Way back when we first started, we
opted for a “Pvt Ltd” form of Company for two reasons, one: to
ensure that later the name would not change and two: it allows for
capital formation. The first reason is important because one can
start a partnership with just about any name. Subsequently if you go
to register with the ROC, the first thing you need to do is get your
name approved. At that time if you find the name you were using not
available it can be quiet a loss.
In the early days, I started to two
Companies, today I will think twice, I would rather set up a division
under the first rather than incorporate a new one. While we went fast
forward running one Company the other fell on the back burner. We had
a table space, registered office in Panaji and the owner closed it.
One fine morning we got a court notice. We had not filed our returns.
Now, believe me you do not want to be going to court for not filing
returns, it is a criminal case and personal presence is required. At
that time the fine was 500/- but my other shareholder who was abroad
had a warrant issued against him for not being present. Today, the
rules do permit late filing, one has not to go to court and the fines
have increased and some offenses coupled with imprisonment of
directors. So pay close attention to the annual return.
Actually, an entrepreneur would be well
advised to get the services of a Company Secretary from day one. The
law allows smaller companies to self manage. What actually happens is
that when you have to get certified by a CS, your paper work is non
existent or in a total mess. At, Zarhak because of my previous
experience, we had minute books, statutory registers, etc. and with
an early run in with ROC, filing returns was always a priority.
The other issue which we had a hard
time was closing our Company. Initially, we tried amalgamation, that
proved too be too costly, so we filed nil returns as it was a cheaper
option. Basically, amalgamation is a court procedure so it is time
consuming and the most expensive part is the lawyers fees which both
companies have to pay. We were fortunate as the ROC announced an easy
exit scheme. Under that we were able to close easily. Now, the same
provisions are applicable so closing is easier. If you intend to
close, liquidate your assets, ensure all employees dues settled
especially statutory like PF etc., buy back your shares and ensure no
creditors are on the books.
Today, unlike then every Director has
to have a DIN (Director Identification No), if you are a defaulter in
any way your DIN is blocked and you cannot transact. Surely not a
good situation. The fines and jail terms are much stiffer under the
new Act. Most of us are only hearing about the CSR mandate that the
Act has now made mandatory for certain type of Companies. It would be
wise to get your Companies Act (pun intended) together and pay
attention to the ROC's requirements sooner than later.
Suggested reading: The Companies Act
2013
