Company Formation & Trust
INTRODUCTION
Company involves the corporation being a legal entity in the eyes of the law or the method of creating the company's own name. Incorporation literally means a company being born or a company being formed. However, different legal compliances need to be complied with in order to incorporate a corporation.
What are the Benefits of a Company?
Human resource department must be aware of all the laws. There are HR laws which are applicable from the top position to the subordinate of a company. Following are various laws and provisions that are applicable to any organization.
- To dispense with any remaining liabilities. In order to establish continuous existence and the transfer of ownership.
- To gain tax benefit.
- Enhance the market image of the company.
- Improve business management skills.
How to register an Indian company?
Registering an Indian business is now an easy four-step procedure. Here's what you have to purchase:
- Certificate with Digital Signature (DSC)
- Identification Number of Director (DIN)
- MCA Portal Registration
- Receive a company registrar's certificate of incorporation (ROC)
These are the fundamental measures to incorporate a corporation with minimal government approvals in India. File separate ROC forms to register a company in India.
The following papers must be filed with the Company Registrar:
- The Association Memorandum (duly stamped) and a double copy thereof
- Articles of Association and a copy thereof (duly stamped).
- An affidavit from the memorandum claimant in form INC-9
- Proof of residency
- Identity evidence
- Check of subscriber signatures on Form INC-10.
- A copy of a letter from the Companies Registrar confirming the company's proposed name available
- The e-form no. 1 for forming a business (with prescribed stamps)
- Receipt for payment of the identification fee and filing fee recommended.
Applicable Company Formation Laws in India
In India, the Indian Corporations Act of 2013 and the Foreign Exchange Management Act of 1999 (FDI) and the Limited Liability Relationship Act 2008 are regulated by the ministry of corporate affairs, The following companies can be formed by both Indian promoters and international promoters:
Company Types which can be Incorporated in India
Private
A private company is a private enterprise and at least two or more individuals must form a private enterprise. There is no publicly traded private sector, i.e. there is no public deal for a private company. A private business therefore restricts the freedom to sell its shares and limits the membership to 200, except in one individual company.
The minimum conditions for the company
- Directors (Minimum Two)
- Owners (Minimum Two)(Directors & Shareholders can be the same)
- Rs. 1,00,000/- Minimum paid-up balance
- DIN for both managers
- Digital signatures of all managers
- Subscriber or director consent
- Proof of Registration Address
- NOC from the premises holders
Public
A public enterprise is known as a non-private enterprise. Only a public corporation is subject to the following conditions:
- At least seven shareholders must be kept.
- At least three directors must be a public corporation.
- No limit or ban on collecting public funds through IPO, FPO, etc.
Limited Partnership with Liability (LLP)
LLP is an alternative company company which provides the advantages of a company's limited liability, but gives its members the freedom to coordinate their internal management on the basis of a mutually agreed arrangement, as is the case with a partnership company. LLP is a private entity and a distinct legal entity from its partners. It would be a continuous succession. Although the LLP shall be a single legal body responsible for the full scope of its properties, partners' liabilities shall be limited to their negotiated LLP contribution.
Company of one person (OPC)
It is a form of company created by the Law of Companies Act 2013, which has a shareholder and manager. The sole director and shareholder needs to appoint a person during the incorporation of a one-person firm.
Section 8
Section 8 Company is a company that is authorised for research, social welfare, worship, charity, trade, craft, technology, sport, education and environmental conservation purposes pursuant to Section 8 of the Company Act of 2013.
TRUST
A trust is nothing more than the transfer of property by the owner to a third party on whose behalf the owner is trust. Property does not only imply real estate, Cash, shares or some other valued commodity may be used. In addition, the instrument by which the whole trust is declared/created is called 'the instrument of trust' or 'the act of trust.'
Parties to a Trust
- Author/Settler/Trust or/Donor: The person who wishes to move his belonging and relies on another person for trust formation.
- Trustee: the one who acknowledges the faith in creating the trust
- Beneficiary: The individual who, in the near future, will profit from confidence.
What are the general aims of a trust?
The key goal is to establish the trust for a legitimate reason. For example, if Mr. X has borrowed the bank's money and gave it to Mr. Y to give the money to needy children then, the trust itself is void since the principal purpose* is illegal. * So how do we truly grasp whether the target is legitimate or illegal? Section 4 of the Act provides the response. According to Section 4, all uses, unless it is:
- Is prohibited by law.
- Defeats legal provisions.
- Is Fradulent
- Includes injuries to or property of another person
- Unethical or contrary to public policy
Who can form a trust?
A Trust can be established by:
- Someone with responsibility for contracts: a person, an AOP, a HUF, a corporation etc.
- If a trust is to be formed on or on behalf of a minor, then authorization of the original Principal Civil Court shall be required.
Furthermore, it also depends on the law in force which prevails at this particular time and the degree to which the trust's author may wish to disposes of its land.
What kinds of trusts can be established?
Private trusts:
Private trusts: a closed community is a private trust. In other words it is possible to classify the beneficiaries. Eg: A trust built for the author's relatives and associates.
Public Trusts:
Public Trusts: A big body public trust is established, i.e. the general public. E.g.: charitable institutions for the general population of non-profit NGOs.
Private Trust Registration Mandates
Section 5 of the Act stipulates that:
- Immovable property: A non-testamentary instrument must establish a private trust in writing. In addition, a non-testamentary instrument must be signed and recorded by the trust author or trustee. However, if a will is produced by the non-testamentary instrument, registering is not required.
- Movable properties: A trust of mobile land may be declared or a transfer of title of the property to the trustee as is the case for an immovable property. Therefore, registration is not compulsory.
