Manner of Appointment of Statutory Auditors and Payment of Remuneration

i. Procedure to appoint Statutory Auditors in the case of Companies not having an Audit Committee
a. An Auditor matching his qualification and experience with the size and requirements of the Company shall be chosen by the Board.
b. The Board shall then see whether there are any orders or pending proceedings relating to professional matters of conduct against the proposed Auditor before ICAI or any other competent Authority.
c. The Board has to see whether he satisfies the eligibility norms specified under Section 141.
d. The Board has to obtain a declaration from the Auditor that he is eligible to issue a certificate under rule 4(1).
Note: As per Rule 4(1), the Company has to get the eligibility certificate after the Auditor is appointed in the AGM. What if the management finds out if the Auditor is ineligible to issue the certificate after he is appointed? The Board should then take the pains to identify a new Auditor in replacement of the appointed Auditor. To avoid such a scenario, it is suggested that clause (d) be followed.
e. The Board has to finalize the remuneration payable to the Auditor in consultation with him and pass the resolution in the Board subject to the approval of the shareholders in the Annual General Meeting. Section 142 requires the Company to quantify the remuneration in the General Meeting.
Note: Under the Companies Act, 1956, The Company had the privilege to appoint Auditors in the AGMs on a remuneration that could be decided by the Board at a later date. That era is over.
f. With the Board’s consent on the Appointment as well as on the remuneration, the intended resolution to be passed could be mentioned in the AGM NOTICE itself. Here is the model resolution.
“Resolved that in accordance with the provisions of Section 139, 141 and 142 of the Companies Act, 2013 read with rule 3(7) of the Companies (Audit and Auditor) Rules, 2014, M/s.ABC & Co, Chartered Accountants, Bangalore be and are hereby appointed as Statutory Auditors of the Company so as to hold the said office from the conclusion of this meeting till the conclusion of the sixth Annual General Meeting on a consolidated remuneration of Rs.22,000 (Rupees twenty two thousand four hundred and seventy two only) for each Audit period unless otherwise revised subsequently at the time of ratifications in the subsequent Annual General Meetings”. for more information: Book keeping services
“Resolved further that M/s ABC & Co, Chartered Accountants, Bangalore shall in addition to the above remuneration be eligible to reimbursement of all expenses incurred during the course of Audit and availing   all such facilities as are extended to them during Audit”.
g. The Company shall file an E Form in ADT–1 intimating the Registrar about the appointment of Auditors within 15 days from the date of his appointment
h. The Company shall also inform the Auditors about his appointment in the AGM within 15 days of his appointment.
ii. Procedure to appoint Auditors in the case of Companies having an Audit Committee
i.    Instead of the Board, the Audit Committee has to go through the process of selection of Auditors as mentioned in Clause (a) to (e) and then recommend to the Board which in turn recommends to the Members for consideration in the AGM.
ii.    a. If the Board disagrees the recommendation of the Audit committee, it shall refer back again to the said Committee citing reason for disagreement and recommending reconsideration.
b. If the Audit committee decides not to reconsider the recommendations made by the Board, the Board shall then record the reason for disagreement and send its own recommendations for consideration to the members to decide in the Annual General Meeting.
3. Conditions and Eligibility Criteria for Appointment of Auditors
The Auditor appointed by the Members or by the Board as the case may be, shall submit a certificate stating that
i. He is eligible for appointment and is not disqualified for appointment under the Companies Act, 2013, the chartered Accountants Act, 1949 and the rules and regulations made there under.
ii. The proposed appointment is asper the terms provided under the Act.
Note: Section 141 and rule 10 list out the eligibility criteria for the Auditors and Section 144 list out services that he should not render either directly or indirectly while serving as Auditor
iii. The proposed appointment is within the specified limits laid under the Act.
iv. The list of proceedings against the Auditor or Audit firm or any partner of the Audit firm pending with respect to professional matters of conduct as disclosed in the certificate is true and correct.
4. Filling up of Casual Vacancy caused due to various reasons in the case of Companies not subject to Audit by the Comptroller and Auditor General of India
a. In the case of casual vacancy caused by the resignation of the Auditor, the following procedures have to be      followed.
i. The Board of Directors shall approve the filling up the casual vacancy within thirty days and then recommend such appointments to the members.
ii. The members in an Extra Ordinary General Meeting shall confirm and approve the vacancy filled up by the Board on its recommendations within three months.
b. In the case of casual vacancy caused by any other reason other than resignation of the Auditor, the Board of Directors has the powers to fill such a vacancy within thirty days.
c. In the case of Companies having Audit Committee, filling up of casual vacancy shall be done after taking into account the recommendation of such a Committee in addition to the recommendation of the Board.
The Appointed Auditor shall hold office till the conclusion of the next Annual General Meeting
5. Filling up of Casual Vacancy in the case of Companies subject to Audit by the Auditor Controller General of India
i. The Comptroller and Auditor General of India shall fill up the casual vacancy within thirty days.
ii. In case the casual vacancy is not filled as mentioned in (i) above, the Board of Directors shall fill such vacancy within the next 30 days.
6. Reappointment of either the retiring Auditor or some other Auditor in the place of the retiring Auditor.
As per Section 139(9) of the Act, the retiring Auditor shall be reappointed at an Annual General Meeting if
i. He is not disqualified for reappointment
ii. He has not given the company a notice of unwillingness to be reappointed.
iii. A special resolution is passed at the Annual General Meeting appointing some other Auditor or providing expressly that he shall not be reappointed.
iv. The retiring Auditor shall continue to remain as Auditor till the end of this term viz., conclusion of the sixth Annual General Meeting if no other auditor is appointed or reappointed.
Note: This is contrary to rule 3(7) as mentioned earlier.
7. Services to be rendered by the Statutory Auditor
i. The Auditor shall conduct the Statutory Audit the manner in which it is laid down under Section 143.
ii. The Auditor in his report shall specify all matters as are enumerated in Section 143 and Rule 11.
iii. In case of frauds, the Auditor shall report in the manner laid under Rule 13.
iv. Section 146 requires the Auditor to attend either by himself or through his authorized representative who shall be qualified to be an Auditor all general meetings and he shall have the right to be heard on any part of business that concerns him. (However the Company may exempt the Auditor in complying with this provision)
8. Services not to be rendered in the capacity as Statutory Auditor
The Auditor shall not render either directly or indirectly to the Company, or its Holding or Subsidiary Company the following services.
a. Accounting and Book keeping service.
b. Internal Audit
c. Design and Development of any financial information system
d. Actuarial Services
e. Investment advisory services
f. Investment Banking Services
g. Rendering of outsourced financial services
h. Management Services
Any other services as may be prescribed by the Government.
9. Restrictions on Term of Office that a Statutory Auditor can hold applicable only to certain class of Companies
The term of office of an Individual Auditor shall be for five years and for a firm of Auditors shall be for two consecutive terms of five years for the following classes of Companies.
a.    All listed Companies
b.    All unlisted Public Companies having a share Capital of Rs.10 Crores or more.
c.    All Private Companies having a capital of more than Rs.20 Crores
d.    All Companies not falling under clause (b) and (c) but having Public borrowings from financial institutions, banks or Public deposits of Rs.50 Crores or more.
However the Act has given time to comply with the above provisions by the aforesaid companies within a period of three years viz., on or before 31–3–2017.

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Analysis of Some Relevant Sections UNDER INCOME TAX With Regard to Transfer of Immovable Property

Existing Section 50C: Section 50C affects all the transactions of land and buildings in the country except Jammu and Kashmir. This section comes into picture at the time of computing capital gains under section 48 of the Income Tax Act, 1961. Section 50C provides that if the value stated in the instrument of transfer is less than the valuation adopted, assessed or assessable by the stamp duty authorities, the valuation as adopted, assessed or assessable by the stamp duty authorities will be considered for the purpose of computation of capital gains arising on transfer of land or building or both. Income tax consultants

For example: If in the agreement for sale, the value of the flat is stated at Rs. 24 lacs but according to the stamp duty authorities the valuation of the flat is Rs. 34 lacs, then it will be considered that the flat has been sold for Rs. 34 lacs and capital gains will be computed on the basis of Rs. 34 lacs.

Section 50C is applicable only to transfer of land or building or both provided it is a  capital asset. Thus, in cases when such assets are held as stock-in-trade, the section does not apply. By implication, it does not affect sale of land or building by a builder or a developer because land, building, shops, flats, etc sold by the builders and developers are generally stock-in-trade in their hands and not the capital assets.

Last few statements in bold letters acts as a platform for the insertion of new section 43CA

New Section 43CA(With effect from 1st April, 2013): A new section 43CA has been
inserted by the Finance Act, 2013 which provides stamp duty value to be considered for the purpose of computation of income under the head "Profits and Gains of Business or Profession" in respect of all transactions relating to land or building or both. This amendment has an adverse impact on almost all transactions of real estate entered into by all real estate developers and traders in India because their income would be computed on the basis of  notional income and not the real income as appearing in the books of account of a tax payer.

Exception to Section 43CA:
•    Sale consideration is received in a mode other than cash.
•    Sale consideration is received on or before the date of agreement of transfer.
•    The date of an agreement fixing the value of consideration for the transfer of the
•    asset and the date of registration of the transfer of the asset are not the same.

When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.

Section 56(2)(vii):

Existing Law: Where any immovable property is received by an individual or HUF without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property would be charged to tax in the hands of the individual or HUF as income from other sources. It is further stated that the existing provision does not cover a situation where the immovable property has been received by an individual or HUF for inadequate consideration.

As amended by the Finance Act, 2013: The provisions of clause (vii) of sub-section (2) of section 56 is amended so as to provide that where any immovable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration, shall be chargeable to tax in the hands of the individual or HUF as income from other sources.

Exception to Section 56(2)(vii):

•    Sale consideration is received in a mode other than cash.
•    Sale consideration is received on or before the date of agreement of transfer.
•    The date of an agreement fixing the value of consideration for the transfer of the
•    asset and the date of registration of the transfer of the asset are not the same.

When the above three conditions are satisfied, the stamp duty value may be taken as on the date of the agreement for transfer and not as on the date of registration for such transfer.

Section 194IA: A new section 194IA has been inserted by Finance Act, 2013 so as to
provide that every transferee, at the time of making payment or crediting of any sum as consideration for transfer of immovable property (other than agricultural land) to a resident transferor, shall deduct tax, at the rate of 1% of such sum only if the purchase value of immovable property is in excess of Rs.50 Lakhs. Consequent to this insertion, the tax payers would be required to obtain TAN (Tax Deduction Account Number) Number and also perhaps would be required to file the yearly TDS return(With effect from 1/6/2013).

Section 80EE (Inserted by Finance Act, 2013): Helpful for individuals having total income
beyond Rs. 6 lacs:
•    Lender is a bank or public financial institution.
•    Loan sanctioned between 1/4/2013 to 1/4/2014.
•    Loan is for acquisition or construction of a new house.
•    On the date of sanction of loan he should not own any residential property. Loan amount is less than or equal to Rs. 25 lacs.
•    Value of residential property is less than or equal to Rs. 40 lacs. Only interest paid is allowed up to Rs. 1 lac. in the year I. If less than Rs 1 lac. is claimed in the I year, then the balance amount can be claimed in the year II. Maximum Rs 1 lac deduction can be claimed in the 2 year spread.

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Company Formation service India

1.        Which legal entity is going to be best for what you require?

The most suitable form of entity for carrying out business in India with a long term objective would be to form a Private Limited Company, by making investment through the equity shares in the Company. The basic Requirement for a private Limited Company in India is as follows:-

·         Minimum Two Directors of The company

·         Minimum Two Shareholders of the Company

·         Minimum Capital of the Company should be INR 100000/-

2. How long does the appropriate registration of the above suggested legal entity take?

The formation of the above Entity in India takes Approximate 12-15 Days after receipt of all the necessary Documents, The breakup of the Number of days is as follows :-

Activity	Days
Taking Directors Identification Number (DIN)	1 Day
Taking Digital Signature of Directors	1 Day
Reservation of the name of the Company	5 Days
Preparation of other Document such as MOA,AOA, Forms etc	2 Days
Filling of Documents with Authorities	1 Days
Liaison with the authorities and Correction	3 Days
Getting Final Certificate of Incorporation	2 Days
Total Number of Days	15 Days

3. Formation Cost involved in the formation of the Above Company?

The Cost of formation of Private limited depends on the Authorised Capital of the Company; Following is the breakup of Cost for the formation of the Company with a Minimum required authorised Capital of INR 1 Lac.

Activity	Days
Taking Directors Identification Number (DIN)	INR 1500/- Each Director *2
Taking Digital Signature of Directors	INR 5000/- Each Director*2
Reservation of the name of the Company	INR 1000/-
Filling fees of government for final documents*	INR 6200/-
Other Government Expenses	INR 3000/-
Total Cost	INR 23200/-

* Fees Changes with the amount of Capital of Company

4. What are the operating principles/ legal requirements/ accounting requirements of a foreign company operating in India?

A foreign company operating in India and registered in India is treated as a Local Indian company. Following are the basic information for your information:-

• Subsidiary of Foreign Company need to take RBI Approval for investment made in India.
• Company need to maintain its books of Accounts.
• Company need to get its accounts audited every year.
• Company need to file its tax return annually.
• Company need to file annual account with authorities annually.
• Income tax rates applicable to Companies @30%.
• Company need to have various Business registration with authorities like PAN, TAN, VAT, CST, Services Tax, Profession Tax, Central Excise, Import Export Code, Shop Act etc depending on the applicability.
• Regular Monthly/Quarterly/Six Monthly Return shall be filled for above registration as per applicability.

5. What is the process on getting investment capital into the country? What are the pitfalls of this?

Investment in India is governed by the Foreign Direct Investment Guidelines, Mainly the investment in India is allowed under two Method :

Investment through Prior Approval : In certain nature of business the prior approval is required from the government of India and once the approval is received than the investment can be made in the Indian Company.

Investment under Automatic Route : Most of the Business are allowed to invest under automatic route, Under automatic route the company can invest in Indian Company without prior approval. Once the capital is remitted in the Indian Company within 180 of the introduction of capital the company has to carry out all the necessary document filling with the RBI. Following are the documents.

• Filling intimation of receipt of Share Capital (within 30 Days)
• Filling FCGPR form with share allotment details and other information
• Filling Legal Compliance certificate from Company Secretary.
• Filling share valuation certificate from the Chartered Accountant.

The applicability of the above 5.1 & 5.2 need to be checked based on the nature of activities and business to be conducted by the foreign Company in India.

6. Can another company be sole share holder & director of a Private Limited Company?

As per the Basic requirement for the Company formation we need minimum 2 Shareholders and 2 Directors Hence we need minimum two shareholders and directors. In order to fulfill your requirement we can form Company by giving just one share to the second shareholders. The second shareholder will hold the shares on behalf of the Company itself hence the ownership will be 100% with the Company. In respect of the directorship we need minimum two individual name to be acting as directors of the Company.

7. Do the directors need to be present in person in India to perform the formation?

No the directors need not be present to perform the formation of the Company, They can provide the documents through the courier to our office and we can take care of the things. Further there are certain documents which are required to Notarised or Certified by the Indian embassy in your country. Following are the documents which needs certification.

• Passport of the directors – Duly Notarised
• Proof of the Residential address of Directors – Duly Notarised
• Documents mentioning the father’s name of the directors. (Birth Certificate)
• Declaration of subscription of shares in the own handwriting of the shareholders or person authorised by Company. – Certified by Indian Consulate
• Resolution by the investor Company mentioning about investment in India and authorising any person to sign all documents on the investors behalf.

The above documents shall be duly notarised or certified by Indian Embassy in their country. Know more about information: Know more about information: NGO Registration In India and International transfer pricing

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Company Registration in Chandigarh

Business financial services

Chandigarh a city with pre planned real estate and wonder infrastructure welcomes varied themes of companies and corporate houses. In past few years; the city of Chandigarh has grown up with its all segments ranging from agriculture, industrial products, textiles, garments, automobile and many more. With the same amazing growth, the city got packed with world renowned business houses and corporate branch offices. This up gradation in the relative fields of the corporate sector needs to excel its leading edges.

Here, we accompany your corporate needs with company-registration; where an advance team of business attorneys and company lawyers would make you out with every legal possibility to make your company legal and trustworthy from law point of view. Here we guide you with every business formation services in Chandigarh in order to boost your corporate projects internally and externally as well. We serve our clients with complete quality and credentialed where we notify them with every status while filing company incorporation application.

Company Incorporation / Formation Services Chandigarh

While forming a company; there are various rules and regulations being formulated and stated by the concern authority. These respective regulations and procedures for company incorporation in Chandigarh usually varied with types and forms of companies. Likewise there are various types of companies available in the Indian corporate act including limited liability partnership, Limited Liability Company, private company, semi Government Company, public company and many more. All these companies get incorporated and formed under their own respective rules and regulations. It is mandatory to get follow with each and every single point of act in order to get company registration in Chandigarh. Know more about information: Company Incorporation

Thus, do mail us at info@carajput.com or call us at 011-43520194 to avail from private or public company registration services Chandigarh, LLP or LLC registration in Chandigarh.