Business Enterprises 3rd Proof

Chapter 1
Introduction to Forms of Business Enterprises,

and Non-Business Organisations (NGOs)
chapter at a glance
1.01 Selection of Business Organisation 1.02 Forms of Business Enterprise.

to Start a New Enterprise
1.01 Selection of Business Organisation to Start a New Enterprise

The selection of a form of organisation to carry on the business is first and the most crucial
decision to take. Selection of form of business organisation is dependent upon a number of
interdependent factors, which are briefly discussed hereunder:
(i) The nature of business is probably the most important factor. It is important because
in many businesses / professions human face is very important, such as restaurant
business or profession of doctors, chartered accountants, company secretaries, etc.
Businesses where pool of resources and skills such as finances, managerial skills or
engineering skills etc. are involved can be better carried on if they are operated as a
Partnership Firm or Limited Liability Partnership or Limited Liability Company. To illustrate,
large construction contracts or manufacturing can be better operated as a company.
(ii) Scale or volume of business operations is another key factor to decide on the form of
the enterprise. Large scale operations are better carried on as a company, whreas small
scale operations are better carried on as proprietorship or partnership or even Limited
Liability Partnership.
(iii) The management policy with respect to management is another key factor to decide
form of business organisation. Management, that has a policy to exercise direct control,
is more suitable where the business is operated as a proprietorship firm. If the
management has a policy of indirect control, company form of business is more
suitable.
(iv) Capital involved in the business is another key factor for the decision. The businesses
requiring large capital are generally carried on as a company because under this form
of business organisation large capital can be raised either through share capital or loan
capital, i.e. loans, etc.
(v) Risks and liabilities involved also influence the decision. If the risk and liabilities are
going to be large, it may be better to operate as a company.
(vi) Likely tax liability is another factor influencing the decision. The form of business
organisation under which the tax liability is likely to be low is generally more
preferred.
1.02 Forms of Business Enterprises

Normally five types of business organisations are available to choose from to start a business
venture. These forms of businesses are:
(i) Sole Proprietorship: It is a form of business enterprise where ownership lies with one
person alone and having unlimited liability. The sole proprietor has to club his income
Establishing Business Enterprises and Non-Business Organizations (NGOs)
from all businesses or sources and prepares one single income tax return. As far as
Central Sales Tax and VAT are concerned, sole proprietor may have different registrations
under Sales Tax Act and VAT for different businesses. It is the least expensive and easiest
form to commence a business.
(ii) Partnership: It is a form of establishment in which two or more persons join together
to commence the business by pooling in their individual resources and skills. Every
partnership firm is assessed to income tax as a separate entity and therefore, every
partnership must file its own return of income. Partner receiving income from the firm
includes it to his individual return of income, subject to certain conditions relating to
exemptions. We shall discuss them in detail under Direct Tax.
(iii) Limited Liability Partnership (LLP): The concept of LLP is relatively new. It is a
combination of partnership and a limited liability company. LLP like a limited liability
company has the advantage of limited liability (with exceptions) and also the flexibility
of a partnership. It is governed by the LLP Act under the Companies Act, 1956. An LLP
has to file its own return of income whereas income from LLP earned by the partners is
taxed in their individual hands. Besides an LLP has to file an annual return with the
Controlling Office i.e. Registrar of Companies.
(iv) Limited Liability Company: A company limited by shares is governed by the Companies
Act, 1956. The main advantage of a company is that the liability of the shareholders is
limited to the shares subscribed by them, except where the company is incorporated as
a company with unlimited liability besides it being in a position to raise sizeable capital.
A company has to file its own return of income. A shareholder normally gets dividend,
which is not taxable presently. It is so because the company pays Dividend Distribution
Tax on dividend paid to the shareholders.
A company may be a private limited company or a public limited company or even an
unlimited private or public company.
(v) Charitable Trusts, Societies and Charitable Companies (NGO): It is not a form of
business organization but are set up to render services for the benefit of the society in
general. They are often referred to as Non- Governmental Organization (NGO). Examples
are World Wild Life Fund (WWLF), UNICEF. Similarly, credit and Thrift Societies are
established to provide cheaper loans to its members out of the contributions received
also from its members.Non-governmental organization (NGO) is a term that widely used
with reference to a legally constituted, non-governmental organisation established with
a purpose to do welfare activities for the welfare of the society in general and upliftment
of poor and downtrodden in particular. They are referred to as NGO because they
undertake to work in the area of public welfare, predominantly an area of work for the
Government.
1.2
Introduction to Forms of Business Enterprises and Non-Business Organisations (NGOs)
Notes
1.3
1.4
Chapter 2
Sole Proprietorship
chapter at a glance
2.01 Meaning 2.02 Capital

2.03 Final Accounts 2.04 Bank Accounts
2.05 Loans 2.06 Central Sales Tax and Value Added Tax (VAT)
2.07 Income Tax 2.08 Closure of Sole Proprietorship Firm
2.09 Merits 2.10 Limitations
2.11 Legal Formalities to Establish a Sole Proprietorship
2.01 Meaning
Sole Proprietorship form of business is generally preferred where the operation of business
is small. A Sole Proprietorship is a form of business owned by an individual. A sole proprietorship
firm is not a legal entity by itself but it derives it from the owner (Proprietor) who owns the
business. The proprietor of such firms is personally responsible for firm’s debts because the
owner and the business, in the eyes of law, are not separate from each other. The owner may
mix his business assets and personal assets. But, following the “Business Entity Concept” of
accounting the transactions and events should be recorded in the books of account from the
business point of view.
2.02 Capital
Capital is introduced by the owner. Besides, he or she may raise loans in the name of the
firm. However, he or she cannot raise capital by selling the interest in the business. It is so
because on sale of his share in part will convert the sole proprietorship into partnership firm.
In case, he or she sells the entire share then the ownership will change from one person to
the other.
2.03 Final Accounts

The final accounts of a sole proprietorship firm are prepared following the accounting concepts
and principles. The main accounting concept followed being “Business Entity Concept” -
business being considered to be separate from the owner (proprietor) of the business and
thus, transactions and events are recorded in the books from the business point of view and
not from the owner’s point of view. It is because of this concept that the owner is shown as
a creditor of the firm to the extent of his capital. The firm’s final accounts comprise of Trading
Account and Profit & Loss Account and the Balance Sheet. It must be borne in mind that the
assets and liabilities appearing in the balance sheet are those of the firm and not the proprietor
although the proprietor is individually owner of the assets and also liable for the liabilities if
the firm is not able to meet them.
2.04 Bank Accounts

The Sole Proprietorship firm may have any number of banking accounts as it requires. These
bank accounts may be operated by the sole proprietor or the by authorised person empowered
by the sole proprietor. The banking account(s) is opened in the name of the firm and showing
the individual as the proprietor. PAN of the proprietor will be used as PAN for the bank account.
Bank will require the proprietor to sign the Account Opening Form duly stamped for the firm
as a proprietor. Example, the stamp will be as follows:
For Bharat Textile & Co.

(Proprietor)
The stamp is required to be put on bank instruments say cheques and communication with
the bank. Besides the bank will also seek an affidavit from the proprietor of the firm.
2.05 Loans
The Sole Proprietorship firm can raise loan in its own name from the private parties or banks.
It is again reiterated that even though loan is raised in the name of the firm yet, the owner
will be personally liable to repay it.
2.06 Central Sales Tax (CST) and Value Added Tax (VAT)
The Sole Proprietorship firm must get its own registration number under the Central Sales
Tax Act and VAT Act. If the owner is sole proprietor of more than one sole proprietorship firms,
every such firm should have its own registration under the two Acts.
2.07 Income Tax

The owner reports in his return of income, the profit earned by him from the Proprietorship
firm as is reported in the Profit and Loss Account. It means that the sole proprietorship firm
does not file its return of income separately.
2.08 Closure of Sole Proprietorship Firm

The business ceases to exist on the owner’s death. However, an owner can sell the business,
but can no longer remain the proprietor. He may also close the business, if he so desires.
2.09 Merits
A sole proprietorship form of organisation enjoys following benefits:
(i) It is easy and inexpensive to form a sole proprietorship.
(ii) It involves least regulatory burden.
(iii) The owner exercises direct control on decision making.
(iv) It requires minimal working capital to start-up.
(v) It enjoys tax advantages if your business is not doing well, like, deducting your losses
from your personal income (except set–off of business loss against salary income).
(vi) It involves lower tax bracket when profits are low, and so on.
(vii) There is a positive relationship between the risks undertaken and the profits shared
since profits will go to you directly
2.10 Limitations
Sole proprietorship is not free from limitations. It suffers from the following limitations
(i) It faces unlimited liability (if there are business debts, personal assets would be used
to pay off the debt)
(ii) Entire income of your business would be taxable at your personal rate and, if your
business is profitable, this may put you in a higher tax bracket
(iii) In case of death or illness of the proprietor there is a chance of lack of continuity for
the business
(iv) It is difficult to raise capital for one person, since his credibility also has limitations.
2.2
Sole Proprietorship
2.11 Legal Formalities to Establish a Sole Proprietorship

It requires following legal formalities:
(i) The proprietor is required to have Permanent Account Number (PAN) from the Income
Tax Department, if he does not have the same. It may be noted that if the sole proprietor
has a PAN in his individual name, it will be taken as the PAN of the sole proprietorship
firm.
(ii) Tax Deducted Account Number (TAN) from Income Tax Department. TAN is required to
be obtained where the firm is required to deduct tax at source.
(iii) The proprietor should have a current account with a bank in the name of the firm.
(iv) All official papers like letter-heads, invoice and vouchers etc. must be in the name of
proprietorship firm.
(v) It should be registered under the Value Added Tax,Central Sales Tax, Custom, Service
Tax and Excise as applicable. Please refer to chapter on Value Added Tax, Central Sales
Tax and Excise/Custom in the Indirect Tax Module.
(vi) The proprietorship should also be registered under Delhi Shops and Establishment Act,
1954 as applicable.
2.3
Notes
2.4
Chapter 3
Partnership
chapter at a glance
3.01 Meaning 3.02 Features of Partnership

3.03 Applicability of Partnership Act, 1932 3.04 Advantages of a Partnership Form
3.05 Limitations of Partnership 3.06 Types of Partners:
3.07 Legal Formalities to Establish Partnership 3.08 Main Clauses of Partnership Deed
3.09 Registration under the Partnership Act 3.10 Dissolution of Partnership
3.11 Dissolution of Firm 3.12 Taxation of a Partnership Firm
3.01 Meaning
“Partnership is the relation between persons who have agreed to share the profits of a business
carried on by all or any one of them acting for all.”
[Section 4 of the Partnership Act, 1932]
Partnership, thus, is a form of business organisation where two or more persons come together
pooling in their individual resources (finances, management skill or technical skills etc.) and
agree to share the profits of the business. In a partnership, business may be conducted by
all or any one of them acting for all. They settle the terms and conditions and reduce them
into writing.
With a partnership, one would combine his financial resources with his partner into the
business. One can settle the terms of the agreement with the partner(s) on the basis of which
the business will be conducted.
3.02 Features of Partnership

A Partnership form of business organisation has the following characteristics:
(i) The Partnership Act, 1932 does not require that an agreement (partnership deed) be in
writing, it can be oral also. But, it is not only preferable that the partnership deed be in
writing but, but it must be in writing under the Income Tax Act, 1961.
(ii) The object of the agreement must be to share the profits (losses) of a business that is
legal.
(iii) The business may be carried on by all the partners or by any of them acting for all of
them.
(iv) There should be at least two persons to form a partnership.
(v) The maximum number of members that can exist in partnership is 10 in case of a firm
carrying on banking business and 20 in case of any other business.
(vi) In his/her role as a partner, a person acts both as a principal as well as an agent.
3.03 Applicability of Partnership Act, 1932

The partnership form of business organisation is governed by the Partnership Act, 1932.
3.04 Advantages of a Partnership Form

The Partnership form of business organisation enjoys following benefits:
(i) Easy to form - like sole proprietorships. Partnership can be formed easily without any
lengthy legal formalities by agreeing to the terms and conditions and thereafter reducing
them into writing. A sample agreement or partnership deed is appended as annexure

for your reference.
(ii) It is not necessary to get the firm registered under the Partnership Act, 1932. But it is
always advantageous to get the firm registered. It is so because it has the major
advantage that a registered firm can sue any other party in the court of law, if it is
registered.
(iii) Availability of large resources - Since two or more partners join hands to start a
partnership business, it may be possible to pool together more resources as compared
to a sole proprietorship. The partners can contribute more capital, more effort and more
time for the business.
(iv) Better Decisions - The partners are the owners of the business. Each of them has equal
right to participate in the management of the business. In case of any conflict, they can
sit together to solve the problem. Since all partners participate in the decision-making
process, there is less scope for reckless and hasty decisions.
(v) Flexibility in Operations - A partnership firm is a flexible organization. At any time, the
partners can decide to change the size or nature of the business or area of its operation.
There is no need to follow any legal procedure. Only the consent of all the partners is
required.
(vi) Risk Taking - In a partnership firm all the partners “share” the business risks. For
example, if there are three partners and the firm incurs a loss of Rs.12,000 in a particular
period, then all partners share it and the individual burden will be Rs. 4,000 only. Because
of this, the partners may be encouraged to take up more risk and hence expand their
business more.
(vii) Protection of Interest of Each Partner - In a partnership firm, every partner has an equal
say in the decision making and the management of business. If any decision goes against
the interest of any partner, he can prevent the decision from being taken. In extreme
cases an unsatisfied partner may withdraw from the business and may ask for its
dissolution. In such extreme case the “partnership deed” is required. In the absence of
the partnership deed, no legal protection is given to the partners.
(viii) Benefits of Specialization - Since all partners are owners of the business, they can
actively participate in every aspect of business as per their specialization, knowledge
and experience. If you want to start a firm to provide legal consultancy to people, then
one partner may deal with civil cases, one in criminal cases, and another in labour cases
and so on as per the individual specialization. Similarly, two or more doctors of different
specializations may start a clinic in partnership.
(ix) Division of Work. Partners may allocate work among themselves for better and effective
working and controls. Such allocation may be administrative, marketing, production
etc.
3.05 Limitations of Partnership

Partnership firm suffers from the following limitations:
(i) Unlimited liability - All the partners are jointly liable for the debt of the firm. They can
share the liability among themselves or any one can be asked to pay all the debts even
from his personal properties depending on the arrangement made between the
partners
(ii) Uncertain life - The partnership firm has no legal existence separate from its partners.
It comes to an end with death, insolvency, incapacity or the retirement of a partner.
3.2
Partnership
Further, any unsatisfied or discontent partner can also give notice at any time for the
dissolution of the partnership.
(iii) Lack of harmony - In a partnership firm every partner has an equal right to participate
in the management. Also, every partner can place his or her opinion or viewpoint before
the management regarding any matter at any time. Because of this, sometimes there
is a possibility of friction and discontent among the partners. Difference of opinion may
lead to the end of the partnership and the business
(iv) Limited Capital - Since the total number of partners cannot exceed 20, the capital to be
raised is always limited. It may not be possible to start a very large business in partnership
form.
(v) Non-transferability of share - If you are a partner in any firm, you cannot transfer your
share or part of it to outsiders, without the consent of other partners. This creates
inconvenience for the partner who wants to leave the firm or sell part of his share to
others.
3.06 Types of Partners

(i) Active partners - The partners who actively participate in the day-to-day operations of
the business are known as active partners. They contribute capital and are also entitled
to share the profits of the business. They also share the losses that the business
faces.
(ii) Dormant partners - Those partners who do not participate in the day-to-day activities
of the partnership firm are known as dormant or “sleeping partners”. They only contribute
capital and share the profits or bear the losses, if any.
(iii) Nominal partners - These partners “only” allow the firm to use their “name” as a partner.
They “do not” have any real interest in the business of the firm. They do not invest any
capital, or share profits and also do not take part in the business of the firm. However,
they do remain liable to third parties for the acts of the firm.
(iv) Minor as a partner - In special cases a minor can be admitted as partner with certain
conditions. A minor can only share the profit of the business. In case of loss his liability
is limited to the extent of his capital contribution for the business.
Partnership is an appropriate form of ownership for medium sized business involving limited
capital. This may include small scale industries, wholesale and retail trade; small service
concerns like transport agencies, real estate brokers; professional firms like chartered
accountants, doctors' clinic, attorney or law firms etc
3.07 Legal Formalities to Establish Partnership

Under the Act, persons who have entered into partnership with one another are individually
called as 'partners' and collectively as 'firm' and the name under which they run their business
is called the 'firm name'. When establishing a partnership, you should have a partnership
deed. Draft of partnership deed is attached as annexure for better understanding.
3.08 Main Clauses of Partnership Deed

(i) Description of the partners.
(ii) Description of the firm
(iii) Principal Place of business
(iv) Nature of business.
(v) Commencement of business.
3.3
(vi) Capital contribution

(vii) Interest on capital
(viii) Interest on drawings
(ix) Salary to partners
(x) Profit – sharing ratio
(xi) Interest on loan
(xii) Method to value assets and liabilities, in case of reconstitution of firm
(xiii) Continuation of firm in the event of death of a partner
(xiv) Settlement of accounts
(xv) Accounting period
(xvi) Rights and duties of partners
(xvii) Duration of partnership
(xviii) Bank operation
(xix) Settlement of disputes
3.09 Registration under the Partnership Act:
Registration of partnership firms in India is though not compulsory but is desirable. For
registration, an application in Form I (annexure 5) along with the fee, a copy of the Partnership
Deed is submitted to the Registrar of Firms of the state in which any place of business of the
firm is situated or is proposed to be situated.
The application form is signed by all the partners or by their agents specially authorised in
this behalf, and in presence of a Witness. The Partnership Deed may be typed or handwritten
on a Non- Judicial Bond paper as per the duty prescribed under the Stamp Act applicable in
the respective state. It is prescribed to be 1% of Capital, subject to maximum of Rs.500
provided the capital Rs. 5,000 (the value of Bond Paper is different in other States). Every
copy of the deed should be on a Non-Judicial Bond Paper of Rs. 2. Every page of the original
deed, as well as of its copies, has to be signed by all the partners, in presence of two (Non-
Partner) witnesses. On being satisfied, that the requirement as to registration have been
complied with, the Registrar will issue a certificate of registration under his hand, in the
prescribed form.
3.10 Dissolution of Partnership
Dissolution of Partnership means change in partnership. It may be:

(i) Change in profit – sharing ratio among existing partners; or
(ii) Induction of new partner or partners; or
(iii) Retirement of one or more partners; or
(iv) Death of a partner, but the firm is continuing.
It is important to note that a change in profit–sharing ratio and induction of new partner or
partners is made only if the partnership has a clause to that effect or all the partners agree
to the change. Partnership is usually at will and therefore, a partner can retire by giving notice
of retirement.
It is important to note that in the event of death of a partner a firm may cease to exist if it
does not have a clause in the partnership deed to the effect that the firm will continue to exist
3.4
Partnership
in the event of a death of a partner. If the deed does not have a clause to this effect, Partnership
Act comes into play which provides that the firm will cease to exist from the date of death.
All the assets will have to be sold and liabilities paid. Balance in the capital accounts of the
partners will be paid after payment of outside liabilities.
3.11 Dissolution of Firm

Dissolution of firm means discontinuation of business by the firm. All the assets will have to
be sold and liabilities paid. Balance in the capital accounts of the partners will be paid after
payment of outside liabilities.
3.12 Taxation of a Partnership Firm

Partnership firms are subject to tax as a separate entity. The taxable income is arrived at
after allowing salary to partners and interest on capitals of the partners. Salary is allowed as
stated in the partnership deed or as per the provisions of section 40(b)(v) of the Income Tax
Act, 1961. Interest is allowed as provided in the partnership deed or at the rate prescribed
in section 40(b) (iv) of the Act. The maximum rate of interest is twelve percent per annum.
The remuneration and interest paid to the partners are taxable in the hands of the respective
partners up to the amount allowed as expense under the above sections.
Is Partnership Deed Necessary?

Before a partnership is formed, a “Partnership deed” should be prepared. This partnership
deed may be oral or in writing. However, it is wise to make sure that the partnership deed is
in writing because of the following main reasons:
(i) Future conflicts may be resolved.
(ii) Benefits under section 184 of the Income Tax Act, 1961, i.e., the firm shall be eligible
for deduction on account of interest, salary, etc. [This point is discussed in detail under
the module Direct Tax.]
3.5
Annexure 1
Sample Deeds of Partnership

Partnership Deed
(Where a new firm is commenced)
(Establishing a New Partnership Form)
THIS DEED of Partnership is made on this .................... day of ...................., at New Delhi
amongst:
1 Mr. ..................................S/o................................,resident of..............................,
New Delhi-.........................hereinafter called the First Party;
2 Mr. ..................................S/o................................,resident of..............................,
New Delhi-.........................hereinafter to be called the Second Party;
3 Mr. ..................................S/o................................,resident of..............................,
New Delhi-.........................hereinafter to be called the Third Party; and
4 Mr. ..................................S/o................................,resident of..............................,
New Delhi-.........................hereinafter to be called the Fourth Party;
Preamble
1. WHEREAS the parties to this deed have agreed to carry on the business
of Import, Export and Trading of Merchandise under the name and style of
“........................................................”
2. AND WHEREAS all the parties to this DEED have decided to actively devote their time
and attention to the business of the partnership.
3. AND WHEREAS the parties to this deed have agreed to invest in the capital of the
business
4. AND WHEREAS the parties to this DEED have settled all the other terms and
conditions
5. AND WHEREAS it has been considered expedient to reduce the terms and conditions so
settled into writing.
Now this Deed is Witnesseth as Under:

Name
1. The name of the firm shall be ........................ or any other name that may be agreed
upon by the parties to this DEED time to time.
Place of the Business

2. The principal place of business of the partnership shall be located at ......................, New
Delhi- .................However, the business may be conducted from such place or places as
may be mutually decided by the parties to this DEED from time to time.
Effective
3. That this partnership shall be effective from ..........................., the date above written.
Nature of Business
4. That the business of the partnership shall be that of ............................... and related
line of business or any other business that may be mutually decided by the parties to this
DEED.
Partnership
Capital
5. That all the parties to this Deed shall invest capital of the business as required by the
business from time to time or as may be mutually agreed to by the parties to this Deed.
Initial Capital will be Rs................, which will be introduced by all the partners to this
Deed equally.
Drawings
6. That the parties to this DEED shall make drawings as and when required for their personal
need.
Sharing of Profits
7. That the Profit/Loss shall be shared by the parties equally.
The profit/loss shall be determined after changing all expenses relating to the business.
Books of Account
8. That the partnership shall maintain regular books of account and the same shall be open
to inspection by the parties to this DEED at all reasonable hours.
Financial Year
9. That the financial year of the business shall end on March 31 every year. Accordingly, the
Books of Account for the first year of partnership shall close on March 31, 2010
Bank Account
10. That the partnership shall open bank account(s) with such bank (s) in the name of the
partnership and the same shall be operated by any of the parties to this Deed.
Duration and Notice

11. That the partnership has been and shall be a partnership AT WILL. Any partner wishing
to retire from the partnership may do so after giving two clear calendar months notice in
writing, to the other party and the party wishing to retire shall be deemed to have retired
from the partnership upon expiry of the notice.
Pledge, Assign, Mortage

12. That no partner shall pledge, assign or mortgage his share in the partnership nor shall
the partnership be liable for any liabilities by any of the parties to this DEED for the purpose
other than those relating to the business of the partnership nor shall the firm be liable for
the personal debts or obligations of the parties to this DEED.
Death or Insolvency
13. That it is specifically agreed that the death or insolvency of any of the parties to this DEED
shall not result in the dissolution of the partnership firm. The business of the partnership
shall be carried on as before, in such an event, by the remaining partners with legal heirs
of such deceased or insolvent partner.
Salary to Partners
14. That the salary shall be paid to the partners actively devoting time to the business of the
firm, as agreed from time to time amongst partners, it shall however not exceed the
amounts specified in the Income Tax Act, 1961 as in force.
Or
That the partners shall be paid salary as follows:
3.7
a. Rs. ....................... per annum

b. Rs. ....................... per annum
c. Rs. ....................... per annum
d. Rs. ....................... per annum
That the partners shall be entitled to salary as per the Income Tax Act, 1961in their profit-
sharing ratio.
Interest on Capital
15. Parties shall be paid interest on their capital at the rate of .......... percent per annum but
it shall not exceed the rate that may be prescribed in the Income Tax Act, as amended
and in force.
AMENDMENTS
16. That any alteration or amendment to this Deed can be made in the Partnership Deed by
executing a Supplementary Partnership Deed or Amendment to Partnership Deed.
ARBITRATION
17. That in case of doubt, dispute or difference of opinion amongst the partners regarding the
partnership, business or any of the terms of the partnership or the construction thereof,
the same shall be settled by the arbitration, in accordance with the provisions of the Indian
Arbitration Act, 1961 then in force.
APPLICATION OF INDIAN PARTNERSHIP ACT

18. That anything not hereinafter specifically provided for shall be governed by the provisions
of the Indian Partnership Act, 1932
THIS PARTNERSHIP DEED IS SIGNED BY THE PARTNERS IN THE PRESENCE OF THE

WITNESS OF THE DATE AND PLACE WRITTEN ABOVE.
WITNESSES:
1. ________________
________________
________________
2. ________________
________________ (________________)
________________ FIRST PARTY
(________________)
________________ SECOND PARTY
(________________)
________________ THIRD PARTY
(________________)
________________ FOURTH PARTY
___________________________________________________________________
3.8
Annexure 2
Partnership Deed (Induction of New

Partnership in the Existing Partnership firm)
THIS DEED of Partnership is made on this ..................day of ................., 2010 at New
Delhi amongst:
1. Mr. ...............................son of Mr. ................................,resident of.........................,
New Delhi-.........................hereinafter referred to as the First Party;
New Delhi-.........................hereinafter referred to as the Second Party; and
New Delhi-.........................hereinafter referred to as the Third Party; and
Preamble
1. WHEREAS the first and second parties were carrying on business and style of M/s
.............................. since ..............................as a partnership vide Partnership Deed
dated................................ .
2. AND WHEREAS they were sharing profits and losses equally.
3. AND WHEREAS they have agreed to induct Mr. ...............................son of
Mr. ..............................resident of......................................into partnership
w.e.f. ......................................
4. AND WHEREAS the first and second parties were carrying on business and style of M/s
........................... since ....................... as a partnership vide Partnership Deed
dated......................... Parties to this deed have agreed to continue carrying on the
business of Import, Export, Trading, Sourcing, Marketing, Operation in Financial Market
like Mutual Funds, Insurance Companies etc. under the name and style of
“.............................”
5. AND WHEREAS, the parties to this DEED have decided to actively devote their time and
attention to the business of the partnership.
6. AND WHEREAS the parties to this deed have agreed to invest in the capital of the business
in their profit-sharing ratio. Excess capital in their Capital accounts shall be transferred to
their respective loans accounts. Any shortcoming shall be brought in by them.
7. AND WHEREAS the parties to this deed have agreed to devote time and attention to the
business of the firm.
conditions.
settled into writing
Now this Deed is Witnesseth as Under:

Name
1. The name of the firm continue to be M/s........................ or may be changed to any other
name that may be agreed upon by the parties to this DEED from time to time.

2. The principal place of business of the partnership shall be located at ........................
However; the business may be conducted from such place or places as may be mutually
decided by the parties to this DEED.
Effective
Nature of Business
4. That the business of the partnership shall continue to be that of Import, Export, Trading,
Sourcing, Marketing , Operation in Financial Market like Mutual Funds, Insurance Companies
of every kind and nature and related line of business or any other business that may be
mutually decided by the parties to this DEED
Capital
5. That all the parties to this Deed shall invest capital in the business as required by the
Initial Capital will be Rs..................., but in their respective Profit-Sharing ratio.
Interest on Loan from Partner

6. Loan from partners shall carry interest @ 10 % per annum.
Drawings
7. That the parties to this Deed shall make drawings as and when required for their personal
need.
Sharing of Profits
8. That the Profit/Loss shall be shared by the parties as follows:
Party A 30%
Party B 40%
Party C 30%
The profit/loss shall be determined after changing all expenses relating to the business.
Books of Account
Financial Year
10. That the financial year of the business shall end on March 31 every year as is being followed
presently.
Bank Account
partnership and the same shall be operated by any two parties to this Deed.
Duration and Notice

12. That the duration of the partnership is AT WILL. Any partner wishing to retire from the
partnership may do so after giving two clear calendar months notice in writing, to the
other party and the party wishing to retire shall be deemed to have retired from the
partnership upon expiry of the notice.
Pledge, Assign, Mortage

13. That no partner shall pledge, assign or mortgage his share in the partnership nor shall
the partnership be liable for any liabilities by any of the parties to this DEED for the purpose
other than those relating to the business of the partnership nor shall the firm be liable for
the personal debts or obligations of the parties to this DEED
3.10
Partnership
Death or Insolvency
shall not result in the dissolution of the partnership. The business of the partnership shall
be carried on as before, in such an event, by the remaining partner with legal heirs of
such deceased or insolvent partner.
Salary to Partners
16. That if the profits of the business are insufficient to pay the above salary, partners shall
be entitled to salary as per the Income Tax Act, 1961in the above said proportion.
Interest on Capital
17. Parties shall be paid interest on their capital at the rate of 12 percent per annum but it
shall not exceed the rate that may be prescribed in the Income Tax Act , 1961 as amended
and in force.
Amendments
Arbitration
Arbitration Act, 1961 then in force.
Application of Indian Partnership Act

of the Indian Partnership Act.
This Partnership Deed is Signed by the Partners in the Presence of the
Witness of the Date and Place Written above.
WITNESSES:
1. ________________
________________
________________
2. ________________
________________ (________________)
________________ FIRST PARTY
________________ (________________)
SECOND PARTY
(________________)
________________ THIRD PARTY
___________________________________________________________________
3.11
Annexure 3
Deed of Partnership (Where a Partner

Retires from Partnership)
THIS DEED of Partnership is made at.................... on this .................... day of ...............
by and between:
1. Shri ............................... aged about .............. years, son of Shri ............................
...... resident of ……………………… (hereinafter called the First Party);
2. Shri ............................... aged about ............... years, son of Shri ...........................
....... resident of …………………. (hereinafter to be called the Second Party);
3. Shri ............................. aged about ................ years, son of Shri ...........................
resident of (hereinafter to be called the Third Party); and
4. Shri .......................... aged about ................. years, son of Shri ..............................
.... resident of (hereinafter to be called the Fourth Party);
Preamble
WHEREAS the parties to this deed have been carrying on the business of ........................
........ under the name and style of M/s. ......................... with its principal place of business
at ............. on the terms and conditions incorporated in the Partnership Deed executed on .
........................................
AND WHEREAS the parties to this deed have been carrying on the above said business in
partnership on the terms and conditions mutually agreed amongst themselves as aforesaid.
AND WHEREAS the fourth party namely Shri …………………. has desired to retire from the firm
as partner. In compliance with the terms and conditions of the Partnership Deed dated ……………..
he has served a written notice dated ……. expressing his desire to retire from the
partnership.
AND WHEREAS the remaining partners after considering the partnership deed dated ……….
and in view of the clause to the effect that partnership is at will, acceded to the request.
AND WHEREAS it was agreed among all that Shri ……….. Shall retire from the partnership
w.e.f. ……… on which date accounts of the firm shall be drawn and share of the fourth party
(retiring partner) shall be determined.
AND WHEREAS the parties to this deed have settled the terms and conditions post retirement
of the fourth party namely Shri ………… and have desired to reduce the settlement terms with
the retiring partner and also among themselves which shall govern the partnership post
retirement.
THIS DEED IS WITNESSETH as under:

Name Clause
1. That the partnership business shall continue to be carried on under the name and style of
M/s. ....................................
Nature and Place of Business

2. That the partnership business has been and shall continue to be that of ................ with
its principal place of business at .............. The continuing partners namely Shri ………..
(first party); Shri ………….. (second party) and Shri ……………. (third party) may by mutual
consent carry on any business and from any other place or places, in such other name or
Partnership
names and of such other nature or natures, as they may deem fit and proper from time
to time.
Settlement of Accounts with Retiring Party

3. That the accounts of the firm have been drawn as on the date of retirement i.e. ………. and
the profit arrived at, which have been credited to the capital accounts of all the partners
(including retiring partner) in their profit – sharing ratio as per the original partnership
deed dated…………..
4. That the assets have been revalued at the current market value and also liabilities have
been re-assessed. The surplus arising from this has been credited to the capital accounts
of all the partners in their old profit – sharing ratio. In the light of the clause in the old
partnership deed dated ………, the surplus so arrived at has been reversed and debited to
the capital accounts of the continuing partners.
5. That the payment to the retiring partner shall be made as follows:
(i) Rs. ………………. is transferred to his loan account and shall be paid after one year along
with the interest @ … % p.a.
(ii) Balance Rs. …………….. is paid by cheque bearing number ………….. dated ……….. drawn
on ………………
Dormant Partner
6. That the third party namely Shri ...................... is not a working partner but is only
financing, dormant and sleeping partner. The party shall not be in charge of, responsible
to the firm for the conduct of the business of the firm and need not take interest in day-
to-day working and business of the partnership firm.
Salary to Partners
7. That Shri................................ and Shri ............................ the first and the third parties
have agreed to be actively engaged in the business of the partnership firm. The said
partners shall be working partners. It is hereby agreed to that in consideration of the said
parties keeping themselves actively engaged in the business of the partnership firm and
working as working partners, shall be entitled to remuneration.
The remuneration payable to the said working partners shall be computed in the manner
laid down under section 40(b)(v), read with Explanation 3 of the Income-tax Act, 1961 or
any other applicable provision as may be in force in the income-tax assessment of the
partnership firm for the relevant accounting year. Such amount of remuneration shall be
distributed between the said working partners in the following proportion:
A. Shri...............................(First Party) ....... per cent of such amount; and
B. Shri...............................(Second Party) ....... per cent of such amount
The partners shall be entitled to increase or reduce the above remuneration and may agree
to pay remuneration to other working partner or partners as the case may be. The partners
may also agree to revise the mode of calculating the above said remuneration as may be
agreed to by and between the partners from time to time.
Interest on Capital to Partners

8. That interest at the rate of 12% per annum or as may be prescribed under section 40(b)
(iv) of the Income-tax Act, 1961 or any other applicable provisions as may be in force in
the Income Tax Act, 1961 for the relevant accounting period or at a lower rate as may be
agreed to by and between the parties from time to time shall be paid to the partners or
credited to the partners on the amount standing to the credit of the account of the
partners.
3.13
Such interest shall be considered as an expenditure of the firm and shall be debited to the
Profit & Loss Account of the firm before arriving at the divisible profit or loss. The interest
to persons other than partners shall be paid or credited to their accounts at the rate or
rates as may be agreed to by and between the partners and such persons from time to
time.
Determination of Distribution Surplus

9. That the net profit of the partnership firm after deduction of all expenses including rent,
salaries, other establishment expenses, interest and remuneration payable to the partners
in accordance with this deed of partnership or any supplementary deed as may be executed
by the partners from time, to time, shall be divided and distributed amongst the partners
in the following proportion:
Sr. No. Name of Party Share in profits
1.
2.
3.
The losses, if any, including loss of capital suffered in any year shall also be apportioned in
the above said proportion.
Accounts
10. That the parties shall keep or cause to be kept proper books of account and documents
and shall make entries therein of all receipts, payments and other matters as is usually
done and entered in the books of account kept by persons engaged in business similar to
that of the firm. Each partner shall have a right to have access to and to inspect and take
copy of the same.
11. That the books of account shall be closed on 31st day of March each year. The net profit
or loss after deducting all expenses, interest, remuneration, out goings shall be divided
between the parties in proportion to the sharing ratio referred to hereinabove.
Duration of Partnership
12. That the partnership has been and shall be a partnership at will.
Banking Accounts
13. That the bank account or accounts have been and shall be maintained in the name of the
firm and shall be operated singly or jointly by the partners.
Financial Instruments
14. All bonds, bills, notes, bills of exchange, hundies or promissory notes or other securities
given on behalf of the partnership (except cheques) shall be signed, endorsed, accepted
or executed jointly by all the partners and any bond, bill, note, bill of exchange, etc. to
which any partner may be a party contrary to this provision shall be deemed to have been
on the personal account of such partner and he shall pay and discharge the same out of
his own moneys and indemnify other partners and the firm against payment thereof and
against all actions, proceedings, costs, charges, expenses, claims and demands in respect
thereof.
Applicability of Partnership Act, 1932

15. That notwithstanding anything contained in the Indian Partnership Act it is hereby mutually
agreed to by and between the parties that in case of death of any one or more partners,
the firm shall not be dissolved but shall continue to be carried on by and between the
3.14
Partnership
surviving partners and legal heirs and/or representatives of the deceased partner, as a
continuing concern, on the same terms and conditions as incorporated in this Deed or on
such terms and conditions as may be agreed to by and between them from time to time.
It is hereby further clarified that it shall be deemed as change in constitution and not
succession.
General
16. That with respect to any matter connected with the affairs of the firm, which is not
specifically provided for herein, the partners may make such agreements there for and
may set in such manner with regard thereto as may be agreed upon by and between
themselves.
17. That the parties hereto shall be true and faithful to each other and shall not do or cause
to be done anything which may be detrimental to the interest of the firm.
18. That if the partners deem proper and in their interest, they may admit any other person
or persons as partners on the terms and conditions as may be mutually agreed amongst
themselves.
19. That the partners to this deed are partners in their individual capacity/representing Hindu
Undivided Family styled as M/s. ..................................... The parties do not represent
any other person.
20. That the partners shall be entitled to modify the above terms relating to remuneration,
interest, etc. payable to partners by executing a supplementary deed and such deed when
executed shall have effect unless otherwise provided from the first day of accounting
period in which such supplementary deed is executed and the same shall form part of this
deed of partnership.
21. That the retiring partner has signed this Partnership Deed as a confirming party.
22. That all disputes arising out of the partnership deed among the partners or between any
one of them or their legal representatives and whether during or after the partnership,
shall be referred to the sole arbitrator in accordance with the provisions of the Arbitration
and Conciliation Act, 1996 then in force.
IN WITNESS WHEREOF the parties to this deed have set their hands on the day and year
first above written and in the presence of:
WITNESSES:
1. ________________
________________
________________
2. ________________
________________ (________________)
________________ FIRST PARTY
________________ (________________)
SECOND PARTY
________________
(________________)
________________ THIRD PARTY
___________________________________________________________________
3.15
Annexure 4
Partnership Deed (Conversion of Sole

Proprietary Business to Partnership Firm)
This DEED OF PARTNERSHIP is made on this .................... day of .................., 2010 at New
Delhi amongst:
a. Mr. .............................. son of Mr. ....................................., resident of ....................
.................................................., hereinafter referred to as the First Party; and
b. MMr. .............................. son of Mr. ....................................., resident of ....................
.................................................., hereinafter referred to as the Second Party.
Preamble
1. WHEREAS the first party was carrying on business of ...................... under the name
and style of M/s .......................................... since ......................... as a partnership
firm.
2. AND WHEREAS the first party is in requirement of funds for business expansion.
3. AND WHEREAS the first party has decided to convert the proprietary firm into
partnership.
4. AND WHEREAS he has agreed to induct Mr. ............................ son of Mr.
............................ resident of ...................... into partnership w.e.f. ........................
5. AND WHEREAS the first and second parties have agreed to carry on the same Business
under the name and style of M/s ......................................
6. AND WHEREAS, all the parties to this DEED have decided to actively devote their time
and attention to the business of the partnership.
7. AND WHEREAS the parties to this deed have agreed to invest in the capital of the business
in their profit-sharing ratio.
conditions.
settled into writing.
Now this Deed is Witnesseth as Under

Name
1. The name of the firm shall continue to be M/s .......................... or may be changed to
any other name that may be agreed upon by the parties to this Deed from time to time.

2. The principal place of business of the partnership shall continue to be located at ....................
.............................................................. However, the business may be conducted
from such other place or places as may be mutually decided by the parties to this DEED
from time to time.
Effective
Nature of Business
4. That the business of the partnership shall continue to be that of Import, Export, Trading,
Sourcing, Marketing, Operations in Financial Market like Mutual Funds, Insurance Products
Partnership
of every kind and nature and related line of business or any other business that may be
mutually decided by the parties to this DEED.
Capital
5. That all the parties to this Deed shall invest capital in the business as required by the
Initial Capital will be Rs. ................./-, but in their respective Profit-Sharing ratio.
Interest on Loan from Partner

6. Loan from partners shall carry interest @ 10% per annum.
Drawings
7. That the parties to this Deed shall make drawings as and when required for their personal
need.
Sharing of Profits
8. That the Profit/Loss shall be shared by the parties as follows:
Party A 50%
Party B 50%
The profit/loss shall be determined after charging all expenses relating to the business.
Books of Account
Financial Year
10. That the financial year of the business shall end on March 31 every year as is being followed
presently.
Bank Account
partnership and the same shall be operated by any two parties to this Deed.
Duration and Notice

12. That the duration of the partnership is AT WILL. Any partner wishing to retire from the
partnership may do so after giving two clear calendar months notice in writing, to the
other party and the party wishing to retire shall be deemed to have retired from the
partnership upon the expiry of the notice.
Pledge, Assign, Mortgage

That no partner shall pledge, assign or mortgage his share in the partnership nor shall the
partnership be liable for any liabilities by any of the parties to this DEED for the purpose other
than those relating to the business of the partnership nor shall the firm be liable for the
personal debts or obligations of the parties to this DEED.
Death or Insolvency
shall not result in the dissolution of the partnership. The business of the partnership shall
be carried on as before, in such an event, by the remaining partner with legal heirs of
such deceased or insolvent partner.
3.17
Salary to Partners
15. That if the profits of the business are insufficient to pay the above salary, partners shall
be entitled to salary as per the Income Tax Act, 1961 in the above said proportion.
Interest on Capital
16. Parties shall be paid interest on their capital at the rate of 12 percent per annum but it
shall not exceed the rate that may be prescribed in the Income Tax Act, 1961 as amended
and in force.
Amendments
Arbitration
Arbitration Act, then in force.
Application of Indian Partnership Act

of the Indian Partnership Act.
This Partnership Deed is Signed by the Partners in the Presence of the

Witness on the date and Place Written above.
WITNESSES:
1. ________________ (________________)
________________ FIRST PARTY
________________
2. ________________ (________________)
________________ SECOND PARTY
________________
___________________________________________________________________
3.18
Partnership
FORM NO.1
(Prescribed under the Indian Partnership Act,1932)
FILLING FEE Rs.3/-
THE INDIAN PARTNERSHIP ACT, 1932
Application for the registration of firm by the name ………………………………………………………………………..
presented to the Register of firms filling by Shri …………………………………………………………………………………
We, the undersigned, being the partners of the firm * M/s …………………………………………………………………………
hereby apply for registration of the said firm and for that purpose the following, pursuant to
section 58 of the Indian Partnership act, 1932.
The Firm’s name
Place of business (a) Principal Place

(b) Other Place
Name of partners in full Date of joining The firm Permanent Address in full
Duration of the Firm

Station………. Signature of the partners or their specifically
authorized agents
Date………….
?? Here enter the name of the firm
?? If any partner is a minor the fact whether he is entitled to the benefits of partnership should
be set out herein.
N.B.- This form must be signed by all Partners or their specifically authorized agents in this
behalf in the Presence of witness or witnesses who must be either a Gazetted officer, Advocate
Attorney, Pleader or Honorary Magistrate.
1 I……………………………………….son of………………………………….years of age of……………………………..religion, do
hereby declare that the above statement is true and correct to the best of my knowledge
and belief.
Date………………… Signature……………………….
Witness……………..
and belief.
and belief.
and belief.
3.19
Notes
3.20
Chapter 4
Joint Stock Company
Chapter at a Glance
4.01 What is a ‘Company?’ 4.02 Company and its Characteristics

4.03 Merits of a Company 4.04 Distinction between a Company
4.05 Types of Companies and a Partnership
4.06 Formalities to Establish a Company 4.07 Additional steps to be taken for formation
4.08 Additional steps to be taken for registration of a Public Limited Company
of a Part IX Company 4.09 Memorandum of Association and Articles
4.10 Certificate of Incorporation of Association
4.11 Certification of Commencement of Business 4.12 Public Subscription and Prospectus.
4.13 Tax Registration. 4.14 Flow Chart of Incorporation of Private Company.
4.15 Flow Chart of Incorporation of Public Company. Private Company.
4.01 What is a ‘Company?’

The term ‘company’ means a company formed and registered under the Companies Act, 1956
or an existing company. The phrase ‘existing company’ means a company formed and registered
under any of the previous companies laws, i.e.
(i) The Indian Companies Act, 1866;
(ii) The Indian Companies Act, 1882;
(iii) The Indian Companies Act, 1913.
4.02 Company and its Characteristics

A company possesses following characteristics:
(i) Creation by law: A company is a voluntary association of persons formed for some
common purpose (generally business), with capital divisible into parts, known as shares
and with a limited liability. It is created under law and is thus, known as an artificial
person with a perpetual succession and a common seal.
On registration, a company acquires a personality distinct from its members. A member
can, therefore, be both its shareholder and a creditor simultaneously.
(ii) Perpetual succession and common seal: A company is a juristic person with a
perpetual succession and a common seal. Members of a company may change from
time to time, but that does not affect the continuity of the company. Thus, the death or
insolvency of a member does not affect the corporate existence of the company. The
company goes on until it is wound up. Again, since the company has no physical existence,
it must act through its agents and all such contracts entered into by its agents must be
under the seal of the company.
(iii) Legal entity: A company is a legal entity distinct from its members. It can sue and be
sued.
(iv) Limited liability: The privilege of limited liability for business debts is one of the principal
advantages of doing business under the corporate form of business. A company may be
a company limited by shares or a company limited by guarantee. In a company limited
by shares, the liability of members is limited to the unpaid value of the shares whereas
in a company limited by guarantee, the liability of members is limited to such amount
as the members may undertake to contribute to the assets of the company, in the event
of its being wound up.
(v) Free Transferability of Shares: Shares in a company are freely transferable so that
no shareholder is permanently or necessarily wedded to a company.
(vi) Common Seal: A common seal acts as the official signature of the company. The name
of the company should be engraved in it. Any business document not bearing the common
seal of the company is not legally enforceable. A common seal is required to be affixed
on the following deeds and contracts-
(a) Power of attorney made in favour of a person to execute the deeds on behalf of the
company;
(b) A share certificate;
(c) A share warrant;
(d) Any deed as required by the Articles.
4.03 Merits of a Company
The main advantages of a company form of organisation are as follows:
(i) Limited liability: The liability of all the members of a limited company is limited to the
nominal amount (face value) of their shares therein. This enables even not too enterprising
people to invest part of their money in industrial ventures carried on by limited companies
because they know beforehand that their liability is limited.
(ii) Transferability of shares: Shares in a company can be transferred (subject to any
restriction in the Articles of Association) from one person to another without the consent
of the other members.
(iii) Separate legal entity: A company is a separate legal entity from its members and its
existence is not affected by the death or insolvency of a member.
(iv) Control: The control of a company can be secured by acquisition of the majority of the
company’s shares which carry the voting power.
(v) Management: The formation of a company permits the proprietor of a business to
realise his goodwill or to relieve himself of the actual management if he so desires, while
retaining the controlling interest in the business. It also enables the employees to become
shareholders.
(vi) Dealing between members and the company: In the case of a company which is a
legal person distinct from its members, loans between the members and between the
company and its members present no difficulty. The company and its members can sue
each other in the ordinary way.
4.04 Distinction between a Company and a Partnership
S. Basis of Company Partnership
No. Difference
1. Entity A company is a separate and distinct legal A partnership firm is an association of
entity, apart from its members. several persons called partners and has
no separate legal entity apart from the
partners.
2. Number of A private company can have a maximum In case of partnership, the maximum
members of 50 members. In case of a public number of partners in case of a firm
company, there is no limit as to the carrying on banking business should
maximum number. However, the minimum not exceed 10, and in case of any other
number of members is 2 in case of a business 20.
private company and 7 in case of a public
company.
3. Management The management of a company is Any partner has a right to take part in
conducted by elected persons called, the management.
directors.
4.2
Joint Stock Company
4. Liability The liability of the members is generally The liability of the partners is unlimited,
limited to the value of their shares in the and is joint and several.
company, and that too, to the extent of
the unpaid value.
5. Position of A member of a company is not an agent A Partner, by implication, is an agent
Members of the company, and has no power to act of the firm for the purposes of the
on its behalf. business of the firm.
6. Position of The creditors of the company cannot sue The creditors of the partnership firm
Creditors the members individually. can sue the partners individually and
also in the name of the firm.
7. Position of a A member of a company can enter into A partner cannot enter into contract
member and a contract. with the firm.
a partner
8. Transfer of Shares are freely transferable in case A partner may assign his interest in the
shares of a public company whereas there are firm to anyone without the consent of
restrictions on transfer of shares in case all other partners.
of a private company.
9. Books of Proper books of accounts must be kept. Keeping proper books of accounts
accounts though desirable is not compulsory.
10. Audit Audit is compulsory under law. A company Audit is not compulsory under law.
should get its accounts audited by a
chartered accountant.
11. Winding A company, being a legal person, can A partnership firm can be dissolved at
only be dissolved as laid down under any time by any partner if it is at will.
the law.
4.05 Types of Companies

A company can be classified into different categories, as described below:
(i) Public Company and Private Company – A company which is not a private company
is called a public company. The minimum number of shareholders and directors required
for registering a Public Company is 7 and 3 respectively. It must have a paid – up capital
of at least Rs. 5,00,000. There is no restriction as to number of members, issue and
transfer of shares and acceptance of deposits. On the other hand a private company is
a company which has the following characteristics:
(a) It should have minimum 2 members, the number of shareholders is limited to
fifty,
(b) It should have minimum 2 directors,
(c) Shareholders’ right to transfer shares is restricted, and
(d) An invitation to the public to subscribe to any shares or debentures is prohibited,
and
(e) It must have a minimum paid-up share capital of Rs. 1,00,000.
(ii) Profit and Non-profit making companies – Generally companies are incorporated
with a purpose of earning profit. However, a non-profit company may also be registered
under (Section 25) the Indian Companies Act, 1956, with the following features:
(a) Promotion of commerce, art, science, religion and charity etc.
(b) Prohibits distribution of profit / income among members , and
(c) Registered with limited liability without addition of Limited / Private Limited to its
name.
4.06 Formalities to Establish a Company
All companies are required to be registered under the Companies Act, 1956. Company is now
registered online under MCA 21. For Registration of a company following steps are required:
(i) Proposed directors should obtain DIN (Director Identification Number) which is to be
filled in all documents for registration. If the proposed director is a director in another
4.3
existing company then he will be in possession of DIN, which shall use in promoting the
new company. If a person is becoming a director for the first time, he will have to obtain
a DIN.
(ii) The promoters decide on up to maximum 6 names which should be in conformity with
the proposed objects of the business. Ensure that the name does not resemble the name
of any other already registered company and also does not violate the provisions of
emblems and names (Prevention of Improper Use Act, 1950) by availing the services
of checking name availability on the website of the Registrar of Companies (ROC).
The last words in the name are required to be "Private Ltd." in the case of a private
company and "Limited" in the case of a Public Company.
(iii) Apply in eForm 1A for approval of the name of the company, suggesting 6 alternative
names in order of preference, along with a filling fee of Rs. 500/- to the Registrar of
Companies having jurisdiction, where the company proposes to have its registered office.
The ROC generally informs the applicant within seven days from the date of submission
of the application, whether or not any of the 6 proposed names applied for is available,
if found in order and as per the guidelines for name approval. If any of the proposed
names is not found in order, the ROC will seek further 6 proposed names to be considered
for approval.
(iv) Once a name is approved, it is valid for a period of six months, within which time
Memorandum of Association and Articles of Association together with other documents
should be filed. If one is unable to do so, an application may be made for renewal of
name by paying additional fees. After obtaining the name approval, it normally takes
approximately two to three weeks to incorporate a company depending on where the
company is registered. If for any reasons the registration cannot be applied for, the
promoters should seek extension of time.
(v) After the name approval the applicant can apply for registration of the new company by
filing the required forms (that is eForm 1, 18 and 32) within 60 days of name
approval.
(vi) Get the Memorandum of Association (MOA) and Articles of Association (AOA) prepared
by a chartered accountant, company secretary or solicitor.
(vii) Get the MOA and AOA stamped from the state treasury with appropriate stamp duty.
(viii) Get the MOA and the AOA signed by at least two subscribers (in case of private limited
company) and seven subscribers (in case of public limited company) in his/her own
hand, his/her father's name, occupation, address and the number of shares subscribed
for and witnessed by at least one person. It should be noted that a private company
can be registered if the subscribers undertake to subscribe shares of Rs. 1,00,000. In
the case of a public limited company, the limit is Rs. 5,00,000. Ensure that the subscribers
are the same persons who are named in eform 1A as promoters. Subscribers must sign
the MOA and AOA only after they have been stamped by the treasury
(ix) Ensure that the Memorandum of Association and Articles of Association are dated on a
date after the date of stamping.
(x) Login to the portal and fill the following forms and attach the mandatory documents
listed in the eForm
(a) Declaration of compliance - eForm-1
(b) Notice of situation of registered office of the company - eForm-18.
(c) Particulars of the Director's, Manager or Secretary - eForm-32.
(d) Consent to act as director, etc. – eForm 29.(Applicable only for Public limited
Companies).
(xi) Submit the above eForms after attaching the digital signature along with the challan of
payment of the requisite filing and registration fees (either through credit card or payment
in the designated bank). The physical copy of Memorandum of Association and Articles
of Association must also be sent to the ROC.
4.4
Joint Stock Company
(xii) After processing of the documents processing is complete and Corporate Identity is
generated to obtain Certificate of Incorporation from the ROC.
4.07 Additional steps to be taken for formation of a Public Limited
Company:
To obtain Commencement of Business Certificate after incorporation of the company the public
company has to make following compliances
(i) File a declaration in eForm 20 and attach the statement in lieu of the prospectus (schedule
III).
(ii) File a declaration in eForm 19 and attach the prospectus (Schedule II) to it.
(iii) Obtain the Certificate of Commencement of Business.
4.08 Additional steps to be taken for registration of a Part IX Company:
The Part IX Company is required to file eForm 37 and eForm 39 apart from filing eform 1, 18
and 32.
The company is required to file eForm 1 first and then the company can file the other eforms
(18, 32, 37 and 39) or separately.
4.09 Memorandum of Association and Articles of Association
The Memorandum of Association and Articles of Association are the most important documents
to be submitted to the ROC for the purpose of incorporation of a company. The Memorandum
of Association is a document that sets out the constitution of the company. It contains, amongst
others, the objectives and the scope of activity of the company besides also defining the
relationship of the company with the outside world.
The Articles of Association contain the rules and regulations of the company for the management
of its internal affairs. While the Memorandum specifies the objectives and purposes for which
the company has been formed, the Articles lay down the rules and regulations for achieving
those objectives and purposes.
Registration fee is scaled according to the share capital of the company, as stated in its
Memorandum. A private company can commence business on receipt of its certificate of
incorporation.
4.10 Certificate of Incorporation
After the duly stamped and signed Memorandum of Association and Articles of Association,
documents and forms are filed and the filing fee is paid, the ROC scrutinizes the documents
and, if necessary, instructs the authorised person to make corrections. Thereafter, a Certificate
of Incorporation is issued by the ROC, from which date the company comes in to existence.
It takes one to two weeks from the date of filing Memorandum of Association and Articles of
Association to receive a Certificate of Incorporation. Although a private company can commence
business immediately after receiving the certificate of incorporation, a public company cannot
do so until it obtains a Certificate of Business from the ROC.
4.11 Certification of Commencement of Business
A public limited company must obtain a Certificate for Commencement of Business from ROC.
ROC issues the certificate only if the prescribed formalities have been fulfilled. Company has
to submit the ‘statement in Lieu of Prospectus’ detailing therein the required information in
form no...... .On completion of the legal formalities, ROC will issue the Certificate.
4.12 Public Subscription and Prospectus
A Public company has the option of inviting the public for subscription to its share capital.
Accordingly, the company has to issue a prospectus, which provides information about the
company to potential investors. The Companies Act specifies the information to be contained
in the prospectus.
The prospectus has to be filed with the ROC before it can be issued to the public. In case the
company decides not to approach the public for the necessary capital and obtains it privately,
it can file a “Statement in Lieu of Prospectus” with the ROC.
4.5
On fulfilment of these requirements, the ROC issues a Certificate of Commencement of Business

to the public company. The company can commence business immediately after it receives
this certificate.
4.13 Tax Registration
Companies, under the Income Tax Act, 1961, are required to file its return of income, whether
the company has conducted any business or not. They therefore, must obtain Permanent
Account Number. In addition to this, business liable to deduct tax must necessarily obtain a
Tax Deduction Number (TAN). The PAN is required to be stated in various other documents
and correspondence such as the documents pertaining to sale or purchase of any immovable
property (exceeding Rs 5 lacs), etc.
4.14
Incorporation of Private Company
Start Process of Incorporating a Private Company
Check Whether Apply for DIN

DIN is available.
No
Yes
Apply for Name/

Reapply for Name.
No
Whether Name
available.
Yes
After getting name approved memorandum has to be printed and are duly stamped
(form treasury). Stamped fee depends on the authorized capital of the company.
Preparing documents for incorporation and filling with ROC: Form 1, Form 32 [Directors
appointment], Forms 18[Registered office address], POA from all the promoters. DD for ROC fees.
After filling all these documents. Certificate of incorporation is sent by registrar of the
companies through speed post at registered office of the company.
Company incorporated.
4.6
Joint Stock Company
4.15
Incorporation of Public Company
Start Process of Incorporating a Public Company
No
Check Whether Apply for DIN
DIN is available.
Yes
Apply for Name/

Reapply for Name.
No
Whether Name
available.
Yes
After getting name approved memorandum has to be printed and are duly stamped
(form treasury). Stamped fee depends on the authorized capital of the company.
Preparing documents for incorporation and filling with ROC: eForm 1, eForm 32 [Directors
appointment], Forms 18[Registered office address], POA from all the promoters. DD for ROC fees.
After filling all these documents. Certificate of incorporation is sent by registrar of the
companies through speed post at registered office of the company.
Apply to obtain the certificate of commencing business form ROC. In order to obtain this certificate,
the company must apply with the provision of section of 149 of the Companies Act, i.e. if the
company issued the prospectus, then the procedure stated in section 149 (1) is become applicable
and if it has not issued a prospectus, then the procedure as laid down in section 149 (2) shall apply
and statement in lieu of prospectus in eForm No-20 shall be filed with the registrar.
Company incorporated.
eforms related to companies are annexed as per their serial number hereinafter.
4.7
Note: Only first page of the relevant eforms are given here because of continuous amendments
and updations complete forms are available of supplimentary copy.
FOrM nO. 1 application and declaration for incorporation of a

company
[pursuant to sections 33(1) and (2) of
the companies act, 1956]
note - all fields marked in * are to be mandatorily filled.

1. *Indicate Registrar of Companies (RoC) reference number for name approval
(Service request number (SRN) of Form 1A) Pre-fill
2.(a) Name of the company
(b) *Type of the company New company (others) Section 25 company Part IX company Producer (Part IXA) company
(c) Whether the company is public or private Public Private
(d) *Category (e) *Sub-category

(f) Section 25 licence number
(g) *Whether the company is Having share capital Not having share capital
3. Name of the state in which the company is to be registered
4. Name of office of the Registrar of Companies in which the company is to be registered
5. Capital structure of the company, in case of company having share capital
(a) Authorised capital of the company (in Rs.)

Break up of Authorised capital
Number of equity shares Total amount of equity shares (in Rs.)
Nominal amount per equity share
Number of preference shares Total amount of preference shares

(in Rs.)
Nominal amount per preference

share
(b) Subscribed capital of the company ( in Rs.)
Break up of Subscribed capital
Number of equity shares Total amount of equity shares (in Rs.)
Nominal amount per equity share
Number of preference shares Total amount of preference shares

(in Rs.)
Nominal amount per preference
share
6. Details of number of members, in case of company not having share capital
(a) Enter the maximum number of members
(b) Maximum number of members excluding proposed employee(s)
7. *Main division of industrial activity of the company
Description of the main division
8. *Enter the number of promoters (first subscribers to the Memorandum of association (MoA))
Page 1 of 4
4.8
Joint Stock Company
FOrM 1a application form for availability or change of name
[pursuant to sections 20 and 21

of the companies act, 1956]
1. *Application for Incorporating a new company Changing the name of an existing company
part a : availability of name
2. Details of applicant
(a) *Director identification number (DIN) or Income tax Pre-fill
permanent account number(Income tax PAN) or passport number
(b) *Name
(c) *Occupation
(d) *Address Line I
Line II
(e) *City
(f) *State (g).*Pin code

(h)*ISO country code
(i) Country
(j) *e-mail ID
(k) Phone (l). Fax

3.(a) *Type of company New Company(others) Section 25 company Part IX company Producer(PartIXA)company
(b). *State whether the proposed company is public or private Public Private
(c). *State the category of proposed company
(d). *State the sub-category of proposed company
4. *Whether the proposed company is Having share capital Not having share capital
5. *Name of the state in which the proposed company is to be registered

6. *Name of office of the Registrar of Companies in which the proposed company is to be registered
7. Details of promoters (proposed first subscribers to Memorandum of association (Moa))
*Enter the number of promoters (proposed first subscribers to MoA)
I. *Category
*DIN or Income-tax PAN or passport number or corporate

identity number (CIN) or foreign company registration Pre-fill
number (FCRN) or any other registration number
*Name
II. *Category
*DIN or Income-tax PAN or passport number or corporate

identity number (CIN) or foreign company registration Pre-fill
number (FCRN) or any other registration number
*Name
Page 1 of 5 4.9
FOrM 1B application for approval of the central government

for change of name or conversion of a public
[pursuant to sections 21 or 31(1) company into a private company
1.* Purpose of application

Change of name Conversion of a public company into a private company
2(a). *Corporate identity number (CIN) of company
(b). Global location number (GLN) of company
(c) Reference to Registrar of Companies (RoC)

regarding approval for availability of name Pre-fill
(Service request number (SRN) of Form 1A) (Applicable in case of change of name)
3(a). Name of the company
(b) Address of the registered

office of the company
(c) *e-mail ID of the company
4. Proposed name of the company
5. *Reason(s) for change of name or conversion of a public company into a private company
6. Particulars of filing Form 23 with Registrar of Companies(RoC)
(a).*SRN of Form 23
(b).*Date of passing the special resolution (DD/MM/YYYY)
(c).*Date of filing Form 23 (DD/MM/YYYY)
7. *Name of the company at the time of incorporation (to be displayed in the certificate)
8. (a) Number of members present at the meeting where the special resolution was passed for change of name or
conversion and number of shares held by them
(i) *Number of members
(ii) *Number of shares held by them
Page 1 of 2
4.10
Joint Stock Company
FOrM 18
[pursuant to section 146 of the
notice of situation or change of situation of registered
office
companies act, 1956 ]
1.*This form is for New company Existing company
2.(a) *Form 1A reference number (Service request number (SRN)

of Form 1A) or corporate identity number (CIN) of company
(b) Global location number (GLN) of company Pre-fill
(b) Address of the

registered office
of the company
(c) Name of office of existing Registrar of Companies(RoC)
(d) Purpose of the form Change within local limits of city, town or village
Change outside local limits of city, town or village
Change in office of RoC within same state
Change in state within office of same RoC
Change in state outside office of existing RoC
4. Notice is hereby given that
(a) The address of the registered office of the company with effect from
(DD/MM/YYYY) is
The date of incorporation of the company is

*Address Line I
Line II
*City
*District
*State
Country
*Pin code
*e-mail ID
(b) *Name of office of proposed RoC or new RoC
(c) The full address of the police station under whose jurisdiction the registered office of the company is situated
*Name
*Address Line I
Line II
*City
*State
*Pin code
Page 1 of 2
4.11
FOrM 19 Declaration of compliance with the provisions of section 149(1)(a),

(b) and (c) of the companies act, 1956
[pursuant to section 149(1)(d) of
1.(a) *Corporate identity number (CIN) of company Pre-fill
(b) Global location number (GLN) of company
(b) Address of the

registered office
of the company
3. *I,
residing at (Present residential address)
* Line I
Line II
*City
*State *Pin code *ISO country code

Country
*being a director of the company, do solemnly and sincerely declare

the secretary of the company, do solemnly and sincerely declare
a company secretary (in whole-time practice), do solemnly and sincerely declare
i. *That the amount of the share capital of the company offered to the public for subscription is Rs.
ii. *That the amount stated in the prospectus as the minimum amount which, in the opinion of the Board of directors,
must be raised by the issue of share capital in order to provide for the matters specified in clause 5 of schedule II
of the Companies Act, 1956 is Rs.
iii.*That shares held subject to the payment of the whole amount thereof in cash have been allotted to the amount of
Rs.
iv.* That every director of the company has paid to the company on each of the shares taken or contracted to be
taken by him, and for which he is liable to pay in cash, a proportion equal to the proportion payable on
application and allotment on the shares offered for public subscription except the following directors, namely
who has or have not taken or contracted to take shares, for which he is or they are liable to pay in cash.
That no director of the company has taken or contracted to take any shares for which he is liable to pay in cash.
v. That no money is, or may become, liable to be repaid to applicants for any shares or debentures which have been
offered for public subscription by reasons of any failure to apply for, or to obtain, permission for the shares or
debentures to be dealt in on any recognised stock exchange.
vi.*The statement in paragraphs above are true to

my knowledge and those in the remaining paragraphs are true to the best of my information and belief.
Page 1 of 2
4.12
Joint Stock Company
FOrM 20 Declaration of compliance with the provisions of section

149(2)(b) of the companies act,1956
[pursuant to section 149(2)(c)

(b) Address of the

registered office
of the company
3. *I,

*Line I
Line II
*City
Country
*being a director of the company, do solemnly and sincerely declare

the secretary of the company, do solemnly and sincerely declare

i. *That the amount of the share capital of the company subject to the payment of the whole amount thereof in cash is
Rs.
ii. That the company has not issued a prospectus inviting the public to subscribe for its shares, and that it has filed
with registrar a statement in lieu of prospectus.
iii. *That shares held subject to the payment of the whole amount thereof in cash have been allotted to the amount of
Rs.
iv.* That every director of the company has paid to the company on each of the shares taken or contracted to be
taken by him, and for which he is liable to pay in cash, a proportion equal to the proportion [payable on
application and allotment on the shares payable in cash], except for the directors, namely
who has or have not taken or contracted to take shares, for which he is or they are liable to pay in cash.
That no director of the company has taken or contracted to take any shares for which he is liable to pay in cash.
v. *The statement in paragraphs above are true to

my knowledge and those in the remaining paragraphs are true to the best of my information and belief.
Page 1 of 2
4.13
FOrM 20a Declaration of compliance with the provisions of section

149(2a) or of section 149(2B)
[pursuant to section 149(2a)(ii)
(b) Address of the

registered office
of the company
3. *I,
*Line I
Line II
*City

Country
*being a director of the company,do solemnly and sincerely declare

the secretary of the company,do solemnly and sincerely declare
i. *That the company has, by a special resolution passed at the general meeting held on
approved of the commencement of -
(DD/MM/YYYY)
new business not germane to the business which it was carrying on at the commencement of the
Companies (Amendment) Act, 1965 ( XXXI of 1965).
business in relation to object(s) other than the main object(s) or object(s) incidental or ancillary thereto
as specified in its memorandum of association.
*That whereas at the general meeting held on (DD/MM/YYYY) , no special resolution

was passed in regard to the commencement of -
new business not germane to the business which the company was carrying on at commencement of
the Companies (Amendment) Act, 1965 ( XXXI of 1965).
business in relation to object(s) other than the main object(s) or object(s) incidental or ancillary thereto
as specified in its memorandum of association,
but the votes cast on a show of hands or poll in favour of the proposal to commence any business
contained in the resolution moved at the meeting (including the casting of vote by the chairman)
by members who being entitled so to do voted in person or by proxy exceeded the votes cast against
the proposal by members who being entitled and voting, the board of directors made an application
to the Central Government to allow the company to commence such business and the Central
Government has in its letter number dated (DD/MM/YYYY)
granted the necessary permission.
ii. The statement made above is true to the best of my knowledge.
Page 1 of 2
4.14
Introduction to Forms of Business Enterprises and Non-Business Organisations (NGOs)
FOrM 23 registration of resolution(s) and agreement(s)
[pursuant to section 192 of

1.(a)*Corporate identity number (CIN) of company Pre- Fill

(b) Address of the

registered office
of the company
3. *Registration of Resolution(s) Agreement Postal ballot resolution(s) under section 192A
4. Date of dispatch of notice for passing of
(a) Resolution(s) (DD/MM/YYYY)
(b) Postal ballot resolution(s) (DD/MM/YYYY)
5. Date of passing of
(a) Resolution(s) (DD/MM/YYYY)
(b) Postal ballot resolution(s) (DD/MM/YYYY)
6. Number of resolution(s) for which the form is being filed
Details of the resolution
I. (a) Section of the Companies Act, 1956 under which passed
(b) Purpose of passing the resolution
If others, mention the section and purpose
(c) Subject matter of the resolution
(d) In case of listed company, mention whether resolution passed by postal ballot Yes No
(e) Indicate the authority passing or agreeing to the resolution
Board of directors Shareholders Class of shareholders Creditors
(f) Whether ordinary or special resolution or with requisite majority
Ordinary resolution Special resolution Requisite majority
Page 11.15
of 4
FORM 23AAA Application to Central Government for modification in

the matters to be stated in the company's balance
[Pursuant to section 211(4) sheet or profit and loss account
of the Companies Act,1956]
Form Language English ihndI

Note - All
* fields marked in * are to be mandatorily filled.
1(a). * Corporate identity number (CIN) of company Pre-Fill
(b). Global location number (GLN) of company
2(a). Name of the company
(b). Address of the

registered office of
the company
3(a). * Turnover of company (in Rs.)
(b). * Whether the company is a hotel company Yes No

If yes
(i) Percentage of income from food
(ii) Percentage of income from beverage
4. * Financial year for which exemption is sought for From To

(DD/MM /YYYY) (DD/MM/YYYY)
5. * Whether latest accounts have been adopted by members or not: Yes No
6. * Nature of business Manufacturing Trading Export oriented Service company
VI to the Companies Act,1956 from which exemption has been sought for
7. * Specific paras of part II of schedule vi
along with precise justification for each exemption
8. *Is this the first application Yes No
If yes, state precise reasons as to how the company has been complying in the past
Page 1 of 3
4.16
Joint Stock Company
FORM 32
Particulars of appointment of Managing Director,
directors, manager and secretary and the changes
among them or consent of candidate to act as a
Managing Director or director or manager or
[Pursuant to sections 303(2), 264(2) or 266(1)(a)
secretary of a company and/ or undertaking to
and 266(1)(b)(iii) of the Companies
(iii) Act, 1956] take and pay for qualification shares
Form Language English ihndI
Note - All *fields marked in *are to be mandatorily filled.
1. *This form is for New company Existing company
2. (a) *Form 1A reference number (Service request number (SRN)
of Form 1A) or corporate identity number (CIN) of company
(b)Global location number (GLN) of company Pre-fill
3. (a) Name of the company
(b) Address of the

registered office
of the company
(c) e-mail ID of the company
4. Number of Managing Director, director(s) for which the form is being filed
5. Details of the Managing Director, directors of the company
I. Details of the Managing Director or director of the company
Director identification number (DIN) Pre-fill

Name
Father's name
Present residential address
Nationality Date of birth
Appointment Cessation Change in designation
Designation Date of appointment or

change in designation
Category (DD/MM/YYYY)
Whether chairman, executive director, non-executive director
Chairman Executive director Non-executive director
DIN of the director to whom the appointee is alternate Pre-fill

Name of the director to whom the
appointee is alternate
Name of the company or institution

whose nominee the appointee is
e-mail ID of director
In case of cessation
Hereby confirmed that the above mentioned Director Managing Director is not associated with the company
with effect from (DD/MM/YYYY) due to
Page 1 of 3
4.17
FOrM 37 application by an existing joint stock company or by an

existing company (not being a joint stock company) for
[pursuant to sections 565, 566, registration as a public limited or private limited or an
567 and 568 of the companies unlimited company
act, 1956]
1. *Please specify the type of company Existing company Joint stock company
2. *Form 1A reference number Pre-fill
3. *Name of the company
4. Name of the proposed company
5. *Date of instrument constituting the company (DD/MM/YYYY)
6. *Description of the instrument
attachments
1.*Copy of the instrument constituting or regulating the company Attach
2. Optional attachment(s) - if any Attach List of attachments
Remove attachment
Declaration
To the best of my knowledge and belief, the information given in this application and its attachments is correct and
complete.
I am duly authorised to sign and submit this form.
to be digitally signed by
Managing director or director or manager or secretary of the company
Modify Check Form Prescrutiny Submit
For office use only:
This e-Form is hereby registered
Digital signature of the authorising officer Submit to BO
Page 1 of 1
4.18
Joint Stock Company
FOrM 39 registration of an existing company as a limited

company
[pursuant to sections 565(1), 567
(a) and (c) and 568(a) of the
companies act, 1956]
1. *Form 1A reference number Pre-fill
2. Name of the company
3(a). Number of shares taken upto date (DD/MM/YYYY)
Equity
Preference
(b). Amount paid on each share
Equity (in Rs.)
Preference (in Rs.)
part a
list of members (pursuant to section 567)
Please attach a separate list for the equity or preference shareholders
4. List of members upto the date (DD/MM/YYYY)
5(a). Date of resolution declaring the amount of guarantee (DD/MM/YYYY)
(b). Amount of guarantee (in Rs.)
part B
resolution assenting to registration with limited liability [pursuant to section 565(1) proviso, clauses (vi and vii)]
Please attach a copy of resolution
6. *Date of general meeting passing the resolution assenting to registration with limited liability
(DD/MM/YYYY)
7. *Place of general meeting
Verification
We being the directors of do

solemnly and sincerely declare that the particulars set forth in the several documents accompanying this declaration
are true to our knowledge in regard to the particulars *
and true to the best of our information and belief in regard to the other particulars.
Page 1 of 2
4.19
FOrM nO. 44 Documents delivered for registration by a foreign

company
[pursuant to section 592 of
1. *Company name
2.(a) *Country where the company is registered (enter ISO country code)
(b) Country
3. *State of principal place of business in India
4. *Date of establishment of the principal place of business in India (DD/MM/YYYY)
5. Full address of registered or principal office of foreign company [see sub-section (1) (b)]
(a) *Address Line I

Line II
(b) *City
(c) *State
(d) Country
(e) *Pin code
6. address of principal place of business in India
(a) *Address Line I
Line II
(b) *City
(c) *District (d) *State
(e) *Pin code (f) Country
(g)*e-mail ID
7. Details of type of office and main division of business activity
(a) *Type of office

(b) If other, then
provide details
(c) *Main division of bussiness activity to be carried out in India

(based on relevant sub class and description given in NIC-2004)
Description of the main division
Page 1 of 4
4.20
Joint Stock Company
FOrM nO. 68 application for rectification of mistakes

apparent on record
[pursuant to rule 20g of the companies (central
government's) general rules and Forms (Second
amendment), 2010]

1.(a) * This form is for rectification of information filed through
Form 1A Form 1 Form 44
(b) * Form 1A reference number (Service request number Pre-fill

(SRN) of approved Form 1A) or SRN of approved Form 1
or SRN of approved Form 44
2.(a) Corporate identity number (CIN) or Foreign company

registration number (FCRN) of company
(b) Address of the

registered office or
of the principal place
of business in India
of the company
(c) Name of the applicant
(d) * e-mail ID
4. rectification required in respect of Form 1a -

Originally filled in information vide above mentioned Srn
(a) Approved name of the company
(b) Type of the company

(c) Category of the company
(d) Sub-category of the company
enter the correct information that should have been filled in. enter only the relevant field(s) from the
following, which need to be rectified.
(e) Type of the company
New company (others) Section 25 company Part IX company Producer (Part IXA) company
(f) Category (select whichever is applicable)
(g) Sub-category (select whichever is applicable)
Page 1 of 3
4.21
Notes
4.22
Chapter 5
Limited Liability Partnership
Chapter at a Glance
5.01 Concept of “Limited Liability Partnership” 5.02 Why a new legislation for LLP?
5.03 How to Incorporate a New Limited Liability 5.04 Flow chart of Establishing Limited Liability
Partnership Partnership.
5.05 Distinction among Company, Partnership Firm and an LLP
5.01 Concept of “Limited Liability Partnership”

LLP is an alternative corporate business form that gives the benefits of limited liability of a
company and the flexibility of a partnership. The LLP can continue its existence irrespective
of changes in partners. It is capable of entering into contracts and holding property in its own
name. The LLP is a separate legal entity, liable to the full extent of its assets but liability of
the partners is limited to their agreed contribution in the LLP. Further, no partner is liable on
account of the independent or un-authorized actions of other partners, thus individual partners
are shielded from joint liability created by another partner’s wrongful business decisions or
misconduct. Mutual rights and duties of the partners within a LLP are governed by an agreement
between the partners or between the partners and the LLP as the case may be. The LLP,
however, is not relieved of the liability for its other obligations as a separate entity.
Since LLP contains elements of both ‘a corporate structure’ as well as ‘a partnership firm
structure’ LLP is called a hybrid between a company and a partnership.
5.02 How to Incorporate a New Limited Liability Partnership

The Registrar of Companies (ROC) is the prescribed authority having jurisdiction over the
incorporation where the LLP proposes to have its registered office.A Limited Liability Partnership
may be incorporated as per the procedure explained below:
(i) Decide on the Partners and Designated Partners.
(ii) Obtain Designated Partner Identification Number (DPIN) and a digital signature
certificate.
(iii) Decide on the name of the LLP and check whether it is available.
(iv) Draft the Limited Liability Partnership agreement.
(v) File the Limited Liability Partnership agreement, incorporation documents and obtain
the Certificate of Incorporation.
The Brief details of above points are as follows:
Reservation of name
(i) Before reservation of name one has to register on the website of Ministry of Corporate
Affairs, developed for LLP services, i.e. www.llp.gov.in . This website may also be accessed
through the website of the ministry www.mca.gov.in On the home page of the URL www.
llp.gov.in click “Register” tab on top right hand corner of the page.
(ii) After User Registration All designated partners of the proposed LLP shall obtain
“Designated Partner Identification Number (DPIN)” by filing an application individually
online in eForm -7. Pay filing fee of Rs.100 online through credit card (master/visa)
(iii) Partner/Designated partner of LLP/proposed LLP, whose signatures are to be affixed on

the eForms has to obtain class 2 or class 3 Digital Signature Certificate (DSC) from any
authorized certifying agency, details of which are available on the home page of the LLP
portal under the tab “Certifying Authorities”.
(iv) Once above formalities are over Name of the LLP is required to be finalised. Free name
search facility (of existing companies / LLPs) is available on MCA portal .The system will
provide the list of similar/closely resembling names of existing companies/LLPs based
on the search criteria filled up.
(v) Details of minimum two designated partners of the proposed LLP, one of them must be
a resident of India, is required to be filled in the application for reservation of name.
Only individuals or nominees on behalf of the bodies corporate as partners can act as
designated partners.
Registration
(i) Once the name is reserved by the Registrar, log on to the portal and fill up eForm-2
“Incorporation Document and Statement”.
(ii) Pay the prescribed registration fee as per the slab given in Annexure A of the LLP Rules,
2009, based on the total monetary value of contribution of partners in the proposed
LLP.
(iii) Statement in the eForm is to be digitally signed by a person named in the incorporation
document as a designated partner having permanent DPIN and also to be digitally signed
by an advocate/company secretary/chartered accountant/cost accountant in practice
and engaged in the formation of LLP.
(iv) On submission of complete documents the Registrar after satisfying himself about
compliance with relevant provisions of the LLP Act will register the LLP, maximum within
14 days of filing of Form-2 and will issue a certificate of incorporation in eForm-16.
(v) eForm 3 (Information with regard to LLP agreement and changes, if any made therein)
and eForm-4 (Notice of Appointment of Partner/Designate Partner, his consent etc.) may
be filed with the prescribed fee simultaneously at the time of filing eForm-2 or within
30 days of the date of incorporation or within 30 days of such subsequent changes.
5.04 Flow chart of Establishing Limited Liability Partnership.

The framework for incorporating a Limited Liability Partnership is in place and currently
registrations are centralized at Delhi. Following is the flow chart of establishing Limited Liability
Partnership:
Acquire DPIN Register DPIN, Check name

Acquire DSC DSC with LLP Availability
Download LLP File

Track Status
Forms Electronically
Receive LLP Ready to

Certificate after Function
5.2
Limited Liability Partnership
5.05 Distinction among Company, Partnership Firm and an LLP

In order to help you decide on which legal form to choose, here’s a feature comparison between
the Limited Liability Partnership, Partnership firm and a Company:
Features Company Partnership firm LLP

Registration C o m p u l s o r y r e g i s t ra t i o n Not compulsory. Unregistered C o m p u l s o r y r e g i s t ra t i o n
required with the Registrar of Partnership Firm will not have required with the Registrar of
Companies. Certificate of the ability to sue. Companies
Incorporation is conclusive
evidence.
Name Name of a public company to No guidelines. Name to end with “LLP””
end with the word “limited” Limited Liability Partnership”
and a private company with
the words “private limited”
Capital Private company should have Not specified Not specified
contribution a minimum paid up capital of
Rs. 1 lakh and Rs.5 lakhs for
a public company
Legal entity Is a separate legal entity Not a separate legal entity Is a separate legal entity
status
Liability Limited to the extent of unpaid Unlimited, can extend to the Limited to the extent of the
capital. p e r s o n a l a s s e t s o f t h e contribution to the LLP.
partners
No. of Minimum of 2. In a private 2- 20 partners Minimum of 2. No maximum.
shareholders / company, maximum of 50
Partners shareholders
Foreign Foreign nationals can be Foreign nationals cannot form Foreign nationals can be
Nationals as shareholders. partnership firm. partners.
shareholder /
Partner
Taxability The income is taxed at 30% The income is taxed at 30% Not yet notified.
+ surcharge + cess + surcharge +cess
Meetings Quarterly Board of Directors Not required Not required.
meeting, annual shareholding
meeting is mandatory
Annual Return Annual Accounts and Annual No returns to be filed with the Annual statement of accounts
Return to be filed with ROC Registrar of Firms and solvency & Annual Return
has to be filed with ROC
Audit Compulsory, irrespective of Compulsory Required, if the contribution
share capital and turnover is above Rs.25 lakhs or if
annual turnover is above Rs.
40 lakhs.
How do the High creditworthiness, due to Creditworthiness depends on Perception is higher compared
bankers view stringent compliances and goodwill and credit worthiness to that of a partnership but
disclosures required of the partners lesser than a company.
Dissolution Very procedural. Voluntary or By agreement of the partners, Less procedural compared to
by Order of National Company insolvency or by Court Order company. Voluntary or by
Law Tribunal Order of National Company
Law Tribunal
Whistle No such provision No such provision Protection provided to
blowing employees and partners who
provide useful information
during the investigation
process.
5.3
Notes
5.4
Chapter 6
Charitable Trusts, Societies and

Charitable Companies (NGO)
Chapter at a Glance
6.01 Introduction 6.02 Formation and Registration of

6.03 Trusts a Non-Profit organisations in India
6.04 Society 6.05 Charitable Companies (Section-25)
6.01 Introduction
The device of ‘society’ was evolved to fulfill the need of an institution of non-commercial
nature for promotion of numerous charitable activities like education, art, religion, culture,
music and sports etc.
The need for a legal entity which could own ,posses and manage the funds and assets for
achievement of charitable or promotional objects, as laid down by donors, is the result of
these endeavours. A society can be formed to achieve these ends.
Similarly the public charitable trust is a possible form of not-for-profit entity in India. Typically,
public charitable trust can established for a number of purposes, including the relief of poverty,
education, medical relief, provisions of facilities for recreation, and any other object of general
public utility. Indian public trusts are generally irrevocable. No national law governs public
charitable trusts in India,although many states (particularly Maharashtra, Gujarat, Rajasthan
and Madhya pardesh) have Public Trusts Acts.
In India non profit / public charitable organisations can be registered as trusts, societies, or
a non profit company limited, under section-25 of the Companies Act, 1956. Non-profit
organisations in India (a) exist independently of the state; (b) are self-governed by a board
of trustees or ‘managing committee’/ governing council, comprising individuals who generally
serve in a fiduciary capacity; (c) produce benefits for others, generally outside the membership
of the organisation; and (d), are ‘non-profit-making’, in as much as they are prohibited from
distributing a monetary residual to their own members.
6.02 Formation and Registration of a Non-Profit organisations in India

(i) Trust
(ii) Society
(iii) Company under section 25 of the Companies Act,1956
Additional Licensing/ Registration
6.03 Trusts
A Public Charitable trust is established by an individual or individuals coming together with a
purpose to do charitable activities. The individual or the group of individuals make a initial
contribution of resources say donation in cash or kind and execute a Trust Deed declaring the
objects for which it is established and how the affairs of the trust shall be managed.
Legislation: Different states in India have different Trusts Acts in force, which govern the
trusts in the state; in the absence of a Trusts Act in any particular state or territory the general
principles of the Indian Trusts Act 1882 are applied.
Main Instrument: The main instrument of any public charitable trust is the Trust Deed,
wherein the aims and objects and mode of management (of the trust) are stated. following
are the contents of the Trust Deed(Draft of Trust deed is attached as annexure 1 for better
understanding):
(i) Name of the Trust
(ii) Head office of the Trust
(iii) Objects of the Trust for which it is established
(iv) Number of Trustees
(v) Terms of Office of the Trustees
(vi) Meeting and Proceedings of the Trustees
The trust deed should be signed on each page by the persons called settler establishing the
trust, in the presence of two witnesses. Please refer to annexure 1 being a draft Trust Deed
Trustees: A trust must have a minimum of two trustees; there is no upper limit to the number
of trustees. The Board of Management comprises the trustees.
Payment of Stamp Duty: Stamp Duty is payable on Trust Deed which is as provided in the
Stamp Act.The amount of Stamp duty payable depends on the amount of value of the initial
contribution only by the settlers.
Registration under the Trust Act:

The application for registration to the office of the sub-registrar having jurisdiction over the
region in which head office is proposed to be set up.
After providing details (in the form) regarding designation by which the public trust shall
be known, names of trustees, mode of succession, etc., the applicant has to affix
prescribed court fee stamp to the form and pay a very nominal registration fee as is
prescribed.
The application form should be signed by the applicant before the regional officer or a notary.
The application form should be submitted, together with a copy of the trust deed.
Two other documents which should be submitted at the time of making an application for
registration are affidavit and consent letter.
Registration under the Income Tax Act

The income of charitable trust are governed by Sections 11,12 and 13 of Income Tax Act.
1961.A charitable trust must be registered under the Income Tax Act, 1961 to avail the
income tax benefits available to it. On making an application in form no 10A, the Income Tax
Authorities grants registration.It is granted as is prescribed u/s 12AA of the Income Tax
Act,1961.
6.04 Society
According to section 20 of the Societies Registration Act, 1860, the following societies can be
registered under the Act: ‘charitable societies, military orphan funds or societies established
at the several presidencies of India, societies established for the promotion of science,
literature, or the fine arts, for instruction, the diffusion of useful knowledge, the diffusion of
political education, the foundation or maintenance of libraries or reading rooms for general
use among the members or open to the public, or public museums and galleries of paintings
and other works of art, collection of natural history, mechanical and philosophical inventions,
instruments or designs.’
6.2
Charitable Trusts, Societies and Charitable Companies (NGO)
Legislation: Societies are registered under the Societies Registration Act, 1860, which is a
federal Act. In certain states, which have a charity commissioner, the society must not only
be registered under the Societies Registration Act, but also, additionally, under the Bombay
Public Trusts Act.
Main Instrument: The main instrument of any society is the memorandum of association
and rules and regulations (no stamp paper required), wherein the aims and objects and mode
of management (of the society) should be enshrined.
Members: A Society needs a minimum of seven managing committee members; there is no
upper limit to the number managing committee members. The Board of Management is in
the form of a governing body or council or a managing or executive committee
Application for Registration:

Registration can be done either at the state level (i.e., in the office of the Registrar of Societies)
or at the district level (in the office of the District Magistrate or the local office of the Registrar
of Societies).(2)
The procedure varies from state to state. However generally the application should be submitted
together with: (a) memorandum of association and rules and regulations; (b) consent letters
of all the members of the managing committee; (c) authority letter duly signed by all the
members of the managing committee; (d) an affidavit sworn by the president or secretary
of the society on non-judicial stamp paper of the prescribed fees, together with a court fee
stamp; and (e) a declaration by the members of the managing committee that the funds of
the society will be used only for the purpose of furthering the aims and objects of the
society.
All the aforesaid documents which are required for the application for registration should be
submitted in duplicate, together with the required registration fee. Unlike the trust deed, the
memorandum of association and rules and regulations need not be executed on stamp
paper.
6.05 Charitable Company Registered Under the Companies Act, 1956

According to section 25(1)(a) and (b) of the Indian Companies Act, 1956, a company can be
established ‘for promoting commerce, art, science, religion, charity or any other useful object’,
provided the profits, if any, or other income is applied for promoting only the objects of the
company and no dividend is paid to its members.
Legislation: Section-25 companies are registered under section-25 of the Indian Companies
Act. 1956.
Main Instrument: For a section-25 company, the main instrument is a Memorandum of
Association and Articles of Association
Trustees: A section-25 Company needs a minimum of three trustees; there is no upper limit
to the number of trustees. The Board of Management is in the form of a Board of directors
or managing committee.
Application for Registration:

(i) An application has to be made for availability of name to the registrar of companies,
which must be made in the prescribed form no. 1A, together with a fee of Rs.500/-. It
is advisable to suggest a choice of three other names by which the company will be
called, in case the first name which is proposed is not found acceptable by the
registrar.
(ii) Once the availability of name is confirmed, an application should be made in writing to
the regional director of the company law board. The application should be accompanied
by the following documents:
6.3
Three printed or typewritten copies of the memorandum and articles of association of

the proposed company, duly signed by all the promoters with full name, address and
occupation.
A declaration by an advocate or a chartered accountant that the memorandum and
articles of association have been drawn up in conformity with the provisions of the Act
and that all the requirements of the Act and the rules made thereunder have been duly
complied with, in respect of registration or matters incidental or supplementary
thereto.
Three copies of a list of the names, addresses and occupations of the promoters (and
where a firm is a promoter, of each partner in the firm), as well as of the members of
the proposed board of directors, together with the names of companies, associations
and other institutions in which such promoters, partners and members of the proposed
board of directors are directors or hold responsible positions, if any, with description of
the positions so held.
A statement showing in detail the assets (with the estimated values thereof) and the
liabilities of the association, as on the date of the application or within seven days of
that date.
An estimate of the future annual income and expenditure of the proposed company,
specifying the sources of the income and the objects of the expenditure.
A statement giving a brief description of the work, if any, already done by the association
and of the work proposed to be done by it after registration, in pursuance of section-
25.
A statement specifying briefly the grounds on which the application is made.
A declaration by each of the persons making the application that he/she is of sound
mind, not an undischarged insolvent, not convicted by a court for any offence and does
not stand disqualified under section 203 of the Companies Act 1956, for appointment
as a director.
(iii) The applicants must also furnish to the registrar of companies (of the state in which the
registered office of the proposed company is to be, or is situate) a copy of the application
and each of the other documents that had been filed before the regional director of the
company law board.
(iv) The applicants should also, within a week from the date of making the application to
the regional director of the company law board, publish a notice in the prescribed manner
at least once in a newspaper in a principal language of the district in which the registered
office of the proposed company is to be situated or is situated and circulating in that
district, and at least once in an English newspaper circulating in that district.
(v) The regional director may, after considering the objections, if any, received within 30
days from the date of publication of the notice in the newspapers, and after consulting
any authority, department or ministry, as he may, in his discretion, decide, determine
whether the licence should or should not be granted.
(vi) The regional director may also direct the company to insert in its memorandum, or in
its articles, or in both, such conditions of the licence as may be specified by him in this
behalf.
6.06 Difference between Trust, Society and Charitable Company

Trust Society Charitable Comapny
Statute/Legislation Relevant State Trust Act or Societies Registration Act, Indian Companies Act,
Bombay Public Trusts Act, 1860 1956
1950
6.4
Jurisdiction Deputy Registrar/Charity Registrar of societies Registrar of companies

commissioner (charity commissioner in
Maharashtra).
Registration As trust As Society
In Maharashtra, As a company u/s 25 of
both as a society the Indian Companies Act.
and as a trust
Registration Trust deed Memorandum of Memorandum and articles
Document association and rules and of association. and
regulations regulations
Stamp Duty Trust deed to be executed No stamp paper required No stamp paper required
on non-judicial stamp for memorandum of for memorandum and
paper, vary from state to association and rules and articles of association.
state regulations.
Members Required Minimum – two trustees. Minimum – seven Minimum three trustees.
No upper limit. managing committee No upper limit.
members. No upper limit.
Board of Trustees / Board of Governing body or council/ Board of directors/
Management Trustees managing or executive Managing committee
committee
Mode of Succession Appointment or Election Appointment or Election by Election by members of
on Board of members of the general the general body
Management body
6.5
Annexure
TRUST DEED
THIS DEED OF TRUST is executed on this ………………… th day of …………………………………… at
New Delhi by ………………………………… son of Shri …………………………………….resident of
……………………………….., New Delhi – 100 052 hereinafter called the SETTLOR (which expression
shall unless excluded by or repugnant to the context be deemed to include its heirs, successors,
administrators and representatives, etc.)
WHEREAS the settlor is desirous of creating and establishing a trust absolutely and exclusively
for Charitable purpose and objects.
AND WHEREAS the following Trustees have, agreed to act as the TRUSTEES OF THE
TRUST:
1. ……………………………son of Shri …………………………..resident of ……………………………….., New Delhi;
and
2. Mr………………………………….. son of Shri ……………………….resident of …………………………New
Delhi
and jointly referred to as THE TRUSTEES (which expression shall be deemed to include all
such persons who shall in future by the virtue of this DEED or otherwise be treated as
TRUSTEES from time to time).
AND WHEREAS in order to effectuate his above stated desire, the settlor has on the date of
this DEED handed over sum of Rs. 10,001/- (Rupees Ten Thousand and One Only) in cash
hereinafter referred to as TRUST FUND to the trustees who have acknowledged the receipt
of the same as corpus of the Trust as such and also together with all such other proportions,
additions, appropriations accumulations, accretions, etc. for the purposes and objects of the
Trust on the terms and conditions and with such other powers and obligations as contained
hereunder :-
NOW THIS TRUST DEED WITNESSTH AS UNDER

1. Name
The name of the Trust Shall be ……………………………………….
2. Head Office
The Head Office of the Trust shall be at …………………………………., New Delhi but the trustees
shall be at the liberty to transfer head office to any other place and also to open such
offices and branches at such places as the trustees may decide from time to time.
3. Trust Property
The settlor possessing a sum of Rs. 1,001/- (Rupees One Thousand and One Only) of which
he is the exclusive and absolute owner, hereby transfers the said sum upto the trustees
to be possessed and held by them exclusively as TRUST FUND for the purposes and objects,
specified in the DEED. The said sum of Rs. 1,001/- (Rupees One Thousand and One Only)
shall become the initial corpus of the TRUST which can be further augmented by all kinds
of specific gift, donations, subscription, grants, presents, offerings, and voluntary
contributions, whether in cash or in kind of every nature and description towards the corpus
of the TRUST, or by accumulations and accretions of income (s) from the Trust property
or by other means as may be decided by the trustees from tine to time. Without generality
of movable or immovable properties which may, under the terms of these presents be
purchased, acquired, substituted, added, converted by the trustees from time to time.
4. Aims & Objects of the Trust

The objects of the Trust are charitable and advancement of any other object of general
public utility not involving the carrying on of any activity for profit
(a) To facilitate and support efforts of socially, physically and naturally challenged persons,
especially women, children and adolescents to improve their social, educational and
economic status through provision of technology and resources.
(b) To support and ensure a people-centered society, by especially channelising the
potential of socially marginalised people into action groups for their self-development
and growth by bridging the gap between needs and resources.
(c) To organize, undertake, support and assist any projects and programme(s) designed
to provide:
(i) Educational, recreational, social, cultural and spiritual activities.
(ii) Spare-time employment for those who are physically fit and active.
(iii) Information regarding existing facilities for paying guest accommodation, clubbing
of single persons, companionship, common messing, medicaid and medicare,
conducted sightseeing and pilgrimage tours, etc.
(iv) Brain Bank for accumulation and dissemination of knowledge, publication of literary
works, books brochures, periodicals, newsletters etc., in furtherance of the objects
of the Society.
(v) Counseling and professional consultancy services concerning legal aid, taxes,
duties, property, pensions, savings, investments, insurance, cooperative projects,
etc.
(vi) Sponsorship of economically weak ‘Aged’ persons for institutional care.
(vii) Surveys, research and studies of the problems of the ‘Aged’.
(viii) Study circles, seminars, conferences, fetes, rallies and conventions, etc.
(ix) Collaboration with other voluntary organizations to accomplish the above
objects.
(x) Affiliation with other National/ International organizations engaged in the welfare
of the ‘Aged’.
(xi) Regular dialogue/ report with Government authorities and humanitarian agencies
to highlight the problems of the ‘Aged’ to elicit support for the Society.
(xii) Creation of suitable climate for fostering greater understanding and social
integration between the elder and younger generations.
(a) To undertake aid, assist, conduct on its own and / or in collaboration with the other
educational and research institutions, education, training and research for the
promotion and development of scientific management.
(b) To propagate professional management in India through research projects, meetings,
group discussions, lectures, speeches, workshops, clinics, seminars, conferences,
study programmers, classes for imparting education and training in different aspects
of management either by itself and / or in collaboration with other institutions having
similar objects.
(c) To grant annual awards to research scholars and eminent writers on the aforesaid
subject as may be adjudged as the best work by the committee to be appointed by
the Board of Trustees.
(d) To undertake, aid, assist, conduct, carry on or help to carry on scientific or applied
research in Management and related fields fields including management accounting,
taxation, corporate laws, public finance, technology and related subjects and maintain
research centers, libraries, workshops and conduct experiments therein.
6.7
(e) To establish, maintain and run libraries and build up collection of books, periodicals,
papers and other literature, films, audio – visual aids, etc.
(f) To provide facilities for the exchange of opinions and views, techniques, practices,
trends and for stimulating thought on the subjects of interest to the trust.
(g) To co- operate with professional, educational, research, financial, industrial institutions
and Governmental and other organizations in the exchange and collection of
information.
(h) To print publish and distribute (on no profits and no loss basis or at subsidized costs)
newspapers, periodicals, books , reports studies, brochures, pamphlets and other
republication of interest.
(i) To institute awards, fellowships, scholarships, prizes, medals, diplomas, certificates
etc., for the furtherance of the objects of the Trust.
(j) To undertake, organize and facilitate study centers, conference, lectures, seminars,
workshops and the like to promote the objects of the Trust.
(k) To establish, maintain and / or run clinics or hospitals and render other kind of aid
and assistance in any manner to the existing clinics and hospitals, such established
clinics or hospitals or like nature shall provide relief without any distinctions of caste,
colour or creed and solely for charitable purpose and not for the purpose of profit.
(l) To establish, maintain and / or run studentships, scholarships (including scholarships
for going abroad for further studies) for deserving students or to give school and
colleges fees and render other kind of aid and assistance in any manner to students
and others including supply of books, stipends, medals, medicines, advance loans to
promising students to pursue further studies or to set themselves in business,
profession or vocation and other incentives to study without any distinction of caste,
colour or creed.
(m) To establish and / or promote and / or run and / or support by providing grant in aid,
financial or other assistance in any manner to schools, colleges and such other
institutions of like nature and description established at any place in India for promotion
of all skill, character or education amongst the public in general and to help in complete
development of all aspect of life comprising economic, physical, intellectual as well as
spiritual well being and educational institutions solely for educational purposes and
not for the purpose of profit.
(n) To render assistance and / or grant financial aid to other recognized public charitable
institutions or societies established exclusively for similar or any of the public charitable
purposes and objects.
(o) To open, found, construct, establish, take over, equip, promote, conduct, maintain,
support, subsidies, grant aid, and make donations to research centers, schools,
colleges, hostels, libraries or literary societies and institutions engaged in rural
development and publications for imparting or developing professional, management,
scientific, literary, industrial, legal, medical or other knowledge and training.
(p) To co-operate with other institutions in India and other parts of the world having
objects wholly or partly, similar to those of the trust by exchange of facility and staff
and by undertaking such of the activities as may be considered conducive to closer
co-operation with such other institutions.
(q) To undertake and manage educational and development projects in the areas of
management of resources, environment, rural management especially for women,
rural masses, and weaker sections of the society.
(r) To establish, maintain and manage residential quarters, hostels, and other buildings
for providing residential and related facilities for the scientific research scholars,
trainees, students, faculty member, staff and other connected persons.
6.8
(s) To do any other act, engage in any other public charitable activity for advancement
of general public utility not involving the carrying of any activity for profit.
(t) To conduct, offer test services for selection, recruitment of students of management,
management / technical trainees, and managers.
(u) To impart skills in sports to budding sportsmen involving improving the skills, providing
coaching and guidance to talented sportsmen towards achievement of excellence and
to plan, develop, construct, acquire, takeover, manage, maintain and utilize sports
infrastructure and facilities.
(v) To hold, sponsor, organize, manage and arrange, on its own and to offer facilities for
coaching camps, exhibition matches and other activities, and purposes, and to organize,
including but not limited to social and cultural activities, in the interests of cricket and
other sports or benefit of sports persons or otherwise in furtherance of these
objects;
(w) The undertake study, research (on farms, seeds, produce etc.) and to publish the
results thereof and results so arrived at to farmers in order to made them use the
results for the betterment of their farm use, production of produce, seeds.
5. THE TRUSTEES shall cause true and regular accounts to be kept of all moneys received
and expended and of all matters in respect thereof in the course of management of Trust
Property or in relation to the carrying out of the objects and purposes of the Trust as well
as of all assets, credits and effect of the Trust Properties.
The accounts of the Trust shall be audited by an Auditor who shall be a member of the
Institute of Chartered Accountants of India, constituted under the Chartered Accountants
Act, 1949 (Central Act, XXVIII of 1949).
6. for the furtherance of the objects of the TRUST and in accordance with the provisions of
the Income Tax Act, for the time being in force, the TRUSTEES will have the following
powers ;-
(a) To accept any gift, donation contributions, grant, subscription, financial or other
assistance in cash or in kind from any person(s) or trusts, or companies, societies or
institutions.
(b) To apply the whole or part of income of the TRUST FUNDS on any one or more of
the objects of the TRUST as the TRUSTEES may in their discretion, from time to
time, determine.
(c) To invest and invested the TRUST FUNDS and to alter, vary or transpose such
investments from time to time as the TRUSTEES may in their discretion deem fit.
(d) To borrow or raise or secure payment of money with or without security.
(e) To sell, dispose off, alienate or otherwise deal with any property comprising of the
TRUST FUND.
(f) To let out or demise any immovable property comprised in the TRUST FUND for such
period and at such terms and conditions as the TRUSTEES in their discretion may
think fit.
(g) To keep account(s) with any bank or banks (whether saving or current or fixed) to
operate such account(s) and to give instructions to the Bank and to provide for opening
and operation of such account(s) by the TRUSTEES or by the agent appointed by the
TRUSTEES.
(h) To adjust, settle, compromise, compound, refer to arbitration all disputes, actions,
suits, claims, demands and proceedings regarding the TRUST FUND.
(i) To appoint attorneys or agents and to delegate to such attorneys or agents all or any
of the powers vested in them under these present and from time to time remove such
attorneys or agents and to appoint other(s) in his or their place.
6.9
(j) To appoint or make provision for the appointment of any person (including all or any
of the TRUSTEES, a committee or administrator, Managing Trustee or otherwise) fro
the purpose of the TRUST in such manner and subject to such rules and regulations
as the TRUSTEES may prescribe and also to appoint or provide for the appointment
of separate trustee to hold any property or any funds or investments, subject to the
provisions of this DEED in such manner and subject to such rules and regulations as
the TRUSTEES may from time to time think fit.
(k) To make, vary alter or modify schemes, rules and regulations for carrying out the
objects of the TRUST and for the management of the affairs thereof and of running
any institution in furtherance of the objects of the TRUST and otherwise for giving
effect to the object of the TRUST.
(l) To start, abolish, discontinue and restart any charity or charitable institution for the
benefit of the general public and to impose any condition(s) to any subscription or
donation made to them.
(m) To set apart the whole or part of the income of the corpus of the TRUST FUND or
part thereof for any of the objects of the TRUST.
(n) To join, incorporate or amalgamate this TRUST with other or others having similar or
allied objects upon such terms and conditions as the TRUSTEES may in their discretion
think fit particularly having regard to and in conformity with the objects and nature
of this TRUST.
(o) To apply to the Government, Public Bodies, Urban, Municipal, District and other Bodies,
Corporations, Companies or Persons for and to accept grant of money and of donations,
gifts, subscriptions, and other assistance with a view to promote the objects of the
TRUST and to discuss and negotiate with the Government Departments, Public and
other Bodies, Corporations, Companies of Persons, Scheme and other work and matters
within the object of the TRUST and to confirm to any proper condition(s) upon which
such grants and other payments may be made.
(p) To takeover, acquire, manage, control or aid any existing institution or institutions
having, objects of this TRUST and on such terms and conditions as may be thought
expedient.
(q) To purchase or otherwise acquire and undertake all or any part of the property, assets
liabilities and engagements of any or more of this TRUST is authorized to
amalgamate.
(r) To transfer all or any part of the property, assets, liabilities and engagements of this
TRUST to any or more of the Trust, Societies, Institutions or Associations with which
the TRUST is authorized to amalgamate.
(s) It shall be lawful for TRUSTEES of these present at any time or the time of winding
up, if they so desire to transfer and handover the TRUST FUNDS in their possession
or control to any other Charitable Trust, Society, Corporation, Institution or Organization
recognized by the Income Tax Act, on such terms and conditions as the TRUSTEES
shall in their absolute discretion think fit and proper.
7. It shall be lawful for the TRUSTEES to give aid by way of donation out of the income or
corpus of the TRUST FUND or otherwise to different Charitable Institutions, Societies,
Organizations or Trusts in India which may have been established or which may hereafter
be established for like charitable purposes mentioned in these present or any of them.
8. The TRUSTEES shall have the power at their uncontrolled discretion instead of acting
personally to employ and pay agent (including Bank) to transact any business or to do
any act whatsoever in relation to the TRUST of these including the receipt and payment
of moneys without being liable for loss and shall be entitled to be allowed and paid all
charges and expenses incurred thereby.
6.10
9. It shall be lawful for the TRUSTEES to borrow moneys either on the security of any property
comprised in the TRUST FUND or otherwise for all or any of the purposes of these present
and it shall be lawful for the TRUSTEES to make such borrowings on payment of such
interest and otherwise on such terms and conditions as they may in their absolute discretion
think fit.
10. The TRUSTEES shall be chargeable only for his acts omission and commission and a
TRUSTEE shall not be answerable or accountable for neglect, default, acts of commission
of other TRUSTEES nor of any banker or other persons with whom the TRUST
PROPERTIES/SECURITIES(S) may have been deposited or kept.
11. The receipt of a person authorized by the TRUSTEES or by a resolution of the BOARD
OF TRUSTEES for moneys paid or received or for any property transferred or delivered
to in favour of the TRUSTTES(S) in execution of any of the powers thereof shall effectually
discharge any person(s) so paying or transferring or delivering.
12. BOARD OF TRUSTEES
(a) The management and control of the TRUST and the TRUST PROPERTIES shall vest in
the BOARD OF TRUSTEES, which shall comprise not less than 2 (Two) and not more
than 15 (Fifteen) trustees, including the Chairperson. The Board of Trustees shall
appoint one of their to be Chairperson, another as Vic Chairperson, another as Secretary
and another as Treasurer.
13. The TRUSTEES may irrespective of religion, sex, caste, colour, creed or nationality, who
accepts the aims and objects and to abide by the Rules and Regulations of the TRUST,
admit such person as member of the TRUST.
14. If and often as the TRUSTEE of these present shall die or desire to retire or refuse or
become incapable to act in the TRUST hereof or shall take the benefit of the Insolvency
Law for the time being in force or if any TRUSTEE should remain absent from three
consecutive meetings of the Board of Trustees without leave of absence then and in every
such case it shall be lawful for the surviving or continuing TRUSTEE or TRUSTEES for
the time being of these present (and for the purpose the retiring or refusing TRUSTEE if
willing to act in the exercise of this power be considered a continuing Trustee) to appoint
new TRUSTEE(S) in place of the TRUSTEE(S) so dying or desiring to retire or refusing
or becoming incoming incapable to act or taking the benefit of the Insolvency Low or failing
to attend three consecutive meetings of the Board of Trustees without heave given, and
upon every such appointment or vacancy, the number of TRUSTEES for the time being
of these present shall not be less than 2 (Two) nor more than 15 (Fifteen). The TRUSTEES
may also appoint additional TRUSTEE(S) provided that by the appointment of such
additional TRUSTEE(S) the maximum number of TRUSTEES fixed above is not
exceeded.
15. EFFECT OF APPOINTMENT OF NEW TRUSTEES: upon every such appointment made
in pursuance of the last foregoing clauses thereof, the newly appointed TRUSTEE(S) shall
have all the powers and authorities of a TRUSTEE under these present.
16. POWER TO DETERMINE ALL QUESTIONS OF DOUBT OR DIFFICULTY: It shall be
lawful for the Board of Trustees to settle and determine all matters of interpretation of
THESE PRESENT as well as mattes of difficulty, doubt or dispute and all question arising
in the course or identical to the administration, management and execution of the trust
and power (s) of THESE PRESENT and any such settlement or determination (although
the question involved may not have been actually raised) shall be valid, binding and
conclusive and shall not be objected to or re-opened upon any ground whatsoever.
17. Every TRUSTEES will be at the liberty to resign on giving one month’s notice of his intention
to do so.
6.11
18. This BOARD OF TRUSTEES may from time to time frame rules for the conduct and
regulation of the meeting of TRUSTEES.
19. MEETING: The Board of Trustees may meet for transaction business from time to time
and shall so meet at least once in every three calendar months.
(a) Two Trustees shall form a quorum for a meeting of the TRUSTEES.
(b) All matters will be decided by majority except as stated in Para (f) below.
(c) Notice of the Board of Meeting shall ordinarily be given twenty one days in advance in
writing to each member. However, the meeting may be held at shorter notice in the
case of emergency with the consent of majority of the TRUSTEES.
(d) Resolution passed without any meeting of the Board of Trustees but by the circulation
thereof and evidenced in writing under the hands of majority of the TRUSTEE shall be
valid and effective as a resolution duly passed at a meeting of the TRUSTEES.
(e) Mr……………………………will be the first Chairperson of the TRUST and shall be for life.
Mr……………………………………………..will be the trustee for life.
(f) Subject to 14 above, the office bearer shall be appointed by a simple majority. However,
a 2/3rd majority of the Board of Trustees would be required to remove an office
bearer.
20. The TRUST hereby created shall be irrevocable.
IN WITNESS WHEREOF THE SETTLOR HAS EXECUTED THESE PRESENTS ON THE
________TH DAY OF _________________ FIRST ABOVE WRITTEN.
Witnesses Settlor
6.12
Notes
6.13
6.14

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Chapter 1

Introduction to Forms of Business Enterprises,

1.01 Selection of Business Organisation 1.02 Forms of Business Enterprise.

1.01 Selection of Business Organisation to Start a New Enterprise

1.02 Forms of Business Enterprises

2.01 Meaning 2.02 Capital

2.03 Final Accounts

2.04 Bank Accounts

For Bharat Textile & Co.

2.07 Income Tax

2.08 Closure of Sole Proprietorship Firm

2.11 Legal Formalities to Establish a Sole Proprietorship

3.01 Meaning 3.02 Features of Partnership

3.02 Features of Partnership

3.03 Applicability of Partnership Act, 1932

3.04 Advantages of a Partnership Form

them into writing. A sample agreement or partnership deed is appended as annexure

3.05 Limitations of Partnership

3.06 Types of Partners

3.07 Legal Formalities to Establish Partnership

3.08 Main Clauses of Partnership Deed

(vi) Capital contribution

3.09 Registration under the Partnership Act:

3.10 Dissolution of Partnership

Dissolution of Partnership means change in partnership. It may be:

3.11 Dissolution of Firm

3.12 Taxation of a Partnership Firm

Is Partnership Deed Necessary?

Sample Deeds of Partnership

Now this Deed is Witnesseth as Under:

Place of the Business

Duration and Notice

Pledge, Assign, Mortage

a. Rs. ....................... per annum

APPLICATION OF INDIAN PARTNERSHIP ACT

THIS PARTNERSHIP DEED IS SIGNED BY THE PARTNERS IN THE PRESENCE OF THE

Partnership Deed (Induction of New

Now this Deed is Witnesseth as Under:

Place of the Business

Interest on Loan from Partner

Duration and Notice

Pledge, Assign, Mortage

Application of Indian Partnership Act

Deed of Partnership (Where a Partner

THIS DEED IS WITNESSETH as under:

Nature and Place of Business

Settlement of Accounts with Retiring Party

Interest on Capital to Partners

Determination of Distribution Surplus

Applicability of Partnership Act, 1932

Partnership Deed (Conversion of Sole

Now this Deed is Witnesseth as Under

Place of the Business

Interest on Loan from Partner

Duration and Notice

Pledge, Assign, Mortgage

Application of Indian Partnership Act

This Partnership Deed is Signed by the Partners in the Presence of the

The Firm’s name

Place of business (a) Principal Place

Duration of the Firm

Joint Stock Company

4.01 What is a ‘Company?’ 4.02 Company and its Characteristics

(d) Category (e) Sub-category

(f) State (g).Pin code

State Pin code *ISO country code