Term Paper of Business Environment

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PROCEDURE TO SETUP BUSINESS IN INDIA

Submitted to: - Compiled by:-

Mr. Pranav Ranjan Yogesh Sharma

LOVELY SCHOOL OF BUSINESS

Reg. No. – 10901333

Roll. No. - R1901B26

ACKNOWLEGEMENT

It was a golden opportunity for me to associate myself with this highly professional organization.

I am indebted to Mr.Ashok Mittal Vice chancellor and my Class Incharge Mr Pranav Ranjan. I wish to acknowledge my deep sense of gratitude to Dr.Ravinder Nagpal who provided me full co-operation and knowledge whenever I needed.

I am also very happy to include the names of my friends, well wishers for their valuable help and friendly advice during my term paper.

While writing this report, I have kept in mind the entire requirements needed. Although every care has been taken to check the entire mistake & misprint. Yet it is difficult to claim perfection.

Yogesh Sharma

PROCEDURE TO SETUP A BUSINES IN INDIA

First 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 available

• Private limited company

• Public limited company

• Unlimited company

• Limited liability partnership

• Partnership

• Sole proprietorship

• Liaison office

• Project office

• Branch office

• Joint venture company

• Subsidiary company

Both 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 COMPANY

A 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 office

A 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 INDIA

In 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...
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