Veto Rights and Good Governance: Are the Two in Sync?

One of the most debatable questions in CimplyFive's First Survey on Secretarial Practice conducted in July 2016 was on the practice of taking Director's consent for holding Board Meeting at shorter notice.
Though this is not a statutory requirement, our survey indicated that 81% of the respondents revealed that they took Directors consent for holding Board Meetings at shorter notice. Taking consent from all participants even though it is not mandatory seems to be a desirable practice as it meets the basic yardstick of good governance, which is to enable all the eligible members to participate in the decision making process. The moot question is, does a deeper scrutiny of this practice stand the test of good governance?
When we dig deeper, an unintended implication of this practice has the effect of providing a veto right to each and every director, as the failure of even a single director to give their consent has the effect of deferring the Board Meeting, even if every other director wants to have it.
In this context, it is worth noting an interesting observation made by the Robert's Rules of Order, first published in 1876 which is considered the Bible of Parliamentary procedures, on getting consent from members. The options available are:
All members, or
All members present, or
All members present and voting.
The Book reasons that getting consent from all the members or all members present has the effect of treating a vote to abstain or inability to vote for whatever reason, as a negative vote. Given this effect, this basis is not to be used unless the matter is of such grave importance that a positive consent from all the members is considered essential. Given this backdrop, it is worth examining how and why veto rights emerged, and is it an appropriate instrument for Corporate Board Meetings.
Veto rights or negative affirmative rights are basically negation of the power of majority to take decisions. This is a right not normally accorded in the statute books, which uphold the principles of democracy and endorses decision made by the majority. The rare exceptions where the rule of majority is negated by the statutes is when the rights of a minority group is adversely affected or a basic principle of their association is being modified, altered or substantially changed.
In sharp contrast, veto rights are a standard feature of private Shareholder Agreements that are used mainly by financial investors taking a stake in start-ups to protect their large financial outlay they bring to the table. Covering areas of Board representation, Approval for Financing plans and CXO appointments, Anti-dilution provisions and Shareholder Reward sharing mechanisms like Right of First Offer (ROFO), Right of First Refusal (ROFR), Tag along rights and Drag-along rights, veto rights have a logical and justified place, as in their absence it will be difficult for start-ups with ideas to attract capital, despite the knowledge that capital without entrepreneurs will remain idle cash. Hence, for dreams to be realized and idle cash to become riches, veto embedded in shareholder agreements is a valuable conduit.
In contrast to shareholder meetings where ownership rights are to be protected, the Corporate Board is more a body of collective wisdom to guide and run the company, which includes some high-end residual powers that involve day to day running of the company like powers to borrow and appoint representatives to present company's interest. Given the nature of the Corporate Board, it is worth debating if consent from Directors should be obtained for holding Board Meetings at Shorter Notice.

What Are the Different Business Legal Structures?

There are several common legal structures that you can set your business up under. Which one you chose is going to depend on what kind of business you are setting up, who else is involved in this plan with you, your own personal preferences, among several other factors.
Here is a quick overview of your options.
Sole Proprietorship
This is still the most common type of business structure, particularly for small businesses that are just starting out. This means that one person owns and is responsible for the business. They make all the decisions, but they also hold all the financial responsibility. The profits or losses from the business are reported on the proprietor's personal taxes.
General Partnership
This is very similar to a sole proprietorship, except that there is more than one person involved in owning and operating the business. The business is still connected to you, but also to your partners. This means you all share in the management and financial responsibilities of the business.
Corporation (LTD or INC)
A corporation is an entity that is formed and does business on its own, separate from anyone personally. This means that the financial situation of the business does not roll over onto the person who owns the business.
While this may seem like the better option to avoid personal liability if something happens within the business, it can be extremely tedious and expensive to set up and maintain. This is not a viable option for most small business owners because most of them cannot afford the set up fees or maintenance of records required.
Limited Liability Company/Corporation (LLC)
This is a newer and very popular type of business structure because it offers the benefits of a corporation, does not require a lot of the same hassle. Unlike a limited liability partnership, you can set up this type of company with only one person. It provides a lot of the financial protection of a corporation, but does not require as extensive measures to upkeep.
Limited Liability Partnership (LLP)
This is a different type of partnership, but it also provides some of the financial protection of a corporation. Unlike an LLC, you must have at least two partners. However, it is easier to maintain and keep your structure than an LLC. This business structure is also much more common in the UK, which LLCs are more popular in the US.
How you set up your business is an important decision. The structure you choose could make a big financial and legal difference. It will depend on many factors, including local laws. Take the time to research your options and talk to an accountant or other business professional and anyone else involved in your business before making your decision.

What Is the Current International Regulatory Regime for Multinational Enterprises (MNEs)?

Since WWII, the MNEs have mushroomed at an incredible speed, but the international law has yet to catch up. At present, the international regulatory regime remains fragmented leaving a huge gap between legality and reality. While the MNEs' day to day activities are controlled under domestic laws, their multinational nature necessitates a more coordinated and efficient multilateral approach.
The current international regulatory regime can be summarized under five categories as follows:
1. Informal Regulation
Since the 1980s non-governmental organizations (NGOs) have been exercising tremendous influence over the MNEs' operations, by monitoring them closely, and furiously lobbying with the governments. Some MNEs have been self-regulating in the interest of the society.
2. Soft Regulation
This is a new type of regulation which emerged in the last two decades, which essentially shames corporations into voluntarily accepting certain constraints in response to critics, best practice guidelines and Less Developed Countries' (LDCs) scorn. Much reliance has been placed on the effectiveness of such soft regulation. Although they are called "soft," as Peter Munchinski states, they can be hardened into positive law.
Soft regulation works mostly in the areas of labor / human rights, environmental protection and corporate governance. MNEs do not follow these guidelines out of altruistic concern, but rather to enhance their public image.
3. Bilateral Treaties (BITs)
There is a plethora of BITs that affect MNE activities. These documents are concluded between two states wishing to regulate MNE activities which they impact their nations. However, in reality most of the BITs serve to protect the investors' rights in the host country, by limiting the host countries' power over the foreign owned subsidiaries.
Developed nations use BITs to ensure the favorable treatment of their investors in the host countries. BITs customarily include "national treatment" and "Most-Favored-Nation" clauses to accomplish this goal.
Moreover, most of the BITs oblige the host countries to provide adequate and prompt compensation for expropriated investments, waive their right to impose obligations on the MNEs to employ local labor and use local material, and allow them to transfer funds and profits back to their home countries at a market exchange rate.
Furthermore, most of the BITs contain a binding arbitration clause whereby foreign investors can sue the host government.
One positive aspect of the BITs is that it prevents the MNEs from playing the signatories against each other. However, as Muchlinski points out, this is impossible if the equality of bargaining power lacks in the negotiations.
As Kenneth Vandevelde rightfully pointed out, the BIT movement as a whole may be seen as part of an ongoing process to create a new international law of foreign investment to respond to the demands of the new global economy... While the world has developed a relatively elaborate legal structure for trade [in the GATT and WTO institutions]... it has yet to create a similar structure for international investment.
Despite the large and increasing number of BITs, it is open to question whether BITs have been effective in promoting an efficient, liberalized market for investments worldwide.
4. Regional Treaties
Nations across the globe have been opting for regional integration as a way to gain political power, liberalize trade, and accelerate industrialization.
The most powerful organizations are between industrially developed nations, however LDCs have had a few attempts as well.
4.1. North American Free Trade Agreement (NAFTA)
NAFTA is a free trade agreement between the US, Canada and Mexico, which is modeled on the existing Canada-U.S. Free Trade Agreement (FTA). It offers a balanced and stable regulatory system for the MNEs.
However, NAFTA has many enemies, who blame it for the deregulation of international commerce. It is true that MNEs enjoy unprecedented protection, unrestricted right of movement of capitals, goods and services under NAFTA, at the expense of workers' or farmers' rights.
Chapter 11 of NAFTA provides for binding arbitration as a dispute resolution mechanism between MNEs and member governments. Critics argue that taxpayers are being punished in favor of the corporations and that the nations are unable to regulate in the best interest of public health, safety and welfare. This extraordinary assault on the states' sovereignty has led to new proposed agreements such as the Central American Free Trade Agreement (CAFTA) and agreements with Peru, Panama and Colombia.
While the opponents accuse NAFTA as being socially irresponsible, its champions rightfully argue that corporations' ability to resort to binding arbitration is nothing new, in fact it existed in BITs for a long time. This argument is contrived however, especially when considering the increasing number of lawsuits by MNEs.
For example, the Canadian Cattlemen for Fair Trade sued the U.S. to recover $300 million for suspension of imports of Canadian cattle after the discovery of mad cow disease in Alberta. Although the case never saw the light of day, critics ceased the moment to declare that "[b]y entering into NAFTA, the United States no longer has the right to protect its domestic cattle industry from contamination."
In 1996, Metalclad Corporation sued the Mexican government when the Municipality of Guadalcazar refused it permission to reopen a waste disposal facility. In 2000, the arbitral tribunal awarded the company $16,7 million in compensation on the grounds that local environmental laws prohibiting the toxic-waste-processing plant that the company was building were tantamount to expropriation.
The Canadian government was forced to lift restrictions on manufacturing an ethanol-based gasoline additive that it considered hazardous after an American manufacturer said that the ban hurt its business.
United Parcel Service, the package-delivery company, has filed a complaint contending that the very existence of the publicly financed Canadian postal system represents unfair competition that conflicts with Canada's obligations under NAFTA.
Critics contend that NAFTA violates the nations' sovereign immunity, and treats MNEs "as [..] equal subject of international law, on par with governments." The irony is that corporations cannot sue their own governments, which means that foreign investors are treated more favorably than the national investors of a member state.
NAFTA is an important organization that has helped businesses bloom. Its future is uncertain however, especially since the election of a publicly critical new American president in 2016.
4.2. ANDEAN COMMON MARKET (ANCOM)
ANCOM is a customs union which was created in the Cartagena Agreement signed in 1969 between the South American countries of Bolivia, Colombia, Ecuador, Peru -and Venezuela, until its withdrawal in 2006- with a view to promote a balanced and harmonious development of the Member States through elimination of internal tariffs, adopting a common external tariff, and harmonizing economic and trade policies.
ANCOM was disorganized for the longest time. The members believed that foreign investment weakened local business, so they enacted a Common Code for the Treatment of Foreign Investment (Decision 24) to restrict foreign investment.
ANCOM members continually breached their Agreement, but the enforcement against offenders was impossible since the Agreement lacked a dispute resolution mechanism. The Andean Court of Justice was only created in 1983.
Decision 24 was replaced by "Decision 220" in 1987. ANCOM finally became operational after the establishment of a Free Trade Area in 1993 and Customs Union in February 1995. Today all the goods circulate duty free within the subregion.
ANCOM still needs to overcome obstacles before it can become a major economic power in the world like the European Union or NAFTA.
4.3. EUROPEAN UNION (EU)
EU is a political and economic union of 28 countries with a complex web of laws that regulate MNEs, such as the International Market Law, International and European Food Law, Global Administrative Law, Export/Import Controls (including EU Dual-Use Regulation), Economic Sanctions, Anti-Corruption and Anti-Money Laundering, Data Protection, Investment Barriers, Trade, Competition and Disputes.
The EU states healed their grievances since the two World Wars. The Union has won the Nobel Peace Prize in 2012 for promoting peace and international co-operation. It is known for its economic / political stability and strong commitment to human rights and the due process of law. The Copenhagen Criteria for EU membership mandates commitment to human rights, rule of law and market economy.
5. Multilateral Treaties
5.1. Binding Multilateral Instruments
The first binding multilateral rules appeared in the 1995 with the Uruguay Round of multilateral trade negotiations (MTN) coming into effect. The MTN led to the creation of the WTO and GATT became part of the WTO agreements. Subsequently the Agreement on Trade-Related Investment Measures (TRIMs) was incorporated into the WTO.
5.2. Failed Attempts
5.2.1. UN Code of Conduct on Transnational Corporations
About 40 years ago ITT interfered in Chile's internal politics, and caused the overthrow of President Salvador Allende. The matter became subject to hearings in the Church Committee of the United States Congress. President Allende delivered a speech at the General Assembly of the United Nations in 1972, in which he drew international attention to the "economic power, political influence and corrupting action" of the MNEs. Following the uproar, the United Nations Centre on Transnational Corporations (UNCTC) coordinated the drafting of the UN Code of Conduct on Transnational Corporations with a view to establish a multilateral framework to set out the rights and obligations of the MNEs and host nations. The negotiations faded in 1990.
The failure of the efforts was attributed to the conflicting agendas of the following three interest groups:
• LDCs favored regulation under domestic laws for fear that MNEs would violate their sovereignty. Since they did not invest outward, they ignored investors' rights.
• Socialist countries did not allow any inward FDIs. They refused to allow their MNEs to be controlled under a multilateral code.
• The developed countries already had a system to protect their MNEs. Their only reason to negotiate a multilateral agreement was their desire to prevent LDCs from eroding the standards of customary international law.
5.2.2. The Multilateral Agreement on Investment (MAI)
The developed countries wanted to consolidate the strongest features of the existing BITs and other regional arrangements into one document.
The negotiations continued until 1997 without public notice, until a leaked copy of the draft reached an NGO, who accused it of favoring the interests of the investors "far above those of governments, local communities, citizens, workers and the environment."
MAI was attacked as an attempt "to multiply the power of corporations over governments and eliminate policies that could restrict the movement of factories and money around the world. [NGOs argued the document] places corporate profits above all other values" and "puts democracy at risk."
Critics also argued that Article 2.1 which provides that "A Contracting Party shall not expropriate or nationalize directly or indirectly an investment in its territory of an investor of another Contracting Party or take any measures having equivalent effect" would prevent individual governments from passing any laws preventing MNEs from making profit.
It was argued that "environmental, health, or workers' rights legislation that could threaten profits could be interpreted as "expropriation" and prohibited by the treaty"
Another criticism was that the "[MAI empowers] corporations and investors to sue governments directly for cash compensation, in retaliation for almost any government policy or action that undermines profits." The opponents cited the $251 million in damages lawsuit brought by the U.S.-based Ethyl Corporation's against the Canadian government where the Canadian parliament banned a fuel additive produced by Ethyl for environmental and health reasons, the company sued for damages, claiming that Canada violated its NAFTA commitments.
The draft was abandoned in 1998. The real reason for its failure remains the subject of controversy. One view is that the negotiators had many unresolved issues such as the exclude certain sensitive sectors from the negotiations, for example Canada and France wanted to exclude cultural industries. Another view is that the NGOs have brought down the MAI. "If a negotiator says something to someone over a glass of wine, we'll have it on the Internet within an hour, all over the world," said Maude Barlow, chair of the Council of Canadians, a citizens' interest group. The MNEs have not pushed for another multilateral agreement for fear that NGOs' reactions. They prefer to keep a low profile while benefiting from the patched up coverage of the BITs.
6. CONCLUSION
It is evident that MNEs are likely to continue to mushroom. They have successfully spread their activities and amassed enough power and money to bully any one nation standing alone. As some of their critics have rightfully noted, the unique mission to make profits have turned some of the MNEs into sociopaths. They have avoided taxation, violated labor regulations, polluted the environment, engaged in immoral activities, all with impunity.
The existing national and international bodies are simply not equipped to deal with the expansion of international trade. The obvious solution is to come up with an efficient and coordinated mechanism to control the MNE activities through binding and enforceable multilateral instruments.
The past attempts have attracted the same criticisms as NAFTA (although the offending clauses were unnoticed in BITs). New multilateral instruments need to heed all the stakeholders' concerns. They must balance the interests of the host countries and with those of the MNEs, while listening to NGOs. They must design a dispute resolution mechanism that will be designed and implemented to balance private rights with public goods in a legitimate and constructive manner. Such mechanisms must discourage frivolous lawsuits by MNEs and governments must be able to regulate in the best interest of public health and safety.
Finally, in the day of the internet, concocting agreements behind closed doors is no longer realistic. A wider range of groups would need to be invited to negotiations, and more consideration needs to be paid to how non-negotiators and public would construe these documents.

Multinational corporations have increased in numbers since World War II. These corporations are regulated in the host countries, while they remain controlled by their parent companies from other jurisdictions. The current international regulatory system does not provide adequate oversight over their activities, and this lack of oversight gives corporations ample opportunity to engage in unethical practices both towards inhabitants of the host countries and the environment. These businesses need to be regulated in a more coordinated and efficient manner. This article explores the current international regulatory systems, and discusses what steps can be taken to eliminate the loopholes the corporations have been using to continue their harmful practices with impunity.

Role and Duties of a Company Secretary

A Company Secretary is a senior position in a private sector company or public sector organisation, normally in the form of a managerial position or above. In large American and Canadian publicly listed corporations, a company secretary is typically named a Corporate Secretary or Secretary.
Despite the name, the role is not a clerical or secretarial one in the usual sense. The company secretary ensures that an organisation complies with relevant legislation and regulation, and keeps board members informed of their legal responsibilities. Company secretaries are the company's named representative on legal documents, and it is their responsibility to ensure that the company and its directors operate within the law. It is also their responsibility to register and communicate with shareholders, to ensure that dividends are paid and to maintain company records, such as lists of directors and shareholders, and annual accounts.
In many countries, private companies have traditionally been required by law to appoint one person as a company secretary, and this person will also usually be a senior board member.
ROLE AND DUTIES OF A COMPANY SECRETARY:
Companies law requires only a listed company to have a whole time secretary and a single member company (any company that is not a public company) to have a secretary.
The secretary to be appointed by a listed company shall be a member of a recognized body of professional accountants, or a member of a recognized body of corporate / chartered secretaries or a person holding a masters degree in Business Administration or Commerce or is a Law graduate from a university recognized and having relevant experience. However, the company secretary of a single member company shall be a person holding a bachelor degree from a university recognized.
The duties of a company secretary are usually contained in an "employment contract". However, the company secretary generally performs the following functions:-
Functions of secretary:
(1). Secretarial functions:

• To ensure compliance of the provisions of Companies Law and rules made there-under and other statutes and bye-laws of the company.
• To ensure that business of the company is conducted in accordance with its objects as contained in its memorandum of association.
• To ensure that affairs of the company are managed in accordance with its objects contained in the articles of association and the provisions of the Companies Law.
• To prepare the agenda in consultation with the Chairman and the other documents for all the meetings of the board of directors.
• To arrange with and to call and hold meetings of the board and to prepare a correct record of proceedings.
• To attend the broad meetings in order to ensure that the legal requirements are fulfilled, and provide such information as are necessary.
• To prepare, in consultation with the chairman, the agenda and other documents for the general meetings.
• To arrange with the consultation of chairman the annual and extraordinary general meetings of the company and to attend such meetings in order to ensure compliance with the legal requirements and to make correct record thereof.
• To carry out all matters concerned with the allotment of shares, and issuance of share certificates including maintenance of statutory Share Register and conducting the appropriate activities connected with share transfers.
• To prepare, approve, sign and seal agreements leases, legal forms, and other official documents on the company's behalf, when authorised by the broad of the directors or the executive responsible.
• To advise, in conjunctions with the company's solicitors, the chief executive or other executive, in respect of the legal matters, as required.
• To engage legal advisors and defend the rights of the company in Courts of Law.
• To have custody of the seal of the company.

(2). Legal obligations of secretary:

• Filling of various documents/returns as required under the provisions of the Companies Law.
• Proper maintenance of books and registers of the company as required under the provisions of the Companies Law.
• To see whether legal requirements of the allotment, issuance and transfer of share certificates, mortgages and charges, have been complied with.
• To convene/arrange the meetings of directors, on their advise.
• To issue notice and agenda of board meetings to every director of the company.
• To carry on correspondence with the directors of the company on various matters.
• To record the minutes of the proceedings of the meetings of the directors.
• To implement the policies formulated by the directors.
• To deal with all correspondence between the company and the shareholders.
• To issues notice and agenda of the general meetings to the shareholders.
• To keep the record of the proceedings of all general meetings.
• To make arrangement for the payment of the dividend within prescribed period as provided under the provisions of the Companies Law.

(3). To maintain the following statutory books:

• the register of transfer of shares;
• the register of buy-backed shares by a company;
• the register of mortgages, charges etc.;
• the register of members and index thereof;
• the register of debenture-holders;
• the register of directors and other officers;
• the register of contracts;
• the register of directors' shareholdings and debentures;
• the register of local members, directors and officers, in case of a foreign company;
• Minute books;
• Proxy register;
• Register of beneficial ownership;
• Register of deposits;
• Register of director's share holding; and
• Register of contracts, arrangements and appointments in which directors etc are interested.

(4). Other duties:The company secretary usually undertakes the following duties:
(a) Ensuring that statutory forms are filed promptly.
(b) Providing members and auditors with notice of meeting.
(c) Filing of copy of special resolutions on prescribed form within the specified time period.
(5). Supplying a copy of the accounts to every member of the company, every debenture holder and every person who is entitled to receive notice of general meetings. You must send annual audited accounts.
(6). Keeping or arranging for the having of minutes of directors' meetings and general meetings.Apart from monitoring the Directors and Members minutes books, copies of the minutes of board meetings should also be provided to every director.
(7). Ensuring that people entitled to do so, can inspect company records.For example, members of the company are entitled to a copy of the company's register of members, and to inspect the minutes of its general meetings and to have copies of these minutes.
(8). Custody and use of the common seal.Companies are required to have a common seal and the secretary is usually responsible for its custody and use. (Common seals can be bought from seal makers)
THE POWERS OF A COMPANY SECRETARY:
Companies Law allows him to sign the statutory returns and applications.
THE RIGHTS OF A COMPANY SECRETARY:
The rights of a company secretary depend on the terms of his or her contract with the company. The secretary has no special rights under Companies Law.

Incorporation of a Company in Pakistan

Incorporation is the legal process used to form a corporate entity or company. A corporation is a separate legal entity from its owners, with its own rights and obligations. Corporations can be created in nearly all countries in the world and are usually identified as such by the use of terms such as "Inc." or "Limited" in their names.
Throughout the world, corporations are the most widely used legal vehicle for operating a business. While the legal details of a corporation's formation and organization differs from jurisdiction to jurisdiction, most have certain elements in common.
Incorporation of a Company in Pakistan:
Any three or more persons associated for lawful purpose may, by subscribing their names to the Memorandum of Association and complying with the requirements of the Companies Act 2017 form a public company and any one or more persons so associated may, in like manner, form a private company. If only one member forms a private company, it is called a single member company.
Private Limited Company: A private company is required to have a minimum of 2 members and 2 directors. It may commence its business immediately after its incorporation. A private company, through its Articles of Association (AoA) restricts the right to transfer its shares, limits the number of its members to fifty (50) and prohibits any invitation to the public to subscribe for its shares.
Single-Member Company: Single Member Company as is evident from the name is the type of the company with only one member who is the sole director of the Company as well. All the shares are vested with single member; however, it is mandatory for the single member to nominate an individual as nominee director, to act as director in case of his death, and an alternate nominee director who will act as nominee director in case of non-availability of nominee director. A corporate entity cannot become its member or director.
Public Limited Company: A public unlisted company must have at least 3 members and 3 directors. It does not become entitled to commence its business unless it obtains 'Certificate of Commencement of Business' from the Registrar of Companies, Securities and Exchange Commission of Pakistan. There is no restriction on the maximum number of members and transfer of shares. A public company has option to list its securities/shares at any stock exchange in Pakistan. It must then have at least 7 members and 7 directors. Its minimum paid up capital should be Rs. 200 million and it is also required to make a public offer/issue of its shares which must be subscribed by at least 500 applicants. The post issue paid up capital is required to be at minimum Rs.500 million.
Approval Required of the Ministries/Departments:
Prior approval of the Ministries/Departments etc. noted against each category of the following companies is required to be obtained before incorporation of companies.

• A banking Company: (I) Ministry of Finance (II) State Bank of Pakistan
• A non-Banking finance Company (NBFC): SECP
• A company providing security service: Ministry of Interior
• A corporate brokerage house: Stock Exchange (for transfer of membership card in favour of proposed company)
• A money exchange company: State Bank of Pakistan
• An association not for profit u/s 42 of the Companies Act, 2017: License from SECP.
• A trade organization: License from Ministry of Commerce

REGISTRATION OF A COMPANY:Following are the requirements for registration of a new company under the Companies Act, 2017.
Availability of Name:
The first step with regard to incorporation of a company is to seek the availability of the proposed name for the company from the registrar. An application is required to be made with prescribed fee seeking availability certificate for each name.
Documents for registration of a limited company:
The following documents are required to be filed with the registrar concerned for registration of a private limited company:
(I) Copy of national identity card or passport, in case of foreigner, of each subscriber and witness to the memorandum and article of association,
(II) Memorandum and articles of association: Four printed copies of Memorandum of Association in case of offline submission and one copy for online submission, duly signed by each subscriber in the presence of one witness. In order to facilitate general public, the standardized specimen of Memorandum of Association of various sectors has been provided on the Commission's website.
(III) Form - 1: Declaration of applicant for compliance
(IV) Form - 21: Notice of situation of registered office of the company
(V) Form - 29: Particulars of first directors of the company
(VI) Registration/filing fee: Original paid challan evidencing the payment of fee as prescribed in any of the authorized branches of the bank.
Obtaining Digital Signature of Directors:
The client will connect to https://eservices.secp.gov.pk/eServices, to log on to his/her account or signup, in case of a new user. User will receive an e-mail containing the user activation link. By clicking on the link, user account will be activated.
You already have one login/user ID which will be used for one Director of the proposed Company. For remaining directors create secondary user ids through login into existing user ID in SECP eServices for all directors.
Digital signatures are mandatory for submitting case through e services (online). For digital signature of directors, obtain the form and get it signed by each director (One form for one director). SBC will fill in the rest of NIFT Form and submit the same at National Institutional Facilitation Technologies (NIFT) counter at CRO-SECP along with following documents;

• Attested copies of CNIC of all Directors
• Attested copies of Availability of Name Letter issued by SECP.

NIFT will deliver digital signatures details through email. Download the signature at the same day while following the instructions given in that email. NIFT charges prescribed fee per director.Additional Requirements for the Incorporation of a public Company:
In addition to the requirements for incorporation of a private limited company as stated above, the public companies are required to file the following documents at the time of incorporation:

1. Form 27 (List of persons consenting to act as director)
2. Form 28 (Consent of Directors)

Contractual Capacity & Right to Invest:Immediately upon registration with SECP, the entity becomes eligible for entering into contracts or arrangements with resident or non-resident entities or individuals. The right to invest is an inherent right of a limited liability company within or outside Pakistan.
Commencement of Business:
A Certificate of Incorporation issued by the Registrar of Companies is a conclusive proof of establishment of the entity in Pakistan. This also entitles a PLC to commence its business.

Offshore Company - Going Global

An offshore company is registered or incorporated outside the country where it has its main offices and operations, or where its principal investors reside. The term "offshore" can refer to any country, but it is mostly associated with certain countries, or jurisdictions, where the local laws offer asset protection, business flexibility, tax minimization and privacy protection. Forming an offshore company begins with choosing a business structure and jurisdiction. Then, the business owners must appoint a registered agent or trustee, incorporate the company and fulfill all financial reporting responsibilities.
Characteristics of offshore companies:
Offshore companies differ depending upon the corporate law in the relevant jurisdiction. All offshore companies have certain characteristics:
They are broadly not subject to taxation in their home jurisdiction.
The corporate regime will be designed to promote business flexibility.
Regulation of corporate activities will normally be lighter than in a developed country.
The absence of taxation or regulation in the home jurisdiction does not exempt the relevant company from taxation or regulation abroad.
Another common characteristic of offshore companies is the limited amount of information available to the public. This varies from jurisdiction to jurisdiction. Most jurisdictions have laws which permit law enforcement authorities (either locally or from overseas) to have access to relevant information, and in some cases, private individuals.
Most offshore jurisdictions normally remove corporate restraints such as thin capitalisation rules, financial assistance rules, and limitations on corporate capacity and corporate benefit. Many have removed rules relating to maintenance of capital or restrictions on payment of dividends. A number of jurisdictions have also enacted special corporate provisions to attract business through offering corporate mechanisms that allow complex business transactions or reorganisations.
Uses of offshore companies:
There are frequent allegations that offshore companies are used for money laundering, tax evasion, fraud, and other forms of white collar crime. Offshore companies are also used in a wide variety of commercial transactions from holding companies, to joint ventures and listing vehicles. Offshore companies are also used widely in connection with private wealth for tax mitigation and privacy. The use of offshore companies, particularly in tax planning, has become controversial in recent years, and a number of high-profile companies have ceased using offshore entities in their group structure as a result of public campaigns for such companies to pay their "fair share" of Government taxes.
Tax Haven:
A tax haven is a jurisdiction that offers favorable tax or other conditions to its taxpayers as relative to other jurisdictions. Particular taxes, such as an inheritance tax or income tax, are levied at a low rate or not at all. Maintains a system of financial secrecy, which enables foreign individuals to hide assets or income to avoid or reduce taxes in the home jurisdiction.
The following jurisdictions are considered the major destinations:
(1.) Bermuda:
Bermuda earned the dubious distinction of ranking No.1 on Oxfam's 2016 list of the world's worst corporate tax havens. Bermuda features a zero percent corporate tax rate, as well as no personal income tax rate. Due to the lack of corporate taxes, multinational companies have raked in huge amounts of money in Bermuda.
(2.) Netherlands:
The most popular tax haven among the Fortune 500 is the Netherlands, with more than half of the Fortune 500 reporting at least one subsidiary there. Oxfam's list of the worst corporate tax havens placed this Benelux country at No.3.
National governments often use tax incentives to lure businesses to invest in their country. However, far too often tax incentives have been found to be ineffective, inefficient and costly, according to Oxfam.
(3.) Luxembourg:
This tiny EU member state remains a center of relaxed fiscal regulation through which multinationals are helped to avoid paying taxes. It's the leading banking center in the Euro zone, with 143 banks that manage assets of around 800 billion dollars.
Pros: In Luxembourg, disclosure of professional secrecy may be punished with imprisonment. Asides from that, many international corporations choose Luxembourg as location for their headquarters and logistics centers, due to low taxes and excellent European location.
Cons: Tax exemptions on intellectual property rights may come up to 80% in Luxembourg, which is why many companies choose to manage their IP rights from here. However, it's important to note that the tax exemption applies only to intellectual property rights instituted after December 31 2007.
(4.) Cayman Islands:
Assets of 1.4 trillion dollars are managed through the banks in this country right now. Being a British territory, which has 200 banks and more than 95,000 companies registered, the Cayman Islands is the world leader in hosting investment funds and the second country in the world where captive insurance companies are registered (designed to ensure the assets of a parent company having another object of activity). Over half of GDP is provided by the Cayman Islands financial services sector.
Pros: The Cayman Islands is one of the few countries or territories in which the law allows companies to be formed and manage assets without paying tax. This is considered legal and it's not seen as a strategy to avoid taxes.
Cons: The tax benefits for incorporating in the Cayman Islands exists mainly for companies who are doing business in several countries, in order to avoid the hassle of dealing with various taxation systems.
(5.) Singapore:
Strategically located, the Republic of Singapore has a reputation as a financial center that's really attractive to "offshore" funds of Asian companies and entrepreneurs.
Pros: Legislation on the confidentiality of banking information entered into force in 2001 and since then, the electrifying city-state is recognized by the strictness with which it implements that law. And Singapore does not waive these rules, in spite of pressure from foreign governments.
Cons: Singapore is not a country used by wealthy individuals seeking important tax benefits, as most countries from this region offer a relaxed tax regime.
(6.) Channel Islands:
Located between England and France, the Channel Islands host hundreds of international corporate subsidiaries.
The Channel Islands consist of two British Crown dependencies:

• The Bailiwick of Jersey, consisting of Jersey
• The Bailiwick of Guernsey, consisting of three separate jurisdictions: Guernsey, Alderney and Sark

Crown dependencies are not part of the United Kingdom, but are instead self-governing territories.There is no inheritance tax, capital gains tax or standard corporate tax. This has made Jersey a popular tax haven, and the island now houses $5 billion worth of assets per square mile. Maybe you should add the Channel Islands to your list when you look for cheap places to retire.
(7.) Isle of Man:
The Isle of Man is considered somewhat of a financial center for low taxes. This tiny island, located between England and Ireland has a very low income tax, of maximum 20% and no more than 120,000 pounds.
Pros: Low tax rates are not the only advantages offered by this small island. Their pension plan is also really great, which is way many companies choose to have their employee pension plans held in accounts in this country. It's possible to benefit from these pension plans starting from the age of 50 and onwards.
Cons: Establishing companies in the Isle of Man may be costly, especially for non - commercial activities and the registration process can be quite complex.
(8.) Ireland:
Ireland is often referred to as a tax haven, despite Irish officials asserting that is not the case. However, a Congressional Research Service report found that American multinational companies collectively reported 43 percent of their foreign earnings in five small tax haven countries: Bermuda, Luxembourg, the Netherlands, Switzerland and Ireland.
(9.) Mauritius:
Located in the Indian Ocean, near Madagascar, Mauritius is another island that attracts many foreign investments. A large number of international corporations have subsidiaries established in Mauritius.
Pros: The corporate tax levied in Mauritius is really low, compared with other jurisdictions, of only 15%. Capital gains and interest are not taxed in Mauritius and residents can also benefit from various tax exemptions, due to double tax treaties.
Cons: Mauritius was used as a location for investments, especially for those directed towards India, but in May 2016, a new protocol amending the double taxation treaty between India and Mauritius was signed. This gives India a source based right to tax capital gains, which arise from alienation of shares of Indian resident companies acquired by Mauritius residents.
(10.) Monaco:
This tiny state has only 36,000 residents, but it attracts many entrepreneurs and companies willing to invest in this small country. Why? Because the income tax for residents hasn't changed since 1869.
Pros: Once a person has become a Monaco resident, they are allowed to keep all the income they make, without any limitations. It's no wonder that most of the world's millionaires are residents of Monaco. Corporate taxes are also really low, which makes Monaco a great location to start a company.
Cons: In order to become a Monaco resident, a person needs to be a citizen of an EU - member state or have a long-term French visa. It's also necessary to deposit at least 100,000 Euro in a bank in Monaco, to have private health insurance and to buy a property in Monaco.
(11.) Switzerland:
Switzerland has in its banks right now the equivalent of 6.5 trillion dollars of assets under management, and 51% of that comes from abroad, so it's not really a surprise the country is also a global leader in asset management, with a market share of 28%.
Under international pressure, Switzerland has relaxed slightly in recent years its laws on fiscal secrecy, but the lobby for keeping these regulations remains strong as evidenced by the aggressive policy of the country against pressures for disclosure of information in this sector.
Pros: Combining low taxes with a top - notch banking system, it's no wonder that Switzerland is one of the most popular tax havens in Europe. Opening a Swiss company is a relatively fast process, compared with the legal hurdles of other European states.
Cons: Although any individual or legal entity is allowed to register a company in Switzerland, one of the conditions required by Swiss law is to have at least one Swiss company director. To solve the Swiss directorship issue and tackle company formation Switzerland you should talk to experts.
(12.) Bahamas:
Pros: In the Bahamas, the personal income tax rate is zero. It can't get any lower than that, right? There is also no wealth tax, no capital gains tax, no withholding tax and various other tax benefits both for individuals and for companies.
Cons: Not everyone can take advantage of a tax exemption on personal income, just those who are also residents of the Bahamas. Obtaining the residence here requires, in particular, the realization of an investment in a local property of a minimum value of $500, 000 (or a minimum of $1,5 million for the accelerated procedure).
The Bahamas doesn't levy direct taxes, so there are no double tax treaties with other countries, but this tiny country has signed tax information agreements with 29 other countries, including USA, UK and Canada. However, information disclosure is limited to criminal matters.
(13.) Hong Kong:
Hong Kong is one of the emerging tax havens, as here assets of 2.1 trillion dollars are managed right now. It has the second largest stock market in Asia, after Tokyo, and shows the highest density of people with fortunes of more than 100 million dollars. Just under half of foreign investment in China went to Hong Kong in 2012 for example.
Pros: Companies incorporated in Hong Kong pay tax only on profits sourced in Hong Kong and the tax rate is currently at 16.5%. There is no withholding tax on dividends paid to foreign shareholders and no tax on capital gain.
Cons: China's control over Hong Kong hinder initiatives to increase transparency and further enables the holders of bearer securities - instruments for some of the most harmful criminal activity - to remain unidentified. This damages somewhat the credibility and the reputation of companies registered in Hong Kong.
(14.) Malta:
Malta makes it on the top of the list of the countries with the lowest taxes in the world in 2016, which is why is one of the best tax havens in 2017. Living on the small Mediterranean island makes it possible to gain the status of resident and to be thus taxed only on income from local sources.
Pros: One of the best tax advantages for individuals and companies is that there is no tax levied in Malta for revenues obtained abroad.
Cons: Maltese nationality can also be obtained through a citizenship by investment program, for those who want a faster process. However, in order to obtain Maltese citizenship, it is necessary to make investments in Malta worth about 1 million Euros.
(15.) Panama, which is a significant international maritime centre. Although Panama (with Bermuda) was one of the earliest offshore corporate domiciles, Panama lost significance in the early 1990s. Panama is now second only to the British Virgin Islands in volumes of incorporations.
(16.) New Zealand, the remotest jurisdiction, has the advantage of being a true primary jurisdiction but with a tough but practical regulatory regime. It is well positioned for the Asian market but retains close ties to Europe.
(17.) Nevis: the offshore companies located in this Caribbean island of the Federation of Saint Kitts and Nevis are exempt from all local taxes, including income, withholding, capital gain taxes, stamp duties and other fees or taxes based upon income or assets originating outside of Nevis or in connection with other activities outside of Nevis

All Consideration Is Good Consideration, As Long As There Is an Exchange Made Between Parties

Consideration is an origin of any promise made to anyone, when a person makes a promise to another he does so in respect of deriving some benefit or return for his promise which another is competent to bestowing on him. This is called consideration. It is part of the contract law simply exchange of one thing of value for another thing. In the contract law, consideration is being considered so significant for the validity of an agreement that the absence of consideration make the contract invalid. Consideration is one of the six elements of contract which is required in case of a valid contract. The doctrine of consideration has been developed by the common law.
Consideration must be in the form of value which a person gives to another person. But there are also conditional consideration convene the legally values. For example, a military officer cannot demand a reward for the capture of any terrorist because he is already on a duty to perform for the state. There are many judgments available in the books of law with a view to explain the consideration, one of them as follows; in which the crew members could not got the extra money which is promised by the captain of the ship in exchange of sailing the ship to back home because they were already doing their job.
It is a matter of fact that consideration must move from one party to another party. There are precedents available in the books of law. There is a case in which the subcontractor received the claim as he was promised to get extra money if he builds a block of flat for the party. In this case subcontractor stuck into financially crisis and the party promised to pay some extra money if subcontractor completes the project but after completion the project the party refused to pay extra money claiming that projected got late but court gave order to pay extra money declared that the promisor made practical benefit.
A substantial consideration may be in the form of right, interest, profit and benefit. It is also in the form of responsibility or in the form of undertaking or economic values. There is another case available in the books of law in which a father promised to pay his son if his son quit smoking and drink and drugs. After that father refused to pay but court passed judgment in the favor of son as it was a valuable consideration and gave judgment to pay his son promised money. The most important purpose of consideration is to binding a document in the legal protocol.
A good consideration may be in the form of present, past and future. A consideration given before the date of present promise is said to be a past consideration. In English law the consideration must be present and future and past consideration is not liable to be considered. But in some regional law the past consideration must be deemed as good consideration. A good consideration does not have to be equal or sufficient.
A valid consideration must be against the promise between both the parties. It is also in the form of payment of money but there are other instances representing the valid consideration. An indemnity agreement in which collateral surety will be given is also an instance of valid consideration.
A good consideration not needs to be sufficient and correspondent to the promise. While making a contract there may be a chance of undue influence or coercion which leads the consideration into the inadequacy. Consideration should be certain and real and competent and not to be illusory or vague. If a man promises to another that if you do my work I will discover a treasure for you, it is not a certain consideration although it may contain a sense of doubt. These kinds of consideration are not considering a good consideration. The main object of the consideration should not be prohibited by the law. In case the performance of an act is against the law the agreement would be called a void agreement. Sale of liquor without registration is an open example of void agreement.
If a consideration is including in the injury of a person or damage of anyone property then it is also called unlawful consideration. This kind of considerations has no legal capacity in any court of law and is not claimable. When a person keeps a promise to do anything that includes the damaging the property of any other against an exchange then this kind of claim is not valid.
A good consideration should not be immoral and damaging the cultural attributes and behavior of any living society, although it should be contributing the positive vibes in the society subsequently helps to building a good relationship between the legitimate parties. Immoral consideration includes letting a house to a person having notorious reputation in the society which can create disturbance to neighborhood.
Consideration should not be against the public policy or any law prevailing in the region. A person cannot make any promise subsequently against the public policy or damaging the right in respect of public at large. Interfering in the administration of justice is clear example of encroachment in the public policy. A good consideration should not involve any intention which makes an agreement against the public policy.
When any party or any person want to make an agreement between them there is a consideration exist and without consideration both the parties cannot make a contract or any agreement. It is a rule of law that with a valid consideration an agreement cannot exist and a good consideration makes an agreement into legitimate contract. So consideration is an essential element in any contract made between the parties and without consideration a contract cannot be consider a valid contract. The absence of consideration renders the contact invalid but it should be noted that inadequacy of the consideration in not a ground for invalidity of the agreement. An agreement can be invalid on other various grounds. A consideration turns a contract into a legitimate document which is also admissible in the court of law of any region in the world.

All You Need to Know About Company Formation in Dubai

Business structures in Dubai are broadly divided into sole proprietorships, partnerships, and companies. Each of these have their pros and cons, but most people prefer to operate as a company because it is recognized as a separate legal entity from the owners. This means that the owners are only personally liable for the company's liabilities to the extent of their ownership of the company.
Legal entities in Dubai
Company formation in Dubai is a bit complex and without a good understanding of the different types of companies and the requirements and procedure for registration, it can be quite difficult to do it right. A one-person company is a company whose shares are owned by one person. In Dubai, this type of company can be owned by a GCC national, a UAE national, or another company whose shares are all owned by GCC or UAE nationals. The name of the company must include the name of the owner and LLC at the end. Such a company's shares cannot be publicly traded; further requirements must be met for a one-person company to go public.
A limited liability company (LLC) is a company that has anything from 2 to 50 stockholders. For an LLC to be registered in Dubai, at least 51% of the shares should be owned by UAE nationals. Such companies' accounts are required to be audited by an auditor who is accredited by the UAE. LLCs' shares are publicly traded on the stock exchange. One-person companies and LLC's pay corporate tax, which is separate from the individual owners' tax. Partnership companies are owned by two or more people who may either be limited or general partners. The general partners are UAE nationals while the limited partners are foreigners. Profits are shared according to a pre-agreed ratio and partners are taxed individually.
A sole proprietorship is a business owned and run by one person. The owner is personally liable for the business's financial obligations, meaning that in the event that the company is unable to meet its financial obligations, the owner's personal assets can be used to settle them. This is the main disadvantage of this type of business. However, it gives the business owner complete autonomy to run the business the way he/she wishes to, without the bureaucracy involved in managing a company. Additionally, unlike companies, a sole proprietorship has no minimum capital requirements. For a sole proprietorship to be registered in Dubai, the owner must be a UAE national or a GCC national, and must be qualified to provide the services he/she is offering if it is a consultancy business.
Conclusion
While the above are not the only forms of legal entities in Dubai, they are the most common. Company formation in Dubai is not very complicated if you understand the different legal entities and their implications on your business. However, it may be prudent to use the services of a business lawyer to help you decide which legal entity is the best for your business, and to help you out with the registration of your business.

Doing Business in Multiple States

During the incorporation process, you may hear terms such as, "foreign corporation", "foreign LLC" or, "qualification" depending upon the type of entity that is being formed. The term, "foreign", however does not relate to another country, but rather relates to your home state. This means that if your company is formed as a corporation or limited liability company in one state, but is operating in another state, the state of operation is deemed as the "foreign state".
This is an important feature of business compliance. To help you understand this issue, let's tackle the concept of "Qualifying as a Foreign Entity" using the following scenario: Jane Doe formed a limited liability company called XYZ LLC in Delaware, but the business is conducted solely in Florida. In this case, XYZ is a domestic LLC in the State of Delaware and possibly a foreign LLC in the State of Florida.
Why a Foreign Entity Filing?
There are a few situations where a business owner may be required to make this type of filing, including:

• Maintaining a brick or mortar location
• Hiring Employees
• Transacting business that requires special licensing
• Deciding to file a Fictitious Name or "Doing Business As "(DBA) in another state
• Closing on Real Estate

There are also cases where filing as a Foreign Entity will likely not be required: These include:

• Telephone sales
• An online business that sells goods to people in other states
• National advertising campaigns
• Selling through independent contractors

The ProcessIf you fit any of the filing criteria for a foreign entity, or you have been told to register as a foreign entity, there is a process to file.
To qualify your business, you will undergo a similar process to that of the incorporation or LLC formation. In most states, the document that is filed is called a Certificate of Authority or Foreign Registration. As with any state applications, there are filing fees, which can range from $25 to $750. In most states, there are additional documents that must accompany the Certificate of Authority or Foreign Registration. The documents consist of either a Certificate of Good Standing and/or a Certified Copy of the Articles of Incorporation or Certificate of Formation from the home state. The Certificate of Good Standing will demonstrate that your business is in good standing and that there aren't any outstanding fees.
A Registered Agent is required when you file as a foreign entity. Most Registered Agent companies provide their services in every state, so you will be able to retain the same Registered Agent service.
Once you have secured all your documents, the Certificate of Authority, Certified Copy and/or Certificate of Good Standing, and any other supporting documentation, can be submitted to the state. Normal processing times vary from one to three weeks.
Additional Requirements
As with other incorporation or LLC filing requirements, a few states have other requirements of Foreign Corporations or LLCs. Arizona, Georgia, Pennsylvania, Nebraska, and New York require that a business advertise or publicize in a local paper that your company is now providing services and conducting business in that state. Many states also require that foreign companies and LLCs file an annual report. In a few states, you will be required to file biennial reports. Of course, there will be filing fees. To aid businesses in this requirement, many states have online portals for filing annual reports.
So now that you have a better understanding about "qualification", be sure to conduct your due diligence. Check with any state that you plan to do business in and research their laws. A good starting point for research will always be the Secretary of State's office.

Documents Required for LLP Registration

Limited Liability Partnership is a new form of business and a really convenient form of business. It is more advantageous for the small business firms and the start-up's to start or carry out their business with the least risk and convenience. This is the form of business which carries the benefit of Limited Liability like a Company as well as achieves the flexibility of the general Partnership. Moreover, the LLP incorporation procedure is not a complex process if everything is done accurately as per the given law and by providing the detailed documents to the RoC- Registrar of Companies.
Hence one shall be aware and careful about the documents required for Incorporation of a Company. List of documents required are mentioned and discussed below:
For the registration of the LLP the Designated Partners needs the following documents:
Required documents for Incorporation:
Documents required can be bifurcated into two parts. Namely:

1. In respect of Designated Partners
2. In respect of Registered Office

In respect of Designated PartnersA person being Indian National or a Foreign National can be a designated partner or partner of a Limited Liability Partnership. Documents required are listed below respectively:
The Indian Nationals:
The Indian Nationals will require these documents:
1. PAN Card: (Self-attested by Designated Partner or Partner)
The PAN card copy is a mandatory document for the Incorporation where the Name written in the PAN card will be taken as the name for identity proof thus it is necessary to keep the PAN Card up-to-date (in case of change of name, or marriage) at the time of submitting the documents. In case there is any error in the PAN Card then the process will get stuck.
2. Voter's ID/ Passport/ Driver's License: (Self-attested by Designated Partner or Partner)
Any of the above mentioned proofs can be attached with the documents and these proofs should contain the name and details similar to the name and details stated in the PAN Card, in case they are not so then one should get them rectified before submitting them to the RoC. The above mentioned documents can be used as address proof of the Designated Partner's current address. The documents like Election Card, Ration card, Adhaar Card etc. can also be provided here as proof.
3. Scanned copy of Latest Bank Statement/Telephone or Mobile Bill/Electricity or Gas Bill: (Self-attested by Designated Partner or Partner)
The bills which are to be attached as resident proof and should be latest or recent which can be 2-3 months old and not more than that so as to get accepted. It should contain the name of the Designated Partner as stated under the PAN Card.
4. Scanned copy of passport-sized photograph
The Foreign Nationals:
1. Passport:
The passport of the foreign national is mandatory for the Incorporation as it states the identity of the foreign national. The Passport stating the Name and Date of Birth of the Designated Partner should be apostilled and notarised and should be in English Language. (Translated in case the same is in foreign language)
2. Address Proof:
The Designated Partner can attach any of the below mentioned documents as an address proof:

• Driving Licence
• Residence Card
• Bank Statement
• Government issued form of Identity containing Address

3. Residential Proof:The Designated Partner can attach any of these documents which are Bank statement or any kinds of bills such as Electricity Bills, Telephone Bills, and Mobile Bills. (Appostilled and notarized document)
In respect of Registered Office Address:
The registered office address proof as mentioned below shall be submitted along with the form filed for Certificate of Incorporation in the name of the Limited Liability Partnership:

1. The document stating the full address of the property where LLP will be registered such as Electricity Bill/Property Tax Bill/ Telephone Bill etc.

NOC, in case of Rented Property: The no objection certificate along with the valid Rent Agreement by the owners of the Property.

The above mentioned documents are required for the Incorporation of the Limited Liability Partnership with MCA. The documents should be submitted in a proper form, in order to follow the hassle-free Incorporation process. For a faster, easier and transparent process.

Floatation of a Company and Prospectus

Once a company has been registered, it has to take off. This is described as floatation of a company. It is true that a company comes into existence once registered and can immediately upon do business. But a newly formed company often needs to get sufficient capital to take off. The promoters there have to take necessary steps to take off. The promoters there have to take necessary steps to obtain working capital for the successful take off of the company.
Where there is an existing business in the form may be of a sole business or a partnership, which is taken over by the new company, the capital of the former business becomes part of the capital to float the new company. Similarly there is transfer of capital where one company takes over another.
There exist various ways of floating or raising capital for a company. The method is usually affected by the type of company: whether private or public.
Private companies usually rely on equity contributions from their shareholders, though new shares may be issued for cash.
Also, capital may be raised by debentures, loans and overdraft. It could also be floated by private placement. On the other hand, public companies may be financed to take off by equity contributions, debentures, loans and overdraft and private placement. But additionally, it could invite the public to buy shares and purchase its debentures by being quoted in the stock or capital market.
PROSPECTUS
A public company invites the public to subscribe for its shares and debentures through the issuing of a prospectus. Section 48 of the Investments and Securities Act (I.S.A.) provides that it shall not be lawful to issue any form of application for securities in a public company unless the form is issued with a prospectus of the company.
A prospectus is any notice, circular, advertisement, or other invitation offering to the public for subscription or purchase any shares or debentures of a company.
The ISA by section 57(1) provides that no prospectus shall be issued by or on behalf of a company or in relation to an intended company unless, on or before the date of its publication, a copy has been delivered to the Securities and Exchange Commission for registration.
CONTENT OF A PROSPECTUS
By section 50(1) of the Investment and Securities Act every prospectus issued by or on behalf of a company must state:
- The number of founders or management or deferred shares (if any).
- Directors' qualification shares (if any) and remuneration of the directors as provided in the articles.
- Names, addresses and descriptions of the directors or proposed directors;
- The minimum subscription, which is the amount, which in the opinion of the directors, must be raised through the issue in order to provide sums for the following matters.
a) The price of any property purchased which is to be paid for out of the proceeds of the issue;
b) Any preliminary expenses and underwriting commission payable by the company.
c) Repayment of any money borrowed by the company in view of a and b above
d) The amount to be provided in respect of the matters stated in (iv) otherwise than out of the proceeds of the issues and the sources of such amounts.
- The time of the opening of the subscription lists.
- The amount payable on application and allotment on each share.
- Particulars of shares and debentures issued otherwise than for cash
- Particulars of options on shares or debentures
- Particulars of vendors of properties sold to the company.
- Amount paid for property, stating amount paid for goodwill.
- Date, parties, and general nature of every material contract.
- Names and addresses of the company's auditors.
- Directors interest in the property proposed to be acquired by the company.
- Preliminary expenses, commission and brokerage.
Promoters remuneration.
EXPERT STATEMENT IN A PROSPECTUS
Where a prospectus includes a statement made by an expert before it is issued, two conditions must be satisfied:
1. He must have given his consent and must not, before delivery of a copy of the prospectus for registration, have withdrawn his written consent to the issue with his statement included;
2. A statement that he has given his consent must be contained in the prospectus.
LIABILITY IN RESPECT OF PROSPECTUS.
Since potential investors in the company know little or nothing about the company, the contents of a prospectus must include material facts as would enable the investing public to make a correct assessment of the true purpose and position of the company. Consequently, the prospectus must not contain false or misleading statements or information. The company and those responsible for the issue of a prospectus that contains misstatements at the action of the subscriber maybe civil or criminal.
CIVIL REMEDIES.
This is both under the common law and the CAMA 2004; and they are:
1. Action by the aggrieved subscriber in damages for fraud under section 562, he may sue for compensation.
2. Action for recession of the contract of allotment (section 571).
To succeed in a claim for damages and /or recession under the common law, such subscribers must prove:
a) That the misstatements is a material statement of facts;
b) That he was induced by the misrepresentation to subscribe for the shares;
c) That the misrepresentation was fraudulent and that it was made by a person acting on behalf of the company;
d) That he suffered loss or damage thereby. Under the CAMA, to succeed, the aggrieved subscriber must prove that the prospectus contained a misstatement which he relied upon and thereby suffered loss.
CRIMINAL PROCEDURES
By section 563, any officer of the company who authorizes the issue of a prospectus, or a statement in lieu of prospectus, which contains untrue statements shall be guilty of an offense and be liable on conviction upon an indictment to imprisonment for a term not exceeding 2 years or fine not exceeding N5, 000 or both; or summary conviction to a term of 3 months or a fine of N500 or both.

Features of a Limited Liability Partnership

A foreign investor looking to set up business in India must consider multiple factors before deciding on what type of business entity to choose. Limited Liability Partnership (LLP) is gaining popularity with its numerous benefits it gives to the entrepreneur. LLP is a business entity which combines the limited liability of a company and the flexibility of a partnership.
LLP Registration in India requires that the LLP should operate in an industry where 100% FDI is allowed
We have listed down the features on a LLP which should help you make informed decision.
Partner's Liability is Limited
One of the main reasons to register an LLP is limited liability. Limited liability means limited exposure to financial risk by investors of a company. Limited liability ensures the partner's liability in the LLP is limited to the capital amount invested in the LLP.
For example, if Sam invested Rs 50,000 to start a LLP in India. The maximum liability he can have is Rs 50,000. In other words, his can potential loss cannot be beyond Rs 50,000. He won't be liable for any liability beyond this initial Rs 50,000.
Another important feature of an LLP is that the act of one partner does not affect the other partner. For example of one partner borrowed some money in the name of the LLP without the knowledge of the other partner, the other partners cannot be held liable.
Transfer and Exits
LLP has perpetual succession meaning, the LLP can continue its existence irrespective of changes in partners. Partners may come and go but the LLP continues to be in existence. A partner of an LLP can resign and assign his profit sharing to another person and exit the LLP. Exit formalities can be completed by way of executing a simple supplementary agreement.
Legal Compliance
Limited companies need to hold board meeting 4 times a year, at least once in every quarter. It also needs to hold annual general meeting and maintain minutes for such meetings. LLPs do not have to adhere to such compliance unless and otherwise specified in the LLP Agreement.
LLP need not get its accounts audited unless its turnover exceeds Rs. 40 Lacs or the capital contribution is more than Rs 25 Lacs any financial year.
Income Tax
LLPs do not have Dividend Distribution Tax (DDT) whereas private limited companies in India are liable to pay DDT @ 16.609 % (inclusive of surcharge and education cess) on dividends paid to the shareholders.
The income tax rate for LLP is 30%. The profits shared by the partners after paying taxes is exempt from tax.
Let's look at an example
Jack and Jill start a LLP with 50% profit sharing between them. In a financial year, the LLP had profit of Rs 10,00,000. The corporate tax is Rs 3,00,000 (30% of profit). The balance Rs 7,00,000 was shared between Jack (Rs 3,50,000) and Jill (Rs 3,50,000). Jack and Jill do not have to pay tax on their income.
Body Corporate
LLP and Private Limited companies are body corporate and a legal entity separate from its partners and shareholders. Limited Liability Partnership, similar to a private Limited company, is capable of entering into contracts and holding property in its own name.
LLP Agreement
LLP is organized and operates on the basis of an agreement. The LLP agreement will have the mutual rights, duties and obligations of the partner in relation to each other and other legally binding provisions.
Remuneration and Interest on capital
Partners are allowed to take remuneration as a working partner, provided the LLP agreement permits.
The partners of the LLP are also eligible to charge interest on the capital invested up to 12% p.a. The partners also can take interest on loan given to the LLP, provided the interest rates are within the limits specified in the income tax act.

Different Types Of Companies That Can Be Formed

If you are thinking about starting a business then you may be thinking about different company types that are present. Are you wondering what kind to form? If yes, it may be a good idea to know about some company types. This article aims to inform you about a limited, single member, and unlimited company.
Let us start off by describing what a company is.
What is a company?
A company tends to be a legal form particularly of business organization that is regarded as a separate legal entity. It is therefore separate along with distinct from the individuals who run it.
Now let us look at a few types so that you can get an idea of which one may be better for you to form.
A Limited Company
The shares present will be owned by the shareholders it has.
In a limited liability company, it is vital to know that the shareholders' liability, if the business should fail, tends to be limited precisely to how much, if any, of the remaining unpaid precisely on the shares that are held by them.
Being a separate legal entity, this type of business tends to, therefore, be separate along with distinct from the individuals that run it.
It is important to know that only the business may be sued particularly for its obligations moreover may sue so as to enforce its rights.
There are different types of limited company. This includes A Private Company Limited by Shares (LTD company), A Designated Activity Company (DAC), A Designated Activity Company Limited by Guarantee (DAC), A Company Limited by Guarantee (CLG) and A Public Limited Company (PLC).
A Single Member Company
This is a business that is incorporated with only one member. Or it is one whose membership tends to be reduced to one individual.
Nevertheless, the company needs to have a minimum of two directors plus a secretary. (This case can be revoked if it is an LTD one. This may also be such that it is a single director company).
It is up to the sole member to not hold General Meetings, encompassing Annual General Meetings (AGM's).
Financial statements along with reports which would usually be laid before its AGM will still have to be prepared plus forwarded to the member.
Remember that all company types may be single member companies.
An Unlimited Company
There is no limit put on the liability of an unlimited company's members.
Recourse may be had precisely by creditors to the shareholders specifically in respect of any liabilities that are owned by the company that it has not been able to discharge.
This type of company may be public or private. It should have at least two shareholders.