The Ministry of Corporate Affairs in its continuous effort to boost the startup ecosystem has made some operational and compliance relaxations for Startups, Section 8 Companies and Government Companies.

In its notification dated 13th June 2017, the MCA has made some amends to its initial notification under G.S.R. 464(E) dated the 5th June 2015 published in the Gazette of India, Extraordinary, Part-ll, Section 3, Subsection (i).

For the purpose of the following notification, the term ‘Start-up’ or ‘Start-up company’ means:

“A private company incorporated under the Companies Act, 2013 (18 of 2013) or the Companies Act, 1956 ( 1 of 1956) and recognised as start-up in accordance with the notification issued by the Department of lndustrial Policy and Promotion, Ministry of Commerce and Industry.”

a) The Startup incorporated/registered in India must be an entity as a Private Limited Company (under The Companies Act, 2013) or a Registered Partnership Firm (under The Indian Partnership Act, 1932) or Limited Liability Partnership (under The Limited Liability Partnership Act, 2008) and

b) up to seven years from the date of its incorporation/ registration; however, in the case of Startups in the biotechnology sector, the period shall be up to ten years from the date of its incorporation/ registration; and

c) if its turnover for any of the financial years since incorporation/ registration has not exceeded Rupees 25 crores.

Relaxations for Startups

Image Courtesy – Times of India

Further exemptions were issued for Section 8 companies and Government companies as well.

Relaxations for Section 8 Companies

For the purpose of the notification, a section 8 company is defined as:

“Section 8 company is a company registered under the Companies Act, 2013 for charitable or not-for-profit purposes. It pertains to an establishment ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.”

The following are the exemptions that have been issued for Section 8 Companies as defined above –

Relaxations for Government Companies

For the purpose of the notification, a Government company is defined as:

“A Government company is defined under Section 2(45) of the Companies Act, 2013 as any company in which not less than 51% of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company.”

The following are the exemptions that have been issued for Government companies as defined above:

Important Note: All the exceptions, modifications and adaptations provided to Private Companies, Section 8 Companies and Government Companies stand automatically be withdrawn if they fail to file their Financial Statements or Annual Return with the Registrar.

To know more about the above-mentioned relaxations for startups and other companies, talk to our experts at Integra Books today.

Blog Image Credits – SujanPatel

 

The most frequent problems that business owners face are to do with accounting & regulatory compliance. Entrepreneurs view time invested in doing both as unproductive time.

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