April 2024

Digital Signature

learn / /

A Digital Signature Certificate (DSC) is affixed on documents submitted in electronic form by the authorised person. It ensures the security and authenticity of the documents submitted electronically. DSC is affixed on all the documents filed on the Ministry of Corporate Affairs (MCA) portal. Online transactions such as Incorporation of a company or LLP, Income Tax e-filing, etc., are validated using DSC. The Controller of Certifying Authorities (CCA) has appointed Certifying Authorities (CA) for issuing DSC. CA’s have the licence to issue Class 3 DSC. Class 3 Digital Signature Certificate Class 3 DSC is the most secure certificate with a signature and encryption certificate. IndiaFilings will help you get the Class 3 DSC with an encryption certificate and a USB token; it can use for encryption and signing. A signature certificate is used to sign a document, while an encryption certificate is used to encrypt the data. Class 3 DSCs will be issued to individuals and companies/organizations. Class 3 Digital Signature can use for many purposes such as MCA e-filing, Income Tax e-filing, e-Tendering, LLP registration, GST application, IE code registration, Form 16, Patent and trademark e-filing, Customs e-filing, e-Procurement, e-Biding, e-Auction and more. Class 3 DSC for Individual IndiaFilings can help individuals to obtain Class 3 Digital Signature with ePass Token. The authorized person can attach DSC to documents that are submitted electronically. It guarantees the confidentiality and validity of electronically supplied records. Class 3 DSC for Company/Organization Class 3 DSC is valid for companies, NGOs, trusts, government departments, and organizations. IndiaFilings can help you obtain an eMudhra Class 3 Digital Signature certificate in India with two-year validity and a secure USB token. DSC will be issued in the Company’s name; this proves the user’s right on behalf of a company and contains personal and Company details. Class 3 DSC for Company is issued to authorize the signatory of any company. Digital Signature Certificate Advantages Authentication: Helpful in authenticating the personal information details of the individual holder when conducting business online. Reduced cost and time: Instead of signing the hard copy documents physically and scanning them to send them via e-mail, you can digitally sign the PDF files and send them much more quickly. A DSC holder does not have to be physically present to conduct or authorize a business. Data integrity: Documents that are signed digitally cannot be altered or edited after signing, which makes the data safe and secure. Government agencies often ask for these certificates to cross-check and verify the business transaction. Authenticity of documents: Digitally signed documents give confidence to the receiver to be assured of the signer’s authenticity. They can take action on the basis of such documents without getting worried about the documents being forged. Importance of DSC for Fulfilling Statutory Compliances Legal Compliance: DSCs are crucial for complying with electronic signature laws and regulations. They ensure that digital transactions and documents meet legal requirements. Business Transactions: In the corporate world, DSCs are essential for signing contracts, agreements, financial transactions, and other crucial documents. They offer a secure and convenient way to conduct business. Government Transactions: Many government agencies and departments require DSCs for online filing forms, applications, and other submissions. They help establish trust in online interactions with the government. Financial Transactions: Banks and financial institutions often mandate using DSCs for secure online banking and financial transactions. This ensures the protection of financial data and the prevention of fraud. International Trade: DSCs are indispensable for international trade and commerce. They facilitate secure and legally compliant exchange of trade-related documents and transactions, such as import-export licenses and trade agreements. Requirements for applying for a Digital Signature Certificate Aadhaar card. PAN card. Passport-sized photo. Address proof. Renewal of Class 3 DSC ccording to Controller of Certification Agencies (CCA) guidelines, renewing Digital Signatures requires fresh identity verification. You can renew your Class 3 DSC by following the same process as buying a new Digital Signature Certificate on the IndiaFilings website. You can apply for DSC renewal through our website once it is expired or before the expiry date. Pricing for renewal remains the same as buying a new DSC through our website. Types of DSCs Sign  A person can use Sign Certificates for signing a document. It can be affixed to a PDF, files or documents for GST returns submission, income tax returns, MCA online forms and other web-based services. It validates the integrity of the document and authenticates the user’s identity. It assures the receiver that the data mentioned is unaltered and the document is untampered. Encrypt A person can use the Encrypt Certificate to encrypt files, documents or other sensitive and confidential data. DSC encryption is for confidential documents and data. It helps enterprises and companies to encrypt and upload documents on web portals. This certificate can also be used to encrypt personal data and send it securely. Encrypt DSC is suitable for e-commerce documents, legal documents, e-tender filing documents and other confidential records.  Sign and Encrypt A person can use the Sign and Encrypt Certificate for both signing and encrypting purposes. It is usually used for filing government documents, forms and applications. It is suitable for those users who need to maintain and authenticate the confidentiality of the data exchanged. Classes of DSC- The type of applicant and the purpose for which the Digital Signature Certificate is obtained define the kind of DSC one must apply for, depending on the need. There are three types of Digital Signature certificates issued by the certifying authorities. Class 1 Certificates These are issued to individual/private subscribers and are used to confirm the user’s name and email contact within the database of the certifying authority. Class 2 Certificates  These are issued to the authorities signatories for the purpose of e-filing forms on the government portal, such as the Ministry Of Corporate Affairs (MCA) website, income tax website, GST website, etc. However, from 01.01.2021, the Controller of Certifying Authority has instructed to discontinue Class 2 Certificates, and Class 3 Certificates will be issued in place of Class 2 Certificates.  Class 3 Certificates  These certificates are used in online

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Articles of Association and Alteration in AOA

Companies Act 2013 / /

Rules and regulations are systematic way to do any kind of work, and Articles of Association (AOA) is a rule book for the functioning of the company. AOA contains all rules and targets of the company which one must stick to it. AOA has formed at time of incorporation of the company. These regulations are for the internal functioning of a company. There are two significant forms of documents, which provides the company’s targets and lead the operation of the company and its internal and director’s affairs. These significant documents are Memorandum of Association (MOA) and Articles of Associations (AOA).  Definition of AOA as per Companies Act, 2013 The Companies Act, 2013 provides the following definition of AOA in Section 2(5) of the Act: “Articles of Association” means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act. This definition states that the AOA refers to the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or the current Companies Act, 2013. The AOA is a legal document that sets out the company’s internal management structure, ownership, and control, as well as the rights and responsibilities of shareholders, directors, and other officials. It plays a critical role in the governance of the company and must be in compliance with the legal framework and regulations governing the establishment and operation of companies in India. What is the Purpose of the Company to make AOA? The main purpose of forming AOA is to provide a legal framework for the internal management and governance of a company. It sets out the rules and regulations governing the relationship between the company and its members, as well as the relationship among the members themselves. The AOA outlines the company’s objectives, powers, and limitations, as well as the procedures for conducting meetings, voting, and making decisions. It also defines the rights and responsibilities of the company’s directors, officers, and shareholders. By forming AOA, the company can ensure effective management, protection of stakeholders’ interests, and compliance with regulatory requirements. It provides clarity on the company’s objectives and governance structure, which can help in attracting investors and business partners. Information contains by AOA Name Clause: It specifies the name of the company, which must be unique and distinguishable from other companies. Registered Office Clause: It specifies the location of the registered office of the company, which is the official address of the company for all communications. Object Clause: It specifies the objects or purposes for which the company is established and authorized to operate. The object clause may be specific or general, depending on the company’s nature and scope of operations. Share Capital Clause: It specifies the amount and types of share capital authorized by the company, as well as the rights and privileges attached to each class of shares. Liability Clause: It specifies the liability of the members or shareholders of the company, which may be limited or unlimited. Membership Clause: It specifies the conditions for becoming a member or shareholder of the company, as well as the rights and obligations of members. Management Clause: It specifies the powers and duties of the board of directors and other officers of the company, as well as the procedures for appointment and removal of directors. Meetings Clause: It specifies the procedures for calling, holding, and conducting meetings of shareholders and directors. Voting Clause: It specifies the rules for voting at meetings of shareholders and directors, including the rights of different classes of shareholders. Dividend Clause: It specifies the policies and procedures for declaring and paying dividends to shareholders. Winding-up Clause: It specifies the procedures for winding up or dissolution of the company, including the appointment of liquidators and distribution of assets to creditors and shareholders. The above information contained in the AOA provides a framework for the governance and management of the company, ensuring that it operates in a transparent and efficient manner while protecting the interests of its stakeholders. Alterations of AOA The Alteration of AOA refers to the process of amending or modifying the company’s existing AOA. This can be done to keep the AOA in line with the company’s changing needs and objectives, to address any legal or regulatory changes, or to reflect changes in the ownership or management structure of the company. The alteration of AOA can be done through a special resolution passed by the company’s shareholders or by the board of directors What is the process for the Alteration in AOA? Board Meeting: The first step is to convene a meeting of the Board of Directors of the company to discuss the proposed alterations to the AOA. The Board must pass a resolution approving the proposed alterations. Shareholder Meeting: The company must then call for a general meeting of its shareholders to consider and approve the alterations to the AOA. A notice of the meeting, along with the proposed alterations, must be sent to all shareholders at least 21 days before the meeting. The notice must also contain an explanatory statement explaining the reasons for the proposed alterations. Passing of Special Resolution: At the general meeting, a special resolution must be passed by the shareholders, approving the alterations to the AOA. A special resolution requires the affirmative vote of at least three-fourths of the shareholders present at the meeting or by proxy. Filing of Form MGT-14: Within 30 days of passing the special resolution, the company must file Form MGT-14 with the Registrar of Companies (ROC). The form must include a copy of the special resolution, the altered AOA, and other required documents. Approval by the ROC: The ROC will examine the documents filed by the company and may approve or reject the alterations made to the AOA. If the ROC approves the alterations, it will issue a Certificate of Registration of the Special Resolution. Update the Company’s Records: Once the alterations are approved by the ROC, the company must update its records, including the AOA and other

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Director

Companies Act 2013 / /

“Director” means a director appointed to the Board of a company; A director is ordinarily someone appointed to manage a company’s business and affairs. Every registered company must have at least one director. Who a company’s directors are, and key information about them, is recorded on the Companies Register. Meaning of Director Companies Act, 2013 defines the term “Director” as someone appointment to the Board of a company. The Board of Directors means a group of those individuals elected by the shareholders of a company to manage the affairs of the company. Since a company is an artificial legal person created by law, it is necessary to act only through the agency of natural persons. It can only act through human beings, and it is the Directors through whom mainly the company acts. Therefore, the management of a company is entrusted to a body of persons called “Board of Directors”. Another definition of a Director is someone who administers, controls or directs something, especially a member of a commercial company; one who supervises, controls or manages; a person elected by the shareholders of a company to direct company’s policies; person appointed or elected according to law, authorised to manage and direct the affairs of a company. Role as a director determining and implementing policies and making decisions preparing and filing statutory documents with the Companies Office or other agencies calling meetings, including an annual meeting of shareholders maintaining and keeping records binding the company to contracts with suppliers, lenders and others dealing with the company. Becoming Director For a person to become a Director in Private Limited Company, he/she requires a Director Identification Number (DIN Number). DIN Number can be obtained for any person over the age of 18 by applying to the DIN Cell. IndiaFilings Learning Center provides more information about the procedure for obtaining DIN in India. Types of Director in Company Managing Director- A “Managing Director” means a Director who, by virtue of Articles of Association of a Company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of affairs of the company. Whole-time Director or Executive Director- An Executive Director or whole-time Director is someone in full-time employment of the company. Ordinary Director- An “Ordinary Director” means a simple Director who attends the Board meetings of a company and participate in the matters put before the Board of Directors. These Directors are neither whole-time Directors or Managing Directors. Additional Director- An Additional Director is someone appointed by the Board of Directors between two annual general meetings subject to the provisions of the Articles of Association of a Company. Additional Directors shall hold office only upto the date of the next annual general meeting of the Company. Number of Directors and additional Directors of a company together shall not exceed the maximum strength fixed for the Board of Directors by the Articles of Association. Alternate Director- Alternate Director is someone appointed by the Board of Directors in a general meeting to act for a Director called the “original director” during his absence for a period of not less than three months from India. Generally, alternate Directors are appointed for a person who is Non-Resident Indian (NRI) or for foreign collaborators of a company. Professional Director- Any Director possessing professional qualifications and do not have any pecuniary interest in the company are called Professional Directors. In large companies, Professionals are sometimes appointment to the Board to utilize their expertise in the management of the Company. Nominee Director-Banks and Private Equity investors who grant debt or equity assistance to a company generally impose a condition as to appointment of their representative on the Board of the concerned Company. These nominated persons are called as nominee Director. In a One Person Company (OPC), a nominee Director is someone nominated by the sole Director of the One Person Company to take over affairs of the OPC in case of death or incapacitation of sole Director. Maximum and Minimum Number of Directors nly an Individual (living person) can be appointed as a Director in a Company. A body corporate or business entity cannot be appointed as a Director in a Company. A company can have a maximum of fifteen Directors – it can be increased further by passing a special resolution. Minimum Number of Director in Company are as follows: Private Limited Company – Minimum two Directors in case of Private Limited Company Limited Company – Minimum three Directors in case of Limited Company. One Person Company – Minimum one Director in case of One Person Company FAQs What is the role of a director in a company? Directors are responsible for overseeing the management and strategic direction of the company. They make key decisions, ensure compliance with laws and regulations, and act in the best interests of the company and its stakeholders. How are directors appointed? Directors may be appointed by the shareholders at a general meeting or by the existing directors, depending on the company’s Articles of Association and applicable laws. They are typically elected to serve for a specified term. What are the qualifications required to become a director? The qualifications for directors vary depending on the jurisdiction and the company’s Articles of Association. In general, directors should have the necessary skills, experience, and integrity to fulfill their duties effectively. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A Certificate | FCRA Registration |DGGI Cases

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Public Sector Undertakings (PSU)

learn / /

Public Sector Undertakings are a major part of the Indian economy that comprises public services and enterprises and it provides services that benefit the entire society. public sector undertakings in India and their evolution and operations.In India, public sector undertakings have more than 51% of capital shared by the government. Public sector undertakings are critical drivers of India’s economic recovery. Public Sector – 3 Major Classifications The public sector can be classified into:- Departmental Undertaking – Directly managed by concerned ministry or department. (e.g. Railways, Posts, etc.) Non-Departmental Undertaking – PSU (e.g. HPCL, IOCL, etc.) Financial Institution (e.g. SBI, UTI, LIC, etc.) The rationale behind the establishment of PSU’s was Industrialisation and the establishment of Capital Goods Industries and Basic Industries. The organizations that are not a part of the public sector are termed as private sector that works to raise profit for the organization. Objectives of Setting up Public Sector Unit (PSU) To create an industrial base in the country To generate a better quality of employment To develop basic infrastructure in the country To provide resources to the government To promote exports and reduce imports To reduce inequalities and accelerate the economic growth and development of a country. Role of Public Sector in the Upliftment of Society Public sector & capital formation – This sector has been a major reason for the generation of capital in the Indian economy. A large amount of the capital comes from the Public sector Units in India Creation of Employment opportunities – Public sector has brought about a major change in the employment sector in the country. They provide a lot of opportunities under various domains and thus helps in uplifting the Indian economy and society. Development of Different Regions – The establishment of major factories and plants has boosted the socio-economic development of different regions across the country. Inhabitants of the region are impacted positively concerning the availability of facilities like electricity, water supply, township, etc. Upliftment of Research and Development – Public sector units have been investing a lot to introduce advanced technology, automated equipment, and instruments. This investment would result in the overall cost of production. Public Sector Undertakings (PSU) – Problems Inappropriate investment decisions Improper Pricing Policy Excessive overhead cost Lack of Autonomy & Accountability Overstaffing Trade Unionism Under Utilization of capacity Public Sector Undertaking – Reforms New Industrial Policy 1991 Voluntary Retirement Scheme, 1988 (Golden Handshake) Administered Price Mechanism The policy of Navratnas (Best performing PSUs were called Navaratnas) The government gave them a significant degree of autonomy so they can perform better. The policy of Mini Ratnas (Presently 60 PSUs have been granted this status) The policy of Maharatnas (category created in 2010) Net profit should be 2500 crore Net worth should be 10000 crore Turnover should be 20000 crore PSU must be a Navratna and must be listed in Stock Exchange PSU also must have a significant global presence. In 2010 Govt granted 4 Navratnas Maharatnas status to ONGC, IOCL, SAIL, and NTPC. After sometime Govt granted this status to CIL. FAQs What is the public sector undertaking? Public Sector Undertakings are a major part of the Indian economy that comprises public services and enterprises, and it provides services that benefit the entire society. What are the different types of Public Sector undertaking? Public sector undertaking can be classified into three types. These include Departmental Undertaking, Non-Departmental Undertaking and Financial Institution. What is the main objective of the public sector in India? The Public sector works for the welfare of the public and the overall development of the country. The public sector helps the government to enforce social control on trade and industry for ensuring equitable distribution of goods and services. 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