the primary legal document of a company. Memorandum contains the name of the company, authorized share capital, initial members and object clause. Articles are a set of internal regulations that govern the day to day operations of the company. Both memorandum and articles have to be filed with Registrar of companies at the time of incorporation or if there are any changes thereafter. At least two subscribers (shareholder) are required in the memorandum and each of the subscriber must subscribe to at least one share in the company.Share CapitalShares must be expressed in a fixed amount. "No par value" or "bearer" shares are not permitted. Shares to be subscribed must be expressed in Indian rupees.Annual MeetingsAn annual general meeting (AGM) must be held once in every financial year and not more than 6 months after the end of financial year. However, a company need not hold its first AGM until 18 months of its incorporation.Public FilingsThe names and personal particulars of the directors and secretary, register of charges, share capital, registered office address etc. must be filed with the Companies Registry for public inspection upon incorporation and if there is any change thereafter.Accounts & AuditorsEvery company is required to appoint an auditor each year at its AGM. An auditor must be qualified by virtue of the Institute of Chartered Accountants of India Act 1949 and completely independent of the company. Audited accounts of the company serve as tool for various stakeholders like creditors, bankers, investors and revenue authorities.Benefits of company incorporation through us:Our executives will spend the time it takes to ensure your Indian offshore corporate structure provides the following benefits: Limited liability for corporate directors; Minimisation of international tax liabilities; Minimal statutory filing obligations; Incorporation in a politically stable jurisdiction; A corporate bank account with an international retail or private bank; Nominee shareholders and directors for confidentiality of beneficial owners; Low share capital requirements;Corporate Finance ServicesWe help organisations in following matters: Preparations of Project Reports including Financial Viability of the Project. Assisting clients in raising finance through various instruments available in market viz. private placement of shares, Inter-Corporate Deposit, Terms loans, working capital limits. Assistance in External Credit Borrowing (ECB) from overseas bodies and approval from Indian authorities.Corporate MattersCompany legislation requires businesses to perform many administration tasks that take up a lot of valuable company time. The last thing you need as a business owner is to be stressed out trying to ensure you are complying with the Companies Act 1993.The possible threat of penalties for failing to keep up with the changing rules is too great a risk to take.Here, we are able to relieve this burden for you. Our services include: General advice on company law Company formations Filing of annual returns on your behalf Preparation of all documentation related to minutes and resolutions Maintenance of statutory books Assistance in changes of directors, shareholders, addresses, and office details Bonus Issues Share transfers Registered Office Facility

Establishing an IT or ITES CompanyDo you want to establish Information Technology (IT) or Information Technology Enabled Services (ITES) business in India?India is considered as one of the preferred destinations for many Corporations doing business in IT or ITES.The reasons are obvious: Availability of qualified manpower with proven computing skills. Largest English speaking population. Highly cost effective infrastructure. Focus Area of Central and State Government. Availability of ready to use, state-of-the-art infrastructure in the form Software Technology Parks of India in almost every major city. 100% income tax exemption to 100% export oriented units registered under STP scheme of the Government of India.These Software Technology Parks (STPs) are equipped with leasehold plots of land and ready to use offices, 24/7 power supply, broadband connectivity and single window clearance. The benefits of registration under STPI can also be enjoyed in owned set-up and the custom bonding requirements have been relaxed.To know more on our STPI Consultancy services click here.We specialize in setting up your business in India IT and ITES sector. Our expert team provides the following services for clients in IT & ITES sector: Incorporation of a company. Compliance with Registrar of Companies (ROC). Liaison with the Reserve Bank of India towards FDI approvals Registration of the Corporation under STP scheme to avail the above referred benefits. Registering the Corporation with the Income Tax Department and obtaining Permanent Account Number (PAN) and Tax Account Number (TAN). Setting up Payroll and Payroll Taxes. Setting up the accounting by using the client preferred software.We do not just set-up your business in India. We also continue to help you by: Offering part time CFO services. Undertaking write-up work for you. Preparation of Financial statements. Calculation and payment of withheld taxes. Preparation and filing of returns of income and withheld taxes. Filing of various returns with the Registrar of Companies. Any other consulting under the Income Tax Act and the Companies Act.This way you can focus on core issues of business of software development / processing and we take care of the other non-core functions.STPI ConsultancySTPI (Software Technology Parks of India) SchemeThe 100% Export Oriented Unit scheme (STP scheme) is for setting up of software development and IT enabled services firm in India for 100% Export. A distinctive feature of the STP/EHTP scheme is it provides single point contact services for member units, enabling them to conduct exports operations at a pace commensurate with global standards. The STP scheme is administered by the Directors of STPI.STPI scheme benefits and highlights1. Income tax holiday as per section 10A of the IT Act.2. Customs duty exemption on imports of capital equipments. Equipment can also be imported on loan or lease basis.3. All relevant equipment/goods including second hand equipment can be imported (except prohibited items).4. 100% excise duty exemption on indigenous items procurement.5. Central Sales Tax reimbursement on indigenous items procurement.6. Green card enabling priority treatment for government clearances / other services.7. 100% Foreign Direct Investment permissible through 'Automatic Route' of RBI.8. Sales in the DTA (Domestic Tariff Area) up to 50% of the foreign exchange earned by the STP/EHTP unit.9. 100% Depreciation on capital goods over a period of five years.10. Software units may also use the computer system for training purpose (including commercial training).Periodic Compliance Services1. Statutory Reports for STP Units2. Statutory Compliance for STP UnitsStatutory Reports for STP Unitsa. Monthly Progress Reports (MPR) & Quarterly Progress Reports (QPR): All units are required to submit Monthly Progress Reports & Quarterly Progress Reports by 7th of a month on completion of previous month and by 10th of a month on completion of previous quarter respectively in the prescribed format . It is a mandatory requirement and units which are irregular in submitting MPRs & QPRs can be denied services of STPI.b. Annual Performance Reports (APR): Yearly performance report should be submitted as per the prescribed format.Statutory compliance for STP unitsAccountsDistinct Identity:If an industrial enterprise is operating both as a domestic unit as well as an EHTP/STP unit, it shall have two distinct identities with separate accounts, including separate bank accounts. It is, however, not necessary for it to be a separate legal entity, but it should be possible to distinguish the imports and exports or supplies affected by the EHTP/STP units from those made by the other units of the enterprise.Maintain the accounts as under:a. Maintenance of Sales Invoices.b. Maintenances of Fixed Asset Registers.c. Maintenance of Foreign Inward Remittance Certificate file (FIRC) & Bank Realization Certificate (BRC) file where the original of the FIRCs and BRCs are kept.d. Maintenance of contract file, where copies of contracts received from buyers are maintained.BankingThe units are free to have as many bank accounts as it desires but shall have to designate a single branch of the bank with which all export documents will be submitted. In other words the work of handling of all shipping documents & realization of export proceeds will have to be entrusted to this designated bank branch.FDI Foreign Direct InvestmentAn OverviewThe Government of India has recently undertaken a comprehensive review of the FDI policy and associated procedures. As a result, a number of rationalisation measures have been undertaken which, inter alia include, dispensing with the need of multiple approvals from Government and/or regulatory agencies that exist in certain sectors, extending the automatic route to more sectors, and allowing FDI in newsectors. The latest changes in the FDI policy were notified videPress Note 4 (2006 Series).As per the extant policy, FDI up to 100% is allowed, under the automatic route, in most sectors/activities. FDI under the automatic route does not require prior approval either by the Government of India or the Reserve Bank of India (RBI). Investors are only required to notify the concerned Regional Office of RBI within 30 days of receipt of inward remittances and file required documents with that office within 30 days of issue of shares to foreign investors.ROUTES FOR FOREIGN DIRECT INVESTMENT (FDI)a. Automatic RouteFDI up to 100% is allowed under the automatic route in all activities/sectors except the following which require approval of the government: Activities/items that require an Industrial Licence Proposals in which the foreign collaborator has an existing venture/tie up in India in the same field Proposals for acquisition of shares in an existing Indian company in some cases All proposals falling outside notified sectoral policy/caps or under sectors in which FDI is not permittedb. Government Approval RouteAll activities which are not covered under the automatic route, require prior Government approval. Areas/sectors/activities hitherto not open to FDI/NRI investment shall continue to be so unless otherwise notified by Government.Role of D Batra & Co. (DBC)DBC provides strategic advice on Foreign Direct Investment (FDI) in India. DBC has executed substantial FDI assignments for a number of foreign corporations, the assignments included detailed presentations viz. options available to a foreign entity for doing business in India; documenting cases for approval; obtaining of approvals and permissions from the Reserve Bank and/or Foreign Investment Promotion Board and/or Government of India for setting up of liaison, branch, project offices, wholly owned subsidiaries, JV companies etc.DBC also advises on the methodology to be followed in regard to the management of foreign exchange.

PROCEDURE TO SETUP BUSINESS IN INDIA

INTRODUCTIONFirst Question comes to our mind that what type of company we are going to setup in India?Types of business entities in India:In India, the following types of business entities are availablePrivate limited companyPublic limited companyUnlimited companyLimited liability partnershipPartnershipSole proprietorshipLiaison officeProject officeBranch officeJoint venture companySubsidiary companyBoth the Indian promoters and the foreign promoters can form the above mentioned business entity.We here are talking in the formation of public limited company. A company in India can have foreign directors provided some conditions are fulfilled the directors of an Indian company both Indian and foreign directors are required to obtain Director Identification Number and Digital Signature Certificate.There are some restrictions regarding issuing sweat equity for a company in India.Also see Annual corporate fillings in India for corporate maintainance requirements in India.PUBLIC LIMITED COMPANYA public company is defined as a company which is not a private company. The following conditions apply only to a public company:It must have at least seven share holders.A public co. is not authorised to start business upon the grant of the certificate of incorporation. In order to be eligible to commence business as a corporation it must obtain another document called trading certificate.It must publish a prospectus or file statement in lieu of a prospectus before it can start transacting business.A public company is required to have at least 3 directors.It must hold statutory meetings and obtain government approval for the appointment of the management.There are several other provisions contained in the companies ACT,1956 which are applicable only to public companies and should be consulted.Liaison office/representative officeA liaison office could be established with the approval of the government of India. The role of liaison office is limited to collection of information, promotion of exports/imports and facilitates technical/financial collaborations. Liaison office can not undertake any commercial activity directly or indirectly.TYPICAL PROCEDURE TO ESTABLISH BUSINESS IN INDIAIn India establishing a business take some time. Besides incorporation there are many other formalities in establishing business in India. The following chart contains technical formalities including incorporating a public/private limited company in India:Obtain DIN for proposed directors of the new companyObtain DSC for proposed directors of the companyFilling the proposed name of the company for approval to the registrar of the companies; get the memorandum and articles of association wetted by the ROC and Printed along with the certificate of commencement.Make an application to the supritendent of stamps or an authorised bank requesting for stamping fo the memorandum of association and articles of association.Present the required documents along with the registration fee to the registrar of companies to get the certificate of incorporation.Obtain company sealApply for UTI investors services limited/national securities depository limited to obtain a permanent account number.Register with employees provident fund organisationRegister for provision tax.PROMOTERPromoter is an Entitythatplansaprojectorformationof a newfirm, and thensellsorpromotesthe plan or idea to othersPromoters of company(1) These promoters have power of defining the object of a company and to decide on the various connected matters regarding the incorporation of Public ltd company. The company promoters are going to incorporate is a public company and these promoters are to enter into preliminary contracts with vendors and to make arrangements for preparation, advertisement on the circulation of prospectus.(2) Company will pay the remuneration to the promoters after promotion.(3) If Company does not agree to enter into the contracts before the incorporation of the company the promoters will be liable for that.REQUIREMENTSDIN (director identification number)As per provision new section 266A, inserted by company Amendment Act 2006, every individuals that is directors of a company will make an application for the allotment of DIN to central government in DIN form.DIN is the first requirement so firstly Directors of company are going to formulate, will obtain DIN.e-Form 1ACompany is going to suggest six names to the registrar of company for the selection of one suitable name in e-Form. Six names are as given below--XYZ company limited- PQR company limited-MYN health insurance limited-ILK company limited-MNP company limited-JSM company limitede-Form 1A is signed by the Mr. Yogesh who is one of the promoter of company.The registrar of companies intimated Mr. Yogesh within in six month, the best suitable name is MYN health insurance limited.MEMORANDUM OF ASSOCIATIONMOA is the charter document of the company, the promoter going to promote for the registration of company under company Act 1956. The MOA was prepared according to table B of schedule 1 for making company limited by share.CONTENTS OF MOA-(1)Name clause- the promoter of company going to suggest to the registrar of company MYN health insurance company as a main name and other suggested name also to show that our company Public Company is limited by shares. We are using limited word at the end of the name and the name accepted by the registrar will be engrave on its seal and be published affix on the outside of every office or place where business will be carried on.Domicile clauseThe registered office is the address given to the registrar of the companies of the office. Notice in form no. 18 is the form required to fill for the domicile of the company and this form should be submitted to the registrar of the companies with in 30 days of the incorporation of the business. Also the name of the company should be written outside the registered office in two languages one in the local language and another English.Object ClauseThis clause very important as specifies which are the activities to be carried out and which not to be carried out. The company cannot do anything which is not written in the memorandum of associationThis clause must specify :-The company will carry on business of insurance against the health of people.Insurance is done against various diseasesThe company may diverse the business.In case of non trading company whose business is not confined to one state must mention the objects which are extended to the states in which they are going to operate.Doctrine of ultra vires state that the company cannot do anything beyond what is written in the MA clause and are not reasonable incidentally or necessary to the attainment of objects is ultra-vires the company and therefore void. No liability of the company arouse on such transactions which are beyond the power mentioned in the memorandum of association.Liability clause A declaration that the liability of the members is limited as the company is limited by the shares.The following are exceptions to the rule of limited liability of members :-If a member agrees in writing to be bound by the alteration of MA / AA requiring him to take more shares or increasing his liability, he shall be liable upto the amount agreed to by him.If every member agrees in writing to re-register the company as an unlimited company and the company is re-registered as such, such members will have unlimited liability.If to the knowledge of a member, the number of shareholders has fallen below the legal minimum, (seven in the case of a public limited company and two in case of a private limited company ) and the company has carried on business for more than 6 months, while the number is so reduced, themembers for the time being constituting the company would be personally liable for the debts of the company contracted during that time.(5) Capital Clause- MYN company have authorized capital of 10 crore and value of each share us Rs. 100.(6) Association Clause- this clause was followed by names, addresses and description of subscribers. The persons who are desire for the motion of company and the number of shares by these subscribers are 2000 in total.ARTICLES OF ASSOCIATIONThe AOA is subsidiary document of MYN health insurance company, which specify all the rights and duties of all the members and directors. Company is following the table A of schedule 1, in which they made all the rules and regulations of their own.CONTENTS-(1)Share capital- authorized capital of company is Rs. 10 crore and it is divided into Rs. 100 per share.(2) Calls on share- MYN Company has divided the face value of shares that Rs. 100 into five parts.(a)Application money- Rs. 15 per share(b)Allotment money- Rs. 35 per share(c) First call- Rs. 20 per share(d) Second call- Rs. 20 per share(e) Third call- Rs. 10 per shareRULES AND REGULATIONS--Directors have right to receive and postpone a call of share.- If the shareholders will not pay the unpaid amount after the due notice, share will be forfeited by the company.-MYN lien on shares-MYN health insurance company limited will have first lion on the shares and debentures registered in the name of members and upon the proceed of sales.The Board of Director of MYN health insurance Company limited may declare on share wholly or in part to be exempt this procedure.-Transfer of sharesThe shareholders of the company can transfer the share of company where they feel like.-Alteration of capitalAs provide in MOA of MYN health insurance of company limited the capital of company can be increased or decreased by passing a special regulation and making alteration in AOA.-Dividend and ReservesThe company will transfer 10% of its net profit to reserve for its future and rest after making necessary deductions will be divided as dividend to the shareholders.-Borrowing powersSubject to the provision of section 58 A, 202 and 243 of the company act 1956, MYN health insurance company limited may from time to time raised or borrow any sum or sums of money.-Conversation of share into stockBy passing a special resolution, the MYN health insurance company limited can convert any paid up shares in to stock.-General Meeting(1)First A.G.M. shall be held by the company within 18 months of its incorporation.(2) Subsequent A.G.M. of company shall be held in each subsequent calendar year and not more than 18 months shall elapse b/w two A.G.M.-Directors-(a)Member of directors shall not be less than 3 or limit on maximum.(b) First directors of company are-- Yogesh- Shivam- Manoj(c) The first directors shall holds office until the close of first A.G.M. of the company.Powers of directors-The board shall be enlist exercise will soul powers do will such aid and things as company is authorized is exercise and do.-Power to make calls-power of issue of debenture-power to borrow money otherwise than by debentures- Power to make loans-The seal-Company has a common seal and directors shall precicle for the sale .-Audit-Every year the accounts of the company shall be balanced and audited and correctness of the profit and loss account and balance sheet ascertained by one or more auditors.-Winding up-If MYN health insurance limited company will be wound up and the assets available for distributed among the members as such to repay the whole of the assets will be distributed so that, as .. as may be, the losses shall be .by the members in proportion and the capital paid up.E-Form 32- this form mention the particulars of directors. The personal details here and with the addresses are provided are similar. E-Form 32 is signed by the promoter of the company.CERTIFICATE OF INCORPORATIONCOMPANY NAME: MYN HEALTH INSURANCE LTD105899I HERBY CERTIFY THAT MYN HEALTH INSURANCE LTD. ON THIS DAY HAS BEEN INCORPORATED UNDER THE COMPANIES ACT, 1956 AS A PUBLIC LIMITED COMPANYSigned at Chandigarh1 NOVEMBER 2009Seal of RegistrarS.N.PANDEYRegistrar of companiesCERTIFICATE OF COMMENCEMENT OF BUSINESSI hereby certify that MYN health insurance Ltd. of Ludhiana. which was incorporated under the Companies Act, 1956 on the 9-November, day of Monday 2009 prescribed form that the conditions of sections that has been complied with this certificate is given under my hand and is entitled to commence the business.Seal of RegistrarRegistrar of CompaniesAdvantages of incorporating in IndiaMany tax exemptions available to the company set up in Speciel Economic Zone;Many tax incentives available to IT companies;India has got double taxation treaties with many countries.Minimum authorised capital of only INR 100,000 and INR 500,000 for private and public company respectively is required to form an establishment in India.Skilled and intelligent employees are available at nominal rate.With its large base of English speaking skilled human resource, it is most sought after destination for business process outsourcing, knowledge process outsourcing etc.Applicable laws for forming a company in IndiaThe laws applicable for incorporating a company in India include the Indian companies ACT,1956 read with companies (central government) general rules and forms, 1956 the Indian Income TAX Act, and other laws and regulation. The foreign exchange management Act,1999 is applicable for foreign investments and transactions.REVIEW OF LITERATURE1-KUMAR SANJAY AND ASSOCIATESWe at KSA focus on helping clients design and build Tomorrows organisation. We provide real world solutions to complex business issues through audit and assurance functions, taxation-international and domestic, due diligence studies evaluation of entry options, partner search, joint venture formations, merger & acquisitions, business valuation studies, assistance in business negotiations and project feasibility studiesWe are a team of professionals with diverse area of specialisation including Corporate Strategists, Tax Advisory Experts, Financial Analyst and Market Analyst and M & A Specialists. Our philosophy has always been to develop and deliver solutions that not just meet but exceed the business expectations of Client.2-Dr. Vijay Vitthals Experience(Business Analyst Healthcare Misys Healthcare Systems) (Hospital & Health Care industry)January 2007 December 2009 (3 years )Business Analyst, Software Development Analyst, Misys EMR, Misys Connect, Misys Healthcare Systems (India) Pvt Ltd under Misys Software Solutions (India) Pvt Ltd Author and owner of Functional Requirement Specification / Functional Document Specification of Interoperability for Misys EMR Connect for both Misys EMR and Misys CPR products Client facing skills /experience in delivering healthcare industry solutions Author for Functional Requirements Specification to the connect product which connects all healthcare EMR products and also to Misys EMR product solving client issues Drafted Functional Requirements Specification for Development Analyst Group3-SUNIL GOYAL(M.Com, M.A.,LLB., Diploma in Labour Law),(Diploma in Taxation, AICWA, FCS, FCA)According to Shri Sunil Goyal (Senior Most partner of the firm) and formed the firm in the year 1980. Having a vast experience since 1980 in the areas of taxation, audits, corporate laws and ranging experience on different aspects relating to functioning of public sector entities at the State and National level including Statutory audit of large number of public sector companies and activitiesrelated to socio-economic development of the State and the CountryHaving experience of more than 10 years in the areas of Auditing and Assurance Services,Mergers and Acquitions, Disinvestments, Joint Ventures and Collaborations, Foreign Exchange Management Act, Taxation including Tribunals and Settlement Commission, Investment Planning, Trustee services, Hand Holding of Foreign Companies to setup business in India Project Related Services, SOX Audit etc.Elected as Central Council Member of the Institute of Chartered Accountants of India in the year 1994 and been serving the Central Council of the ICAI4-Nada Kobeissi (Long Island University)Journal of Small Business Management, Vol. 47, Issue 4, pp. 489-513, October 2009Thus the aim of this paper is to investigate potential relationship between banks' CRA lending activities, and new business start-ups and economic growth in local markets. The paper proposes that new start-ups will have spillover effects that will consequently contribute to community development. After controlling for several potential variables that could have an impact on business start-ups and community developments, the study found a strong positive effect. Beside its social and economic implications, the study also considered policy implications associated with the CRA regulation as a welfare improving initiative in low-income communities. It offers ground for certain government intervention in the loan marketThus the aim of this paper is to investigate potential relationship between banks' CRA lending activities, and new business start-ups and economic growth in local markets. The paper proposes that new start-ups will have spillover effects that will consequently contribute to community development. After controlling for several potential variables that could have an impact on business start-ups and community developments, the study found a strong positive effect. Beside its social and economic implications, the study also considered policy implications associated with the CRA regulation as a welfare improving initiative in low-income communities. It offers ground for certain government intervention in the loan market.Date posted: October 13, 20095-Conflict Resolution and the Role of Corporate Law Courts: An Empirical StudyJoseph A. McCahery (Tilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI))Erik P. M. Vermeulen (Tilburg University - Department of Business Law)August 12, 2009ECGI - Law Working Paper No. 132/2009We study private enforcement of corporate law in a civil law jurisdiction that has a relatively weak company law regime. First, we develop a benchmark for how effective the court is in resolving confl icts in a speedy and decisive manner. We base our findings on a hand-collected database of filings of legal actions brought against companies between 2002-2008. The main conclusion is that the grant of injunctive relief provides an incentive for the parties to the lawsuit to seek out settlements and thereby prevent further costly and unwanted litigation. Our results emphasize the importance of the private enforcement of intra-firm disputes and the effectiveness of a specialized court in providing protection to minority shareholders.Keywords: legal procedure, private enforcement, corporate law, derivative actionsDate posted: August 23, 2009 ; Last revised: September 25, 20096-Corporate Governance and Innovation - Venture Capital, Joint Ventures, and Family BusinessesJoseph A. McCaheryTilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI)Erik P. M. VermeulenTilburg University - Department of Business LawMarch 2006Most of the literature on corporate governance focuses on listed companies. However, the majority of firms worldwide are non-listed. Given the importance of these firms for innovation and job creation, the absence of a robust debate on the best governance practices for these firms is perplexing. Corporate governance for non-listed companies, such as joint-ventures or venture-capital-backed start-ups and spin-offs, is concerned with ensuring that firms are run efficiently and protect the interests of business parties and investors. The article recounts the history of corporate governance from the development of the joint venture business form to the recent initiatives that help to foster the legal infrastructure to keep a modern economy in gear. We argue that the corporate governance debate for non-listed companies will proceed along three dimensions: (1) legal and institutional structures, (2) contractual arrangements, and (3) optional, best practice guidelines.Keywords: corporate governance, innovation, best governance practices, non-listed companies, joint ventures, family-owned businesses, venture capital, company lawDate posted: April 04, 20067-Does the Takeover Bids Directive Need Revision?Joseph A. McCaheryTilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI)Erik P. M. VermeulenTilburg University - Department of Business LawFebruary 4, 2010TILEC Discussion Paper No. 2010-006Does the Takeover Bids Directive need revision? The answer to this question will most likely affect the Commissions assessment of the Directive in 2011 and could initiate its revision. Proponents of such a revision urge the Commission to redress the shortcomings of the Directives implementation in two ways: 1) revising the mandatory provisions of the Directive making them less easily to avoid; and 2) creating new provisions that would weaken incumbent managers lock on control that would make corporate control more contestable. In this short essay, however, we show that the Commissions opt out strategy has proved, in practice, to be remarkably popular with Member States and does not need any further discussion.Keywords: Takeover Bids Directive, Market for Corporate Control, EU Lawmaking, Mandatory Bid Rule, Board Neutrality, Break Through RuleDate posted: February 09, 20108-How Does Corporate Mobility Affect Lawmaking? A Comparative AnalysisWilliam W. BrattonUniversity of Pennsyvlania Law School; European Corporate Governance Institute (ECGI)Joseph A. McCaheryTilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI)Erik P. M. VermeulenTilburg University - Department of Business LawJanuary 2008ECGI - Law Working Paper No. 91/2008Amsterdam Center for Law & Economics Working Paper No. 2008-01 Georgetown Law and Economics Research Paper No. 1086667This paper examines the impact of increased corporate mobility on corporate lawmaking in the European Union (EU). More specifically, we seek an answer to a simple question: Has the increased mobility which arose from the implementation of the Societas Europaea (SE) and the path-breaking decisions of the European Court of Justice (ECJ) led to an outbreak of regulatory competition and the emergence of a Delaware-like member state in Europe? Two types of corporate mobility are distinguished: (1) the incorporation mobility of start up firms and (2) the reincorporation mobility of established firms. As to incorporation mobility, the Centros triad of cases makes it possible for start-up firms to incorporate in a foreign jurisdiction. Many entrepreneurs have taken advantage of this new freedom of establishment. However, recent data from Germany and The Netherlands indicate declining numbers of such foreign incorporations over time. Reincorporation mobility is still far from generally available in the EU. As a result, competitive pressures do not yet motivate changes in the fundamental governance provisions of national corporate law regimes.Keywords: corporate mobility, costs of regulation, regulatory competitionDate posted: January 25, 2008 ; Last revised: April 16, 20099-Limited Partnership Reform in the United Kingdom: A Competitive, Venture Capital Oriented Business FormJoseph A. McCaheryTilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI)Erik P. M. VermeulenTilburg University - Department of Business LawDecember 2004Tilburg Law and Economics Center Discussion Paper No. 2004-024This paper evaluates the primary legal and financial mechanisms that help support the development of a venture capital market. Specifically, we argue that emulating the organizational and contractual pattern of the US venture capital market could enhance the development of the European venture capital market. We first show that the modernization of the 'venerable' limited partnership form, based on US experiences, offers substantial contracting benefits for investors and is crucial to the operation of a mature venture capital market. We then argue that the emergence of more efficient limited partnership structures may arise as a consequence of the competition between European states. We argue that the United Kingdom, which has recently embarked on general and limited partnership law reform, could, in light of the competitive lawmaking environment that the ECJ has opened up, be in the best position to enter the competition within the EU. It then explores the prominent features of the UK special Limited Partnership statute, which makes it possible for venture capitalists to organize their contractual relations that are best suited to the characteristics of the venture capital market. Finally, our analysis provides an understanding of the competitive forces that shape the ongoing reforms of limited partnership law and related business forms in Europe.Keywords: Venture capital, venture capital market, innovative companies, limited partnership, public policyDate posted: February 09, 200510-Network Effects and Regulatory Competition: An Introduction to the Expectations and Challenges of Partnership Law ReformErik P. M. VermeulenTilburg University - Department of Business LawOctober 2005TILEC Discussion Paper No. 2005-028This article examines the theoretical arguments for and against the importance of new partnership-type business forms. Section 1 briefly reviews the history of partnership law reform in Europe. The review of traditional partnership law reveals that the absence of new business forms may be due to status quo bias and network effects. Section 2 turns to the importance of partnership law reform and the introduction of new business forms to a robust economy. Section 3 evaluates whether we can project a pattern of regulatory competition in the business organization law context that could prompt lawmakers to innovate by introducing new partnership-type business forms.Keywords: Network effects, Regulatory competitionDate posted: October 22, 200511-The Corporate Governance Framework of Non-Listed CompaniesJoseph A. McCaheryTilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI)Erik P. M. VermeulenTilburg University - Department of Business LawThis article appears as Chapter One in Corporate Governance of Non-Listed Companies. The chapter evaluates the role of corporate law in formulating effective solutions to the core agency problems that arise in non-listed companies. We show how a range of legal strategies, which were originally designed for public companies but later adapted to closely held firms, can be used effectively to promote economic value while detecting and correcting problems that occur in non-listed companies.The book is divided into three parts. Each of these three parts has a major theme: the theme of Part I is how the creation of clear and simple default rules provide a governance framework for non-listed companies; the theme of Part II is the private ordering of non-listed companies; and the theme of Part III is the analysis of best practice guidelines that supplement the contractual relations between parties.Keywords: corporate governance, non-listed companies, joint ventures, family-owned businesses, innovation, venture capital, company lawDate posted: February 10, 200912-The New Company Law - What Matters in an Innovative Economy?Joseph A. McCaheryTilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI)Erik P. M. VermeulenTilburg University - Department of Business LawMasato HisatakeResearch Institute of Economy, Trade and IndustryJun SaitoNikon CorporationSeptember 2006Lower barriers of entry for new firms and more flexibility in structuring a business organization are the two important factors motivating the introduction of the new company law. In general, policymakers use new company law initiatives to encourage entrepreneurship, innovation, and cooperative arrangements. This paper distinguishes the different strands of company law reforms arising in the United States, Europe and Asia and points to the underlying conditions that shape the markedly different reform outputs. Our empirical analysis points to three important factors - (1) private ordering, (2) fiscal transparency, and (3) limited liability - that effect the incentives for new firm creation. However, we find that many of the new company law reforms are incomplete. Nevertheless, these new company law reforms retain the ability to generate rents due to their adaptability and responsiveness to social and economic change.Keywords: New Company Law, Innovation, Contracts, Incomplete Law, Corporate TaxationDate posted: November 12, 200613- Towards a New 'Company' Structure for High-Tech Start-UpsErik P. M. VermeulenTilburg University - Department of Business LawDecember 2000As far as the venture capital market is concerned, it is widely assumed that Europe lags way behind the United States. Recent papers have asserted that, in order to bridge this gap Europe should piggyback on US capital market institutions and their securities regulations. This paper critically examines these claims and suggests that European policymakers should focus on overcoming the institutional, legal, fiscal, and cultural obstacles that are understood to impose significant costs on start-up firms. A really underrated issue in the success formula of the US venture capital industry is the influence of legal forms on the quality of venture capital contracting. This paper analyzes the characteristics of European company structures, particularly the Dutch private company, and questions whether they are sufficiently flexible and responsive to solve the two-sided agency problems that characterize the relationship between the entrepreneur and the venture capitalists.This paper then argues that the introduction of an optimal organizational form for high-tech start-ups, based on US experiences, is crucial to Europe's attempt to emulate the successful US venture capital market. It is suggested that policymakers, with the support of interest groups, should undertake the task of developing a new limited liability vehicle. Indeed, a new organizational form, which is characterized by clarity and simplicity, may make high profile venture capitalists more willing to invest in new enterprises. The prospects for the introduction of a new vehicle depend on the regulatory competition and emulation, which together may eventually culminate in overcoming path dependent barriers to the European venture capital market.Date posted: January 12, 200114-Traditional and Innovative Approaches to Legal Reform: The 'New Company Law'Joseph A. McCaheryTilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI)Erik P. M. VermeulenTilburg University - Department of Business LawMasato HisatakeResearch Institute of Economy, Trade and IndustryJun SaitoNikon CorporationLower barriers of entry for new firms and more flexibility in structuring a business organisation are the two key factors motivating the introduction of the new company law. In general, policymakers use new company law initiatives to encourage entrepreneurship, innovation and cooperative arrangements. This paper distinguishes the diverse strands of company law reforms arising in the United States, Europe and Asia and points to the underlying conditions that shape the markedly different reform outputs. Our analysis points to three important factors - (1) private ordering; (2) fiscal transparency; and (3) limited liability - that effect the incentives for new firm creation. However, we find that many of the new company law reforms are incomplete. Nevertheless, these new company law reforms retain the ability to generate rents due to their adaptability and responsiveness to social and economic change.Keywords: new company law, innovation, contracts, incomplete lawDate posted: May 14, 200715-Venture Capital Beyond the Financial Crisis: How Corporate Venturing Boosts New Entrepreneurial Clusters (and Assists Governments in Their Innovation Efforts)Joseph A. McCaheryTilburg University - Tilburg Law and Economics Center; Tilburg University - Law School; European Banking Center (EBC); European Corporate Governance Institute (ECGI)Erik P. M. VermeulenTilburg University - Department of Business LawMay 29, 2010In his book, 'Boulevard of Broken Dreams: Why Public Efforts to Boost Entrepreneurship and Venture Capital Have Failed - and What to Do about It,' Harvard Business School Professor, Josh Lerner, explains that governments can only play a limited role in spurring innovation and entrepreneurship. Government initiatives are usually characterized by poor design and a lack of understanding for the venture capital process. He argues that governments better limit their role as catalysts by: (1) ensuring that the economic environment is conducive to entrepreneurial activity; and (2) providing direct investments. In this paper, we investigate the recent examples of governments that have followed either one of these suggestions. Relying on standard measures of success, we find that the participation of multinationals plays a crucial role in realizing the success of these initiatives. In the aftermath of the financial crisis, there is a world-wide revival of corporate venturing activities. We can now see that, insofar as it operates through corporate venture capital investments, the venture capital market is getting its magic back - and that when corporations participate in the process, it gives both strategic and financial benefits to the parties involved, such as governments, traditional venture capitalists, and entrepreneurs. The paper shows a shift in the fundamental nature of corporate venture capital and provides an account of the governance structures and contractual characteristics that encourage successful alliances between corporations and venture capital funds and their portfolio companies.Keywords: Venture Capital, Corporate Venturing, Corporate Venture Capital, Innovation, EntrepreneurshipDate posted: May 29, 2010FINDINGSSo this is the proper procedure to setup a business in India you have to go through the proper process from the idea generation to the commencement of the business. There are certain laws which you have to adhere and disobeyance to it is crime. You have to accumulate all the documents required to be filed with the registrar. Along with the setup of business in India their are certain advantages of incorporation of business in India.And To setup a business in India is not a difficult task there are many government organisations which help you in it.REFRENCES:kumaran.wordpress.com/.../procedure-involved-to-start-a-company-private-limited-in-india/ -madaan.com/incorporateprocedure.htmlwww.companyformationindia.com/steps-to-set-up-a-pvt-ltd-company.htmlwww.taxguru.in/.../procedure-to-set-up-a-branch-office-in-india.htmlbhagatneeraj.trustpass.alibaba.com/.../Company_set_up_procedure_in_India.htmlwww.indianembassy.org/...business_In_India/Incorporation_of_business.aspwww.bmswiz.com/companyformation.aspwww.rbi.org.inelagaan.com/income-tax-blogs/procedure-set-branch-office-indiawww.companyformationindia.com/set-up-a-public-limited-company.htmlECGI - Law Working Paper No. 132/2009

Steps involved in starting business in IndiaRegistration Requirements:No:ProcedureTime to complete:Cost to complete:

1Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National)1 dayINR 100

2Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National)3 daysINR 1,500

3Reserve the company name online with the Registrar of Companies (ROC) (National)2 daysINR 500

4Stamp the company documents at the State Treasury (State) or authorized bank (Private)1 dayINR 1,300 (INR 200 for MOA + INR 1,000 for AOA for every INR 500,000 of share capital or part thereof + INR 100 for stamp paper for declaration Form 1)

5Get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National)5 daysINR 14,133 (see comments)

6Make a seal (Private)1 dayINR 350 (cost depends on the number of seals required and the time period for delivery)

7*Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National)7 daysINR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application form, if not downloaded)

8*Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department7 daysINR 57 (INR 50 application fee + 12.36% service tax)

9*Register with the Office of Inspector, Shops, and Establishment Act (State/Municipal)2 daysINR 6,500 (INR 2000 + 3 times registration fee for trade refuse charges)

10*Register for Value-Added Tax (VAT) at the Commercial Tax Office (State)12 daysINR 5,100 (registration fee INR 5000 + stamp duty INR 100)

11*Register for Profession Tax at the Profession Tax Office (State)2 daysNo cost

12*Register with Employees Provident Fund Organization (National)12 daysNo cost

13*Register for medical insurance at the regional office of the Employees State Insurance Corporation (National)9 daysNo cost

Detailed Steps and Explanation of procedure to start Business in India

Procedure1.Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National)Time to complete:1 dayCost to complete:INR 100Procedure:The process to obtain the Director Identification Number (DIN) is as follows:1. Obtain the provisional DIN by filing application Form DIN-1 online. This form is on theMinistry of Corporate Affairs 21st Century (MCA 21) portal. The provisional DIN is immediately issued.The application form must then be printed and signed and sent for approval to the ministry by courier along with proof of identity and (address):a.Identity proof(any of the following): Permanent Account Number card, drivers license, passport, or voter card;b.Residence proof(any of the following): drivers license, passport, voter card, telephone bill, ration card, electricity bill, bank statement;2. The concerned authority verifies all the documents and, upon approval, issues a permanent DIN. The process takes about 4 weeks.

Procedure2.Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National)Time to complete:3 daysCost to complete:INR 1,500Procedure:To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate.The digital signature certificate can be obtained from one of six private agencies authorized by MCA 21 such as Tata Consultancy Services.Company directors submit the prescribed application form along with proof of identity and address. Each agency has its own fee structure, ranging from INR 400 to INR 2650.

Procedure3.Reserve the company name online with the Registrar of Companies (ROC) (National)Time to complete:2 daysCost to complete:INR 500Procedure:Company name approval must be done electronically. Under e-filing for name approval, the applicant can check the availability of the desired company name on theMCA 21 web site.The ROC in Mumbai has staff members working full time on name reservations (approximately 3 but more if the demand increases). A maximum of 6 suggested names may be submitted. They are then checked by ROC staff for any similarities with all other names in India.The MCA receives approximately 50-60 applications a day. After being cleared by the junior officer, the name requests are sent to the senior officer for approval.Once approved, the selected name appears on the website. Applicants need to keep consulting the website to confirm that one of their submitted names was approved.In practice, it takes 2 days for obtaining a clearance of the name if the proposed name is available and conforms to the naming standards established by the Company Act (1 day for submission of the name and 1 day for it to appear on theMCA website).

Procedure4.Stamp the company documents at the State Treasury (State) or authorized bank (Private)Time to complete:1 dayCost to complete:INR 1,300 (INR 200 for MOA + INR 1,000 for AOA for every INR 500,000 of share capital or part thereof + INR 100 for stamp paper for declaration Form 1)Procedure:The request for stamping the incorporation documents should be accompanied by unsigned copies of the Memorandum and Articles of Association, and the payment receipt.The company must ensure that the copies submitted to the Superintendent of Stamps or to the authorized bank for stamping are unsigned and that no promoter or subscriber has written anything on it by hand. The Superintendent returns the copies, one of which is duly stamped, signed, and embossed, showing payment of the requisite stamp duty. The rate of stamp duty varies from state to state.According to Article 10 and Article 39 of the Indian Stamp Act (1899), the stamp duty payable on the Memorandum and Articles of Association for company incorporation in Mumbai, Maharashtra, is as follows:a. Articles of Association:INR 1000/- for every INR 500,000/- of share capital (or part thereof), subject to a maximum of INR 50,000,000;b. Memorandum of Association:INR 200;c.Form-1 (declaration of compliance):INR 100.Once the memorandum and articles of association have been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father-s name, address, occupation, and the number of shares subscribed. This information must be in the applicants handwriting and duly witnessed.

Procedure5.Get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National)Time to complete:5 daysCost to complete:INR 14,133 (see comments)Procedure:The following forms are required to be electronically filed on thewebsiteof the Ministry of Company Affairs:e-form 1; e-form 18; and e-form 32.Along with these documents, scanned copies of the consent of the initial directors, and also of the signed and stamped form of the Memorandum and Articles of Association, must be attached to Form 1.The fees for registering a company can be paid online by credit card or in cash at certain authorized banks. One copy of the Memorandum of Association, Articles of Association, Form 1, Form 32, Form 18 and the original name approval letter, consent of directors and stamped power of attorney must be physically submitted to the Registrar of Companies. The certificate of incorporation is sent automatically to the registered office of the company by registered or rush mail.The registration fees paid to the Registrar are scaled according to the companys authorized capital (as stated in its memorandum):a.INR 100,000 or less: INR 4,000. If the nominal share capital is over INR 100,000, additional fees based the amount of nominal capital apply to the base registration fee of INR 4,000:b.For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 1,00,000, up to INR 500,000: INR 300;c.For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 500,000, up to INR 5,000,000: INR 200;d.For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 5,000,000, up to INR 1 10,000,000: INR 100;e. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 10,000,000: INR 50.The payment of fees can be made:1. offline:one can upload all incorporation documents and generate the payment challan. Against this challan, the applicant must obtain a demand draft for filing fees amount in favour of - the Pay and Accounts Office, Ministry of Corporate Affairs, New Delhi and this demand draft is payable in Mumbai. The applicant must make the payment at specified branches of certain banks. It takes around one week for clearance of payment. Only after the clearance of payment does the ROC accept the documents for verification and approvals;2. online:the applicant makes the payment by credit card and the system accepts the documents immediately. Please note that in Mumbai, the ROC requests for pre-scrutiny of documents for any corrections, before they are uploaded. Once the documents have been uploaded, they can then be approved without any further correction. The online filing mechanism requires only one copy of scanned documents to be filed (including stamped MOA, AOA, and POA).Schedule of Registrar filing fees for the articles and for the other forms (l, 18, and 32):a.INR 200 for a company with authorized share capital of more than INR 100,000 but less than INR 500,000;b.INR 300 for a company with nominal share capital of INR 500,000 or more but less than INR 2,500,000;c.INR 500 for a company with nominal share capital of INR 2,500,000 or more.

Procedure6.Make a seal (Private)Time to complete:1 dayCost to complete:INR 350 (cost depends on the number of seals required and the time period for delivery)Procedure:Although making a company seal is not a legal requirement for the company to be incorporated, companies require a seal to issue share certificates and other documents. The cost depends on the number of words to be engraved, the number of seals required, and the time period for delivery. The cost can range from INR 300 to INR 500.

Procedure7.Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National)Time to complete:7 daysCost to complete:INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application form, if not downloaded)Procedure:Under the Income Tax Act, 1961, each person must quote his or her Permanent Account Number (PAN) for tax payment purposes and the Tax Account Number (TAN) for depositing tax deducted at source. The Central Board of Direct Taxes (CBDT) has instructed banks not to accept any form for tax payment (challan) without the PAN or TAN, as applicable. The PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department.In order to improve PAN-related services, the Income Tax department (effective July 2003) outsourced their operations pertaining to allotment of PAN and issuance of PAN cards to UTI Investor Services Ltd, which was authorized to set up and manage IT PAN Service Centers in all cities where there is an Income Tax office. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers.The PAN application is made through the above mentioned service centers using Form 49A, with a certified copy of the certificate of registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facilitation Centers will supply PAN application forms (Form 49A), assist the applicant in filling out the form, collect filled-out forms, and issue an acknowledgement slip. After obtaining PAN from the Income Tax department, UTIISL or NSDL as the case may be, will print the PAN card and deliver it to the applicant.The application for PAN can also be made online but the documents still need to be physically dropped off for verification with the authorized agent. For more details see(www.incometaxindia.gov.in,www.utiisl.co.in, and www.tin.nsdl.co.in )

Procedure8.Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax DepartmentTime to complete:7 daysCost to complete:INR 57 (INR 50 application fee + 12.36% service tax)Comment:The Tax Account Number (TAN) is a 10-digit alphanumeric number required of anyone responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect tax at the source must apply for a TAN. The section also makes it mandatory for the TAN to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment challans, and all TDS/TCS certificates issued.Failure to apply for a TAN or to comply with any of the other provisions of the section is subject to a penalty of INR 10,000/- . The application for allotment of a TAN must be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns.Locations of TIN Facilitation Centres can be found atwww.incometaxindia.gov.inand http://tin.nsdl.com The processing fee for both applications (a new TAN or a change request) is INR 50 (plus applicable taxes). After verification of application, the same is sent to the Income Tax Department and upon satisfaction the department issues the TAN to the applicant.The national government levies the income tax. Since outsourcing, any authorized franchise or agent appointed by the National Securities Depository Services Limited (NSDL) can accept and process the TAN application. The application for a TAN can be made either online through the NSDL website (www.tin-nsdl.com) or offline.Upon payment of the fee by credit card, the hard copy of the application must be physically filed with the NSDL.

Procedure9.Register with the Office of Inspector, Shops, and Establishment Act (State/Municipal)Time to complete:2 daysCost to complete:INR 6,500 (INR 2000 + 3 times registration fee for trade refuse charges)Procedure:A statement containing the employer-s and manager-s names and the establishments name (if any), postal address, and category must be sent to the local shop inspector with the applicable fees.According to Section 7 of the Bombay Shops and Establishments Act,-(1948), the establishment must be registered as follows: Under Section 7(4), the employer must register the establishment in the prescribed manner within 30 days of the opening of the business. Under Section 7(1), the establishment must submit to the local shop inspector Form A and the prescribed fees for registering the establishment. Under Section 7(2), after Form A and the prescribed fees are received and the correctness of the statement on the form is satisfactorily audited, the certificate for the registration of the establishment is issued on Form D, according to the provisions of Rule 6 of the Maharashtra Shops and Establishments Rules of 1961.Since the amendments in the Maharashtra Shops and Establishment (Amendment) Rules, 2003 dated 15th December 2003, the Schedule for fees for registration and renewal of registration (as per Rule 5) is as follows:a. 0 employees: INR 100;b. 1 to 5 employees: NR 300;c. 6 to 10 employees: INR 600;d. 11 to 20 employees: INR 1000;e. 21 to 50 employees: INR 2000;f. 51 to 100 employees: INR 3500;g. 101 or more employees: INR 4500.Hence in the given case the registration fees would be INR 2000, as there are 50 employees In addition, an annual fee (three times the registration and renewal fees) is charged as trade refuse charges (TRC), under the Mumbai Municipal Corporation Act,-(1888).

Procedure10.Register for Value-Added Tax (VAT) at the Commercial Tax Office (State)Time to complete:12 daysCost to complete:INR 5,100 (registration fee INR 5000 + stamp duty INR 100)Procedure:Beginning April 1, 2005, the sales tax was replaced by the VAT, which requires registration by filing Form 101.The authorized representative signing the application must be available at the Sales-Tax Office on the day of application verification. The applicant goes to the Sales-Tax Office and up to the registration counter. The clerk at the counter verifies that the applicant has all the required documents and gives the applicant a token (waiting number). After a short wait, the applicant-s number is called and the applicant approaches the desk of a sales-tax officer.There, all the information on Form 101 is manually entered into the system by the officer. Within 10 minutes, the system generates a Tax Identification Number (TIN) Thereafter, the company is considered fully registered to pay taxes. However, the applicant must wait between 10 and 15 days to receive the VAT registration certificate by mail.In addition to Form 101, other accompanying documentation includes:1) Certified true copy of the memorandum and articles of association of the company;-2) Proof of permanent residential address. At least 2 of the following documents must be submitted: copy of passport, copy of drivers license, copy of election photo identity card, copy of property card or latest receipt of property tax from the Municipal Corporation, copy of latest paid electricity bill in the name of the applicant;-3) Proof of place of business (for an owner, in the case of Doing Business): Proof of ownership of premises viz. copy of property card, ownership deed, agreement with the builder or any other relevant documents;-4) One recent passport-sized photograph of the applicant;-5) Copy of Income Tax Assessment Order with PAN or copy of PAN card;-6) challan on Form No. 210 (original) showing payment of registration fee at INR 5000 (in case of voluntary RC) and INR 500 (in other cases).The whole process will be put online by the spring of 2009. This means that rather than physically having to go to the office, companies will fill in all their details online for Form 101 and then go to the office only so that the Sales Tax Office can verify the above listed-documentation.

Procedure11.Register for Profession Tax at the Profession Tax Office (State)Time to complete:2 daysCost to complete:No costProcedure:According to section 5 of the Profession Tax Act, every employer (not being an officer of the government) is liable to taxation and shall obtain a certificate of registration from the prescribed authority. The company is required to apply to the registering authority using Form 1.The registration authority for the Mumbai area is located at Vikarikar Bhavan, Mazgaon in Mumbai.Depending on the nature of the business, the application should be supported with such documents as proof of address, details of company registration number under the Indian Companies Act (1956), details of the head office (if the company is a branch of company registered outside the state), company deed, certificates under any other act, and so forth.

Procedure12.Register with Employees Provident Fund Organization (National)Time to complete:12 daysCost to complete:No costProcedure:The Employees Provident Funds and Miscellaneous Provisions Act (1952) applies to an establishment, employing 20 or more persons and engaged in any of the 183 industries and classes of business establishments, throughout India excluding the State of Jammu and Kashmir.The applicant fills in an application and is then allotted a social security number. The Provident Fund registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. Provident Fund registration is optional if the workforce size is not more than 20. The employer is required to provide necessary information to the concerned regional Provident Fund Organization (EPFO) in the prescribed manner for allotment of Establishment Code Number. No separate registration is required for the employees.Nevertheless, all eligible employees are required to become members of the Fund and individual account number is allotted by the employer in the prescribed manner. As per an internal circular, the code number is to be allotted within 3 days of submission, if the application is complete in all respects. However, in many cases applicants have received the intimation letter with the code number in 12 to 15 days. An online application facility is not provided so far.

Procedure13.Register for medical insurance at the regional office of the Employees State Insurance Corporation (National)Time to complete:9 daysCost to complete:No costProcedure:Registration is the process by which every employer/factory and every paid employee is identified for insurance purposes and their individual records are set up for them.As per the Employees State Insurance (General), Form 01 must be submitted by the employer for registration. It takes 3 days to a week for the Employer Code Number to be issued. The- intimation letter- containing the Code Number is mailed to the employer and that takes an additional couple of days.The Employee-s individual insurance is a separate process that is initiated upon the employer-s registration. The employer is responsible for submitting the required declaration form and employees are responsible for providing correct information to the employer. The employee temporary cards (ESI Cards) are issued on the spot by the local offices in many places.The temporary cards are valid for 13 weeks from the date of the employees appointment. It takes about 4 to 5 weeks to get a permanent ESI card.

We also did a series of posts about the legal information of doing business in India in a 4 part series. Here are those articles that you may find extremely useful in your quest to do business in India.