BUSINESS MODELS AND ENTREPRENEURSHIP VENTURE IN VARIOUS COUNTRIES
A. BUSINESS MODELS:-
Singapore always tops the charts among other jurisdictions when it comes to international surveys assessing business metrics. Its scores are perfect in terms of indicators such as political stability, economic competitiveness, efficacy of business ecosystem, transparency of regulations and other parameters that are crucial for establishing and growing a business entity. Singapore offers the following types of legal structures for forming a business:-
- Sole Proprietorship– A sole-proprietorship is a business owned by one person or one company. There are no partners. The sole-proprietor has absolute say in the running of the business. A sole proprietor is solely and legally responsible for all the contracts relating to the business, owns its assets and is personally liable for all its debts. Therefore, the sole proprietor has unlimited liability and can be sued in his or her name, or the business name. Further, a sole proprietorship is not considered as a separate legal entity.
In Singapore, if a person is engaged in any activity that is carried out on a continual basis for the purpose of gain, such a business must be registered (such as sole proprietorship, private limited company, or limited liability partnership). Any natural person who is of age 18 years or above can register a sole proprietorship. A Singapore registered company is also eligible to register a sole proprietorship. Sole proprietorship must appoint at least one manager who is a natural person of at least 21 years of age and who is ordinarily resident in Singapore – a Singapore Citizen or a Permanent Resident. A local Singapore physical address must be registered. Resident individuals in Singapore can use their residential address as registered office address after getting approval from the relevant authority (Housing and Development Board in the case of public flats and Urban Redevelopment Authority in the case of private residences). Section 11(1) of the Business Names Registration Act 2014 provides that if a foreigner desires to register a sole-proprietorship in Singapore, then he is required to appoint a locally resident authorized representative whilst he continues to reside outside Singapore. Such an authorized representative must be a natural person; at least 18 years of age; otherwise of full legal capacity; and ordinarily resident in Singapore.
In order to register a sole proprietorship business in Singapore, the following documents/information(s) are required:
- Proposed business name;
- Description of principal activities;
- Local business address for the proposed business;
- Copy of Singapore ID for the owner;
- Local residential address of sole-proprietor; and
- Declaration of compliance and Statement of Non Disqualification.
Registration procedure involves a) reserving the name; and b) registration of the business. The registration procedure is computerized (Required to file an application online via BizFile-Accounting and Corporate Regulatory Authority, Singapore/ACRA’s electronic filing and information retrieval system). Once the registration process in complete and if everything is in order, the registrar sends an email notification confirming the successful registration along with the registration number. Singapore government does not issue a hardcopy registration certificate anymore by default as the softcopy is valid and acceptable in Singapore. After the email notification of successful registration is received, the registrant can retrieve a business profile for his new Singapore sole proprietorship that contains important registration information, which can be used to open business bank account, sign office lease, obtain a business phone line, etc.
- Partnership– A partnership is a legal relationship between two or more persons who carry on a business with the objective of making profit and sharing it between them. As a partnership is not an entity in law, it cannot sue or be sued in its own name and it cannot own property. Singapore allows three types of partnerships:-
- General Partnership– which is like a sole proprietorship, partners are personally liable for the debts and liabilities of the business and each partner can be held responsible for the actions of another partner.A general partnership can have between two and twenty partners. As with a sole proprietorship, each partner in a general partnership is personally liable for all the debts and liabilities of the business. If the number of partners exceeds 20 it must be registered as a company. Individuals and companies may set up a partnership. It does not constitute a separate legal entity. It can sue or be sued in the firm’s name but it cannot own property in its own name. The partners divide the profits and the profits are treated as personal incomes of the partners for tax purposes and are taxed at personal tax rates.
- Limited Partnership-consists of general partners and limited partners, at least one of each kind. There is no limit to the number of partners. The liability of a limited partner is limited to the amount of his contributions and not personally liable. Unlike the limited partners, the general partners are personally liable for the debts and liabilities of the business. The limited partner cannot take active management roles in the business.
- Limited Liability Partnership (LLP)– liability of each partner is limited to the extent of his or her contribution. At least two partners are required but there is no upper limit on the number of partners. LLP has a legal identity of its own for it can be sued and sue in its own name. It can own property. Though the partners are not personally liable for the debts and losses of the LLP, the partners become personally liable in case of debts and losses arising from their own actions.
For the registration of the Partnership, first, an application for approval and reservation of Partnership name has to be filed with the Registrar. Thereafter, on approval, a partnership is required to be registered online via BizFile+ with ACRA. For the registration of the partnership, following documents are required:-
- Proposed name of the Partnership;
- Particulars of the partners/managers (foreign passport or Singapore ID);
- Residential address of the partners/managers;
- Consent to Act as Manager and Statement of Non Disqualification to Act as Manager;
- If partner is a company: Registration details of the company;
- Details of the registered address for the Partnership;and
- Declaration of compliance.
The registration process consists of two steps: a) name reservation; and b) registration of the entity. ACRA will send an email notification confirming the registration. A business profile containing the registration details can be obtained from ACRA upon successful registration. Both of these documents are provided in a softcopy format via email which is sufficient to all purposes in Singapore.
- Company– There are two types of companies, Private Company and Public Company. A private company is owned by several shareholders and is not open for public to apply for its shares. There is also a restriction on the transfer of shares of a private company. However, shares of a public company are openly available for subscription.
A limited liability company is the most commonly used business structure in Singapore. Under Singapore Companies Act, a limited liability company may be incorporated as a:-
- Private Company Limited by Shares– or often referred to as a Private Limited Company. A private limited company cannot have more than 50 shareholders.
- Public Company Limited by Shares– offers its shares to the general public and has at least 50 shareholders.
- Public Company Limited by Guarantee-is only for non-profit organizations engaged in work for the national or public interest, such as charity or art.
The first step in incorporating a company to obtain approval for the proposed name. Names for all companies in Singapore must conform to certain guidelines laid down in the Companies Act. After the company name has been approved, the following incorporation documents must be prepared and filed:-
- Memorandum & Articles of Association setting out the objects and bye-laws of the proposed company;
- Statutory Declaration of Compliance (Form 6);
- Certificate of Identity (Form 7);
- Notice of Situation of Registered Office and of Office Hours at time of Incorporation (Form 44); and
- Consent to Act as Director and Statement of Non Disqualification to Act as Director (Form 45).
All applications for the registration of a new company must be submitted online via BizFile+, ACRA’s electronic filing and information retrieval system. The company may commence business once it is registered with ACRA, subject to the condition that the company does not require any licences/approvals from other government agencies in order to carry out the business activities.
- Foreign Company Operations in Singapore– Foreign companies wishing to setup their presence in Singapore, usually chose from one of the following options:-
a) Subsidiary Company– is a Private Limited Company incorporated in Singapore with substantial shareholding held by a local or foreign company. It has a distinct entity than it’s parent company.A foreigner, who wants to set up his own company in Singapore, is required to appoint a locally resident director. The foreigner can continue to reside outside Singapore. Foreigners who wish to incorporate a company and be present in Singapore to manage its operations are strongly advised to seek approval from the Ministry of Manpower (MOM) before registration.
b) Branch Office– is registered in Singapore and is considered as an extension of its parent company and not as a separate legal business entity. Its liability extends to its parent company.Under the Companies Act, the minimum number of authorized representatives required is one. The branch of a foreign company must have at least one authorized representative who is ordinarily resident in Singapore.
c) Representative Office– is a short term set up (upto 3 years) for conducting marketing research activities, build brand value, understand local market and work with local agents. It is not allowed to enter into any commercial activities or any activities which generate revenue.
B. ENTREPRENEURSHIP IN SINGAPORE–
Startups in Singapore may run their business through different modes, such as Sole Proprietorships (foreigners have to appoint an authorized representative who is ordinarily resident in Singapore whilst they reside outside of Singapore in case the foreigner wish to reside in Singapore EntrePass is required), Partnerships (foreigners can apply for partnerships in Singapore if one of the partners is ordinarily resident in Singapore. In case all the partners are foreigners, an authorized representative must be appointed who is ordinarily resident in Singapore) or Companies. Most startups in Singapore prefer operating through a Private Limited Company, given that it is a separate legal entity and gives limited liability. Amongst other criteria required to incorporating a company in Singapore, the company must have at least one (1) local director ordinarily resident in Singapore and one (1) shareholder in order to incorporate and the company must be aware of the Accounting and Corporate Regulatory Authority (ACRA) filing requirements. Further, any foreign person who desires to pursue business prospects in Singapore is required to obtain a work pass called the EntrePass for foreign business people to start a business in Singapore and to optimize the usage of business opportunities available in Singapore. The Ministry of Manpower (MOM) and the Standards, Productivity and Innovation Board Singapore will process the application for the EntrePass and approved EntrePass applicants will enjoy the working pass for up to one year.
A. BUSINESS MODELS:-
China’s Company Law recognizes two types of companies.
- Limited Liability Company- requires a minimum capital of RMB 30,000 with less than 50 shareholders. The capital can be in the form of cash, industrial property or land use rights. A shareholder of a limited liability company is liable for the Company to the extent of the capital contribution it subscribes.
- Company Limited by Shares- set up by promotion or share offer with a minimum share capital of RMB 5 million. For incorporation, no less than two promoters are required. Establishment by share offer is subject to the approval of China’s securities regulator.A shareholder of a company limited by shares shall be liable for the company to the extent of the shares it subscribes.
Foreign Investors generally establish a business presence in China in one of five ways:-
- Wholly Foreign-Owned Enterprise (WFOE)– limited liability company wholly owned by the foreign investor. A WFOE requires registered capital and its liability is limited to its equity, it can generate income, pays tax in China and its profit can be repatriate back to the investor’s home country. Any limited liability enterprise in China which is 100% owned by a foreign company, individual(s) or companies can be called as WFOE. The registered capitalof a Wholly Foreign Owned Enterprise (WFOE) should be subscribed and contributed solely by the foreign investor(s). Foreign investors are not permitted to directly submit the application documents of incorporate a WFOE to the relevant authority in China. They must retain a People’s Republic of China (PRC) entity that is authorized or permitted by relevant authorities to act as a sponsor. The sponsor will submit all the documents to the examination and approval authorities on behalf of the foreign investor.
The registration procedure of a wholly foreign owned enterprise can be summarized as under:-
- Name pre-registration with the local Administrative Bureau for Industry and Commerce (AIC). After an application has been filed, name pre-registration is completed within five working days.
- Project Proposal should be submitted to a local approval authority where investor intends to establish a WFOE.
- Within 30 days, the foreign investor will need to register and apply for a business licence for the WFOE from the local AIC.
- After a business licence has been issued, the company must be registered with some other government authorities and obtain permits, depending on the nature and purpose of the operations. A WFOE must renew the licence with the AIC after it has paid-up the foreign capital to the foreign currency account. After paying-up the capital, the AIC will issue a business licence and the company can begin to operate within the business licence.
Documents required for establishing a WFOE include-
- Copies of passports or ID cards of all investors in the company;
- If the investor is an overseas company, it must provide a company registration certificate;
- Two two-inch photos of the executive director;
- Telephone number and fax number of the company to be established;
- A profile of the new company including details about the field of activities, estimated turnover, estimated number of staff and estimated profit of the new company;
- Original copies of the overseas bank references of each investor. This is to prove credit worthiness of the investors; and
- Original copy of the tenancy agreement of the registered office.
- Representative Office-This entity is intended to allow overseas companies a base in China for networking, conducting market research, promotion and other non-revenue generating activities. It requires no registered capital. The process to set up a representative office in China involves the following steps:-
- Submitting an application for the registration certificate with the local AIC;
- Obtaining a Public Security Bureau Certificate;
- Applying for Enterprise Code Certificates with the Technical Supervision Bureau;
- Registration with Local Taxation Bureau;
- Registration with the State Administration of Foreign Exchange;
- Obtaining Customs Registration certificate;
- Registration with the Statistical Bureau; and
- Opening up a Bank Account.
For registration, documents that may be required include- Certificate of Incorporation; Copy of Articles of Association of the parent company; Letter of authorization from the parents company’s director; Letter of authorized signatory; Appointment letter of China Chief Representative and other Representatives; Passport copies of the China Chief Representative and other Representatives; Brief explanations of the services and business conducted by the parent company and the scope of services of the representative office in China; Bank Reference and Copies of passports, photos and Curriculum Vitae for the China Chief Representative and other Representatives.
- Joint Venture-Joint Ventures are limited liability companies formed between a Chinese company and a foreign investor (the latter of which can be a company or an individual). Equity joint ventures (EJV) and Cooperative Joint Ventures (CJV) can be established in China.
EJV is a limited liability company and is required to be registered as a legal person. The main feature is that the joint venture parties take responsibility for losses and profits according to the ratio of their equity stake. The minimum level of foreign participation in an EJV is 25% of the registered capital in general. Where an EJV with less than 25% of capital contributed by foreign investor(s) is approved and registered, the business licence will indicate “foreign investment ratio below 25%” after the entry in the “Enterprise type” column. Equity cannot be transferred or withdrawn under any scenario without the approval of the government.
A CJV has the option to register as a legal person with limited liability. The parties in a CJV have the flexibility of choosing whether to operate the enterprise as a limited liability company or to operate it as an unincorporated entity under which partners bear unlimited liability. The profits of a CJV are allowed to be shared by participants as specified in the joint venture contract, and not necessarily in proportion to their capital contribution. Investment contributions from each party are not limited to financial capital but may also include non-financial assets such as intellectual property rights, buildings, materials or machinery. Transfer or withdrawal of investments is not subject to the approval of the government. Foreign investors can deploy their registered capital as they see fit.
Joint ventures in China can start their registration following an examination and approval from the Chinese Ministry of Foreign Economic Relations and Trade. The documents needed for establishing a Chinese joint venture are:-
- Application Form;
- Feasibility Study Report;
- Joint Venture Agreement between the two companies; and
- List of Candidates for Managerial Positions and other Company documents, if requested.
- Partnership Enterprise (PE)-Partnership Enterprises allow two or more foreign enterprises or individuals to do business together in China (they also allow for Chinese enterprises, as with a JV). It requires no approval from the Ministry of Commerce and no capital verification report, which means there is no minimum capital requirement. A Foreign Invested Partnership Enterprise (FIPE) can be of the following main forms-
a) General Partnership Enterprise (GPE)-Formed by general partners who bear unlimited joint and several liability for the debts of the partnership. The general partners share unlimited liabilities for the debt of the partnership;
b) Limited Partnership Enterprise (LPE)– formed by a combination of general partners and limited partners where the limited partners bear the liabilities for the partnership’s debts to the extent of their capital contributions. Limited partners generally do not participate in the daily management of the entity’s affairs and are liable for debts of the partnership only to the extent of their capital contributions to the partnership; or
c) Special General Partnership Enterprise (SGPE)– which resembles a general partnership except that it must be a professional service institution offering services requiring professional knowledge and special skills.
FIPE establishment/registration involves the following steps:-
- Name Registration with local State Administration for Industry and Commerce (SAIC);
- Pre-approval from local government authorities concerned if business scope entails such pre-approval;
- Application for temporary Business License with local SAIC;
- Obtaining a Public Security Bureau Certificate;
- Obtaining Organization Code License by local Bureau of Quality and Technical Supervision (BQTS);
- Obtaining Tax Certificate from the Tax Bureau;
- Registration and Approval with State Administration of Foreign Exchange (SAFE);
- Opening Foreign Currency and RMB bank account;
- Injecting Capital from investor’s overseas bank account;
- Obtaining Capital Verification Report by Certified Public Accountant (CPA);
- Hong Kong Company-Hong Kong is one of the fastest and easiest places to set up a business. Although a Hong Kong company is not a legal entity in mainland China, many foreign investors choose to register their business in Hong Kong to invest in China.
B. ENTREPRENEURSHIP IN CHINA–
Up until 1978, China’s industry was dominated by State Owned Enterprises (SOE’s), with ‘entrepreneurship’ only existing as very small-scale activities in retail and services such as street vendors. Throughout the 1980’s, agriculture was de-collectivized, opening up the market to foreign investors and entrepreneurship was actively encouraged through the creation of patent laws and more investor-friendly environments. The most common for foreign businesses are joint ventures, representative offices, and wholly foreign owned enterprises. Each, of course, has its pros and cons.
A. BUSINESS MODELS:-
Given below are the different types of business structures that can be set up in Malaysia. It is pertinent to mention here that regardless of the business that a person is running and depending on the business entity, registration of the business with the Companies Commission of Malaysia is required under the Registration of Businesses Act, 1956 (in case of Sole proprietorship and partnership); the Companies Act, 1965 (in case of a Company) or the Limited Liability Partnership Act, 2012 (in case of a Limited Liability Partnership):-
- Sole Proprietor (or Sole Trader)- Malaysiais owned solely by one individual, as his/her liability is unlimited.
- Partnerships– is a joint-entity holder with two or more persons to carry out a legal business in Malaysia. The Companies Commission of Malaysia requires that partnership entities must comprise of at least two (2) members and a maximum twenty (20) members. Partners in a partnership business entity are also bounded by unlimited liability.
As aforementioned, registration of the Sole Proprietorship and Partnership is governed by the Registration of Business Act, 1956. Business is defined under Section 2 of the Registration of Business Act, 1956 as, “business” includes every form of trade, commerce, craftsmanship, calling, profession., or other activity carried on for the purposes of gain, but does not include any office or employment or any charitable undertaking or any occupation specified in the Schedule;”. As per Section 5 of the said Act, registration of a new business to be done within 30 days from the date of commencement of the business. An application under subsection (1) shall be made in the prescribed form and shall state-
- The name of the business;
- The nature of the business;
- The date of the commencement of the business;
- The address of the place of business, and in the case of a business having more than one place of business, the addresses of the branches;
- In the case of a partnership, the particulars of the partnership agreement, if any;
- In respect of the associates of the business, their full names, positions held, and dates of entry into the business; and
- Such other information as the Registrar may require.
- Limited Liability Partnership (LLP)– is a hybrid between a private limited company and partnership. It is similar to conventional partnership but with the advantages of a private limited company. The salient features of LLP are:-
- It is body corporate and is a separate legal entity from its partners;
- LLP has perpetual succession;
- It is capable of suing and being sued, acquiring, owning, holding and developing or disposing of property; and
- LLP has lesser compliance requirements and is therefore a more affordable business vehicle. For example, LLP is not required to audit its accounts annually.
An LLP may be registered by an application made to the Registrar by furnishing the following information:-
- Name of the proposed LLP;
- General nature of the proposed business of the LLP;
- Proposed registered office of the LLP;
- Name and details of every person who is to be a partner of the LLP;
- Name and details of compliance officer(s) of the LLP;
- If the LLP is formed for the purposes of carrying on any professional practice, the application shall be accompanied by an approval letter from the governing body as specified in the third column of the First Schedule of the LLP Act 2012; and
- Such other relevant information as may be specified by the Registrar.
A registration of LLP is required to be done by the Compliance Officer appointed by the LLP.
- Sendirian Berhad (SDN BHD)– is a Private Limited Company, which prohibits any invitation to the public to subscribe to any of its shares, deposit money with the company for investment or subscription. Minimum members in a private limited company is two (2) and maximum is fifty (50).
- Berhad (BHD)– is a Public Limited Companywhere the shares (of the company) can be offered to the public for fixed periods and any other forms of subscription. The minimum amount of members’ (shareholders) are two (2) and maximum of unlimited amount of members.
Incorporation process of a Company in Malaysia involves the following steps-
- Application of Name Search– A name search must be conducted to determine whether the proposed name of the company is available. The steps involved are: (i) Completion and submission of Form 13A CA (Request for Availability of Name) to SSM; and (ii) Payment of a RM30.00 fee for each name applied.
- Lodging of incorporation document with the Suruhanjaya Syarikat Malaysia (SSM)– including the Articles of Association/Memorandum of Association; Form 48A (declaration by Director)-that he is not a bankrupt and has not been convicted and imprisoned for any prescribed offences; Form 6 (Declaration of Compliance)- This declaration states that all the requirements of the Companies Act have been complied with; and Additional Documents, if any.
- Registration Fees- Each application for the incorporation of a company shall be accompanied with payment as per the schedule provided.
A Certificate of Incorporation will be issued by SSM upon compliance with the incorporation procedures and submission of the duly completed Incorporation Documents.
- Foreign Company- A foreign company/ foreigner intending to start business in Malaysia usually do so in one of the following ways:-
- Branch Office- suitable for business entities that wish to expand their operations in Malaysia for short term basis. The ownership is exclusively that of the parent Company, however, there must be at least one Malaysia Resident Agent to set up the Branch. The liability extends to the parent Company.
- Representative office- suitable for foreign Companies that wish to set up temporary vehicle in Malaysia to conduct research and act as liaison office and other activities which will not result directly in actual commercial transactions.
- Subsidiary Company- Private Limited Company (identified through the words ‘Sendirian Berhad’) is the most common business vehicle in Malaysia. The basic requirements to set-up a Locally Incorporated Company under Companies Act, 1965 (“CA”) are the same for both Malaysian and Foreigner setup:-
- A minimum of two subscribers to the shares of the company (Section 14 CA);
- A minimum of two resident directors (Section 122);
- A company secretary who can be either be an individual who is a member of a professional body prescribes by the Minister of Domestic Trade Cooperative and Consumerism; or an individual licensed by the Companies Commission of Malaysia (SSM); and
- A minimum authorized capital of RM 400,000 and paid up capital of RM2.
Both the director and company secretary shall have their principal or only place or residence within Malaysia.
B. ENTREPRENEURSHIP IN MALAYSIA–
Due in large part to the proactive steps the government has taken to build a positive infrastructure for the Malaysian entrepreneurship scene has even come to grow foreign startups that find Malaysia an easier place to grow their business than back home. In the recent years, the government has adopted a policy of allowing greater flexibility on foreign equity participation in local companies. Most foreign investors incorporate one or more companies in Malaysia through which all operations in Malaysia are carried out. Such companies may even establish Joint Ventures with local companies to enter into Malaysian corporate market.
A. BUSINESS MODELS:-
Following are the different types of business structures that can be set up in the UAE:-
- Establishment or Sole Proprietorship- an entity owned by one individual with the trade license issued in his or her own name. The owner assumes all the financial responsibilities of the entity including all its financial liabilities. Establishments are usually owned by UAE nationals and GCC nationals. Since establishments are exempt from the Commercial Companies Law, certain foreign nationals may also set up sole proprietorships depending on their business activity/activities. These firms usually practice professional services and do not extend to any commercial business. Establishments owned by foreign nationals need to appoint a UAE national service agent to assist in obtaining licenses, visas, etc. The agents have no direct involvement in the business and are paid a lump sum and/or percentage of profits. Establishments or Sole Proprietorships are also sometimes referred to as Civil Companies.
- General Partnership- are limited to UAE nationals only, consisting of two or more partners who are jointly responsible for all financial obligations to the extent of their personal assets.
- Limited Partnership- consist of one or more general partners liable for the partnership’s financial obligations to the extent of their personal assets, and one or more limited partners liable for the partnership’s obligations only to the extent of their respective shares in the company. Usually the general partner manages the business and the limited partner does not participate in day-to-day activities.
- Joint Participation (Ventures)- is an association between two or more partners who share in the profit and loss in one or more commercial businesses conducted by one of the partners in his or her name.
- Public Joint Stock Company- has its capital divided into equal value and tradable shares. Each partner is liable to the extent of his or her respective shares in the company. A minimum of 10 founding members is required. Any UAE businesses involving finance and management of funds on behalf of third parties must take this business form.
- Private Joint Stock Company- requires a minimum of 3 founding members and the shares of this entity cannot be offered to the public unless converted into a public joint stock company. Several conditions must be met before this can occur.
- Limited Liability Company(ies) (LLC)- areformed by a minimum of 2 and a maximum of 50 individuals whose liability is limited to their shares in the company’s capital. Foreign equity in the company may not exceed 49 percent; therefore a UAE national partner must hold a 51 percent share. LLCs are most common among foreign investors.
- Partnerships Limited with Shares- are formed by general partners that are jointly liable for the partnership’s financial obligations to the extent of their personal assets and participating partners who are liable to the extent of their shares. General partners must be UAE nationals and are responsible for the management of the company. Participating partners are prohibited from being involved in the day-to-day activities.
Following are the different types of business structures that can be set up in Saudi Arabia-
- Limited Liability Company (LLC)– most common form for entering into joint ventures with Saudi partners; however, a Saudi partner is not required since there are no legal limitations on the percentage of foreign ownership.The minimum capital investment required to establish an LLC is SR 500,000. An LLC must have between 2 and 50 shareholders and is managed and represented by one or more managers. Following documents are required for registration of LLC in Kingdom of Saudi Arabia (KSA)-
- Completed Investment License Application Form;
- Company board resolution stating their desire to invest in KSA enclosing the partners’ names, capital, each partner’s contribution percentage, activity and general manager appointment;
- Proof of track record or experience in the industry the company wishes to engage in;
- Copies of the participating companies’ CRs attested by the concerned authorities and KSA Embassy in the foreign investor’s country;
- Copy of the enterprise articles of incorporation attested by the concerned authorities and KSA Embassy in the foreign investor’s country;
- Copy of the passport of the general manager;
- Where the activity requires the approval of the concerned authority including financial services, insurance, information, tourism, health or education, the applicant shall provide the approval of the concerned ministry; and
- Copy of trade name booking in case the company desires to obtain trade name. • Authorization to a lawyer’s office approved to finalize all the procedures. This authorization shall be attested by the Saudi embassy or by the investor in the case where it enters KSA conforming to commercial visa.
- Partnership- Foreign companies seeking to do business in the Kingdom may enter into a limited partnership. The limited partnership, or “sharikat tawsiya baseetah”, is a separate business entity comprised of several individuals or companies, including general (at least one) and limited partners. The general partners are liable for partnership debts to the full extent of their personal assets while the limited partners are liable only to the extent of their capital contributions.
- Joint Stock Company– is an entity with at least five shareholders holding transferable shares. The minimum capital requirements are SR 2 million for a private JSC and SR 10 million for a public JSC. Liability of shareholders is limited to the par value of each shareholder’s share capital. The JSC must be approved by license or Royal Decree published in the Saudi Official Gazette. Additionally, it must be registered with the MOC Companies Department and the MOC Commercial Registry.
- Branch Office- Foreign companies may register a wholly foreign-owned Saudi branch office, provided that they obtain the requisite license. The branch office may engage in any government contract or private sector work within the scope of its license. Branch offices are subject to the requirements of the Government Tenders Regulations, where applicable. Branch office registration follows the same general procedure as for the registration of an LLC.
B. ENTREPRENEURSHIP IN THE MIDDLE EAST–
Middle East has emerged as one of the most thriving and rapidly growing market with numerous entrepreneurship opportunities. The region is rife with entrepreneurship initiatives, sponsored by governments, the private sector and NGOs, from the Dubai Enterprise Center to Creative Jordan to the Qatar Business Incubation Centre. These initiatives, along with a huge rise in the use of mobile technology and social networks, have fostered the kind of collaborative and creative attitude needed to get startups off the ground.
A. BUSINESS MODELS:-
Commercial Codes in Republic of Korea offer Koreans and foreign nationals with a variety of recognized options for establishing a business. These include a variety of company, partnership, branch and liaisons office structures. Investors can also form agent or technical assistant agreements. Of particular interest to foreign investors are the joint stock company, the branch office and the liaisons office. Based on the Korean Commercial Code and other related regulations, the following business enterprises are permitted:-
- Corporation (Chusik Hoesa)– A joint stock company, which is very similar to US Style corporation. Chushik Hoesa is the only corporate entity that is allowed, at the present, to publicly issue shares.
- Company (Yuhan Hoesa)- A limited Liability Company, which is very similar to GmbH in Germany of SARL in France.
- Unlimited Partnership (Hapmyong Hoesa)- All partners are liable for the obligation of the partnership.
- Limited Partnership (Hapja Hoesa)- Two types of partners are designated: a general partner and a limited partner.
The types of business presence generally employed by foreign investors in Korea are: (i) liaison office; (ii) branch office; and (iii) a company incorporated in Korea (a subsidiary or a joint venture company with a Korean counterparty).
- Liaison Office-A liaison office generally refers to an office not engaging in profit-generating activities and, thus, not subject to Korean tax. Since a liaison office is considered only in the preliminary phase of investment, a foreign investor generally establishes a branch or a subsidiary as its Korean presence. Stepsfor incorporation include- Bank approval (on an application along with POA to appoint a trustee for submission, appointment letter of Korea Branch Representative and Certificate of Registration); Tax Office Registration and Opening a corporate bank account.
- Branch Office- Establishment of a branch office is governed by the Foreign Exchange Transaction Act of Korea and does not require incorporation in Korea. A subsidiary, however, is established as a Korean corporate entity pursuant to the Korean Commercial Code (“KCC”) after filing a foreign investment report under the Foreign Investment Promotion Act of Korea (“FIPA”). Under the FIPA, in order to be qualified as a foreign investor, the investor is required to invest a minimum of KRW 50 million (approximately US$51,000) and acquire 10% or more of the total issued and outstanding shares of the Korean company. The FIPA provides various benefits and tax incentives available to foreign direct investments. Stepsfor incorporation include- Bank approval (on an application along with POA to appoint a trustee for submission, appointment letter of Korea Branch Representative and Certificate of Registration); Court Registration of Branch; Tax Office Registration and Opening a corporate bank account.
- Company incorporated- Under the KCC, a foreign company can establish its Korean subsidiary in the form of either a joint stock company (Chusik Hoesa) or a limited liability company (Yuhan Hoesa). Incorporation procedure involves-
- Getting approval from Ministry of Finance about foreign direct investment;
- Registering with the Commercial Registration Office of court-Promoters are recruited, inaugural meeting of promoters is held and the minutes are taken, article of incorporation is made and certified by a public notary, Matters related to issuing stocks are decided, Stocks are underwritten by the promoters. (Incorporation through promotion)
Stocks are underwritten by the promoters, stockholders are subscribed and stocks are distributed, Actual investment, Inspection of the incorporation process by the members of the board of directors and auditor is made, The board of directors meets, etc.
- District tax office registration;
- Opening bank account; and
- Registering with the Ministry of Finance and getting FDI certificate.
B. ENTREPRENEURSHIP IN KOREA–
The Republic of Korea is one of the greatest economic development success stories in history- going from one of poorest countries in the world and a major aid recipient to a high-income country and a major aid donor in just a single generation.
A. BUSINESS MODELS:-
Companies wishing to establish business operations in Taiwan typically form one of the following: a Representative Office, a Branch, a Limited Company, or a Company Limited by Shares.
- Representative Office-A Representative Office may operate in Taiwan only as the agent of its overseas principal and is not considered a separate legal entity. It may not engage in profit-seeking commercial activities nor act as principal in any domestic business transaction. A Representative Office is also not allowed to sell goods or provide services in Taiwan. Typically, a Representative Office functions as a sales or purchasing agent for international businesses which have no other presence in Taiwan. Representative Offices are also used to provide technical support and training as well as to oversee quality control in Taiwan. Representative Office Registration Procedures involves the following steps:-
- Set up a Company outside of Taiwan and prepare necessary documents;
- Apply to the Department of Commerce, MOEA, to register the details of Representative Office;
- Register for a Tax Number; and
- Apply for Health and Labor Insurance.
- Branch-A foreign company may also establish a Branch to conduct business in Taiwan. Like a Representative Office, a Branch is not considered an independent legal entity, and so does not need to have shareholders, directors, or supervisors, as would be the case with a subsidiary. The steps involved in registration process of a Branch office involves:-
- Prepare Foreign Documents;
- Application for Branch Name;
- Application for Special Permissions, if applicable;
- Recognition of the Foreign Head Office;
- Open Bank Account;
- Issuance of a Tax Number;
- Application to the city Government for registration of the Branch Office as a Tax-paying Unit;
- Application to Bureau of Foreign Trade, MOEA, for Importer/Exporter registration and to the City Government to the Bureau of Foreign Trade, MOEA, for Importer/Exporter English Name Reservation, if applicable; and
- Application for Health and Labor Insurance.
- Limited Company-Taiwan Limited Companies are similar in structure to US limited liability companies. Taiwan Limited Companies are organized by one or more members, with each member, in general, being only liable to the extent of his or her individual capital contribution.
- Company Limited by Shares- A Company Limited by Shares is similar in form to a US corporation. Shareholder liability is limited to the amount of each shareholder’s capital contribution. A Company Limited by Shares is subject to certain corporate structural requirements: it must have shareholders (at least two individual shareholders or one juridical person shareholder), directors (at least three) and a supervisor (at least one). A Company Limited by Shares can, unlike a Limited Company, become a public company in Taiwan. For the registration of Company, the following steps are required:-
- Reserving the name of the Company on decision of names of Company key people;
- Application to Investment Commission of the MOEA for approval of foreign investors;
- Opening Bank Account as a preparatory office, then remit money
- Application to Investment Commission of MOEA to examine and certify foreign equity investment;
- Registration of company as a Tax-Paying Entity;
- Application for Import or Export License, if applicable;
- Change of Name on Bank Account
- Application for Health and Labor Insurance.
B. ENTREPRENEURSHIP IN TAIWAN:-
Taiwan is ranked the best place to start a business in Asia. In Taiwan, with the emergence of a more open society and the development of the knowledge economy, women have come to account for an increasingly large percentage of entrepreneurs. The main factors affecting women’s entrepreneurial activity can be summarized as follows- The opportunity to achieve higher income levels and secure a better quality of life provided stimulus for the entry of women into the workplace; increased availability of educational opportunities has given women more options; service sector has provided women with significant opportunities for entrepreneurial activity; emergence of the knowledge economy has created new opportunities for women; growth of franchise operation and promotion by government.
A. BUSINESS MODELS:-
Various types of common business structures in Thailand are:-
- Sole Proprietorship–This is a firm, owned by a single individual, which is not incorporated. Under the law, a person acting as a sole proprietor can engage in almost any lawful type of business with the exception of those businesses which have been otherwise regulated by the government.
- Partnership– Thailand provides for three general types of business structures:
- Unregistered ordinary partnerships-in which all partners are jointly and wholly liable for all obligations of the partnership.
- Registered ordinary partnerships-If registered, the partnership becomes a legal entity, separate and distinct from the individual partners.
- Limited partnerships-Individual partner liability is restricted to the amount of capital contributed to the partnership. Limited partnerships must be registered.
- Companies- These are of the following types:-
- Private Limited Companies– formed through a process which leads to the registration of a Memorandum of Association (Articles of Incorporation) and Articles of Association, as its constitutive documents. Shareholders enjoy limited liability. The liability of the directors, however, may be unlimited if so provided in the company’s memorandum of association or the articles of incorporation. All shares must be subscribed to, and at least 25 percent of the subscribed shares must be paid up. Stepsinvolved in the incorporation of the Private Limited Company are as under-
- Registering Company Name;
- Filing of the Memorandum of Association and Articles of Association with the Ministry of Commerce;
- Holding a Statutory meeting;
- Filing a formal Application- containing details of total number of shares subscribed or allotted (distinguishing ordinary shares from preference shares if any), number of ordinary shares or preference shares allotted as fully or partly paid-up otherwise than in money, and in the latter case, the extent to which they are paid-up, amount already paid in money on each share; the total amount of money received in respect of shares, names, occupations and addresses of the directors and if the directors have, power to act separately, their respective powers and the number or names of the directors whose signature is binding on the company, application must also contain the period for which the company is registered, if any has been fixed and address of the principal business office and of all branch offices and any other particulars, which the directors may deem expedient to make known to the public.
- Public Limited Company– Public Limited Companies must have a minimum of 15 promoters. Permission for inviting the public to subscribe for shares must be applied for as prescribed by the Securities Exchange Act B.E. 2535.
When it comes to the intent to operate a business as a foreigner in Thailand the approval requirement under the Foreign Business Act B.E. 2542 must be complied with. Foreigners can be granted a foreign business license for certain business categories (or may be granted an exemption based on a Treaty or specific Act). As it is very complicated and often impossible to obtain a foreign business license most foreigners operate a business without a foreign business license or exemption even though these business categories are restricted or prohibited for foreigners. These foreigners have a work permit issued under a Thai company and operate their business through a Thai limited company. Thai company means under the current Foreign Business Act that half or more of the juristic person’s shares are held by Thais. Foreigners are under the current FBA allowed to have majority voting rights and control in a Thai limited company through preference shares and weighted voting rights. The most popular form of business entity among foreign investors is therefore the private limited company.
B. ENTREPRENEURSHIP IN THAILAND:-
Prior to the 1990s, some 10,000 newly established enterprises were registered annually with the Ministry of Commerce. The number increased to over 20,000 in early 1990s before peaking at 37,988 in 1995. The number of new enterprises declined to 20,371 at the height of the Asian economic crisis. It then picked up again with the economic recovery to 31,757 in 2001. Various factors promote entrepreneurial growth in Thailand such as cultural and demographic factors, attitude towards women, strength of financial system etc. Thai women constitute a significant portion of the workforce, whose role has contributed, to a certain extent, to the country’s development. With their rising educational backgrounds, Thai women are well equipped to be a major force in driving the country towards an industrial and service-based economy.
A. BUSINESS MODELS:-
There are four main types of business entities in the United Kingdom (UK) as under-
- Sole Trader-A sole trader is an unincorporated business. They usually have one owner who will run and work in the business on a day to day basis. Starting business as a sole trader has very few requirements. Sole traders must register with HM Revenue and Customs (HMRC) and follow certain rules on running and naming their business. A sole trader is required to keep the details of his business sales and expenses, send a self assessment tax return every year and pay income tax on profits. Registration can be carried out by filing CW F1.
- Partnership-A partnership is where two or more people come together to carry on a business, trade or other activity. A partnership is also an unincorporated business. For setting up a partnership business it is required to-choose a name; choose a ‘nominated partner’ and register with HM Revenue and Customs (HMRC). The ‘nominated partner’ is responsible for managing the partnership’s tax returns and keeping business records.
- Limited Liability Partnership-A Limited Liability Partnership is a business incorporated at Companies House consisting of two or more persons who share the profits of that entity. An LLP is a separate and distinct from the partners who own it and therefore can protect their personal wealth from the business’ creditors and others to whom it might owe money.
For registering a LLP the following are required- choosing a name; having at least 2 ‘designated members’; having a registered address – this will be publicly available and an LLP agreement. Registration may be done either online or by sending an application through post, or through an agent.
- Company- If a separate entity is set up in the UK, it is usually a company. Four main types of company exist in the UK-
- Private Company Limited by Shares: the members’ liability is limited to the amount, if any, unpaid on the shares held by them (Private Company).
- Private Company Limited by Guarantee– the company does not have a share capital. Instead the members’ liability is limited to the amount that they have agreed to contribute to the company’s assets if the company is wound up;
- Private Unlimited Company– there is no limit to the members’ liability (this form is very rare);
- Public Limited Company-the members’ liability is limited to the amount, if any, unpaid on the shares held by them (“Public Company”). Only a Public Company can offer its shares to the general public. This is the second most common form of company.
Incorporation may be done by registering the Company with the Companies House, for which the following are details required- the company’s name and registered address; names and addresses of directors (and company secretary if you have one); details of shareholders and share capital; details of people with significant control over the company, for example anyone with more than 25% shares or voting rights and the standard industry classification of the Company.
B. ENTREPRENEURSHIP IN UK:-
There is an increase in women entrepreneurs starting their own business ventures. The glass ceiling still persists with an equal opportunity for them on board in equal number is yet to be achieved. Despite this, the number of women entrepreneurs is on the rise in recent times, and these are numbers that are true on a global level. The Internet is definitely the cause; women who until now could not venture out of their houses to work because of obligations to their household and their children can now still become businesswomen over the Internet. The Internet has also made it possible for these women to get an education on how various businesses are run, and they can even get real educational degrees for their various pursuits through online institutions. Not just that, women entrepreneurs can also set up complete businesses, employees and all, through various agencies that the Internet has to offer.
A. BUSINESS MODELS:-
A foreign individual wishing to start a business in Japan can do so either as a sole proprietor (Kojin Jigyo) or by setting up a company. Besides these a foreign company may also open up a representative office or a branch office in Japan.
- Sole Proprietorship- Sole Proprietorship is not an option that is open for everyone. Those with Spouse of Japanese National visa, Long Term Resident visa, Permanent Resident visa, Spouse of Permanent Resident visa can choose to become a sole proprietor without any restriction.If a person has stable contracts with Japanese companies, it is also possible to work as a sole proprietor with some conditions under “Specialist in Humanities” visa or “Engineer” visa. No registration procedure is required to become a sole proprietor. A person is just required to submit certain notifications to the tax office within 2 months after the beginning of the activities and file the tax declaration (kakutei shinkoku) once a year, between February and March for the income earned during the previous year.
- Company- There are currently 4 different types of company in Japan-
- Gomei Kaishaconsists of partners with unlimited liability;
- Goshi Kaishahas at least one partner with unlimited liability and other partner(s) with limited liability;
- Godo Kaisha(GK)– works in a similar way to what is known as LLC (limited liability company) in Western countries and has one or more partners with limited liability.
The incorporation process involves- Determination of basic information (i.e., registered address and managing members), Conformation with the Legal Affairs Bureau that there are bi conflicting corporate name and address; receipt from the GK’s parent company of an affidavit attesting to its existence and its basic information and affidavits bearing the true signatures of parent company representatives. Affidavits must be attested to by a public notary from the signor’s home country; preparation of incorporation documents including articles of incorporation; application to register incorporation of the GK with the Legal Affairs Bureau; acquisition of a certificate evidencing the company’s registration and a certificate evidencing the registration of its seal (approximately 10 days after the application for registration); opening of a bank account under the GK’s name; remittance of capital by a member to the GK’s bank account; and notification to the Bank of Japan of the establishment of GK by the foreign parent company.
- Kabushiki Kaisha (KK)- is run by shareholders with limited liability and by directors who are appointed by shareholders. This is the most well known, prevailing form of incorporation in Japan, used by most major companies.
The incorporation process involves- selection of the type of KK corporate structure and determination of its basic information (e.g., registered address, director(s) and shareholders); confirmation with the Legal Affairs Bureau that there are no conflicting corporate names at the same address; preparation of incorporation documents including articles of incorporation; receipt from the KK’s parent company of an affidavit attesting to its existence and its basic information and affidavits bearing the true signatures of parent company representatives. Affidavits must be attested to by a public notary from the signor’s home country; notarization of the articles of incorporation by a Japanese Public Notary; remittance of the KK’s capital to the personal bank account of the KK’s representative director who is resident in Japan; appointment of directors (and other officers if applicable, such as representative directors and statutory auditors); examination by directors (and statutory auditors, if applicable) of the legality of the establishment procedures; application to register the incorporation of the KK with the Japan Legal Affairs Bureau; acquisition of a certificate evidencing the company’s registration and a certificate evidencing the registration of its seal (approximately 10 days after the application for registration); opening of a bank account under the KK’s name; transfer of the funds kept in the personal bank account of the representative director resident in Japan to the KK bank account; and notification to the Bank of Japan of the establishment of the KK by the foreign parent company.
There is hardly any interest in newly setting up a Gomei Kaisha or Goshi Kaisha since they need to include partners with unlimited liability. Therfore, practically, Kabushiki Kaisha (KK) or Godo Kaisha (GK / LLC) are the only viable options available.
B. ENTREPRENEURSHIP IN JAPAN:-
Foreign entrepreneurs wanting to open businesses in Japan are required to obtain a business manager visa, which serves as the legal permit allowing them to launch commercial operations in the country. Under the recent Program to Increase Foreign Entrepreneurs, launched on January 29, 2016, prospective foreign enterprises who meet all requirements provided by Tokyo Metropolitan Government will be given a six-month preliminary business manager visa. This allows them to start commerce in Japan under the condition that within six months the company fulfills the requirements needed to obtain the visa.
A. BUSINESS MODELS:-
Business in United States of America (USA) can be carried out in the following manners-
- Sole Proprietorship– Owner remains personally liable for lawsuits filed against the business; no state filing required to form a sole proprietorship; it is easy to form and operate and the owner reports business profit and loss on their personal tax return.
- Limited Liability Company-A limited liability company (LLC) is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. LLC formation involves-
- Selecting a Business Name- it must be different from an existing LLC in your state, it must indicate that it’s an LLC (such as “LLC” or Limited Company”) and it must not include words restricted by your state (such as “bank” and “insurance”).
- Filing the Articles of Organization- The “articles of organization” is a simple document that legitimizes your LLC and includes information like business name, address, and the names of its members.
- Creating an Operating Agreement- Most states do not require operating agreements. However, an operating agreement is highly recommended for multi-member LLCs because it structures LLC’s finances and organization, and provides rules and regulations for smooth operation. The operating agreement usually includes percentage of interests, allocation of profits and losses, member’s rights and responsibilities and other provisions.
- Obtaining Licenses and Permits- Once the business is registered, applicant must obtain business licenses and permits. Regulations vary by industry, state and locality.
- Announcement of Business-Some states, including Arizona and New York, require the extra step of publishing a statement in the local newspaper about the LLC formation.
- Cooperative– A cooperative is a business or organization owned by and operated for the benefit of those using its services. Profits and earnings generated by the cooperative are distributed among the members, also known as user-owners.To start up, a group of potential members must agree on a common need and a strategy on how to meet that need. An organizing committee then conducts exploratory meetings, surveys, and cost and feasibility analyses before every member agrees with the business plan. Not all cooperatives are incorporated, though many choose to do so.
Steps involved in establishing a cooperative involves- Establishing steering Committee (a group of people who share an idea for a cooperative forms a steering committee and develops a plan and a timetable for researching and developing a co-op); Conducting feasibility study; Drafting articles of incorporation and byelaws; Preparing a business plan; Securing finances and recruiting members.
- Corporation- A corporation (sometimes referred to as a C corporation) is an independent legal entity owned by shareholders. The corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.
To register a C Corporation following details/documents are required to be filed with the state’s Secretary of State Office- Corporate name, business purpose, registered agent, incorporator’s name, signature and address (This is the person or company preparing and filing the Certificate of Incorporation with the state), Corporations must outline the number of shares of stock they wish to authorize, details of directors, officers and legal address of the company.
Some states require corporations to establish directors and issue stock certificates to initial shareholders in the registration process. Once the business is registered, business licenses and permits are required to be obtained. Regulations vary by industry, state and locality.
- Partnership-There are three general types of partnership arrangements-
- General Partnerships- Profits, liability and management duties are divided equally among partners.
- Limited Partnerships(also known as a partnership with limited liability)- allow partners to have limited liability as well as limited input with management decisions. These limits depend on the extent of each partner’s investment percentage. Limited partnerships are attractive to investors of short-term projects.
- Joint Ventures-act as general partnership, but for only a limited period of time or for a single project. Partners in a joint venture can be recognized as an ongoing partnership if they continue the venture, but they must file as such.
To form a partnership, registration with the concerned State (usually done through concerned Secretary of State’s office) is required. For registration a business name is to be established. Once business is registered, requisite business licenses and permits must be obtained. Regulations vary by industry, state and locality.
B. ENTREPRENEURSHIP IN USA:-
America also has several structural advantages when it comes to entrepreneurship- be it the existence of the world’s most mature venture-capital industry, or a tradition of close relations between universities and industry, or the existence of an immigration policy that, historically, has been fairly open. Besides this there have been several governmental initiatives in the recent past to acknowledge, improve and enhance entrepreneurship in USA. The Global Entrepreneurship Program (GEP) being one of the few, which was established as a vital link between government and private sector to enhance global entrepreneurship and innovation.
A. BUSINESS MODELS:-
In India, the following types of business entities can be established:
- Private Limited Company– A Private Limited Company is held by a few individuals privately, having a separate legal entity. This type of entity does not permit the shareholders to trade their shares publically. It restricts its number of shares to fifty. The shareholders cannot sell their shares without the approval of other shareholders. To incorporate a Private Limited Company, a minimum of two members are required. However, the maximum number of members can reach up to two hundred[maximum number limited to fifty as per the Companies Act, 1956 (“1956 Act”)]. Further, a Private Limited Company must have a minimum of two Directors and can have a maximum of fifteen Directors. A minimum authorized capital (paid up share capital) of Rs.1,00,000/- (One Lakh) is required for forming a Private Company in India, however, there is no upper limit. The liability of each member or shareholders is limited. It means that if a Company faces loss under any circumstances then its shareholders are liable to sell their own assets for payment. The personal, individual assets of the shareholders are not at risk. Such liability of the members or shareholders can be limited by Shares or by Guarantee.
- Public Limited Company– A minimum of seven members are required to form a Public Limited Company. However, there is no restriction on maximum number of members. It must have minimum paid–up capital of Rs. 5 lakhs. The shares allotted to the members are freely transferable. The minimum number of Directors in such Companies is limited to three, however, the maximum can be up to fifteen. A Public Limited Company can raise funds from general public through open invitations by selling its shares or accepting fixed deposits. These Companies are required to write either ‘public limited’ or ‘limited’ after their names. Further by virtue of proviso to Section 2(71) of the Companies Act, 2013 (“2013 Act” for short), a Company which is a subsidiary of a Company, not being a private Company, shall be deemed to be public Company for the purposes of the said Act even where such subsidiary Company continues to be a private Company in its Articles.
- One Person Company–is a private organization that has only one shareholder as well as one director. The concept of OPC combines the benefits of registering a Company as private and yet one person can claim all its shares. The owner of the company should be resident citizen of India and should not be a minor. Further, no person is eligible to incorporate more than a One Person Company or become nominee in more than one such company.
The procedure of incorporation of Private Limited/Public Limited/ OPC can be explained as under:-
- Obtain Director Identification Number [DIN] for the proposed Director(s) DIN can be obtained by filling in the DIR-3 Application along with the following documents: Identity Proof (Copy of PAN Card), Address Proof (Copy of Passport/Election/Voter ID/ Driving Licence/ Aadhar Card/ Electricity Bill/etc.), Passport size photograph (one, recent), Current Occupation, email address of the Applicant, Contact Number and Educational Qualification. The DIR-3 has to be digitally signed by the Applicant.
- Obtain Digital Signature Certificate [DSC] for the proposed Director(s): DSC is equivalent (electronic format) of physical or paper certificate. Since the Ministry of Corporate Affairs accepts electronic submission of Forms on its website, the DSC is mandatory for all the users. It can be obtained by submitting a completely filled DSC application along with all documents as required for DIS-3.
- Select suitable Company Name, and make an application to the Ministry of Corporate Office for availability of name: After drafting of the main object of the proposed Company, the Applicant is required to file e-form INC-1 (Application for Reservation of Name) with the Registrar of Companies.
- Drafting of Memorandum of Association (MOA) and Articles of Association (AOA): After the selection of suitable name, MOA and AOA have to be drafted. Memorandum and articles of association of the company shall be signed by each subscriber to the memorandum who shall mention his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, description and occupation, if any. The witness shall be a practicing professional viz. practicing Company Secretary, Practicing Cost & Management Accountant, or practicing Chartered Accountant. Further, in case of OPC, the subscriber its memorandum shall nominate a person, after obtaining written consent of such person, who shall, in the event of subscriber’s death or his incapacity to contract, become the member of that one person company.
- Sign and file various documents including MOA & AOA with the Registrar of Companies electronically/Filing e-form:The following forms are required to be filed with the Registrar of Companies: Form No. INC-7 (declaration of compliance with the requirements of the Act on application for registration of a company), Form No. INC – 22 (notice of situation of registered office), Form No. DIR – 12 (appointment of directors of the company), and a Power of Attorney to be executed by subscribers and proposed directors (authorization by the promoters of the company to a person/s to carry out appropriate changes as suggested by the Registrar of Companies in any of the incorporation papers that have been filed). Form INC- 2 is the form for incorporation of ‘one person company’ which has to be submitted to the registrar along with the following attachments:- MOA, AOA, Proof of identity of member and nominee, residential proof of the member and the nominee, copy of PAN card of member and nominee, consent of nominee in form INC- 3, affidavit from the subscriber and first director to the memorandum in Form INC-9, list of all the companies (specifying their CIN) having the same registered office address, if any, specimen signature in form INC- 10, entrenched articles of association, proof of registered office address, copies of the utility bills. (not older than 2 months), proof that the company is permitted to use the address as the registered office of the company if the same is owned by any other entity/person, consent from the director, optional attachments.
- Payment of Requisite fee to Ministry of Corporate Affairs and also Stamp Duty: After submission of documents, the applicant is required to submit the requisite fee and stamp duty.
- Verification of documents/forms by ROC: After payment of ROC fee and stamp duties, the ROC verifies/scrutinizes all the documents and may suggest a few changes to be made in the attachments/documents.
- Issuance of certificate of incorporation by ROC: After completion of all the formalities, the subscriber shall receive the final incorporation certificate from the Registrar of Companies. On receipt of such certificate, the business can be commenced.
- Unlimited Company– a form of business organization under which the liability of all its members is unlimited. The personal assets of the members can be used to settle the debts. It can at any time re-register as a limited company under section 18of the 2013 Act.
- Limited Liability Partnership (LLP)– It is governed by the provisions of the Limited Liability Partnership Act, 2008 (“LLP Act” for short). The LLP is viewed as an alternative corporate business vehicle that provides the benefits of limited liability but allows its members the flexibility of organizing their internal structure as a partnership based on a mutually arrived agreement. For an LLP to be incorporated, at least two persons must subscribe their name to a document called an incorporation document, which must then be submitted to the Registrar of companies. There is also a requirement of fling a statement in the prescribed form, made by either an Advocate, or a Company Secretary, or a Chartered Accountant or a Cost Accountant in whole time practice in India or by anyone who subscribed his name to the incorporation document that all the requirements under the Act and the rules made thereunder are complied with in respect of the incorporation, along with the incorporation document. The incorporation document must contain information such as the name of the LLP, its proposed business, address of its registered office, the name, address and photographs of the persons who are to be its partners on incorporation/ designated partners of LLP on incorporation and such other information concerning the proposed limited liability partnership as may be prescribed. Upon receiving the incorporation document the Registrar will retain and register it. Once the documents have been registered, the Registrar will, within a period of fourteen days, register the incorporation document and issue a certificate that the LLP is incorporated by the name specified in the incorporation document.
- Partnership– A partnership is governed by the provisions of the Indian Partnership Act, 1932 (“Partnership Act” for short), which defines partnership under Section 4 as “the relation between persons who have agreed to share the profits of the business carried on by all or any one of them acting for all”. A Partnership arises from a contract, and therefore, such a contract is governed not only by the provisions of the Partnership Act in that regard, but also by the general law of contract in such matters, where the Partnership Act does not specifically make any provision. A minimum of two persons are required to start a partnership business. The maximum number of partners is 10, in the case of a banking business and 20 in any other case. A partnership firm can be registered as per the provisions of Sections 58 and 59 of the Partnership Act, 1932, though it is not compulsory.
- Sole Proprietorship– Sole proprietorship is one type of business where the business owner is the master and slave of their venture. The business owner has the complete creative and financial control over the company and takes sole ownership of the profit and loss as well. This method is best suited for individuals who wish to start a business based on one-man work in a small scale. One of the most important feature of a Sole Proprietorship is the ease of its formation. No agreement is required to be made and registration of the firm is also not essential. However, the owner may be required to obtain a license specific to the line of business from the local administration.The owner of the Sole Proprietorship has a complete control over all the aspects of his business and it is he who takes all the decisions though he may engage the services of a few others to carry out the day-to-day activities. Starting a sole proprietorship is simple as compared to other form of Companies. Unlike, LLP or other private or public companies, in sole proprietorship, there is no requirement of filing an application before the ROC. Further, there is no requirement of a formal registration of a sole proprietorship. A person is simply required to open a bank account with the name and style and take license for varied services including service tax, VAT, IEC, Shops and Establishment License, PAN, Importer-Exporter Code, ESI, Professional Tax, Central Excise Duty, CST Registration, etc. After, obtaining the requisite license, a person can commence with his/her sole proprietorship firm in India.
- Foreign Company– A foreign company can start working by registering under private or public limited company under Company’s Act, 2013 in either by forming a JV or Joint Venture with an Indian firm in the partnership in the ratio of 51:49 where the maximum ratio is held by an Indian firm or an Indian partner or by establishing wholly owned subsidiary in India (1005 foreign investment is allowed in India). They can also set up their base (instead) in India by establishing a liaison office (cannot indulge in any commercial activity, their role is to study the market in India and disseminate the information to the parent company) or branch office in India.
B. ENTREPRENEUSHIP IN INDIA:-
India is witnessing a major growth in entrepreneurship-not because of its X factor but out of the need for its citizens to create their own job. Several governmental schemes such as the “Start up India” have been a major factor for promoting and facilitating entrepreneurial ventures in India.
There are several ways of doing business in Sri Lanka-
- Sole Proprietorship– may be formed without official approval. An individual commencing a sole proprietorship in any other name other than his/her actual name has to apply to the Registrar of Business Names of the respective Provincial Council for registration. The application has to be made in the prescribed form issued by the respective Provincial Council along with the appropriate fee as determined by the Ordinance of such amendments as may be prescribed from time to time. This has to be done with 14 days of commencing the business.
- Partnership– A partnership could be form verbally, impliedly or in writing. Most of the partnerships carry on business in line with the provisions made in Partnership Agreement.Section 3 of the Introduction of Civil Law Ordinance Chapter 89 provides that the English Law will apply to partnerships. Partnerships Ordinance Chapter 179 of 1866 contains a few provisions amending the law of partnership. The other ordinance, which is applicable, specifically to partnerships, is the Prevention of Frauds Ordinance Chapter 84.
- Companies-established in Sri Lanka are governed by the Companies Act No. 17 of 1982 (the Companies Act). The Companies Ordinance Chapter 145 of 1939 governs the companies, which were incorporated prior to 1982. The registering authority for a Limited Liability Company (LLC) is the Registrar of Companies. LLC is one of the most common business entities in Sri Lanka. Setting up of LLC required one Director and two shareholders, who may be of any nationality. Article 5 of the Companies Act, 2007 however, provides that the owners of the Company must appoint one person, resident in Sri Lanka as the Company Secretary. Incorporation process involves obtaining a name approval from the Registrar of Companies followed by filing of the application (with registration form, consent forms of Directors and Secretaries) along with the requisite fees.
- Foreign Company– may establish branch or liaison office in Sri Lanka for conducting their business or research besides incorporating a company under the provisions of the Companies Act, 2007. Companies may also opt to be registered as offshore or overseas companies.
There are several ways by which foreigners may commence business in Pakistan-
- Branch Office– Branch office can be set up in Pakistan if the parent company has an existing contract with a Pakistani company or government body. Hence, the branch office can engage on the business activities which involve invoicing and signing contracts, but only within the confines set up by the parent Company.
- Representative office or Liaisons office– A foreign entity/person can also register a liaison office in Pakistan, provided that the foreign company is entitled to conduct business under the national laws of the home country.
- Joint Stock Companies– Require a minimum of three and maximum of 50 shareholders and can have a public subscription for shares and shareholders may freely dispose off their shares.
- Limited Liability Company– most widely set up business entity sue to low share capital requirements and simplicity of its corporate structure. Also referred to as a Private Company, with the minimum paid up capital requirements of USD 1,000 and only required 2 directors and two shareholders.
Incorporation of company involves-Seeking approval on the name of the Company, payment of fee associated with incorporation and registration of the application, followed by-obtaining digital signature and creation of company seal, registering for sales tax, income tax, registration with Employees Social Security Institutions, Employees Old Age Benefits Institution and Labor Department, if required.