Lower compliance requirements for small businesses under Income tax, companies Act which startups should look at

Exemptions available for small businesses

1. Income Tax Audit Limit - 2 Crore
2. GST Tax Audit Limit - 2 Crore
3. Companies Act Audit Limit - Nil. All are required to get audited.
4. Income tax presumptive - Business Rs. 2cr & professional 50 Lakh
5. GST - Composition - 75 Lakh
6.GST registration - 20 Lakhs


Private Limited company has its exemptions and privileges. Small company further less regulation . OPC gives more flexibility


MCA has notified the much awaited Exemptions to Private Limited Companies under the provisions of the Companies Act, 2013. The Central Government, in the interest of public, directs that certain provisions of the Companies Act, 2013, shall not apply or shall apply with such exceptions, modifications and adaptations. Effective 5th June, 2015, followings exemptions will be enjoyed by the Private Companies:


a) Section-180- Borrowing - Not Applicable

b) Section 160- Deposit of One Lacs - Not Applicable

c) Section 179 & its rules - Filling of various Board resolutions - Not applicable 

d) Section 185---- Provisions shall not apply if :
i) in whose share capital no other body corporate has invested.
ii) If borrowing of Private Limited from Bank/ FIIs/ Body Corporate is less than Twice of Paid Up Capital or 50 Crore (which ever  is lower)
iii) Such co has not defaulted in repayment of borrowings subsisting at the time of making such transactions  
e) Section 188 second proviso ----for OR by general meeting not applicable
f) Section 196(4) and (5) --- Schedule V and Section V --- not applicable
g) Section 141(3)(g) ---- Appointment of Auditor---Limit of 20 Company does not cover -- OPC, Dormant, SMALL co, & Private Limited with Paid Up Capital Less than 100 Crores
h) Section 101 to 107, 109-- if stated in Section or as per Articles
i)  Section 73(2) - Deposits-- shall not apply where the Private Limited accepts from its members monies not exceeding 100% of paid Up & Free Reserves & such Company shall file the details to ROC as specified.
j) Section 62-- right Issue -- Partial Relief that it could be done in less than 15 days and notice to be send by prescribed mode and consent of 90% shareholders is being received,
k) Section 2(76)(viii)-- holding & subsidiary  - for 188 not applicable 


SMALL COMPANY EXEMPTIONS

1.      Signatures in the Annual returns:
Company Secretary (CS) alone, or when there is no CS, a single director of the company can sign the annual returns of the Company. But since a small company need not have a CS, this section empowers the director to sign and authorise the annual returns.
2.      Board meetings:
It may hold only two board meetings in an year. There should be a minimum gap of 90 days between the two meetings and they can be held in each half of the calendar year.
3.      Financial statement:
The Company is not required to include the Cash Flow Statement as a part of its financial statement.
4.      Auditor regulations:
The provision regarding mandatory rotation of the auditor or the maximum term of an auditor being 5 years in case of an individual and 10 years in case of a firm of auditors is also not applicable.
5.      Merger Process:
The merger process of more small companies has to be approved on a fast track basis. Such merger also requires the approval of:
1.      Official liquidator;
2.      Registrar of Companies (ROC);
3.      Members holding 90% of the total number of shares (or more); and
4.      Majority of creditors who represent 9/10th in value of the creditors or class of creditors of the respective companies which are indicated in the meeting convened by the company by giving a notice of 21 days along with the scheme to its creditors for the purpose, or have otherwise been approved in writing.
6.      Consolidated financial statements:
As per S. 129 (3), it appears that small companies are not required to prepare consolidated financial statements. But, the small companies which have an associate company or joint venture have to prepare the consolidated financial statements.
7.      Fees u/s. 403 of Companies Act, 2013:
Fees for filings and other formalities u/s. 403 of the Companies Act, 2013 is also comparatively lower for the small companies.



Analysis of the changes

Under the new companies act 2013, the government has allowed private companies to accept deposits without an offer circular while government firms have been exempted from managerial remuneration limits.


In a significant relaxation, private companies have been exempted from certain provisions for related party transactions under the Companies Act, 2013.

Besides, private firms can now provide a shorter period for offering securities to members by way of right offers, approve employee stock options through a simple majority and follow "an easier procedure" for holding general meetings.

"Private companies have also been allowed to accept deposits from members without the requirement of offer circular and creation of deposit repayment reserve etc... Flexibility has also been provided in the types of share capital that can be issued by private companies," the Ministry said in a press release today.

These entities will not be required to file their board resolutions with the registry and give notice for directorships.

"Requirement of mandatory consent of shareholders with regard to certain transactions relating to sale of undertaking, investments, borrowings etc has been omitted," the release said.

Moreover, one-person companies, dormant, small and private firms with less than Rs 100 crore paid-up share capital, would not be taken into account while calculating the maximum limit of 20 companies for audit by an auditor.

Among others, private companies with no investment by any corporate have been allowed to extend loans to directors subject to certain conditions. An interested private company director has now been allowed to participate in board meeting after declaring his interest, the release stated.


Also, changes have been effected with respect to the place of general meetings.





Changes in CA 2013 which impact private limited companies.

Resident Director:
There should be at least one resident director on the Board. Every company is required to have at least one resident director who has stayed in India for not less than 182 days in the previous calendar year.
Action Point:
Existing Companies are required to comply with this provision by 31st March, 2015. Whereas The companies whose date of incorporation falls between 01st April, 2014 to 31st December, 2014 should have a resident director either as on the date of incorporation itself or within six months of their incorporation.
However, the companies which will be getting incorporated post September, 2014 needs to have a resident director from the date of incorporation itself.

Change in letter-heads, bills, invoices, etc.:
Every company has to get its name, address of its registered office, Corporate Identity Number (CIN) along with telephone number, e-mail, fax (if any) printed on the letter-head of the company, business documents, billheads, letter papers and also in all its notices and other official publications.
Action Point:This needs immediate action. In cases where the letter-heads are already printed, then a rubber stamp with the CIN Number can be prepared and affixed in the same.

Board Meetings:
A company should conduct at least 4 Board Meetings in a year and the gap between two Board Meetings shall not exceed 120 days. Further, at least 7 days notice to be given for Board Meeting.
Action Point:
This provision also requires immediate action. Also, every director shall disclose the interest in the first Board Meeting of the financial year and file the same with the ROC.

Loans to Directors u/s 185:
All the companies are restricted from giving loans to the directors or providing securities guarantees to the directors and related parties.
Action Point:
This provision was earlier not applicable on the private companies. However, this provision has been made equally applicable on private companies under the New Act. Further, the new Act is very stringent on penalties for contravention.
There are provisions for imprisonment as well for contravention of this Act. Imprisonment cannot be avoided even by fully repaying the loans.

Further Issue of Shares:
The earlier provision of further allotment of shares was very simple and non-complicated. However, as per the New Act, even a private company cannot allot further shares to a new person without complying with Section 62.
Action Point:
Get hold of Bare act or your laptop and study the rules before allotting or offering any share.

Related Party Transaction:
No company shall enter into any contract or arrangement with the related party without Board’s approval with respect to specified matters. The provision of obtaining the shareholder’s prior consent by way of a special resolution has also been brought into action.
Action Point:
Few of the points are worth to be noted in this regard. No member of a company shall vote on such special resolution, if such member is a related party in that transaction.

Mandatory to indicate DIN Number:
Every director of the company is required to mention his/her DIN Number while signing all documents.
Action Point:

Whenever you sign any official document in the capacity of Director, make sure to indicate your DIN.

MCA has notified 3 Notifications today which has primarily given exemptions as below:

1.Internal Financial Control: Sec 143(3)(i) has been amended that Internal Financial Control would not be applicable to Private Company ;
a) which is a one person company or a small company; or

b) which has turnover less than rupees fifty crores as per latest audited financial statement or 

c) which has aggregate borrowings from banks or financial institutions or any body corporate at any point of time during the flnancial year less than rupees twenty five crore.

2.Private Companies which are Start Up are not required to prepare Cash Flow Statements and not required to hold minimum number of 4 Board Meeting in a year. (Start up means Private Companies incorporated under Companies act and recognised as Start-up as per Department of Industrial Policy and Promotion.)

3.Private Companies which are small Companies are not required to mention the amount of Remuneration drawn by Directors in Annual Return.

Small Company under new companies Act 2013

Small Company means a company other than public company:-

·         Paid up share capital of which does not exceeds Fifty Lakhs Rupees or such higher amount as may be prescribed which shall not be more than 5 Crores Rupees.
   AND
·         Turnover of which as per last profit and loss account does not exceeds 2 crores rupees or such higher amount as may be prescribed which shall not be more that 20 crores rupees.

Provided that nothing in this clause shall apply to:
a.       a holding company or as subsidiary company;
b.      a company registered under section 8
c.       a company or body corporate governed by any special act.

Small companies are subjected to a lesser stringent regulatory Framework.




Form INC-29 Fast Track Company Registration

To simplify and fast track the procedure for company registration in India, the Ministry of Corporate Affairs (MCA) has introduced Form INC-29 – Integrated Incorporation Form. 
EForm INC-29 deals with the single application for reservation of name, incorporation of a new company and/or application for allotment of DIN. This eForm is accompanied by supporting documents including details of Directors & subscribers, MoA and AoA etc. Once the eForm is processed and found complete, company would registered. Also DINs gets issued to the proposed Directors who do not have a valid DIN. Maximum three Directors are allowed for using this integrated form for allotment of DIN while incorporating a company.

Companies Registered using Form INC-29

The following types of companies can be registered using Form INC-29:
  • Private Limited Company
  • One Person Company
  • Limited Company
  • Producer Company
Types of Company Registration in India are discussed below:
  • What is Private Limited Company?
    A voluntary association of not less than two and not more than two hundred members, usually between closely held group like family, friends and relatives offering limited liability, placing restrictions on ownership. The name contains Pvt. Ltd. Co. as suffix. Shares are not recognized on a stock exchange.
  • What is Public Limited Company?
    A public limited company is a voluntary association of members of not less than seven numbers and can have a maximum of unlimited members having a separate legal existence which limits the liability of the members only to the extent of amount paid towards the shares. The name contains Public Ltd. Co. as suffix. The shares are traded on a stock exchange.
  • What is One Person Company (OPC)?
    OPC is a perfect hybrid structure of a sole proprietorship business and a company. All you need to know about One Person Company is that only one person is required who can act in the capacity of a director as well as a shareholder, which leaves the person from the hassle of finding the right kind of co-partner for starting a new business as registered entity The One Person Company registration process is almost similar to that of a private limited company with minor differences.
  • What is Section 8 Company?
    Section 8 Company is the form of NGO, NPO, Non Profit Organisation, established for promoting commerce, art, science, religion, charity, sports, education, research or any other useful object, under the condition that the profits earned (if any), should be applied only for promoting the objects of the company for which it was formed and not for distributing it to the promoters.
  • What is Part 1 Company?
    The firm may be converted into a company by following the provisions of Part I of the Companies Act, 1956. For the purpose of Part I Company limited by shares, a joint stock company means a company having a permanent paid up share capital of fixed amount divided into fixed amount of shares or held and transferable as stock, or both, to be held only by its members and no other persons. Such a company, when registered with limited liability under the Companies Act, 1956 shall be deemed to be a company limited by shares.


One Person company under Companies Act 2013


ONE PERSON COMPANY

 Companies Act, 2013 has opened the corporate door for the individuals who have all the entrepreneurial expertise and always wanted to have their own company by the new concept of ONE PERSON COMPANY

DEFINITION:-

Section 2(62) of the Companies Act, 2013 defines OPC to mean a Company which has only one person as a member.

The words ‘‘One Person Company’’ is required to be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.

ELIGIBILITY FOR INCORPORATION AND NOMINEE MEMBER

- As per Rule 3(1) of the Companies (Incorporation) Rules 2014, only a natural person who is an Indian Citizen and resident in India  shall be eligible to incorporate / form a OPC. Indian resident means who has stayed in India for a period of not less than 182 days during the immediately preceding one calendar year.

- A nominee for OPC has to be natural person who is and Indian citizen and resident in India.

- No person shall be eligible to become a nominee in more than one OPC.

At the time of incorporation of OPC, the sole member of OPC is required to appoint another person as his nominee and his name shall have to be mentioned in the Memorandum of Association of the OPC.

The nominee so appointed shall become the MEMBER IN THE FOLLOWING SITUATION:

a. in the event of the sole member’s death; or

b. in the event of the sole member becoming incapacitated to contract;

A nominee so appointed is required to give his written consent for the same which is required to be filed with the ROC at the time of incorporation of the OPC along with its MoA and AoA.

A nominee has the right to withdraw his consent if he so desires.

As per Rule 4 of the Companies (Incorporation) Rules 2014:

1. Memorandum of OPC should mention the name of nominee by the OPC   subscriber with the Registrar in Form No. INC.2.

2. The consent of his nominee is to filed in Form No. INC.3

3. OPC to file with the Registrar within 30 days any change in membership:

4. Form No INC.4 is to be filed for the intimation of such cessation and  Nomination.


FOLLOWING PERSON CANNOT BE MEMBER OF OPC:-

 1. Minor (as per Rule 3(4) of the Companies (Incorporation) Rules 2014).  A minor cannot even hold share with beneficial interest.

2. Foreign Citizen

3. Non Resident

4. A person incapacitated to contract

5. Persons other than a Natural Person i.e. living human being

NUMBER OF DIRECTORS

OPC can have one or more Directors on its board. As per the provisions of Sec 149 a OPC can have a maximum of 15 directors. It can, however appoint more than 15 directors after passing a special resolution.

OPC is required to file Annual Return

As per the proviso to section 92(1) of the Companies Act 2013, the annual return in case of OPC shall be signed by the company secretary or where there is no company secretary, by the director of the OPC.

Financial Statements

a. The financial statements of a one person company can be signed by one director alone.

b. Cash Flow Statement is not a mandatory part of financial statements for a One Person Company. [Section 2(40)]

c. Board’s report to be annexed to financial statements may only contain explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.

d. OPC should file a copy of the financial statements duly adopted by its member, along with all the documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year.

Annual General Meeting

As per section 96(1) of the Companies Act 2013, the provision relating to holding of AGM is not mandatory for a OPC.

BOARD MEETING

- Atleast one Board Meeting must be held in each half of the calender year and the gap between the two meetings should not be less than ninety days.

- For the purposes of holding Board Meetings, in case of a one person Company which has only one director, it shall be sufficient compliance if all resolutions required to be passed by such a Company at a Board meeting, are entered in the minutesâ€book, signed and dated by the member and such date shall be deemed to be the date of the Board Meeting for all the purposes under this Act.

Cessation of OPC status

As per Rule 6(1) of the Companies (Incorporation) Rules 2014, OPC shall cease to be entitled to continue as a OPC if:

1. Its paid up capital exceeds Rs.50 lacs; or

2. Its average annual turnover during the relevant period i.e. immediately preceding 3  consecutive financial years exceeds Rs.2 Crores

3. Intimation for increase in threshold limit has to be filed in Form INC 5.

Conversion of OPC into public or private company

As per Rule 6(2) of the Companies (Incorporation) Rules 2014, OPC is mandatorily required to be converted itself into either a private or a public company. Such conversion shall happen within 6 months from the:

1. date of increase of its paid up capital as mentioned in Rule 6(1), i.e. exceeding Rs.50 lacs; or

2. last day of the relevant period during which its average annual turnover exceeds Rs.2 Crores.  

3. Application  for conversion has to be made in Form INC 6.

As per Rule  6(2), (3) and (6) of the Companies (Incorporation) Rules 2014, OPC should ensure that the conversion shall happen in accordance with the provisions of Section 18 of the Companies Act, 2013 which provides for necessary alteration in memorandum and articles, read with section 122 of the Act. The other requirements of minimum capital, minimum number of directors and subscribers as the case may be need to be complied with at the time of any such conversion by OPC.

Conversion of Private Companies into OPC

A private company can be converted into a OPC provided:

1. it is not a Section 8 (with charitable objects) company

2. its paid up capital is equal to or less than Rs.50 lacs

3. its average annual turnover is equal to or less than Rs.2 crores in the relevant period

4. it obtains a NOC from members and ceditors

5.     it passes a special resolution in its general meeting for such conversion and the same is filed with the Registrar within 30 days in form MGT 14


Provisions not applicable to OPC

As per Section 122, the following provisions shall not apply to a One Person Company:

Section 98 – Power of Tribunal to call meetings of members

Section 100 – Calling of extra ordinary general meeting

Section 101 – Notice of meeting

Section 102 – Statement to be annexed with notice

Section 103 – Quorum for meetings

Section 104 – Chairman of meetings

Section 105 – Proxies

Section 106 – Restriction on voting rights

Section 107 – Voting by show of hands

Section 108 – Voting through electronic means

Section 109 – Demand poll

Section 110 – Postal Ballot

Section 111 – Circulation of members’ resolution.

Contracts by One Person Company

If OPC limited by shares or by guarantee enters into a contract with the sole member of the company, who is also the director of the company and where the contract is not in writing, it should be ensured that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract. The said provision is not applicable in case the contract is in writing and where the contract entered is by the company in the ordinary course of its business.

The company should inform the Registrar about every contract entered into by the company and recorded in the minutes of the meeting of its Board of Directors within a period of fifteen days of the date of approval by the Board of Directors

 Opportunities to small Enterprenuers


Small entrepreneurs can carry on their business in form of OPC with status of separate legal entity. The concept is good for Entrepreneurs with new ideas and new ventures trying to explore the corporate world with minimum compliances and maximum benefits as exemptions. Various small and medium enterprises, doing business as sole proprietors, might enter into the corporate domain through OPC. The unorganized sector of the economy will find an outlet to show their entrepreneurial expertise.



Memorandum of Association, Articles of Association , documents of costitution

MOA in United States





In India


INCORPORATED

UNDER THE COMPANIES ACT, 1956

(1 OF 1956)

COMPANY LIMITED BY SHARES

MEMORANDUM OF ASSOCIATION

OF

         NEW ENERGY PRIVATE LIMITED

I. The name of the Company is “NEW ENERGY PRIVATE LIMITED”.

II. The Registered Office of the Company will be situated in the State of Andhra Pradesh.

III. The objects for which the company is established are:

A.        THE MAIN OBJECTS OF THE COMPANY TO BE PURSUED ON ITS INCORPORATION ARE:

1.         To carry on the business of Engineering Procurement & Construction (EPC) activities for Solar related Projects including Solar Power Plants, rooftop installations.

2.         To carry on with the design of steel structure, material optimization, carrying out the Research and Development (R & D) activities by installing prototypes and all other related activities for the installation of the power plant.

3.         To carry on manage, super wise, control the business of transmitting , manufacturing, supplying, generating, distributing and dealing in electricity in solar related projects.

B.        THE OBJECTS INCIDENTAL OR ANCILLARY TO THE ATTAINMENT OF THE MAIN OBJECTS ARE:

1.         To acquire all kinds of apparatus, devices, plant, machinery, tools, utilities, materials and things necessary or convenient for carrying on any of the main objects of the Company. 

2.         To enter into a scheme of amalgamation or arrangement or partnership or into any arrangement for sharing profits, union of interest, cooperation, joint venture, reciprocal concessions or otherwise either in part or whole with any person or company or companies, foreign or otherwise, carrying on or engaged in or about to carry on or engaged in similar business or other business or transaction capable of being conducted so as directly or indirectly to benefit the company.

3.         To apply for, purchase or otherwise, acquire, or develop any patents, developments, inventions, licenses, concessions and the like, conferring any exclusive or non exclusive or limited right to use or any secret or other information as to any invention which may seem capable of being used for any of the purposes of the Company, the acquisition of which may seem calculated directly or indirectly to benefit the Company and to use, exercise, develop or create licenses in respect of or otherwise turn the account the property rights or information so required.

4.         To establish, appoint, regulate and discontinue office, agents, representatives, distributors or retailers in all such places as the Company may from time to time determine for carrying out all or any of the Company’s objects and to act as agents for others or to amalgamate the business operations with any other Company for the business synergies in operations.

5.         To purchase, own, take on lease or in exchange or otherwise acquire and undertake all or any part of the business, rights, privileges, property and liabilities of and to amalgamate or enter into partnership or into any arrangement for sharing profits, union of interest, cooperation, joint ventures, reciprocal concessions or otherwise with any company having objects altogether or in part similar to those of company and to lend money, guarantee the performance or contracts of or subsidize or otherwise assist any such company for such consideration and on such terms as may seem expedient.

6.         To promote, establish, undertake, form and to be interested in and to apply to acquire, hold and dispose of shares in any institution, business, pool, combine, syndicate, industrial trading or manufacturing or company having objects altogether or in part similar to those of company carrying on any business capable of being conducted so as directly or indirectly to benefit the company and to subsidize or assist any industry or undertaking financially or otherwise by issuing or subscribing for or guaranteeing the subscription and issue of shares, stock, debentures stock or other securities such industry or undertaking.

7.         To make donations to such persons or institutions or funds and in such cases, and either for cash or any other assets, as may be though directly or indirectly conducive to any of the Company’s objects or otherwise expedient and in particular, to remunerate any person or corporation introducing business to this Company.

8.         To pay out of the funds of the Company all expenses which the company may lawfully pay with respect to the promotion, formation and registration of the company or the issue of its capital, including brokerage and commission for obtaining applications for or taking, placing or underwriting or procuring the underwriting of shares, debentures or other securities of the Company.

9.         To pay all preliminary expenses of any company promoted by the Company, or any company in which the Company is, or may contemplate being interested, including in such preliminary expenses all or any part of the costs and expenses of owners of any business or property acquired by the company.

10.      To lend and advance money or to give credit to such persons or companies and on such terms as may seem expedient and in particular, to customers and others having dealing with the Company.


 11.      To establish, open offices in foreign countries and to place professionals on different platforms at the client sites or at offices on different projects on Company’s payroll and to process the required visas of professionals for the same and open branches or appoint agencies.

12.      To undertake and execute any trusts the undertaking of which may seem to the company desirable for the benefit of employee or former employees.

13.      To insure the whole or any part of the property of the company, either fully or partially, to protect and indemnify the company from liability or loss in any respect, either fully or partly and also to insure and to protect thereof, either on mutual principal or otherwise.

14.      To furnish and provide deposits and guarantee any funds required in relation to any tender or application for any contract, concession, decree, enactment, property or privilege or in relation to the carrying out of any contract, concession, decree or enactment.

15.      To appoint trusts to hold securities on behalf of, and to protect the interest of the company.

16.      To own, establish, or have and maintain branches and agencies all over India and elsewhere, for serving it’s customers and for servicing its business.

17.      To borrow or raise or secure the payment of money or to receive money on loan at interest or otherwise for any of the purposes of the company, redeem or pay off any such securities, subject to directives of Reserve Bank of India .

18.      To establish, provide, maintain, conduct or otherwise subsidize research and other laboratories, training, colleges, schools and other institutions and to undertake, carry out, promote and sponsor or assist any activity for the promotion and growth of the national economy.

19.      To open accounts with any individual, firms, company or bank and to pay into or withdraw moneys from such account.

20.      To apply or otherwise acquire any patents, copyrights, formulas, licences and the like subject to royalty or otherwise conferring exclusive non – exclusive or limited rights of use upon the Company.

C.     THE OTHER OBJECTS FOR WHICH THE COMPANY IS ESTABLISHED ARE :

1.         To carry on the business of general merchandise, commission agents, manufacture’s representatives, forwarding agents, and to extend facilities to the public for the purchase and sale of merchandise of every description whatsoever.

2.         To carry on the business or vocation of acting adviser and consultant on all matters and problems relating to the technical industries, civil administration, finance, and organization management, commencement or expansion of industry, purchasing techniques and business (Including construction of plants and buildings) Production, purchases, sales, material and cost control, marketing, advertisement, publicity, personnel, export and import to and for institution, concerns bodies, associations, departments and services of the Government public or local authorities, trust scientific research and development centers and to be appointed as technical, financial, industrial administration, civil consultants.


  
3.         To carry on web, portal, internet, internet based business, extranet, call centers net based business and business application and allied business services and other allied activities in all its branches and to appoint authorised dealers or franchises for development and to deal, purchase, sell import, export, any of the above said activities. 

4.         To buy, sell, import, export, develop or undertake the designing. Development, procurement and construction of solar devices either for its own use or for sale in India or for export outside India and to design and develop such devices for or on behalf of manufacturers, owners and users of solar equipments in India or else where in the world and to carry on the business of procuring and constructing the solar equipments.

5.         To acquire, hold, sell buy or otherwise deal in any shares, units, stocks, debentures, debenture-stock, bonds, mortgages, obligations and other securities by original subscription, tender, purchase, change, gift or otherwise and to subscribe for the same, either conditionally or otherwise and sell above mentioned securities.

IV. The liability of the members of the Company is limited.

V.               The Authorized Share Capital of the Company is Rs.1,00,000 (Rupees One Lac only) divided into 10,000 ( Ten Thousand only) equity shares of Rs.10/- (Rupees Ten only) each.

The Company has power from time to time to consolidate or sub-divide or increase or reduce its capital and to issue any of the shares in the capital, original or increased, as ordinary or preferred, with or subject to any preferential, special, deferred or qualified rights, including the right to be converted into equity shares, or any other privileges or conditions as regards payment or dividends, distribution of assets, repayment or reduction of capital, voting or otherwise and generally on such terms as the Company may from time to time by special resolution determine and to vary the regulations of the Company, as for as necessary to give affect to the same, and upon the sub-division of a share to apportion the right to participate in profits in any manner, subject to the provisions of law.


VI. We, the several persons, whose names, addresses and descriptions are hereunder subscribed, are desirous of being formed into a company in pursuance of this Memorandum of Association and we respectively agree to take the number of shares in the capital of the company set opposite to our respective names.





ARTICLES OF ASSOCIATION


INCORPORATED UNDER THE COMPANIES ACT, 1956

(1 OF 1956)

COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION

OF
 NEW ENERGY PRIVATE LIMITED

1.         The provisions of the Table “ A” other than regulations 2,3,4,5,36,37,38,39, 40,41,42 and 43 as applicable to private companies shall be the regulation of the company.

2.         The company is a private limited company as defined in section 3(1) (iii)of the Companies Act, 1956 and accordingly.

a)        The number of members, other than those in the employment of the company and those who having formerly been in such employment and have continued to be members after the employment ceased, shall be limited to fifty, provided that where two or more persons hold one or more shares in the company jointly, they shall be treated as a single member.

b)        No invitation to subscribe for any shares in or debentures of the Comp any.

c)        The right to transfer the shares of the Company is restricted.

d)        Prohibits invitation or acceptance of deposits from persons other than its members, Directors and their relatives.

e)        The minimum paid up capital of the Company is Rs.1,00,000/- or such higher amount as may be prescribed.

3.         The Authorised Capital of the Company is Rs. 1,00,000/- (Rupees One Lakh Only) divided into 10,000 (Ten Thousand Only) equity shares of Rs.10/-(Rupees Ten) each.

3A. The shares shall be under the control of the Directors, who may allot or otherwise dispose of the same to such persons and on such conditions as to payments by way of deposit or calls or as to the amount or time for payment of calls either at par or at a discount subject to the provisions of the Companies Act, and at such time as the Directors may think fit.

  
4.         No transfer of shares other than to a near relative like wife, husband, child, father, mother, brother, sister, brother-in-law, sister-in-law, daughter-in-law, son-in-law, grand children, uncle, aunt, nephew and first cousins shall be made without the approval of the board. Transfer of shares to near relatives as mentioned above shall not be refused by the board.

5.         The number of directors shall be not less than two and not more than twelve until otherwise determined by the general body.

6.             The first Directors of the company are : ....... and they shall be permanent directors of the company.

7.         No share qualification is necessary for any individual for being appointed as a director of the company.

8.         A sitting fees not exceeding Rs.250/- may be payable to every director attending a board of directors meeting plus actual travelling and out of pocket expenses incurred by him/her.

9.         The Directors, subject to the provisions of the Companies Act, 1956 may be paid a monthly remuneration and/or a special percent-age of the profit/turn-over of the company and/or commission as may be determined by the board in addition to benefits and/or amenities applicable to all officers and employees for rendering extra services to the company.

10.      On the death or insolvency of any holder of shares, the directors, shall transfer the shares to such person whom the original holder of shares nominates by a will or in persons who are legal heirs of the members. The directors shall not refuse transfer.

11.      The board may appoint one or more managing directors and/or whole time directors and may confer on him/her them such powers as may be though fit. The remuneration to the Managing Directors and the whole time directors shall be decided by the board from time to time.

12.a) A general meeting including the Annual General Meeting of the company may be called by giving not less than 7 days notice in writing.

b)   A general meeting including an Annual General Meeting may be called after giving a shorter notice than that specified under sub-clause(a) above if consent is accorded thereto by the member of the company holding not less than 75% of such part of the paid up capital of the company as given a right to vote at the meeting.

13.a) The general body of the members of the company may elect any persons as directors apart from the permanent directors specified in the articles and may fix the tenure of office and other terms and conditions in respect thereof.


b)   The board shall have the power at any time and from time to time appoint any persons as additional director, or co-apt provided the number of the directors and the additional directors together shall not at any time exceed twelve.

c)    In case the union government or any state government or any industrial finance corporation or other corporation sponsored or financed by any of the above government or banks, loans or accepts participation in the capital and direction of the company, such government, or corporation or banks shall be entitled to (so long as the company is indebted to such government, corporation or banks or so long as such government, bank or corporation desired by virtue of the financing capacity as a precondition to disbursement of the loans applied for) nominate one or more directors, to look after the interests of each such government or corporation or banks in the board of directors of the company, and while holding such office they shall not be liable to retirement or to hold any qualification shares.

14.      The financial powers shall be exercised on behalf of the company by any of the directors and/or by any person and/or persons so authorized by the board of directors.

15.      The board of directors may appoint, for remuneration from time to time such persons or person either from amongst themselves or from outside, who they deem fit to conduct the day to day affairs of the company. Such person or persons shall, subject to the control, supervision and direction of the board, have the general direction and management of the business of the company. The board shall from time to time delegate such powers as deemed necessary, proper and/or expedient for carrying on the business and concerns of the company including the power to sign all contracts and to draw, sign, accept, endorse and negotiate on behalf of the company all bills of exchange, promissory notes, hundies, cheques, drafts, government securities and other instruments. All amounts shall be paid deem expedient and all receipts of money paid to the company shall be signed by the such person or persons authorized by the board whose receipt shall be an effectual discharge for the money therein stated to have been received. The board shall reserve the right to revoke any of the powers to such person or persons at its will and pleasure.

16.      Subject to the provision of the Companies Act, 1956 any director or such person or persons authorized by the board with the approval of the board of directors may from the time to time raise or borrow any sum of moneys for and on behalf of the company from the members or other persons, companies, banks or institutions as the board may think fit and to raise money for the company on such interest and terms and conditions as may be approved by the Board of Directors.

17.      The company shall have a common seal and the directors shall provide for the safe custody thereof. The seal shall not be applied to any instrument except by the authority of resolution of the Board of Directors and in the presence of atleast two directors and such directors shall sign every instruments to which the seal shall be affixed in his presence provided never- the less that certificate of shares shall be signed in accordance with the Rule(6) of the Companies Issue of Share Certificate Rules, 1960.

18.      Subject to the provisions of the law of land the Act, no member of other person (not being a director) shall be entitled to required the discovery of any information respecting the company’s business or any matter which is or be in the nature of trade secret or secret process relating to the conduct of the business of the company and which in the opinion of the directors will be inexpedient in the interest of the company to communicate or examine the properties of the company without the permission of the directors.