{"id":5963,"date":"2019-08-16T10:16:38","date_gmt":"2019-08-16T04:46:38","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=5963"},"modified":"2022-02-08T14:21:08","modified_gmt":"2022-02-08T08:51:08","slug":"startup-funding-companies-compliance-in-india","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/","title":{"rendered":"Start-up Funding Companies Compliance in India"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e128fb18a4c\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e128fb18a4c\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#What_Is_Start-up_Funding_Companies_Compliance_in_India\" title=\"What Is Start-up Funding Companies Compliance in India\">What Is Start-up Funding Companies Compliance in India<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#BRIEF_INTRODUCTION\" title=\"BRIEF INTRODUCTION\">BRIEF INTRODUCTION<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#ELIGIBILITY_CRITERIA_FOR_STARTUP\" title=\"ELIGIBILITY CRITERIA FOR STARTUP\">ELIGIBILITY CRITERIA FOR STARTUP<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#LEGAL_ASPECTS_OF_STARTUP\" title=\"LEGAL ASPECTS OF STARTUP\">LEGAL ASPECTS OF STARTUP<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Introduction\" title=\"Introduction\">Introduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#What_is_the_matter_youre_addressing\" title=\"What is\u00a0the matter\u00a0you&#8217;re\u00a0addressing?\">What is\u00a0the matter\u00a0you&#8217;re\u00a0addressing?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#What_is_your_solution\" title=\"What is your solution?\">What is your solution?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Marketing_Plan\" title=\"Marketing Plan\">Marketing Plan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Projected_Financials\" title=\"Projected Financials\">Projected Financials<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Sources_of_Finance\" title=\"Sources of Finance\">Sources of Finance<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Incorporation_Related_Compliance_For_Start-up\" title=\"Incorporation Related Compliance For Start-up\">Incorporation Related Compliance For Start-up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Business_Licenses_For_Start-up\" title=\"Business Licenses For Start-up\">Business Licenses For Start-up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Documentation_Requirement_For_Start-up\" title=\"Documentation Requirement For Start-up\">Documentation Requirement For Start-up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#COMPANY_LAW-BASED_COMPLIANCES_FOR_STARTUP\" title=\"COMPANY LAW-BASED COMPLIANCES FOR STARTUP\">COMPANY LAW-BASED COMPLIANCES FOR STARTUP<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Annual_General_Meeting_AGM\" title=\"Annual General Meeting (AGM)\">Annual General Meeting (AGM)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Board_Meetings\" title=\"Board Meetings\">Board Meetings<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#TAXATION_BASED_COMPLIANCES_FOR_STARTUP\" title=\"TAXATION BASED COMPLIANCES FOR STARTUP\">TAXATION BASED COMPLIANCES FOR STARTUP<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Three_years_tax_holiday_in_seven_years\" title=\"Three years tax holiday in seven years\">Three years tax holiday in seven years<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Tax_exemption_on_long-term_capital_gains_LTCG\" title=\"Tax exemption on long-term capital gains (LTCG)\">Tax exemption on long-term capital gains (LTCG)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Tax_exemptions_on_investments_above_the_fair_market_price\" title=\"Tax exemptions on investments above the fair\u00a0market price\">Tax exemptions on investments above the fair\u00a0market price<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#Tax_exemptions_to_individualHUF_on_LTCGs_from_equity_shareholding\" title=\"Tax exemptions to individual\/HUF on LTCGs from equity shareholding\">Tax exemptions to individual\/HUF on LTCGs from equity shareholding<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#CONTRACTUAL_COMPLIANCES_FOR_STARTUP\" title=\"CONTRACTUAL COMPLIANCES FOR STARTUP\">CONTRACTUAL COMPLIANCES FOR STARTUP<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#LABOUR_LAW-BASED_COMPLIANCE_FOR_STARTUP\" title=\"LABOUR LAW-BASED COMPLIANCE FOR STARTUP\">LABOUR LAW-BASED COMPLIANCE FOR STARTUP<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/carajput.com\/blog\/startup-funding-companies-compliance-in-india\/#EVENT-BASED_COMPLIANCES_FOR_STARTUP\" title=\"EVENT-BASED COMPLIANCES FOR STARTUP\">EVENT-BASED COMPLIANCES FOR STARTUP<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n\r\n<p><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/Startup-Funding-Companies-Compliance-in-India.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-15004\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/Startup-Funding-Companies-Compliance-in-India-300x179.jpg\" alt=\"Startup Funding Companies Compliance in India\" width=\"952\" height=\"568\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/Startup-Funding-Companies-Compliance-in-India-300x179.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/Startup-Funding-Companies-Compliance-in-India-768x458.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/Startup-Funding-Companies-Compliance-in-India-800x478.jpg 800w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/Startup-Funding-Companies-Compliance-in-India.jpg 1000w\" sizes=\"(max-width: 952px) 100vw, 952px\" \/><\/a><\/p>\r\n<h2><span class=\"ez-toc-section\" id=\"What_Is_Start-up_Funding_Companies_Compliance_in_India\"><\/span><span lang=\"EN-IN\" style=\"color: red;\">What Is Start-up Funding Companies Compliance in India<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\r\n<h3><span class=\"ez-toc-section\" id=\"BRIEF_INTRODUCTION\"><\/span><span style=\"color: #000080;\"><strong>BRIEF INTRODUCTION<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>Startup Funding Companies Compliance in India basically refers to abiding by the principles. In today\u2019s world of business, compliance has become integral for survival. Failing this, businesses are prone to various fines and penalties under varied regulations and laws.<\/li>\r\n<li>With the laws getting amended on an everyday basis so as the limit the slip-ups made by businesses within the past, one cannot ignore the growing importance of compliance in this day and age. Moreover, wherever any startup receives funding, it becomes their legal duty, to ensure that the investor\u2019s money is in safe and sensible hands.<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"ELIGIBILITY_CRITERIA_FOR_STARTUP\"><\/span><span style=\"color: #000080;\"><strong>ELIGIBILITY CRITERIA FOR STARTUP<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>The Start-up should be incorporated as\u00a0a private\u00a0Ltd.\u00a0Or be registered as a partnership firm or LLP under the relevant acts.<\/li>\r\n<li>Their turnover shall not exceed Rs. 100 Crores in any of the previous financial years.<\/li>\r\n<li>An entity is termed as a Start-up for a maximum of 10 years from the date of its incorporation.<\/li>\r\n<li>The entity shall be working towards innovation\/ improvement of any of the existing products, services, and processes and be having the potential to get employment\/ create wealth.<\/li>\r\n<li>They must also obtain a certification from the Inter-Ministerial Board\u00a0set up\u00a0for such a purpose.<\/li>\r\n<li>An entity formed by means of splitting up or reconstruction of an existing business shall not be considered as a \u201cStart-ups\u201d<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"LEGAL_ASPECTS_OF_STARTUP\"><\/span><span style=\"color: #000080;\"><strong>LEGAL ASPECTS OF STARTUP<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p>More often than not, early-stage founders tend to approach investors way too early, before\u00a0they&#8217;re\u00a0truly ready. Here are some of the pointers in order to have a strong pitch presentation &#8211;<\/p>\r\n<ol>\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Introduction\"><\/span><span style=\"color: #000080;\"><strong>Introduction<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p>An introduction about\u00a0the corporate\u00a0provides the investors\u00a0with a thought\u00a0of who\u00a0they&#8217;re\u00a0and what are their plans. Investors always want\u00a0to grasp\u00a0more about the people behind the scenes, working towards the success of the company; therefore, an introduction of the team\u00a0is additionally\u00a0important.<\/p>\r\n<ol start=\"2\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"What_is_the_matter_youre_addressing\"><\/span><span style=\"color: #000080;\"><strong>What is\u00a0the matter\u00a0you&#8217;re\u00a0addressing?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p>A detailed description of the matter that the corporate aims to eliminate or offer an answer to, what the impact of this problem has been thus far, and its effect on commerce, industry, and society.<\/p>\r\n<ol start=\"3\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"What_is_your_solution\"><\/span><span style=\"color: #000080;\"><strong>What is your solution?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p>Investors must be educated regarding the innovative solution that the corporate is bringing about to tackle the matter.<\/p>\r\n<ol start=\"4\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Marketing_Plan\"><\/span><span style=\"color: #000080;\"><strong>Marketing Plan<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p>The marketing plan looks to answer the questions regarding who the audience is, what markets the corporate is looking to enter into, what the proposed pricing strategy is, and what the varied distribution channels are.<\/p>\r\n<ol start=\"5\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Projected_Financials\"><\/span><span style=\"color: #000080;\"><strong>Projected Financials<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p>An estimate of where the corporate aims to be, in financial terms, some years down the road, thereby outlining the feasibility of the business yet. The financials will include an income statement, a statement of profit and loss, and a balance sheet.<\/p>\r\n<ol start=\"6\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Sources_of_Finance\"><\/span><span style=\"color: #000080;\"><strong>Sources of Finance<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<ul>\r\n<li>Funding plays a significant role in an exceedingly startup\u2019s ability to scale and grow at a gradual pace. It talks about what the capital structure of the corporation shall be, whether primarily comprising equity or debt or both.<\/li>\r\n<li>The primary goal of any start-up is to maximize its profit. While doing so, they have a tendency to ignore the mandatory legal requirements which can affect their business adversely in the longer run. Legal compliance is a necessary wheel that keeps a check on any going needs of a business.<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"Incorporation_Related_Compliance_For_Start-up\"><\/span><span style=\"color: #000080;\"><strong>Incorporation Related Compliance For Start-up<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p>Each structure has its own set of rules and regulations that decided whether registration is required or not, what proportion of tax a corporation must pay, and what all licenses does it require? for example, sole proprietors don&#8217;t need any registration whereas it&#8217;s optional in partnership firms, however, it&#8217;s compulsory for LLPs and private limited companies.<\/p>\r\n<p>Companies have\u00a0a compulsory\u00a0registration requirement under the laws of India.\u00a0a corporation\u00a0may be\u00a0registered as a legal entity under:<\/p>\r\n<ul>\r\n<li>The Companies Act, 2013 \u2013 for private, public, not-for-profit, and one person companies<\/li>\r\n<li>Indian Partnership Act, 1932<\/li>\r\n<li>Limited Liability Partnership Act, 2008<\/li>\r\n<\/ul>\r\n<p>Various companies also prefer to register their businesses under different government schemes and laws to avail the benefits and concessions provided under the laws. Companies, as per their nature of the business, be also registered under the MSME Act, the GST Act, or under the Start-up India Scheme.<\/p>\r\n<h3><span class=\"ez-toc-section\" id=\"Business_Licenses_For_Start-up\"><\/span><span style=\"color: #000080;\"><strong>Business Licenses For Start-up<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>Licenses are integral for running any business.\u00a0based on\u00a0the character\u00a0and therefore the\u00a0size of the business, start-ups\u00a0are also\u00a0required to register their business under various licenses applicable under different statutes in India.<\/li>\r\n<li>The common license that applies to several businesses in the Shop and Establishment license is applicable on all premises where trade, business, or profession is carried out.<\/li>\r\n<li>Other business licenses vary from industry to industry. Various laws in the sector of environment, food and safety, labor and employment laws and import-export laws, FDI Policy, FEMA, SEBI\/RBI regulations have impacted the procurement of licenses in India.<\/li>\r\n<li>For instance, an e-commerce company is required to fulfill additional requirements like GST registration, Professional Tax, etc., while, a restaurant would be required to have licenses like Food Safety License, Certificate of Environmental Clearance, Prevention of Food Adulteration Act, Health Trade License, etc.\u00a0<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"Documentation_Requirement_For_Start-up\"><\/span><span style=\"color: #000080;\"><strong>Documentation Requirement For Start-up<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p>A lot of emerging businesses tend to ignore the formalization of the structure of the contracts and basic incorporation-related documents. This indeed creates a plethora of legal complications, and therefore in case any dispute arises or in case of raising investment, at any stage of a start-up\u2019s growth.<\/p>\r\n<p>Some <a href=\"https:\/\/www.caindelhiindia.com\/blog\/all-about-the-director-kyc-dir-3-kyc-filing\/\">basic documentation\u00a0that each\u00a0start-up<\/a> should be sure of is:<\/p>\r\n<ul>\r\n<li>Drafting of the incorporation documents like the Founder\u2019s Agreement, Shareholder\u2019s Agreement, Memorandum of Association, and Articles of Association, is formed for the registration of the companies under the Companies Ac, 2013, etc.<\/li>\r\n<li>Contracts like the Non-Disclosure Agreement (NDA), Confidentiality Agreement, MoU, Letter of Intent, and others.<\/li>\r\n<li>Work Agreements like the Employment Agreements, Lease\/Rent Agreement, Service Agreement, Consultancy Agreements.<\/li>\r\n<li>Technical Agreements like the Technology Assistance Agreement, Licensing and Assignment Agreement, Outsourcing and Hosting Agreements.<\/li>\r\n<li>Company policies like the\u00a0sexual harassment\u00a0Policy, Employee Grievance Management Policy, Data Privacy and Protection Policy, Whistleblower Policy.<\/li>\r\n<li>Intellectual Property Management in the form of Registration of Intellectual Property like the Copyrights, Patents, Trademarks, etc. in India and also internationally, Licensing and Assignment Agreements associated with their Intellectual Property.<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"COMPANY_LAW-BASED_COMPLIANCES_FOR_STARTUP\"><\/span><a href=\"https:\/\/www.caindelhiindia.com\/blog\/annual-return-of-company-under-companies-act-2013\/\"><span style=\"color: #000080;\"><strong>COMPANY LAW-BASED COMPLIANCES FOR STARTUP<\/strong><\/span><\/a><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<figure id=\"attachment_15006\" aria-describedby=\"caption-attachment-15006\" style=\"width: 951px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/Startup-Companies-Compliance-in-India.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-15006\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/Startup-Companies-Compliance-in-India.jpg\" alt=\"Startup Companies Compliance in India\" width=\"951\" height=\"814\" \/><\/a><figcaption id=\"caption-attachment-15006\" class=\"wp-caption-text\"><span style=\"color: #ffffff;\">Startup Companies Compliance in India<\/span><\/figcaption><\/figure>\r\n<p>Start-ups registering under the Companies Act, 2013, are required to comply with certain compliances. Some of these compliances include:<\/p>\r\n<ol>\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Annual_General_Meeting_AGM\"><\/span><span style=\"color: #000080;\"><strong>Annual General Meeting (AGM)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p style=\"padding-left: 40px;\">There should be one AGM each year and there must be a gap of a maximum of 15 months between 2 AGMs. Approval for Financial statements, Appointment of Auditors, Declaration of Dividends, etc. is the main objective for such meetings.<\/p>\r\n<p style=\"padding-left: 40px;\">The annual general meeting\u00a0must\u00a0take place\u00a0in the\u00a0city where the company\u2019s registered office\u00a0is situated.<\/p>\r\n<ol start=\"2\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Board_Meetings\"><\/span><span style=\"color: #000080;\">Board Meetings<\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p style=\"padding-left: 40px;\">The first board meeting shall be conducted within 30 days from the date of incorporation of the corporate entity. Besides that, four board meetings are purported to take place every financial year in a manner, so that the gap between two consecutive board meetings isn\u2019t more than 120 days.<\/p>\r\n<ol start=\"3\">\r\n<li><span style=\"color: #000080;\"><strong>Mandatory filing of forms<\/strong><\/span><\/li>\r\n<\/ol>\r\n<ul>\r\n<li><strong><span style=\"color: #000080;\">Appointment of Auditor (E-Form ADT-1)<\/span><\/strong><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">The first Statutory Auditor should be appointed within 30 days of the company\u2019s incorporation\u00a0within the\u00a0first\u00a0board meeting. However, in an AGM\u00a0the subsequent\u00a0auditors\u00a0may be\u00a0appointed\u00a0for five\u00a0years.<\/p>\r\n<p style=\"padding-left: 40px;\">An applicant would be required to file form ADT-1 in respect of a 5-year appointment of the auditor. After that, shareholders are required to endorse the auditor in AGM every year, however, there\u2019s no requirement to file ADT-1.<\/p>\r\n<ul>\r\n<li><span style=\"color: #000080;\"><strong>E-Form MGT-7<\/strong><\/span><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">MGT-7 is basically an electronic form that is being issued to the companies by the Ministry of Corporate Affairs (MCA), in order to furnish their annual return details. Every private Ltd. must file the form MGT-7 each year.<\/p>\r\n<ul>\r\n<li><span style=\"color: #000080;\"><strong>E-Form AOC-4<\/strong><\/span><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">Form AOC-4\u00a0is required\u00a0for filing the financial statements\u00a0for every\u00a0financial year\u00a0with the ROC. It is commonly seen, that the primary\u00a0mode of communication between the shareholders\u00a0and the\u00a0Board of Directors\u00a0of a company takes place through\u00a0the financial statements.<\/p>\r\n<p style=\"padding-left: 40px;\">Hence, it is mandatory for every registered company to file form AOC-4.<\/p>\r\n<ul>\r\n<li><span style=\"color: #000080;\"><strong>Directors\u2019 Report<\/strong><\/span><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">As per the Companies Act, 2013 every company is required to prepare a board report containing the main points of the state of the corporate, operations during the year, dividend declaration, net profit, corporate social responsibility standards, etc being in compliance with section 134 of the Companies Act 2013.<\/p>\r\n<ul>\r\n<li><span style=\"color: #000080;\"><strong>Form MBP-1<\/strong><\/span><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">The form MBP-1 is required to be filed by the directors of the corporate within the first meeting of the Board of Directors in every financial year where they would disclose their interest in other entities.<\/p>\r\n<p style=\"padding-left: 40px;\">It is to be noted that a fresh Form MBP-1 is required to be filed, in case, there exists any change in the interest of the director from the earlier submitted MBP-1.<\/p>\r\n<ul>\r\n<li><span style=\"color: #000080;\"><strong>Form DIR-8<\/strong><\/span><\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">Every director is required to file form DIR-8 every yr with the corporate Disclosure of non-disqualification.<\/p>\r\n<ul>\r\n<li style=\"list-style-type: none;\">\r\n<ul>\r\n<li>Compulsory Maintenance of Certain Registers<\/li>\r\n<li>Minutes Register;\u00a0board meeting\u00a0minutes book, and General meeting minutes book made out of any EGM, AGM, Creditors Meetings,<\/li>\r\n<li>Debenture holders Meetings, and Postal Ballot.<\/li>\r\n<li>Statutory Registers;<\/li>\r\n<li>Books of Accounts or Financial Statements maintained in compliance with Section 44aa of the Companies Act, 2013.<\/li>\r\n<li>Register of Directors Attendance at Board meetings or Committee.<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"TAXATION_BASED_COMPLIANCES_FOR_STARTUP\"><\/span><span style=\"color: #000080;\"><strong>TAXATION BASED COMPLIANCES FOR STARTUP<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p><a href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/TAXATION-BASED-COMPLIANCES-FOR-STARTUP.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-15008\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2019\/08\/TAXATION-BASED-COMPLIANCES-FOR-STARTUP.jpg\" alt=\"TAXATION BASED COMPLIANCES FOR STARTUP\" width=\"979\" height=\"526\" \/><\/a><\/p>\r\n<ul>\r\n<li>Under\u00a0Income Tax\u00a0Act, 1961 \u2013 Filing\u00a0of ITR, Tax Audit Reports, TDS Returns, Assessment of\u00a0Tax Liability.<\/li>\r\n<li>GST Act, 2017 \u2013 Registration\u00a0of establishment\u00a0under GST Act, Filing of monthly, quarterly and annual returns, as applicable.<\/li>\r\n<\/ul>\r\n<p style=\"padding-left: 40px;\">Apart from the legal compliance, start-ups\u00a0may also\u00a0avail various rebates available to new companies in India.<\/p>\r\n<ol>\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Three_years_tax_holiday_in_seven_years\"><\/span><span style=\"color: #000080;\"><strong>Three years tax holiday in seven years<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p style=\"padding-left: 40px;\">Under section 80IAC of the\u00a0Income Tax\u00a0Act, any start-up\u00a0that&#8217;s\u00a0established after 1 April 2016 can avail 100% tax rebate on its profits for 3 years within a block\u00a0of seven\u00a0years.<\/p>\r\n<p style=\"padding-left: 40px;\">However, if the Company\u2019s annual turnover is more than Rs 100 crore, then the tax rebate isn&#8217;t available.<\/p>\r\n<ol start=\"2\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Tax_exemption_on_long-term_capital_gains_LTCG\"><\/span><span style=\"color: #000080;\"><strong>Tax exemption on long-term capital gains (LTCG)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p style=\"padding-left: 40px;\">As per Section 54EE of the Income Tax Act, start-ups have been exempted from LTCG tax. However, the same shall be applicable only if the capital gains that be invested in are a part of the fund notified by the govt of India within 6 months from the date of the asset\u2019s actual transfer.<\/p>\r\n<ol start=\"3\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Tax_exemptions_on_investments_above_the_fair_market_price\"><\/span><span style=\"color: #000080;\"><strong>Tax exemptions on investments above the fair\u00a0market price<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p style=\"padding-left: 40px;\">If an eligible start-up does any investment,\u00a0the govt\u00a0exempts the tax on the investment above the fair\u00a0value.<br \/><br \/><\/p>\r\n<ol start=\"4\">\r\n<li>\r\n<h4><span class=\"ez-toc-section\" id=\"Tax_exemptions_to_individualHUF_on_LTCGs_from_equity_shareholding\"><\/span><span style=\"color: #000080;\"><strong>Tax exemptions to individual\/HUF on LTCGs from equity shareholding<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h4>\r\n<\/li>\r\n<\/ol>\r\n<p style=\"padding-left: 40px;\">If an individual\/HUF sells their property and then invests that money to take up a minimum of 50% or more of an existing start-up, then they&#8217;re exempted from tax on these LTCGs.<\/p>\r\n<p style=\"padding-left: 40px;\">The said entity shall be incorporated as a small\/medium, as per the specification provided under MSME\u2019s Act 2006.<\/p>\r\n<h3><span class=\"ez-toc-section\" id=\"CONTRACTUAL_COMPLIANCES_FOR_STARTUP\"><\/span><span style=\"color: #000080;\"><strong>CONTRACTUAL COMPLIANCES FOR STARTUP<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>The essence of any business contract is to make sure the smooth functioning of work. In cases recourse of non-fulfillment of work. Work contracts with employees or freelancers are one of the most crucial aspects to be looked into while starting a venture. one of the important contracts that start-ups might find useful to have is Non-Disclosure Agreements.<\/li>\r\n<li>Start-ups expose to risks just like the theft of ideas and other confidential business information which could be used against the business.<\/li>\r\n<li>Thus, in order to avoid such scenarios, NDAs be drafted and employed by start-ups while discussing critical business information with people outside the organization.<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"LABOUR_LAW-BASED_COMPLIANCE_FOR_STARTUP\"><\/span><span style=\"color: #000080;\"><strong>LABOUR LAW-BASED COMPLIANCE FOR STARTUP<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<p>India being a state has ensured strict measures to be taken for labor welfare and safety. A number of the key laws that require to be followed are:<\/p>\r\n<ul>\r\n<li>The Employee\u2019s State Insurance Act, 1948: This act makes it mandatory for a few establishments to induce themselves to register with the State Insurance Corporation and contribute to the State Insurance Corporation Fund.<\/li>\r\n<li>Employee Provident Fund Scheme, 1952: This act makes it mandatory for\u00a0the businesses\u00a0to contribute towards the Provident Fund of\u00a0the staff.<\/li>\r\n<li>Maternity Benefit Act, 1961: This act makes it mandatory for\u00a0the corporate\u00a0to provide\u00a0the subsequent\u00a0benefits:<\/li>\r\n<li>The\u00a0harassment\u00a0of Women\u00a0at Workplace (Prevention, Prohibition, and Redressal) Act, 2013<\/li>\r\n<li>Payment of Wages 1936 \/Minimum Wages Act 1948\u00a0to manage\u00a0basic wages of the labor force<\/li>\r\n<li>Contract Labor (Regulation &amp; Abolition) Act, 1970\/ Interstate Migrant Workmen (Regulation of Employment And Conditions of Service) Act, 1979 to manage the utilization of labor hired on a contractual or migration basis.<\/li>\r\n<li>The Industrial Disputes Act, 1947 (the \u201cID Act\u201d), enacted for the investigation and settlement\u00a0of commercial\u00a0disputes in any industrial establishment.<\/li>\r\n<li>Trade Union Act. 1926 \u2013 An Act to supply for the registration and regulation of Trade Unions<\/li>\r\n<\/ul>\r\n<h3><span class=\"ez-toc-section\" id=\"EVENT-BASED_COMPLIANCES_FOR_STARTUP\"><\/span><span style=\"color: #000080;\"><strong>EVENT-BASED COMPLIANCES FOR STARTUP<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\r\n<ul>\r\n<li>Some are events and industry-specific compliances like start-ups having FDI would accommodate FEMA; in cases principal Export the business entity would have to comply with Customs law.<\/li>\r\n<li>When the start-up is handling hazardous products or processes it would need Environmental law clearance, whereas when it deals in real estate it would need RERA sanction and other property law compliances.<\/li>\r\n<li>In cases of mergers and acquisitions or huge transactions having an appreciable adverse impact on Competition in India, it might need Competition law approval.<\/li>\r\n<\/ul>\r\n<p>Popular blog:-<\/p>\r\n<p><a href=\"https:\/\/www.caindelhiindia.com\/blog\/application-of-gst-on-contribution-by-rwa-members\/\">GST rollout Small Businesses need to file Return<\/a><\/p>\r\n<p><a href=\"https:\/\/carajput.com\/learn\/how-to-name-your-business-in-india.html\">How to name your business in India?<\/a><\/p>\r\n<p>&nbsp;<\/p>\r\n\r\n\r\n","protected":false},"excerpt":{"rendered":"<p>What Is Start-up Funding Companies Compliance in India BRIEF INTRODUCTION Startup Funding Companies Compliance in India basically refers to abiding by the principles. In today\u2019s world of business, compliance has become integral for survival. Failing this, businesses are prone to various fines and penalties under varied regulations and laws. With the laws getting amended on &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9635],"tags":[9994],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/5963"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=5963"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/5963\/revisions"}],"predecessor-version":[{"id":21904,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/5963\/revisions\/21904"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=5963"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=5963"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=5963"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}