Introduction Every company in this world is established with the objective to do some work and achieve success in that work. According to the Companies Act, 2013, a company can do its business activities within the ambit of its Object Clause. Object clause is the clause which is mentioned in the Memorandum of Association which determine the purpose and scope of work for which the Company operate. However, in this fast moving world, sometime it become essential for the Corporate to indulge in new business activities for its survival and getting profits and required to amend and alter its object clause. For this purpose corporate are required to follow the proper procedure as laid down under the Companies Act, 2013 and the rules and amendment made there under.   However, it is pertinent to note down here is that the practical aspects for alternation in object clause is quite different from the theoretical knowledge. So it is essential to thrown light on practical aspect also.  The complete procedure for change of object of the Company has been categorized in Two Classes: Legal Aspects; Practical Aspects. Legal Procedure for change of Object Clause Section 13 of the Companies Act, 2013 and the rules made there under deals with the alteration and modification of Object Clause under the Memorandum of Association. Further change of Object Clause of the Company requires the change of MOA. Being the charter document of the Company, alteration under MOA can only be made with the approval of the shareholders of the Company by passing special resolution (taking 75% approval of the Members)  in a duly convened General Meeting i.e. Annual General Meeting or Extra Ordinary General Meeting.   Any modification and alteration of object clause in the Memorandum of Association is to be intimated to the Registrar of Companies. Intimation  is required to filed in form MGT-14 within a period of 30 days from the date of passing special resolution in theGeneral Meeting along with the necessary attachments i.e. Certified True copy of Special resolution, Amended copy of MOA and Certified True Copy of Notice of EGM. Practical Procedure for Change of Object Clause Convene and Hold the Board Meeting: The Board Meeting is to be convened as per Secretarial Standard 1. Notice and agenda to be circulated at least 7 days before the meeting. Board Meeting will be held to discuss the following below mentioned matters: Pass the resolution for taking consent of the Board of Director, subject to approval of shareholders at General Meeting i.e. Annual General Meeting or Extra Ordinary General Meeting, for changing the object clause under MOA of the Company. Fix the day, date, time and venue of the General Meeting i.e. Annual General Meeting or Extra Ordinary General Meeting, and authorise any Director or any other person to send the notice of General Meeting to the Members and auditor. Further while issuing notice of General Meeting, provision of section 101 of the Companies Act, 2013 and the rules made thereunder shall be taken [...]

FIU REGISTRATION Every reporting entity under Prevention of Money Laundering Act, 2002 is required to furnish information to the Director, FIU-IND (Financial Intelligence Unit- India). FIU-IND is a central agency and not a regulatory authority whose object is to collect and share/ disseminate financial intelligence information regarding suspicious transaction with the enforcement agencies. All reporting entity needs / to furnish this information through secure online FINnet gateway. The reporting entity needs to register itself with the portal to furnish required information with FIU-IND. The need for registration is in pace just after the FIU-IND released a list of non compliant NBFC’s for not registering them and their designated principal officer under PML Act, 2002 and PML rules with the agency. Therefore, to remove this tag of non compliant, every non compliant NBFC’s is trying to  register themselves and their designated principal officer with the agency. The authorised users for the Portal are Principal Officer and Other users. Other user includes supervisor to principal officer, alternate principal officer, technical person, trainer and other users.  The registration process requires submission of basic details of the user or reporting entity.  The 3 steps registration process to register as new user are: Reporting Entity (RE) selection Principal Officer (PO) registration Other User (OU) registration Reporting Entity (RE) selection The very first step is to select the reporting entity form the database with FIU-IND. The process of selection of reporting entity is as follows: Log into Financial Intelligence Network  FIN net Gateway ie. www.finnet.gov.in. Click register as new user for fresh registration. Search by providing FIU reporting entity ID (FIUREID). It is a 10 digit unique number provided to each reporting entity by FIU-IND. Select the reporting entity details to move to next stage. In case non availability of  FIUREID or no search results found, then the user has to submit basic details of the reporting entity. Fill the basic details such as reporting entity’s name, category and details of the user. On submission, the system will display the following message: The following registration details of the reporting entity have been submitted to FIU-IND. Your reporting entity registration request number is: ________.    Please click on the registration request number to take the printout for future reference. On approval the FIUREID of the reporting entity will be communicated at the email ID provided. The User need to mail the registration request number  @ ctrcell@fiuindia.gov.in  or  Paper/ hard copy may be posted to Director, Financial Intelligence Unit-India, 6th Floor, Hotel Samrat, New Delhi 110021. Once FIUREID has been allotted, the same shall be intimated to the user via email provided at the time of registration, the user can move to next step of registration. Principal Officer Registration Every reporting entity needs to appoint a person as  Principal officer under 2 (1) (f) of the rules. The Principal Officer can be registered only after the reporting entity is selected. The steps to register the Principal Officer are as follows: Select reporting entity from the list Select role of [...]

Background In today’s world, where everyone is trying to become his own Boss by doing his business and achieving his dreams. Thanks to the Government and its“Make in India” campaign, which has relaxed the norms of doing business in India and provides numerous opportunities to the new entrepreneur to start his own business? Government has not only relaxed the laws but also has reduced the compliances/approvals and has eased the process to start one’s own business. In India, there are various form of business, which a person can opt according to his needs, requirements and financial capacity for achieving his dreams. Therefore, it is very important for a person to understand the form of business available to him. The various forms of business can be classified as follows: Sole Proprietorship; Partnership; Societies; Limited Liability Partnership {LLP} Company: One Person Company; Private Limited Company Public Limited Company All the above models of businesses have its own advantages and disadvantages. There are possibilities that one form of business suits to one category of person and might not be suitable to the other person. For example, a small fruit shop is owned and run by a single person who performs all the activities i.e. managing, financing, transportation etc. alone, so, for such person “Proprietorship” would be a better form of business. However, for renowned/established business entities, it would not be possible for a single person to manage the entire things alone so in that scenario, proprietorship would not work. For ready reference of the user, each form of business has been discussed in detail to help the user to take rational decision while selecting the nature of business: Sole Proprietorship:  This is the most simple and easiest form of doing business. The sole Proprietor (Single Person) is the owner of the business. There is no specified enactment to govern this form of business or running of sole proprietors business. Sole Proprietor is solely responsible for all the acts and contracts entered in the course of doing business. He solely enjoys the profits of the business and in case of loss, is personally liable for the same. But there are some restrictions in sole proprietorship concept, as the bank does not feel safe and don’t prefer to provide a loan to the owner and there is no concept of funding in case of sole proprietorship as there is no specific law in India which govern and control the sole proprietorship. Features: It is NOT a separate legal entity The proprietor has unlimited liability The proprietor is personally liable for all the debts and losses of the business The proprietor can sue or be sued in its own name Partnership:  Under the partnership form of business, 2 or more person enter into an agreement to enter into a common business in order to share profits earned and shall be personally liable for loss incurred. All decisions are taken with mutual consent of the Partners. The Partnership is governed by the Partnership Act, 1932 and registration [...]

Introduction We normally take so many services on a daily basis whether as an Individual or as an Entity (Partnership, Company, LLP, Society etc.) services can be of any kind i.e. Legal, Financials, Accounting, IT, Electronic, Banking, and professional services etc. further most of the time while taking any service, oral commitment doesn’t prove very fruitful and give arise to a legal dispute and in such scenario, it is advisable to have the term and condition of availing the service in black and white. Here the document executed in such a scenario is called Service Agreement. Service Agreement is document between the service provider and the client. Under the Service Agreement, details of both the Parties i.e. Service Provider and Service Receiver, i.e. Nature of Service require, Scope of Service, professional Charges for availing Service, Duties of both the Parties, Confidentiality, indemnity, IPR  Arbitration and Jurisdiction etc., are to be mentioned carefully to avoid disputes and misunderstanding. Further Terms of Service Agreement which needs to be taken care of are depicted below: Appointment: The very first clause which needs to be mentioned is appointment of Service Provider by the Client for a particular work. Scope of Services: The appointment should be followed by scope of services which are assigned to Service Provider and within which he is bound to act on behalf of his client. Fees and applicability of Taxes etc.: The Service provider shall be entitled for remuneration against rendering of his services. The Client shall be responsible for making the payment duly on time. Further the details of taxes, if any, also needs to be mentioned, whether the Fee would be inclusive of such taxes or exclusive. Term: The Term of the Agreement needs to be stated specifically like for what time period the agreement will be valid and under what time period Service Provider will complete its assignment. Reimbursement of Expenses: Clause regarding reimbursement of expenses i.e. government charges, out of pocket expense etc needs to be mentioned specifically like whether that will be included under the fee or treated as exclusive. Duties of Service Provider: The Agreement should provide for duties of the Service Provider. Like complete the work within the time frame, not to give any false statement, not to indulge in any wrong practice, work according to scope of work etc. Duties of Client: The Agreement should provide for duties of the Client like to make timely payment, not to make any false statement, provide time to time desired information’s to the Service Provider etc. Ownership of Documents: Any documents, records or materials prepared by the Service Provider while rendering his services to the Client shall be handed over to the Client. The Client shall be the sole owner of the same and Service Provider shall not claim his ownership. Warranties and representation by the Parties: Clause pertaining to Warranties and representation must be mentioned under the Service Agreement like both the parties have the right to enter into this Agreement, both the Parties [...]

Introduction The literal meaning of “Bonus” is “anything given to any person in addition to the customary”. Therefore, the Bonus issue of Shares means issue of shares to the existing shareholders, in proportion to their shareholding, out of free reserves available with the Company as a reward to their investment in the Company. It’s a corporate action recommended by the Board of Directors via converting the surplus funds (accumulated undistributed funds) available with the Company into share capital by issuing additional shares to the existing shareholders in proportion to their holding. In accounting terminology, it is popularly known as capitalisation of profits wherein share capital is increased on one hand and the reserves and surplus account is reduced on the other, resulting increase in number of shares without changing the overall percentage holding of members. Hence, Bonus issue is a weapon in the hands of the Company used for self defence to raise its capital and at the same time to distribute its profits without any inflow/outflow of cash/ assets. Further there may be so many reason behind Issue of Bonus Share, lets check-out one by one. REASON FOR ISSUE OF BONUS SHARES Adequate Free Reserves: Whenever a Company feels that it has surplus funds in its reserves and surplus, instead of declaring dividend, it may be distributed as Bonus shares among the existing shareholders of the Company. By doing this the Company protect the outflow of cash in form of dividend and dividend distribution tax. Capitalisation of Profits: Bonus issue is capitalisation of surplus funds which was not distributed as dividend by the Company to meet its business requirements. With passage of time, when this surplus is in abundant, the Board may decide to convert this surplus into the capital of the Company. Goodwill: Bonus issue of Shares signifies the Good Health of the Company. It signify that Company is stable enough to meet its business/ investors requirements, resulting in additional demand for their shares in the market. No Dilution of stake: Only the existing shareholders are entitled to bonus shares, resulting in no threat of dilution of stake of shareholders with increase in number of shares. Liquidity to investment: Post bonus issue, the demand for the shares rises, and with increase in number of shares, the investment in the Company becomes readily available and easy to be disposed of. No cash inflow: Bonus issue is only conversion of reserves into share capital. There is no inflow of cash, as they are for consideration other than cash i.e. the belief and support received from the investors. No Change in assets: There is no change in total assets of the Company. Neither cash/assets is received unlike normal issue nor cash is paid out unlike distribution of profit by way of dividend. LEGAL PROVISION The provision of Section 63 read with Rule 14 of Chapter IV of The Companies (Share Capital and Debentures) Rule, 2014 deals with Issue of Bonus Shares. SOURCE OF ISSUE OF BONUS SHARES A company may issue [...]

Introduction The Authorized share capital/ Share Capital of the Company means a capital up to which a company is authorized to issue shares to existing or new shareholders. Generally, a company required to have funds, from time to time, for its growth and meet its working capital requirement. In case, if a company has to issue shares, either to existing shareholders or to new shareholders, beyond its authorized capital, then in such a scenario it would first be required to increase its authorized share capital by complying the procedure laid down under the Companies Act, 2013. As per the Companies Act, 2013 which states that a company can increase its authorized share capital by following up the procedure laid down the provisions of section 61, 64 and 13 of the Companies Act, 2013 and the rules made thereunder. According to the above sections, Authorized share capital can be increased by passing Ordinary Resolution in the General Meeting (Annual General Meeting or Extra Ordinary General Meeting) for alteration of its Memorandum of Association. Every such alteration shall become effective only if registered and recorded by the Registrar of Companies (ROC). Therefore, before raising capital beyond the authorized capital, one has to raise its authorized capital and file necessary form so as to avoid hurdles in raising capital. Let’s discuss the procedure of the same in detail…. Procedure A company easily increases its authorized share capital by following up the below-mentioned procedure Authorization under Article of Association: It is essential for the Company to check whether the increase in authorization share capital has been authorized under the Article of Association or not. If the answer is “No”, then it would first be required to make alternation under its Article of Association as such authorization is the prior condition for an increase in share capital as per section 61 of the Companies Act, 2013. Convene and hold Board Meeting: A company would be required to issue a notice of Board Meeting under section 173 of the Companies Act, 2013 to discuss and take a decision on following below-mentioned agenda items: To take approval of Board of Director of the Company for an increase in authorized share capital of the Company. Board to decide the date, time and place for holding of Extraordinary General Meeting (EGM) for taking shareholder approval via passing the ordinary resolution for making suitable amendments under the Memorandum of  Association as per the requirement laid down under section 61 of the Companies Act, 2013. Draft and approve the notice of extraordinary general meeting along with the explanatory statement as per section 102 of the Companies Act, 2013 Authorize any person (Director/Company Secretary etc) for issue 21 clear days notice of Extra-Ordinary General Meeting (EGM) to its existing shareholders, Directors, and Auditor. Holding of Extraordinary General Meeting: the Company would be next required to hold proper extraordinary general meeting and pass the ordinary resolution (approval of at least 51% shareholders) as per the requirement of section 61 of the Company Act, [...]

INTRODUCTION Name of a Company is the identity by which it is known to the world. In this fast moving and competitive world, where the trend changes in every second, it is difficult for a business to survive and stand with the age old traditional names and brands. Companies change its name, brand name as per the latest trend and taste of its consumer and audience in order to maintain their stake and control in the market. Before we proceed towards the procedure, we need to look after the reason behind change of Company name. The reason for Company name change or for adopting new company name can be as follows: Marketing Strategy or Marketing Plan: Sometime traditional Company name are out of trend. To attract more young and demanding consumers and give competition to the upcoming product, Change of Company name idea may be prove very fruitful for the business expansion. Change of Management: In case of change of management of the Company, the new management may decide to carry on the business with a new creative business name ideas. With mutual consent of the management, the company may pursue to register company name as per their strategy. To align with the objects of the Company: The Company may pursue other objects and which may not resemble its existing name. This could also be the reason for change of name and search for new company name. To create new brand name: To create new brand names with the same product, the Board may decide to change the name of the Company and look for firm names suggestions. To change Company name, a proper legal procedure for change of name under new Companies Act, 2013 and the rules and amendment made thereunder is to be followed. However, the practical aspects differ from the theoretical knowledge, hence light is to be also thrown on practical aspect. And the Company has a lot of compliances for change of name. Here we can categorise the process of change of name into three classes: Legal Process Practical process till change of name Post name change process LEGAL PROCEDURE Section 13 and 14 of the Companies Act, 2013 deals with alteration of Memorandum of Articles (MOA) and Articles of Association (AOA). Change of name of the company will result in alteration of MOA and AOA. Being charter documents, alteration of MOA and AOA of the company can only be made by passing special resolution (i.e. approval with more than 75% vote in favour of the resolution) in General Meeting. But before calling a General meeting, the Board needs to ensure that the precious time of the shareholder and cost involved in the meeting is not wasted. Therefore, the Board shall conduct a meeting to file name application with the Central Registration Centre (CRC) for approval. Once the name is approved, the General meeting will be called for alteration of name clause. A company shall, in relation to any alteration of its memorandum of association, file [...]

Reserve Unique Name: New Name availability Service On the occasion of the 69th Republic day, the Government of India takes another step towards ease of doing business in India. After the successful launch of Simplified Proforma for Incorporating Company electronically (SPICe -INC-32), with eMoA (INC-33), eAOA (INC-34), the Ministry of Corporate Affairs has now launched a new web service "RUN” (Reserve Unique Name) for reserving the name for a company w.e.f. 26th January 2018. Name applications will be processed by the Central Registration Centre(CRC) under Non-STP mode. The name applied for will be subjected to a comprehensive check by the Central Registration(CRC). Every person desirous to incorporate a New Company/ change name of Existing Company is required to apply for the name using the RUN service. The steps to apply name through RUN service are as follows: Login into MCA portal. Go to MCA Service>Company Service>RUN(Reserve Unique Name) Fill the following 4 questions: Entity type (Limited New Company/Producer Company/Unlimited/Private(OPC)/Sec. 8/IFSC/Nidhi  Company) CIN (only in case of  change of name of an existing Company) Name (Auto Name check facility is available) Comments (Objects of the proposed company or any other relevant comment) Attachment (relating to Sectoral Regulator approval/NOCs/ or any other document) Submit the form and make payment of Rs. 1,000/-. Once you have submitted the name reservation request, it will then be checked and, if found feasible, approved by the Central Registration Centre (CRC). The stakeholder will receive an email from the CRC advising the outcome of the name reservation request. Once approved, the name will be valid for 20 days in the case of a new company. 60 days in case of existing Company Points to remember A stakeholder may note that: Only one name can be applied at a time. Prior to submission of applications, it is advised to conduct Name and Trade Mark search by using the links available separately on the MCA portal and also ensure that the proposed name is not in violation of Companies Act, 2013. Need to make payment of Rs. 1,000/- every time one submit the form. No resubmission is allowed. The form will be either approved/rejected. Incorporation form is to be filed from the same User ID from which the name was approved. A single attachment of a maximum of 6 MB can be uploaded. So in case of multiple documents, one needs to scan all document as a single file.   Benefits of RUN Service No DIN required for an applicant No DSC required for filling the name reservation form. Auto Check facility for name availability. Easy access for name application. The drawback of RUN Service   Only 1 name is allowed at a time. No resubmission allowed. The form will be either approved/rejected. Every time we submit a form through RUN service, payment of Rs. 1,000/- is to be made.  The RUN service is a  step towards starting a business easier. It will help stakeholders to start their business with a name of their choice. Also will help them to [...]

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