Business Organization and Management is the course for both UG and PG level.PPT helps both the students of MBA and M.Com

Business Organization and Management

1. Concepts of Business, Trade, Industry and Commerce Business “Activities that are related to the production or purchase and sale or distribution of goods or services with the main objective of earning profit come under business . It should be done regular basis.”    

2. Objectives of Business Earning Profit Market standing:  It refers to capture the market share. The business can survive only if  there is demand for its goods and services. So it must aim at satisfaction and winning of  customers. Innovation:  To innovate means to introduce something new into the market. It  includes new products, new method of production, new method of distribution etc. Eg . Introduction of lap top, changes in mobile phone, conversion of traditional  photography to digital, direct marketing etc. Productivity:  It is ascertained by comparing the value of output with the value of  inputs. Every business must aim at greater productivity through the best use of  available resources . Efficient utilization of physical and financial resources

3. …. Manager performance and development:  Business need managers to conduct and  coordinate business activity, therefore improve managers performance and  development is an important objective of every business. Improve workers performance and attitude:  Every enterprise must aim at improving  its workers performance. It should also try to ensure a positive attitude on the part of  workers . Social responsibility:  Social responsibility refers to the obligation of business firms to  contribute resources for solving social problems and work in a socially desirable  manner. 

4. Characteristics of Business/ Features of Business  Economic activity Dealing goods or services Regularity in dealing Profit earning Sale, transfer or exchange Uncertainty and business risk

5. Classification of Business “Business activities may be broadly classified into two broad categories – Industry and Commerce .” Industry:  Industry involves production or processing of goods used for consumption  or for further production.  Types of Industry :  Primary,Secondary ,Tertiary 

6. Primary Industry “Primary industries are associated with extraction of natural resources and reproduction of living organisms like plants, animals, and birds. It is classified into  two types.” Extractive industry - Which engage in extraction of something from natural sources or  from nature. The products extracted are wither directly consumed or are used as raw  materials for further production. Eg . Fishing, mining, oil exploration etc.   Genetic industries - They are engaged in activities like rearing or breeding of animals,  birds and plants. Eg . Agriculture, dairy farming for milk, poultry farming for egg and  meat, Floriculture for flowers pisciculture for fish etc.  

7. Secondary Industries “It deals with materials extracted at the primary stage. These  industries either process the material or produce goods. It is further classified in to  two types.” Manufacturing industries - They engage in converting raw materials into finished  goods. The products manufactured may either be consumer goods or capital goods.  Eg . Producing steal, make furniture , making butter etc.  Construction industries - They engaged in construction of dams, bridged, airports etc.  The products of these industries are immovable, labour intensive and which are used  mostly for public welfare.  

8. Tertiary industries “ They concern with providing services that support the primary  industries and secondary industries. Eg . Transport, banking , insurance etc .”    COMMERCE Commerce is concerned with the buying, selling and distribution of commodities and it is an organized system for the exchange of goods and services in between the businessman and the customers. It is also concerned with the marketing aspects of business, i.e. supply of right type of goods to the right persons, at the right time and at the right price. Thus commerce includes  trade and aids to trade.

9. Commerce “Commerce can be defined as the sum total of all those activities which are involved in the removal of hindrances in the process of exchange of goods .” Functions of Commerce Removal of Hindrance of Person-  It refers to the lack of contact between the producers and customers. Here the trader acts as an intermediary among them and customers are able to find out the products which they are wanted from the market.

10. .. Removal of Hindrance of Place- It is a common problem that the producers and customers are in distant places, hence the commodities should be transferred from the production centre to the hands of customers. This problem can be solved by the system of commerce by means of transport, packing and insurance. Removal of Hindrance of Risk - Goods and properties of business are subject to various risk such as fire, theft, damage etc., and they have to be protected by insuring the goods and properties. Removal of Hindrance of Time- There may be a gap between the production and consumption as the production is carried out in anticipation of future demands.Therefore , it becomes necessary to store the goods until they are sold. This problem can be solved by warehousing . Removal of Hindrance of Knowledge:  Advertising helps in the removal of hindrance of knowledge among the buyers.

11. … Removal of Hindrance of Finance - The problem of finance can be handled by banks, which form part of commerce. It will also help the businessman in exchange of money between different persons at different places. Aids to trade   Banking Service, Transport and Communication, Insurance, Advertising, Warehousing

12. Social Responsibility of a Business Corporate social responsibility (CSR) means that businesses should operate in ways that benefit society in addition to maximizing shareholder value. Socially responsible companies adopt policies that promote the well-being of society and the environment while lessening the negative impacts on them. Companies can act responsibly in many ways such as by promoting volunteering, making changes that benefit the environment, engaging in ethical labor practices, and engaging in charitable giving. Consumers are more actively looking to buy goods and services from socially responsible companies and this impacts their profitability .

13. … CSR includes companies engaging in environmental preservation efforts, ethical labor practices, philanthropy, and promoting volunteering. A company might change its manufacturing process to reduce carbon emissions . Benefiting society and lessening the negative impacts on the environment are among the main benefits and goals of CSR. Consumers are increasingly looking to buy goods and services from socially responsible companies and this can have a positive impact on their bottom lines . Companies that implement social responsibility programs can potentially increase their bottom lines and boost their brand image as well. Social responsibility programs can also have a positive impact on morale among employees.

14. Examples of Socially Responsible Corporations Starbucks Corp. (SBUX) has committed to CSR from the start, including sustainability and community welfare. It purchases Fair Trade Certified ingredients to manufacture products and it actively supports sustainable farming in the regions where ingredients are sourced . Ben & Jerry’s Homemade Holdings Inc. has integrated CSR into the core of its operations. Like Starbucks, the company purchases Fair Trade Certified ingredients . Salesforce.com Inc. (CRM) developed what it calls the “1-1-1 model.” The company dedicates 1% of its equity, 1% of its product, and 1% of its employees’ time back to the community . Big-box retailer Target Corp. (TGT) is also well known for its social responsibility programs. It's donated money to communities in which the stores operate, including education grants.

15. Advantages of Social Responsibility Justification for existence and growth The long-term interest of the firm Avoidance of government regulation Maintenance of society Availability of resources with business Converting problems into opportunities A better environment for doing business Holding business responsible for social problems

16. Disadvantages of Social Responsibility Violation of profit maximization objective Burden on consumers Lack of social skills Lack of broad public support

17. Corporate Social Responsibility Under Section 135 of Companies Act 2013 The provisions of  CSR applies to every company   fulfiing any of the following conditions in the preceding financial year: Net worth of more than Rs.500 crore Turnover of more than Rs.1000 crore Net profit of more than Rs.5 crore The Board of Directors of every company for which the CSR provisions apply must ensure that the company spends in every financial year  at least 2% of its average net profits  made during the i mmediately preceding three financial years  as per its CSR policy. If the company has not completed three financial years since its incorporation, it must spend 2% of its average net profits made during the immediately preceding financial years as per its CSR policy.

18. Forms of Business Organisations Sole Proprietorship –  This is the traditional and popular form of business organization. Its formation is simple, and the owner controls the complete operations of a business and is liable for all financial burdens and debts. A long as they are the only owner, they have the right to operate any category of business. These businesses operations include. Shop or retail business Home-based company Individual consulting firm

19. ….. Partnership –  In partnership, two or more individuals come together to start a business. Each individual gives their share of capital, property, employment or experience, and expects some profits or losses from the business share. All the partners must report their percentage of share on the tax return even if it’s not distributed. In a partnership business, partners are not defined as employees, so taxes are not retained from any distributions.

20. Partnership Deed Partnership deed is a partnership agreement between the partners of the firm which outlines the terms and conditions of the partnership between the partners. The purpose of a partnership deed is to provide clear understanding of the roles of each partner, which ensures smooth running of the operations of the firm.

21. Registration of Partnership Deed All the rights and responsibilities of each member are recorded in a document known as a Partnership Deed. This deed can be oral or written; however, an oral agreement is of no use when the firm has to deal with tax. A few essential characteristics of a partnership deed are : The name of the firm. Name and addresses of the partners. Nature of the business. The term or duration of the partnership. The amount of capital to be contributed by each partner. The drawings that can be made by each partner. The interest to be allowed on capital and charged on drawings. Rights of partners. Duties of partners. Remuneration to partners. The method used for calculating goodwill. Profit and loss sharing ratio

22. Partnership Deed Contents Name of the firm as determined by all partners. Name and details of all the partners of the firm. The date on which business commenced. Firm’s existence duration. Amount of capital contributed by each partner. Profit sharing ratio between the partners. Duties, obligations and power of each partner of the firm. The salary and commission if applicable that is payable to partners. The process of admission or retirement of a partner. The method used for calculating goodwill. The procedure that must be followed in cases of dispute arising between partners. Procedure for cases where a partner becomes insolvent. Procedure for settlement of accounts in the event of dissolution of a firm.

23. Importance of partnership deed It controls and monitors the rights, responsibilities and liabilities of all the partners Avoids dispute between the partners. Avoids confusion on profit and loss distribution ratio among the partners. Individual partner’s responsibilities are mentioned clearly. Partnership deed also defines a remuneration or salary of the partners and working partners. However, interest is paid to each partner who has invested capital in the business.

24. Limited Liability Partnership A sort of business partnership where all the liabilities a person has been restricted to the money he/she invests only. This means that in case the person is unable to get profitable returns, creditors cannot seize their personal assets.  Partners of the partnership firms possess unlimited liability for their total debts and legal consequences. In this, their assets are liable to get attached to meet the debts and liabilities of the firm. However, the LLP formation solved this issue . LLPS have all the primary features of a partnership firm, except that of the unlimited liability of the partners involved and same legal entity status. Also, llps include legal existence and the identities are separate from their partners. 

25. … The Limited Liability Partnership Act was passed by the Parliament of India in the year 2008 for governing the LLP businesses in the country. The Section 2 of this law states that the LLP is a type of partnership which is registered under this act. Also, the LLP agreement refers to the written agreement between either the LLP partners or the LLP itself and its partners. This agreement tends to define the duties, liabilities, rights and powers of the partners in the LLP . Can a private entity be converted to LLP?According to the provisions of the Act, it is possible for a private entity or firm to transform into LLP. any unlisted public company can do this at any given time. 

26. Hindu Undivided Family Business Hindu Undivided Family business is a precise kind of business structure found only in India. This is one of the classical methods of business structure in the nation. It is administered by the Hindu Law. The source of membership in the company is birth in a family and 3 consecutive generations can be members of the company . The business is managed by the head of the family (eldest member) and he is called Karta. However, all the members hold equal ownership over the property of an ancestor and they are called as co- parceners . It refers to a form of business organization which is owned and carried on jointly by the members of the Hindu Undivided Family (HUF). It is also known as Hindu Undivided Family Business.

27. Characteristics of Joint Hindu Family Business Formation There should be at least two male members in the family to form a HUF. Ancestral property should have been inherited by members of HUF. All of the members enjoy this property and have an equal share in that property. Thus, any child taking birth in that family becomes a member of the HUF. There is no requirement for an agreement to become a member. Liability There is limited liability of all the members or co- parceners in the Hindu Undivided Family business. All the co- parceners have equal rights and shares in the property of Hindu Undivided Family business The Karta has unlimited liability.

28. ….. Control Karta is the person who has full control over the Hindu Undivided Family business. Karta can take advice from all the members but he is not bound to accept their decisions. Continuity After the “Karta” is deceased, the very next eldest member takes up the position of Karta in Hindu Undivided Family business. The business can be divided and ended up by the mutual consent of the members. Minor Members The person who has taken birth in Hindu Undivided Family can be a member of the family business. Therefore, a minor can also be a member of the family.

29. Cooperative Society A co-operative society is a voluntary association of individuals having common needs who join hands for the achievement of common economic interest. Its aim is to serve the interest of the poorer sections of society through the principle of self-help and mutual help. The main objective is to provide support to the members. Nobody joins a cooperative society to earn profit. People come forward as a group, pool their individual resources, utilise them in the best possible manner, and derive some common benefit out of it.

30. … A Co-operative Society can be formed as per the provisions of the Co-operative Societies Act, 1912. At least ten persons above of 18 years, having the capacity to enter into a contract with common economic objectives, like farming, weaving, consuming, etc. can form a Co-operative Society. Cooperative Societies Act is a Central Act. However, ‘Cooperative Societies’ is a State Subject (Entry 32 of List II of Seventh Schedule to Constitution, i.e. State List). Though the Act is still in force, it has been specifically repealed in almost all the States and those States have their own Cooperative Societies Act.

31. … If object of the society is creation of funds to be lent to its members, all the members must be residing in the same town, village or group of villages or all members should be of same tribe, class, caste or occupation, unless Registrar otherwise directs. The provision of minimum 10 members or residing in same town/village etc. is not applicable if a registered society is member of another society. The Statement of Objects and reasons states as follows : Cooperative Society can be established for purpose of credit, production or distribution. Agricultural credit societies must be with unlimited liability. Unlimited society is not best form of cooperation for agricultural commodities. Unlimited society can distribute profits with permission of State Government.

32. …. The last word in name of society should be ‘Limited’, if the Society is registered with limited liability. If a society has limited liability, any individual member of such society cannot have share capital more than onefifth of total capital. An individual member cannot have interest in shares exceeding Rs 1,000. This restriction of 20% shares or Rs 1,000 shares value is not applicable to a registered society which is member of another society. Thus, if a registered society is member of another society, it can hold shares exceeding 20% or exceeding Rs 1,000 in value.

33. … Registrar, after inspection or inquiry, or on application received from 75% of members of society, may cancel the registration of society, if in his opinion, the Society should be dissolved. Any member can appeal against the order of Registrar within two months to State Government or other Revenue Authority authorised by State Government. If no appeal is filed within two months, the order of dissolution shall become effective. If appeal is filed, the order will become effective only after it is confirmed by appellate authority. Although all types of cooperative societies work on the same principle, they differ with regard to the nature of activities they perform.

34. Features of Cooperative society Voluntary Association:  The membership of co-operative societies is voluntary. Anyone interested is free to join a co-operative society and leave the society any time after giving proper notice. Equal Voting Rights:  A co-operative society is based on the principle of “one man one vote”. A member of the cooperative society has only one vote irrespective of the number of share(s) held by him and so co-operative society runs on democratic principles. Separate Legal Entity:  A cooperative society needs to be registered under the Cooperative Societies Act. This registration will result in the co-operative society being a separate legal entity. It can make agreements as well as purchase and sell property in its own name and sue and be sued in its own name.  Service Motive:  A cooperative society’s main objective is to provide service to the members and not to maximize profits.  Distribution of Surplus:  Members are paid dividends & bonuses out of the profits of the co-operative society. 

35. Consumer Cooperative Society These societies are primarily for consumers who wish to buy household goods at lower prices. The society buys goods or products in bulk amounts directly from the producer on wholesale rates and sells them to the members, thus eliminating the need for a middleman. The purchased goods are sold to members and non-members in cash. Capital is raised by issuing low denominational shares to the members who also get dividends on the shares. 

36. Producer Cooperative Society Also known as industrial co-operatives, these types of cooperative societies look out for the small-scale producers in a cut-throat market scenario. Production and distribution are handled from within the co-operative. These producers could be farmers, ayurvedic herbal medicine producers, organic produce sellers, handicraft or handloom producers, artisans, etc. Raw materials, ingredients, tools, processing units, etc. needed for the manufacturing or producing the goods are obtained by the members directly, provided to the producers and the final output is distributed to the buyers/non-members without a middle link. 

37. Cooperative Credit Societies These are urban and rural financial societies that provide loans to members at low rates of interest, protecting the members from massive debts to traditional moneylending agencies. They serve a basic but highly personalised banking role in a sense. They have deposit schemes in forms of saving accounts, FD, RD, pension schemes, etc. The money procured is then given on loans to members as personal loans, agricultural loans, housing or vehicle loan, etc. These societies are regularly aided by state and national government subsidies and funding. Some examples are Teachers Co-op Credit society, State Electric Board Employee Co-op Credit Society.

38. Marketing Cooperative Society Mostly for the benefit of farmers, these societies function to market the produce profitably at the best possible prices, increase the bargaining strength of the farmers and protect them from the trials of individual selling and market exploitation. The profits are distributed on the basis of the contribution of produce made. They also educate the farmers on market prices, stabilise supply against demand, help them get loans, and help with grading, pooling, processing and procurement of produce and provide safe storage and reliable transportation facilities. Some good examples are Milk Co-operatives in Gujarat, Maha Grape, Cotton Marketing Co-ops.

39. Housing Cooperative Society Housing co-ops are a type of society that provides affordable housing to the middle and low-income groups. One becomes a member by purchasing shares in the cooperative. Instead of owning the real estate, the members own a share in the entire corporation, which in turn gives them a house to reside in. Such societies are commonly found in urban and semi-urban cities. They construct the residences or flats and provide them to the members to live in and collect the money in instalments. In other cases, they provide the land to the members who themselves construct their own residences

40. Cooperative Farming Societies The financially challenged farmer may not be able to maximise his agricultural output individually and earn optimum profits. Farming co-ops are a way for farmers to retain the right to their land, yet pool together and consolidate land, livestock and equipment while earning a share in the total output as per the contribution made. In better farming co-ops, members co-operate for pre-sowing, seeds, fertilisers and equipment, and joint selling, but cultivate the land separately. In joint farming, they pool in the land as well. Co-op tenant farming is the type in which the society leases the land to the farmers and collects the rent. In collective farming co-ops, farmers are members for life and cannot remove their land but can transfer the land rights to another.

41. Advantages of Cooperative S ociety A co-operative society is operated on the policy of democracy. It indicates that every member has the same rights in conducting the operations in society. Members with capital power cannot control the management by buying a bulk of shares. The surplus received by the cooperative societies is divided in an equal way between members. Hence all the members of the cooperative society are benefited. Moreover, society is 10% amount of the surplus can be used for developing the welfare of the people in a cooperative society. Co-operative societies trade in great amounts and quantities straight from the producers or to the customers. Products are prepared and ranked before they are exchanged. A great amount of sale and purchase assure reasonable prices and high-grade quality. When the aggregate turnover of a Cooperative Societies in a financial year exceeds Rs.12 lakh they have to pay GST. They become liable for GST Registration. The cooperative society has to pay low tax. So they can easily develop the movements or campaigns in society. The fact about the co-operative society is that they are non-profit society. They only work for the welfare of society. Therefore, the government gives various privileges and concessions in terms of tax. The ITR Filling process is way simpler to the cooperative society in comparison to others. The council and goverment keep viewing the development and promote the growth of cooperative societies. They spread all support and facilities to them at their best. Goverment renders loans at low-interest rates, gives subsidies etc.

42. Company form of Businesses Company Registration is mandatory under the Companies Act of 2013. This blog will guide you through the complete company registration process in India, with detailed explanations on costs, documents, and post registration compliances . Understanding the Company Registration process is extremely crucial to legally incorporate and operate a company in India. The process seeks to provide a distinct legal identity to the company which will benefit it in multiple ways. For instance, the company can have a separate bank account in its name to carry out all business transactions. Moreover, it is considered as a separate taxable entity under Income Tax Act. This limits the liability on the owners to use their financial credentials for business operations.

43. …. As a legal entity, the company can sign contracts and file suits in its own name, relieving the owners from using their personal names for these purposes. The biggest advantage, however, is the transparency in company’s data and financial information . All of the company’s data is publicly available for viewing and inspection on the MCA portal. This makes the entity more credible and reliable for investors, customers, creditors and Government agencies alike . Private Limited Company is a Corporate Structure established and incorporated under the Companies Act of 2013. Section 2 of the Act defines a Pvt Ltd Company as a Company which restricts the rights to transfer its shares and limits the number of members to 200. Let’s simplify this definition a little.

44. …. Private Limited Companies are corporate structures co-owned by multiple shareholders who hold a part of the Company’s shares. The transfer of these shares is however restricted. The shares of a Private Company cannot be freely and publicly traded on Stock Exchange Platforms. Moreover, the general public is forbidden to hold the shares of a Private Limited Company. Coming to the second part of the definition, a Private Limited Company limits the maximum number of its shareholders to 200. This indicates that it cannot have more than 200 shareholders at a time. However their minimum number is restricted to 2.

45. … Private Limited Company:  Private Limited Companies are established and incorporated under the Companies Act of 2013.    The minimum number of shareholders required to set up a Private Limited Company is 2. However, their maximum limit is capped at 200. Both individuals and non-individual entities can become shareholders in a Private Limited Company. They can either be Indian or Foreign entities. There is no restriction on the nationality of these shareholders.  Types of Private Limited Company

46. … Small Company:  A Small Company is a Private Company established and operated with limited capital under Section 2 (85) of the Companies Act. As per the recent amendments of the Ministry of Corporate Affairs, a small company cannot have a capital investment exceeding Rs.4 crores. Even if an upper limit is prescribed by the Government, the same would not exceed Rs.10 crores. The definition also places restrictions on the turnover of a small company. The turnover of a small company cannot exceed Rs.40 crores. Further, if a greater limit is prescribed by the Government, the same cannot exceed Rs.100 crores.

47. … One Person Company:  A One Person Company is a special type of Private Limited Company. The Companies Act restricts the number of its shareholders to 1. This sole owner is entitled to 100% shareholding and profits of the One Person Company. Moreover, unlike a Private Limited Company, the shareholder of a One Person Company must be an Individual Indian Citizen who is above the age of 18 years. Recently, the Government has removed the restriction previously placed on Non-Resident Indians to establish an OPC. So, both Indian Residents and Non-Residents can incorporate an OPC in India .

48. Company Registration Process in India

49. … Step 1: Acquire DIN & DSC of Promoters All directors of a Private Limited Company must have their DIN or Director Identification Numbers before the process of company registration begins. To apply for Director Identification Number, applicants can submit form DIR-3 on the MCA website with documents like PAN, Address Proof and Photograph. Also, the authorised director must have a Digital Signature of Class 3 to certify the online company registration application. 

50. Step 2: Select & Reserve Company Name The name of your company cannot just be a random word. It must represent your brand and business activity to be recognizable by your customers appropriately. Additionally, the name must also comply with the MCA guidelines and must not be similar or identical to the name of an existing Company, LLP, or a registered trademark. You can approach us to check the validity of your company’s name before registration. After you’re sure that your company’s name is valid, get it approved and reserved by the ROC . For reserving the company’s name, an application in SPICE Plus PART A form can be filed to the ROC. The applicant can propose two names per application at a fixed government fee of Rs.1,000. After thorough examination of the proposed names, the ROC is going to reserve the one that’s valid and available for the company. Upon Name Reservation, the company receives a Name Approval Letter, valid only for the next 20 days. The applicant must make sure that the Company Registration process gets completed within the validity period.

51. Step 3: Draft MOA & AOA MOA and AOA of the Company are two important legal documents that must be submitted to the ROC for registration. These must be drafted on a stamp paper of appropriate value, and signed by all shareholders in the presence of a Public Notary. The Notary will then stamp the documents on which stamp duty and notary charges will have to be paid. MOA, also called a company’s charter, contains its basic legal information. AOA on the other hand contains the rules and regulations of internal management .

52. Step 4: File SPICE Plus Application SPICE Plus or INC-32 is a web-based application submitted for company registration in India. It is divided into PART A & PART B. As mentioned earlier, PART A is filed for Name Approval of a Company. PART B, on the other hand, is an integrated application used for company incorporation. You can fill out this form and submit it on the MCA website to get your company registered by the ROC. We have discussed the documents and cost of its filing further in the blog.

53. Step 5: Get Company Registration Certificate The SPICE Plus application, with all the documents and fees, gets examined by the ROC. Upon successfully verifying all the information, the ROC proceeds with the Company Registration process. It registers the company and issues a Certificate of Registration in its name. The Certificate of Registration contains the CIN or Corporate Identification Number as the unique identifier of the company. Also, along with the Certificate, the Company is allotted a PAN and TAN in its name.

54. Documents Required in Company Registration Process Documents of Promoters:  Promoters are the first shareholders and directors of a Company who have an interest or contribution in its foundation. All these promoters are required to submit a few personal documents for company registration. These include their PAN cards, Adhar Cards, latest utility bills as Address Proofs, and passport size coloured photographs. Documents of the Registered Office:  Registered Office of the Company is the address with which the company gets registered or incorporated. The Proof of Address of this location has to be submitted for company registration. You can provide utility bills in the name of the company for this purpose. Make sure that such bills are recent and not older than 2 months from the date of application. Aside from this, the office property owner must issue a No Objection Certificate in the Company’s name. 

55. … Legal Drafts & Forms:  Legal Documents like the Company’s Memorandum of Association (MOA) and Articles of Association (AOA) also have to be drafted and submitted for Company Registration. While MOA contains the basic and foundational legal details of the company, AOA documents all of its internal rules and regulations. These documents must be stamped, notarised and signed by all the shareholders. Other than these, DIR-2, INC-9, and INC-14 forms have to be submitted. DIR-2 confirms the director’s consent to act as the same in the company. INC-9 and INC-14 contain declarations by first directors and a practicing professional respectively.

56. Compliances Post Company Registration Process Obtain Company’s PAN & TAN:  You receive the Company’s PAN and TAN immediately after the company registration process is complete. There is no need to apply for the same separately.  Open the Company’s Bank Account:  Within 30 days from the date of incorporation GST Registration:  Get GST Registration as soon as the company becomes liable to pay GST  Shops & Establishment Act Registration:  Within 30 days from the date of incorporation Professional Tax Registration:  Within 30 days from the date of incorporation, if applicable in the state.  1st Board Meeting:  Within 30 days from the date of incorporation 1st Annual General Meeting:  Within 90 days from the date of incorporation.  Appointing of First Auditor:  Within 30 days from the date of incorporation Allotment of Stamped Share Certificates to all shareholders:  Within 60 days from the date of incorporation Declaration for Business Commencement (INC-20A Filing):  Within 180 days from the date of incorporation

57. What is a Memorandum of Association (MOA)? MOA (full form Memorandum of Association) is an important legal document that is used in the incorporation application. According to the Section 2(56) of Companies Act, 2013; ‘memorandum’ means the Memorandum of Association of a company as framed originally and altered regulatory in pursuance of any earlier company act or of this particular act. It is an important document for the registration of a company. This document defines the purpose for which the organisation was founded. Through this document, the company establishes its authority and the terms under which it works . A memorandum helps shareholders in understanding about the business before they invest in the company’s stocks. Through MOA, shareholders can analyse the scope of investing in a business.

58. Components of Memorandum of Association Name clause:  This is a clause through which the name of a company is specified. These names should not be not the same as any existing company. If the company is public, it should include the word ‘limited’ in its name. If it is a private company, then it should include ‘private limited’ in its name.  Registered Office Clause:  In this clause, the name of the state where your registered office is situated. Through this, the jurisdiction of the Registrar of Companies is determined. Company has to inform the Registrar of Companies about its registered office location within 30 days of incorporation or commencement.  Object clause:  This clause mentions the objective of formation of the company. Object clause defines the purpose and range of activities. It includes the main business of the company, objectives that facilitate the main objective and any other objective. Liability clause:  This clause states the responsibility of members of a company. If the company is unrestricted, then the liability is unlimited for a member. When a company is limited by shares, liability is limited by balance outstanding on their shares. If the company is limited by guarantee, the responsibility of members is limited by the amount that each partner agrees to pay.  Capital clause:  It mentions the share capital that has been used for registering the company. This clause mentions shares types, number of shares of every type and face value of share. Those companies that need to be listed should have a prescribed face value of shares. Other companies that do not require to be listed can assume any face value based on multiple factors.   Subscription clause:  This clause mentions the objective of every shareholder for the incorporation of the company. This clause also states the number of shares that every subscriber is taking up. 

59. What is an Article of Association (AOA)? Article of Association (AOA) is a document that provides details on the purpose and regulations of the company’s operations. It is considered a user manual as it outlines the methodology that the company adopts for acquiring day-to-day tasks. The document has a universally similar format. It mentions the purpose, organization, share capital and provisions regarding shareholder meetings.  Through the Articles of Association, one can understand a lot about a company. This includes the method of issuing shares, paying to divide, audit financial records, and providing voting rights. It serves as the primary source that authorities have to assess and grant a separate legal identity to the company from its stakeholders. 

60. Components of Article of Association Company Name:  In an Article of Association, it is important the name of the company is present. This name should be distinguishable to establish the company as a legal entity. The name must include words to specify the type of company, such as ‘Ltd.’ or ‘Inc.’. Purpose:  Another important component of this charter document is specifying the purpose. They need to elaborate on this purpose for stakeholders to understand what the company aims to achieve in the long term. It can be a general purpose statement or detailed information as per the rules of jurisdiction.  Capital structure:  It is also important to state the method used for organizing the capital structure. This represents the manner in which company confers stakes in exchange for the support of stakeholders.  Corporate governance:  An Article of Association also mentions the rights and responsibilities of shareholders. The liability of different members in the company varies as per the jurisdiction. Their indemnity is outlined within the AoA . The rules are legally binding once set in writing. The document may also include the frequency of meeting, dispute resolution, quorus , voting and participation.

61. Prospectus A prospectus is 'any document described or issued as a prospectus including any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for the subscription or purchase of any shares or debentures of a body corporate'. It is issued by a public company which is seeking to raise the required funds from the public by means of issue of shares and debentures. It is not necessary for every company to file a prospectus. A statement in lieu of prospectus is filed with the Registrar of Companies Act instead of Articles of Association. Private companies are not required to file a prospectus.

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