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Company Registration Guidelines
Company Registration Guidelines
The Stand up India scheme aims at promoting entrepreneurship among women and
scheduled castes and tribes. The scheme is anchored by Department of Financial Services
(DFS), Ministry of Finance, Government of India.
Stand-Up India Scheme facilitates bank loans between Rs 10 lakh and Rs 1 Crore to at
least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman
borrower per bank branch for setting up a greenfield enterprise. This enterprise may be in
manufacturing, services or the trading sector. In case of non-individual enterprises at least
51% of the shareholding and controlling stake should be held by either an SC/ST or woman
entrepreneur.
Eligibility
SC/ST and/or woman entrepreneurs, above 18 years of age.
Loans under the scheme is available for only green field project. Green field signifies,
in this context, the first time venture of the beneficiary in the manufacturing or services or
trading sector.
In case of non-individual enterprises, 51% of the shareholding and controlling stake
should be held by either SC/ST and/or Women Entrepreneur.
Borrower should not be in default to any bank/financial institution.
Loan details
Nature of Loan - Composite loan (inclusive of term loan and working capital)
between 10 lakh and upto 100 lakh.
Purpose of Loan - For setting up a new enterprise in manufacturing, trading or
services sector by SC/ST/Women entrepreneur.
Size of Loan - Composite loan of 75% of the project cost inclusive of term loan and
working capital. The stipulation of the loan being expected to cover 75% of the project cost
would not apply if the borrower’s contribution along with convergence support from any
other schemes exceeds 25% of the project cost.
Interest Rate - The rate of interest would be lowest applicable rate of the bank for
that category (rating category) not to exceed (base rate (MCLR) + 3%+ tenor premium).
Security - Besides primary security, the loan may be secured by collateral security or
guarantee of Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL) as decided
by the banks.
Repayment - The loan is repayable in 7 years with a maximum moratorium period of
18 months.
Working Capital - For drawal of Working capital upto 10 lakh, the same may be
sanctioned by way of overdraft. Rupay debit card to be issued for convenience of the
borrower. Working capital limit above 10 lakh to be sanctioned by way of Cash Credit limit.
Margin Money - The Scheme envisages 25% margin money which can be provided
in convergence with eligible Central / State schemes. While such schemes can be drawn upon
for availing admissible subsidies or for meeting margin money requirements, in all cases, the
borrower shall be required to bring in minimum of 10% of the project cost as own
contribution.
Types of Company registration in india,
Proprietorship
A sole proprietorship is a type of unregistered business entity that is owned, managed and
controlled by one person. Sole proprietorship's are one of the most common forms of
business in India, used by most micro and small businesses operating in the unorganised
sectors. Proprietorships are very easy to start and have very minimal regulatory compliance
requirement for started and operating. However, after the startup phase, proprietorship's do
not offer the promoter a host of benefits such as limited liability proprietorship, corporate
status, separate legal entity, independent existence, transferability, perpetual existence -
which are desirable features for any business. Therefore, proprietorship registration is suited
only for unorganised, small businesses that will remain small and/or have a limited period of
existence.
Advantages of Proprietorship
Easy to Establish
A sole proprietorship business does not have any specific registration requirements and the
proprietor’s legal identity is used by the business. Hence, a proprietorship can be started
without any registration. Using the PAN and Aadhaar of the promoter, Udyog Aadhaar
registration and Trademark Registration can be obtained optionally to create and protect
the identity of the business.
Easier to Operate
As a single person is at the helm of affairs, it is easier to operate as the particular person will
be the sole decision maker and he need not consider a plethora of opinions. There is no
concept of a board meeting or approval from other persons in a proprietorship firm.
Sole Beneficiary of Profits
No other business, other than that of a sole proprietorship and one person company, entitles
the owner as the sole beneficiary of profits. In all other types of an entity like a partnership,
LLP or company, a minimum of atleast two persons are involved.
Easy Compliance & Taxation
Since a proprietorship firm is not registered with any Government authority like the Ministry
of Corporate Affairs, the compliance requirements are minimal. Further, the proprietor would
only have to file income tax returns if the firm has taxable income of more than Rs.2.5 lakhs
per annum
Privacy
Since sole proprietorships are an unregistered form of entity, there is no database maintained
by the Government with a list of all proprietorships. Hence, proprietorship firms are more
private when compared to a company or LLP whose details are published on the MCA
website.
Disadvantages of Proprietorship
Unlimited Liability
This is one of the most disturbing aspects of a sole proprietorship firm. On the occurrence of
a loss, the proprietor must meet the liabilities at any cost, which implies that if the need
occurs, his/her personal assets may have to be used for discharging the liabilities.
Partnership
A Partnership Firm is a popular form of business constitution for businesses that are owned,
managed and controlled by an Association of People for profit. Partnership firms are
relatively easy to start are is prevalent amongst small and medium sized businesses in the
unorganized sectors. With the introduction of Limited Liability Partnerships in India,
Partnership Firms are fast losing their prevalence due to the added advantages offered by a
Limited Liability Partnership.
There are two types of Partnership firms, registered and un-registered Partnership firm.
It is not compulsory to register a Partnership firm; however, it is advisable to register a
Partnership firm due to the added advantages
Decision Making
Decision making is the crux of any organization. Decision making in a partnership firm could
be faster as there is no concept of the passing of resolutions. The partners in a partnership
firm enjoy a wide range of powers and in most cases can undertake any transaction on behalf
of the partnership firm without the consent of other partners.
Raising of Funds
When compared to a proprietorship firm, a partnership firm can easily raise funds. Multiple
partners make for more feasible contribution among the partners. Moreover, banks also view
a partnership more favourably while sanctioning credit facilities instead of a proprietorship
firm.
Sense of Ownership
Every partner owns and manages the activities of their firm. Their tasks might be varied in
nature but people in a partnership firm are united for a common cause. Ownership creates a
higher sense of accountability, which paves the way for a diligent workforce.
Number of Members
The maximum number of members a partnership firm can have is restricted to 20. In case of
an LLP, there is no restriction on the maximum number of partners.
Abrupt Dissolution
Easy Funding
One Person Company has been accounted on the category of a private company. OPC can
easily raise funds through angel investors, venture capital and financial institutes. Graduating
to a private limited company; OPC can raise funds and continue business.
More Opportunities, Limited Liability
One Person Company holds a lot of efficient opportunities, limited liability since the liability
of the OPC is limited to the extent of the value of the share you hold, the individual could
take more risk in business without affecting or suffering the loss of personal assets. This leads
to an encouragement to initiate more start-ups and see skilled innovative minds.
Minimum Requirements
Minimum 1 Shareholder
Minimum 1 Director
The director and shareholder can be the same person.
Minimum 1 Nominee
Letters ‘OPC’ to be suffixed with the name of OPCs to distinguish it from other
companies
Single Owner
Single ownership is beneficial than having one or more owner. It is highly beneficial in
making a quick decision, managing the business without following any suggestions and
methodologies, and controlling. It is an individual mind business. The sense of belonging
inspires to grow the business further.
Credit Rating
One Person Company with a bad credit score can even apply for the loan. The credit score of
OPC will not be material if the score of OPC is as per the norms.