The Rights of the Deceased: Moral Rights Incidental to Copyright Law
- Vanshika Agrawal
- 2024-04-25
Contents hide
2 CORPORATE GOVERNANCE AND ITS IMPORTANCE
3 LEGAL COMPLIANCES THAT APPLY TO A STARTUP
3.3 Prevention of sexual harassment at workplace
3.4 Deposit share capital in the bank account of the startup
3.5 Registration under the GST Act
3.6 Filing of income tax returns
3.7 Disclosure by the directors
3.8 Requirement to maintain required statutory registers
Due to the extensive growth of technology and usage of social media, there has been a vast growth of startups. Successful startups like Zomato and Urban Company have encouraged many in the country to innovate and bring in new ideas. There have been government schemes that support startups and encourage young minds to innovate, one such example of the same is schemes launched by the Gujarat government. Startups are important in the economy as they are an indicator of the technological performance in India. Firstly, because new innovation brings technological advancement, Tax, and secondly, new ideas are transferred into commercial applications.[1]
Apart from the benefits of startups, startups have also faced several issues to grow into a successful business or organization. Companies do not only have to plan a good and effective strategy for growth but also comply with various environmental regulations and other regulations of the place where the startup has been proposed. Additionally, tax regimes have to be looked into by the startups to ensure compliance. If companies initiate a startup with all compliances correctly, it will help to prevent future complications and rule out risks with taxation authorities in the future when the startup is about to mature. Government considers startups as a path to innovation India, therefore has made compliance for startups easier through the ‘Make in India’ and ‘Startup India Action Plan’ mandate.[2]
“Corporate governance is the framework that defines whatexists between company shareholders, management teams, the Board of directors, and all other key stakeholders.[3]”
The Corporate governance tries to impose regulation on corporations to minimize risks and further aims to cover all institutional aspects as well as social aspects of business. Compliance is an integral part of corporate governance and moreover a part of business ethics. In this article, we would be looking at the legal compliance that applies to a startup.
The startup after deciding the nature of the business with its unique name and location of business has to be incorporated and has to set up a registered office. The corporation has to decide whether the corporation is a partnership or a company. The company also needs to have a body of management. The business could be made simpler if there is efficiency in registering intellectual properties and ability to procure the relevant licenses. Structure of a startup must consider the need for an efficient mechanism for payment of taxes. Self-certification application has launched by the Indian government to reduce cost of compliances for nine applicable legislations in the area of environment and labor laws.
Current bank account type has to be set up in a bank under the Company’s name, this gives rise to a compliance of the need of a PAN card under the name of the company with the bank resolution that authorizes the company to set up a bank account. Banks also provide benefits to startups through bank accounts called “special privilege accounts.[4]”
Another set of compliances most startups are unaware of are the set of laws provided under Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013 whereby if there are ten or more employees in a startup, the act applies. If the startup is in purview of this statute, then it comes under the District Officer of the region appointed for the purpose. The act requires startups to have a redressal mechanism and non- compliance can lead to cancellation of license of the startup business[5].
Within 60 days of incorporation of the startup, every shareholder is require to deposit the share amount to the bank account of the company. Deposition of money through cheques is a mandate if the shareholder has a subscription of shares that are of value above INR 20,000.[6]
Various benefits are given to startups under the GST Composition Scheme, therefore, to avail such benefits, startups need to register themselves under the GST Act. Though, startups generating less than INR 20,00,000 are exempted from registration under the GST Act.
Details of the company’s earnings, details of taxes startups are liable to pay and the taxes paid. Forms have to be fill if the company is qualified to get some sort of deduction or benefits or refunds by the government, details of the same have to mention in the income tax returns that are filled. Income tax filing is a mandatory requirement by the Indian government even if the startup business is not earning a very significant income. If this requirement is not complied with, there could liability like penalty or prosecution imposed by the Income Tax Department of India[7].
To ensure transparency, directors are mandate to disclose all material facts regarding ownership in the company, status of interest, position held in any LLP (if any).
A record of minutes of the meetings, register of directors and members have to be maintained. Noncompliance could lead to penalty up to INR 3,00,000.
Annual returns have to filled with the registrar of Companies within 60 days of Annual General Meeting (AGM). This has given in the Company Act, 2013.the penalty of noncompliance ranges from 50,000 to 5,00,000.
Entrepreneurs must have the right mindset to achieve the goals the business targets and must comply with all the compliances to achieve the visioned technological growth in the country. This would lead to sustainable and ethical growth of the company.
1] Cradle; schemes for assistance to startup/ innovation by the Gujarat Government; the crAdle; (January 6, 2021; 01:30 PM); https://cradle-edii.in/startup-guideline/government-of-gujarat-schemes/
[2] Pooja Prabhakar; Legal Compliance or startups; Silicon India Startup City; (January 6, 2021; 2:30 PM); https://startup.siliconindia.com/viewpoint/cxoinsights/legal-compliance-for-startups-nwid-7736.html
[3] Board management leaders; the importance of corporate governance; springer; (January 6, 2021; 12:30 PM) https://sprigghr.com/blog/board-management/the-importance-of-corporate-governance/
[4] Aditya Shrivastva; 8 Legal Compliances You Cannot Miss Out On If You Are A Startup; ipleaders; (January 6, 2021; 12:30 PM); https://blog.ipleaders.in/startup-compliances-india/
[5] Pooja Prabhakar; Legal Compliance or startups; Silicon India Startup City; (January 6, 2021; 2:30 PM); https://startup.siliconindia.com/viewpoint/cxoinsights/legal-compliance-for-startups-nwid-7736.html
[6] Aditya Shrivastva; 8 Legal Compliances You Cannot Miss Out On If You Are A Startup; ipleaders; (January 6, 2021; 12:30 PM); https://blog.ipleaders.in/startup-compliances-india/
[7] Ibid.
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