Types of Director in Company

There are various types of Directors appointed in a company for its management of the company. The types of Director in Company are as follow:

1)      First Directors:

Subject to any regulations in the Articles of a company, and the Memorandum of Association, the shareholders or the subscriber shall be deemed to be the Directors of the company till the time Directors are duly appointed in the annual general meeting.

2)      Managing Director:

A “Managing Director” manages the affairs of the company subject to the control of Board of Directors. Such power is entrusted either Articles of Association of a Company or an agreement with the company or a resolution passed in its general meeting by its Board of Directors.

3)       Rotational Directors:

In case of public company or of a private company at least two-thirds of the Directors have to retire by rotation. It refers to such Directors who have to retire (and may, subject to the Articles, be eligible for re-appointment) at the end of his or her tenure.

4)       Whole-time Director:

Whole-time Director is a full-time employment of the company. Such directors are well aware of the company operations and more dedicated in company’s business.

5)      Ordinary Director:

An “Ordinary Director” is a director who takes part in Board meeting and contributes in matters put before the Board. They take part in the meetings of the company. Such directors neither are whole time director or managing director of company.

6)      Additional Director:

An Additional Director is appointed subject to the provisions of the Articles of Association of a Company.  It is the discretion of the Board to appoint Additional Directors. It shall hold office only up to the date of the next annual general meeting of the Company. The no. of additional director along with the board of director shall not exceed the maximum strength fixed for Board of Director by Article of Association.

7)      De Facto Directors:

A ‘de facto director’ is a person who occupies the position of director of a company but who has not been actually appointed as Director but act as a Director. Such persons, although not formally appointed, for the purposes of section 2(1) of the Companies Act, will be treated as a director of the company.

8)      Alternate Director :

When an original Director is absent from the company then Alternate Director can be appointed who acts on a behalf of Director. He is appointed by the Board of Directors of the company and the time period must not be less than 3 months. Such Alternate Director will hold office until such period that the Original Director would have held his or her office.

9)      Professional Director:

These are appointed by Board of Directors for possessing professional qualifications and he /she may not have any pecuniary interest in the company. They are appointed for any expert opinion or advice in any decisions taken keeping in view the interest of company.

10)  Nominee Director:

They can be appointed by certain shareholders, third parties through contracts or by the Central Government in case of any mismanagement.  Nominee Directors must be particularly act in the best interests of the company and its shareholders as a whole. In case of a One Person Company a nominee Director is nominated by the sole Director of the One Person Company to manage the OPC in case of death or incapacitation of sole Director.

11)  Executive Directors:

These Directors of the company who are involved in the day to day management of the company. They have specific titles within the company, for example, managing director, finance director, marketing director etc.

12)  Non-Executive Directors:

They are not involved in the day to day management of the company and are appointed from outside the company. The reason behind appointing non-executive directors is that they can bring an independent voice and perspective to the board.

Author: This blog is written by  Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant.

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Advance Tax

Advance Tax means part payment of one's tax liability before the end of the fiscal year i.e. 31 March. These payments should be payed in advance to the government on your income throughout the year as you earn this Income.

Applicability -If entire tax liability exceeds Rs 10,000 in a financial year.

Senior citizens, persons who are 60 years older or more and do not run a business, are not liable from paying advance tax.

Tax Deducted Source (TDS) - When a person receives salary, Interest, the person paying will subtract TDS before reimbursing the person. If the TDS deducted is higher than the tax due, then the person may not have to pay advance tax.

 In simper sense a salaried employee, need not pay advance tax as employer deducts tax at source (TDS). Advance tax is applicable when an individual has sources of income other than his salary.

Freelancers

 Freelancers almost at all times have advance tax due. This is due to the fact that when freelancers get paid, TDS deducted by the employer paying the freelancer is generally not enough.

Due Dates of payment of Advance Tax (For individuals and corporate taxpayers):

           

On or before 15th June	15% of advance tax
On or before 15th September	45% of advance tax payable
On or before 15th December	75% of advance tax payable
On or before 15th March	Up to 100% of advance tax payable

Filing of AT:

Individuals may pay advance tax using tax payment challans at bank branches authorised by the Income Tax (I-T) Department.  There are 926 branches in India that can accept advance tax payments. Individuals may also pay it online through the I-T department or the National Securities Depository.

Calculation of Advance Tax:

• Estimate Freelancing Income: Sum up the expected income of the person.

• Subtract Expenses: From this income, reduce your expenses which are directly linked to the freelancing work. For e.g. telephone costs, internet connection, rent of your workplace, depreciation on computers, travel expenses, electricity etc.

• Sum up all other Income: include expected income from other sources such as category like House Property, Interest Income, etc.

• If the remaining Tax Due exceeds Rs 10,000, you are required to reimburse Advance Tax as per the due dates mentioned above.

Author: This blog is written by  Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant.

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PATENT

PATENT RIGHTS IN INDIA

The Patent system in India is governed by the Patents Act, 1970 & The Patents Rules 1972.

IT an exclusive right granted for an invention that provides a new way of doing something, or offers a new technical solution to a problem. It is a statutory right granted for a limited period of time to the person  by the Government for an invention, in exchange of full disclosure of his invention and excluding others from making, processing, using, selling  the patented product without his consent.

A patent is a grant by the India patent office.  Through this the patent owner maintains a monopoly for a limited period of time on the use and development of an invention.

For an invention to be patentable it should meet the following criteria –
i) Novelty i.e. some part of it has a new development and has not been published in India or elsewhere before the date of filing of the patent application in India.

ii) Inventive Step: If someone who was skilled in that particular field would consider the invention to be an unexpected or surprising development on the invention date 

iii) Industrial Applicability: Invention should be useful, such that it can be used in an industry.

Procedure of Patent Registration

Patent Documents can be filed either through online or at the patent office in respective jurisdiction: Kolkata, Delhi, Mumbai, and Chennai.

For online filing

Pre-requisite - Login ID & Password; Digital Signature ,Valid Debit/Credit/Net Banking facility for transaction.

 E-Filing Procedure

1. Form 1

2. Provisional/Complete specification in Form 2

 3 Description Claims

 3. Drawings (in pdf format);

 4. Figure of Abstract (in jpg format)

 5. Statement and Undertaking in Form 3

 6. Power of Attorney in Form 26)

7. Declaration of Inventorship in Form 5

8. Form 28 (in case the applicant is a small entity);

 9. Letter/documentary proof to prove the small entity status (if any);

10. Certified true copy of the Priority document (in case priority is claimed) in original, to be submitted within 6 months of filing the Application;

11. Priority Details

 12. Requisite Statutory fees

Statutory fees- For filing patent application

In case of Natural person- 1, 600

In case of small entity- 4, 000

In case of large entity- 8, 000

2. PUBLICATION - A patent application will be published automatically in the official journal after expiry of 18 months from date of filing of the application containing title, abstract, application no. and name of applicant.

Statutory fees-

In case of Natural person- 2,500

In case of small entity- 6,250

In case of large entity- 12,500

3: OPPOSITION (IF ANY)

1.      Pre grant Opposition - Upon publication but before the grant of patent, any person,  on different grounds may file a pre grant opposition, in writing, represent by way of opposition to the Controller against the grant of patent. However the opposition will be taken by the patent office only after the filing of Request for Examination. It may be filed within 3 months from the date of publication of the application.

2.       Post grant Opposition -Upon grant of patent any interested person, on different grounds may file a post grant opposition to the Controller against the grant of patent. Time limit: Within one year after the grant of a patent.

4: REQUEST FOR EXAMINATION

No Request, No Grant In Form 18 within period of 48 months from date of filing or priority, whichever is earlier.

5: FIRST EXAMINATION REPORT

After proper examination of patent application on the criteria of novelty, inventiveness and industrial application, the Patent Examiner will issue a First Examination Report (FER) and will send along with the application and specification to the applicant or authorized agent.

6: AMENDMENT OF OBJECTIONS BY THE APPLICANT

The issued FER give an opportunity to the applicant to file a response and overcome the objections raised by the Examiner. Time limit: Within 12 months from the date on which the First Examination Report has been issued to the applicant.

7: GRANT OF PATENT

 The Controller will grant the application upon satisfactory response by the applicant to overcome all of the objections raised in the FER. On the grant of a patent, the application will be accorded a number, called serial number in the series of numbers accorded to patents under the Indian Patents Act, 1970.

8: RENEWAL FEES

1. To keep a patent in force, the renewal fees shall be payable at the expiration of the second year from the date of the patent and the same shall be remitted to the patent office before the expiration of the second or the succeeding year.

2.The number and date of the patent concerned and the year in respect of which the fee is paid shall be quoted.

3. The annual renewal fees payable in respect of two or more years may be paid in advance.

Key Points

·         Patent application should be file before publishing or disclosing the invention to public.

·         A patent owner cannot exercise his rights in a territory outside India.

·          It prevents others from copying invention without permission of the owner.

·         If an inventor wants protection in other countries then a separate application has to be filed for each country to obtain the worldwide right of patent over his product or process.

·          It gives protection for a period of 20 years in India and is renewable.

·          The person Get royalty by licensing patent for others.

Author: This blog is written by  Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant.

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Trademark Registration Process

Registration of trademark provides a company or an individual a complete ownership of the mark and protects it from the misuse by any third person.  It gives legal right to take appropriate action against third party against an infringement of trademark.

The symbol ® indicates that specific trademark is registered by the owner.

 The symbol ™ indicates trademarks for which a registration application is filed.

 But if any person uses these symbols to deceive the market or by unregistered trademarks or in cases where no application for registration is filed it can lead to serious offence.

 

Trademark registration has many benefits:

1. It will preserve a trademark for generations.

2. It gives the ability to establish a right to the trademarked word, logo, and sound, graphic or even color combination.

3. It protects the “mark” by preventing similar names from being registered by other businesses operating in the space.

4. It develops a unique identity that associate the people with the specific brand.

 Procedure for filing trademark in India is as follow:

1.      Find the Trademark

The first step is the selection of a trademark.

search the trademark records, registry and ensures that the trademark does not resemble the registered mark.

It can be done online or through the trademark office.

The applicant can consult an experienced lawyer for an exhaustive search.

After thorough research, the application for registration in the trademark can be made in the prescribed form.

2.  Form TM-1

The next step is the filling of form TM 1. The application for trademark can be made both online and offline. However, for online application, a Class III Digital Signature is required. For offline application, application to the Offices of the Trademark Registry is required.

The application for registration of trademark must contain the following particulars:

•         “Mark”

•         Trademark owner’s information,

•         List of goods or services for which the trademark will be used.

Once the application is made, the Registrar will search for the uniqueness of name and will check the registered marks and pending applications to ascertain whether any such marks exists.

In case of any objection by the registrar for acceptance of application or to accept the application with certain term and conditions, amendments, limitations, etc., the same is communicated in writing to the applicant and the applicant has to revert back regarding their rectification within period of three months.

 

3.   Use of Trademark 

Now the Mark can be use with ™. But to use ® symbol, it would take up to 2 years if everything goes smoothly.

4.   Examination Report

It takes atleast 3 to 6 months to complete. The process of questioning the applicant claim to the trademark starts. First the government will verify whether the application has any objections: if there is:

No Objection:  then a letter of acceptance will be issued commonly known as TLA.

An Objection: If there is objection raised due to following reasons:

•         If a proposed trademark is similar / identical or copy of already registered trademark.

•         If a word use is unlawful and may hurt the sentiment of particular religion /religions.

 If a government discarded the objection, the trademark will be eligible for advertisement in trade Mark journal.

5.   Advertisement in Trade Marks Journal

It took 3 to 6 months to complete this. It is Free, but legal fees can be charged in case of opposition.

The trademark will be advertised in trademark journal and It will give third party and opportunity to oppose the published trademark. 

The entry of a trademark will entails the date of registration, list of goods or services for which it is registered and other particulars.

The trademark registration will be 10 years and can be further renewed.

If no one opposes the particular trademark then in four month of its publication, a trademark registration certificate will be issued within 6 to 10 months.

if there is any opposition by third party , the process of obtaining certificate may extend to many more months .Both parties will get the opportunity to be heard.

6.   Trademark Registration 

Approximately average months of nine months time period will be required to issue a trademark certificate after publication of advertisement in Trademark Journal. The registered trademark is valid for a period of 10 years and it can be renewable.

Author: This blog is written by  Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant.

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Private Limited Company

Private Limited Companies are those companies which are privately held by the people. They are mostly preferred as a common business organization in India. Shareholders may operate the business themselves, or hire directors to manage the company on their behalf. The main characteristics of a company are as follow:

1.      Minimum 2 and maximum 200 members are required in Private Limited Company.

2.      It shall be started  with minimum paid-up capital  of Rs.1,00,000

3.      It shall have minimum two directors. 

4.      Transfer of share can be restricted as per Articles of the company.

5.      It can take loan from shareholders, directors and relatives of directors but not from the public. Shares cannot be issued to public.

6.      Reduced compliance burden as per company law.

7.      The words 'Private Limited' should be suffix or must come after the name of company. Many of the restrictive provisions of Companies Act are not applicable to Private Limited Company allowing flexibility and convenience unlike Public Limited Company.

Types of Private Limited Company

In accordance to the varying level of liability to the shareholder and other members, promoters can choose to have different type of Private Limited Company. Types of Private Limited Company are as follow:

Company Limited by Shares	Company Limited by Guarantee	Unlimited Companies
In this the liability of the members is limited by the memorandum to the amount i.e. paid up share capital, if any, unpaid on the shares respectively held by them.	The liability of members is limited to such amounts as they may respectively undertake by the memorandum to contribute to the assets. However, in case when the company is winding up its business, they may be asked to pay for the liabilities.	There is no limit to the liability on members. The liability covers the entire unpaid amount, debts and other payables. If company wound up, the creditors can enforce its shareholders to pay for the company debts and liabilities. Since it is still a separate legal entity, hence members of unlimited company cannot be sued individually.

Advantages of a Private Limited Company

·         Limited Liability:

As business entity grows, the need for funds grows too. Hence, businesses have to borrow funds. In private limited company, the extent of liability is limited to the amount invested in starting the business. They are not personally liable to pay the debt.

·         Access to Funding: 

Private limited companies easily accommodate equity funding through venture capitalist, angel investors as they are unlikely to invest in any other structure.

·         Debt-taking Capacity: 

A private limited company can take funds from Banks, debentures and convertible debentures.

·         Greater Credibility:

They have greater credibility as they have to inform about the structure, directors, members, Article and Memorandum of Association and necessary changes to the Ministry of Corporate Affairs. Such information is available in internet in public domain making the business entity more credible as compared to partnerships and proprietorships 

·         Easy Exit: 

Private limited companies can be sold or transferred, either partially or in full, to another individual or entity without any disruption to the current business.

·         Capital:

More capital can be raised as there is no limit on number of shareholder.

·         Business startup:

Minimum number of shareholders need to start the business are only2.More capital can be raised as the maximum number of shareholders allowed is 50.

·         Continuity of existence:

Business is not affected by the status of the owner. It continues to be remain in existence.

·         Brand Value: 

Company’s brand value will get increased because people come to know about the company very well.

·         Tax Advantages:

Private limited companies enjoy tax advantages. These companies pay corporation tax on their taxable profits and tend to be exempt from higher personal income tax rates. It opens the door to more tax-deductible costs and allowances redeemable against profits.

·         Managing Shareholder Affairs:

a) Transfer of Shares: Shares in any form of Company are normally freely transferable. However, in a Private Company the articles can lay down certain restrictions and also the methodology in which they can be transferred.

b) Convening General Meetings: A PLC necessarily has to give a notice of 21 clear days for conducting any general meeting, unless all the shareholders agree for a shorter notice. However, in case of a Private Company the articles can determine the period of notice, which is required for convening a general Notice, as well as the percentage of shareholders to consent for a meeting to be convened at a shorter notice.

Disadvantages of a Private Limited Company

·         The shares cannot be sold or transferred to anyone else without the agreement of other shareholders.

·         In PLC no one is allowed to invite public to subscribe to its shares.

·         The Growth may be limited because maximum shareholders in a PLC are only 50.

Private Limited Company - Incorporation

Any Company Registration start with indentifying the pre-requisites for incorporation and processing required documents for filing with concerned Registrar of Companies. Pre-requisites for company registration area s follow:

a)      Shareholders (Members)

Minimum Two Persons required.

Maximum members can exceed up to 200.

Member can be individual, LLP or any registered company  

b)      Directors

It shall have minimum Two Directors.

One of the directors must be Resident in India, i.e., stayed in India not less than 182 in the previous calendar year.

Proposed Directors shall have a Director Identification Number (DIN) issued by the Ministry of Corporate Affairs.

c)      Company Name

It consists of three parts i.e.

The Name Activity (Signify the industry) Private Limited Company.

The Registrar of Companies shall approve the name of company.

Minimum Share Capital- the Company shall have Rs 100000.

d)     Registered Office Address

At the time of registration of Company, temporary address along with the address of any of the directors can be provided. Although, after registration the company has to file the permanent business address with documentary proof of address, ownership etc.

e)      Company Objects

Objects of the Private Limited Company refer to proposed business activities. Private Limited Company objects shall be legal and shall not misuse or harm the society.The name of Company shall also signify the main, prerequisite objects. If the name of the Company is not describing a particular object, then the Company can have multifaceted objects. The objects are described under a Clause in Memorandum of Association of the Company.

f)       Digital Signature Certificate (DSC)

All documents are filed online with Registrar of Companies. Digital Signature certificate is the ultimate way to verify the authenticity of document. Hence, all the documents shall be authenticated by using a Digital Signature Certificate of the Director.

g)      Professional Certification

Services of professionals such as Chartered Account, Company Secretary, Cost Accountant is required to make necessary Certifications and declarations for incorporation of a Private Limited Company.

Incorporation of a Private Limited Company Process

A private limited company is most common form of business entity in India. It is easy to maintain and raise funds, offers limited liability to its members, offer flexibility, easy bank loan accessibility.  Following are the steps involved in the incorporation of private limited company

 

 1. Obtaining Director Identification Number (DIN) & Digital Signature Certificate

The First step is

ü  Obtaining Director Identification Number (DIN) for the proposed Directors in the Company. Documents regarding the same are

Identity proof, address proof, photograph, current occupation, email, no. education qualification, verification to be signed by the applicant.

ü  Obtaining Digital Signature for one of the Directors of Company.

 

2. Applying for the name

The promoters should propose one or more suitable name for the company but registrar have to select the name in case some names are identical or similar to registered business entities or trademark

ü  The name should not be similar or identical to any registered company or trademark.

ü  The name should not be one prohibited under the ‘Emblems and names Act, 1950’.

ü  The name of company must have suffix “Private limited Company “.

After submission of name, registrar will review and approve one of the name .It usually takes 3 to 5 working days to approve the name for company.

3. Drafting of MOA and AOA

MOA is the Memorandum of Association which covers the important provision of the company’s constitution. AOA contains rules and regulations governing the internal management of the company. It is the binding contract between the members of the company.

For drafting these, subscribers specify the name, occupation, address and sign the subscription pages of the MOA and AOA.

4. Filing for Incorporation of Private Limited Company

§  After the name approval, promoters should submit the application, prescribed fees and below said following documents to the registrar.

§  Declaration from Directors

§  Affidavits of the Directors

A declaration states   that the requirements of the Act and the rules framed there under have been compiled with. This declaration is required to be signed by an advocate of the or Supreme Court or an attorney or a pleader having the right to appear before or a High Court or a Chartered Accountant in whole time practice in India who is engaged in the formation of a company, or by a person named in the Articles as a Director, Manager or Secretary of the Company.

Besides the aforementioned documents, the company must provide relevant information regarding of its registered office within 15 days of registration or during filing of incorporation documents.

5. Subscribing to the Private Limited Company

As per the Companies Act 2013, subscriber must sign their names and must be subscribed to the shares of company incorporated. It means each subscriber must have at least one share of the company. Each subscriber should sign the memorandum in presence of at least one witness and must clearly state the following:

·         Address

·         Personal Description

·         Occupation

·         No of shares subscribed

·         Nature of shares etc.

Likewise, article of association should be signed. Both (Article and Memorandum of association) must be duly signed and stamped.

 

6. Certificate of Incorporation of Private Limited Company

After filing the above mentioned documentsand payment of necessary fess, the certificate for incorporation would be issued by the Registrar of Companies. Upon Incorporation, the company becomes a legal person separate from its incorporators.

  

Author: This blog is written by  Ms. Chanchal Sharma, a passionate blogger of Aapka Consultant.

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