Govt may open educational, legal services to foreigners

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The government is planning to open its education and legal services to foreigners, a move aimed at boosting the country’s services sector.

In a country like India, “this (the liberalisation of the services sector) is to be slow and should have a calibrated approach …It is at a very early stage. A road map has been prepared,” Commerce Secretary Rita Teaotia told PTI.

Explaining the country’s approach to open education sector, the secretary said, in the beginning, opening online courses could be an option.

“Indira Gandhi National Open University is doing something. Some professional bodies are also offering online courses. So, when we have such reputed technical institutions, more online courses can make the training they offer accessible to other countries. So, this could be one step,” she said.

About opening legal services for foreign players, she said the Commerce Ministry’s intention is to work with Bar Council of India (BCI) to move in a direction which is “calibrated and always reciprocal”. The government is also in consultation with the Society for Indian Law Firms for this.

“…so the first step should be to look at our domestic sector and making an environment which allows for the growth of our legal services sector,” she said.

She said the road map developed by the Department of Commerce with stakeholders is to first permit “multi-professional firms to come in, and to allow them to increase size of the firms”.

“So, these could be early stage reforms. Once we do that, in the next stage we can have consultation with the BCI,” she added.

Opening up of these two sectors is under discussion of the Committee of Secretaries.

The UK and the US have been pushing India to open up the sector to foreign firms.

The Advocates Act, which is administered by the BCI, provides for foreign lawyers or law firms to visit India on a reciprocal basis for temporary periods to advise their clients on foreign law and diverse international legal issues.

Income Tax E-Filing Process – At a glance

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Steps for Income Tax E-Filing:

 

 

  1. Select appropriate type of Return Form – ITR and download appropriate Return Form from https://incometaxindiaefiling.gov.in/
  2. Fill your particulars of name, address. PAN Number, date of incorporation (date of birth, in case of individuals), sources of income and the amounts and other details in the ITR return offline and generate a XML file
  3. Register and create a user id/password. User id is always your PAN number.
  4. Login and click on relevant form on left panel and select “Submit Return”
  5. Browse to select XML file and click on “Upload” button
  6. On successful upload, acknowledgement details would be displayed. Click on “Print” to generate printout of acknowledgement/ITR-V Form.
  7. In case the return is digitally signed, on generation of “Acknowledgement” the Return Filing process gets completed. You may take a printout of the Acknowledgement for your records.
  8. Incase the return is not digitally signed, on successful uploading of e-Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same.
  9. The e-verification can be done using Aadhar number or through online banking. A duly verified ITR-V form should be submitted with the local Income Tax Office within 15 days of filing electronically. This completes the Return filing process for non-digitally signed Returns.
  10. For any assistance in filing the paper copy of the return please contact the Public Relations Officer of the local Income Tax Office.

Ease of doing business: Minimum Capital requirement, etc scrapped.

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Companies Amendment Act, 2015 has brought in certain provisions making way for Ease of doing business in India.

The Cabinet, chaired by Prime Minister Narendra Modi, had approved the changes in various provisions of the new Companies Act, 2013, which came into force with effect from April 1, 2014.

 

Minimum Capital requirement scrapped.

In the previous system, every company has to give a declaration to the Registrar of Companies (RoC), stating its paid-up capital is not less than Rs 500,000 in the case of public companies and not less than Rs 100,000 in the case of private companies, before commencement of business and exercising borrowing powers. The minimum paid-up capital requirement compliance and getting the certificate of commencement of business based on the above have been a hindrance for many small businesses.

Now, the minimum paid-up capital criteria have been scrapped, as per the Companies Amendment Act, 2015. Thus, a company can be formed even for small paltry amount of Rs. 10,000 and go ahead with doing business. The need to get the business commencement certificate based on the above compliance, is also dispensed with as per the Companies Amendment Act, 2015.

Common Seal made optional

Another provision under the Companies Amendment Act, 2015, towards Ease of doing business in India, is making Common Seal optional.

As a consequence, changes have been made with regards to authorization for execution of documents [Sections 9, 12, 22, 46 and 223], which made execution of documents, in the past, with  signatures of 2 directors under a Common Seal.

Schedules of Companies Act, 2013 and the corresponding provisions under Companies Act, 1956

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Table containing Schedules of Companies Act, 2013 as notified up to date and corresponding provisions thereof under Companies Act, 1956

Note: This is a ready reckoner for the information of stakeholders. Please refer to the relevant notifications and circulars issued separately.

Schedule. No. as per the Companies Act, 2013 (as notified – 282 sections)
 Schedules corresponding to the provisions of Companies Act, 1956
Schedule I Schedule I
Schedule II Schedule XIV
Schedule III Schedule VI
Schedule IV Nil
Schedule V Schedule XIII
Schedule VI Nil
Schedule VII Nil

Incorporation of Companies under Companies Act, 2013

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Steps for Incorporation of company under Companies Act, 2013

 

  1. Obtaining Digital Signature Certificate

For the Directors of the company, we have to obtain the Digital Signature Certificate (DSC).

For the DSC, the following documents are required:

  • For Indian Nationals: PAN Card (mandatory) and Voter’s identity card or Passport copy or Driving License copy
  • For Foreign nationals and Non Resident Indians: Passport Residential proof such as Bank Statement, Electricity Bill, Telephone / Mobile Bill; Provided that Bank statement Electricity bill, Telephone or Mobile bill shall not be more than two months old. Foreign director’s specimen signature and latest photograph duly verified by the banker or notary.
  1. Obtaining Director Identification No. (DIN)

Application in Form DIR-3 is to be e-filed for getting the Director Identification Number for all the proposed directors.

  1. Application for Reservation of Name

Application in Form INC -1 to be e-filed for the proposed company, giving 5-6 options of the main name with combination of coined words. The same shall be reserved for a period of 60 days.

  1. Drafting of Memorandum of Association

The main lines of business to be pursued on formation of the company to be mentioned. The secondary or incidental objects also to be furnished.

  1. Drafting of Articles of Association

The bye-laws of the company to be drafted as Articles of Association in line with the provisions of the Companies Act, 2013.

  1. Filing Incorporation Form

The e-filing of Form No. INC.7 to be made alongwith,

(a) The Memorandum and Articles of the company duly signed by all subscribers;

(b)   A declaration in Form No.INC.8 by an advocate or Practicing professional (CA, CS, CA) who is engaged in incorporation, and a person named as Director, Manager or Secretary, that all requirements related to incorporation has been complied with;

(c)   An affidavit in Form No. INC.9 from each subscriber and from each person named as first director in the articles that, he is not convicted of any offence in connection with promotion, formation or management of any company, he is not been found guilty of any fraud or misfeasance or of any breach of duty to any company during preceding five years, and all the documents filed with the Registrar contain correct, complete and true information to the best of his knowledge and belief;

(d)  The address for correspondence till its registered office is established;

(e)  The particulars of every subscribers along with proof of identity;

(f)   The Particulars of first directors along with proof of identity; and

(g)  The particulars of interests of first directors in other firms or bodies corporate along with their consent to act as directors.

 

  1. Registered Office to be established

A company shall have a registered office within 15 days of Incorporation and it shall file Form No.INC.22 to verify the same.

Thus all the documents can be filed on-line to incorporate the company.

As initiative of ease of doing business, incorporation can be done through e-filing of single integrated Form 29, as well.

Valuation of Business under DCF Method

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Valuation of Business under DCF Method

Valuation of enterprise is a complex assessment of the intrinsic value of a business enterprise, based on the strength of historic performance, present value and the future potential taking various factors in to account. Hence, the valuation of a business enterprise is both an art and a science. There are broadly three approaches to valuation, namely, Net Asset Approach, Income Approach and Market Approach.

First one is based on Net Assets of the enterprise, viz., the value of the Total Assets as per the Audited Balance Sheet less the Total Liabilities.

Second one is based on the income of the enterprise, viz., EBITDA (Earnings Before Interest, Depreciation and Amortization).

Third one is the market approach, factoring both of the above and the Discounted Cash Flow (DCF) of future earning potential of the business enterprise.

DCF method is recommended as the most appropriate method for valuation of most business enterprises, including start-ups and RBI acknowledges internationally accepted pricing methodology for valuation of shares. SEBI and other bodies also recognize the DCF method as acceptable method of valuation. An illustrative report of valuation on the basis of the DCF Method is given below for the information of the readers.

Valuation of Business of ATL Networks Limited

Background Information:

ATL Networks Limited is a leading telecom infrastructure and service provider with world class path breaking Optic Fiber Technology FTTH (Fiber-to-the-home). ATL Fiber Network offers the High speed Internet access and plethora of services. ATL Networks offers the most advanced technology of delivering the Internet at unbeatable prices.

Valuation Analysis Date:

As represented by the Management, we have taken note of the developments that have happened between Financial Years 2013-14 and 2014-15 and till May 15, 2015, which may have significant impact on the valuation of the entity. Hence, for the focus of valuation of our analysis, we have considered the valuation date to be 23 May 2015. The Management of ATL Networks Limited have provided us the Historical Financials till March 2015 and the provisional till May 15, 2015 and the Projected Consolidated Financials from 2015-16 for the next 10 years.

Valuation Analysis Methodology:

For the purpose of Valuation of business entity, we have used the guidelines as per the Accounting Standards and the latest amended pricing guidelines under the Foreign Exchange Management Act, Regulations issued by Reserve Bank of India as on May 4th 2010.

The Valuation Method suggested by these latest amended guidelines for valuation of business of an unlisted Company is Discounted Cash Flow method.

Discounted Cash Flow Method (DCF):

“The DCF method uses the Future Free Cash Flows of the Company (FFCFC) or equity holders discounted by Cost of Capital/Cost of Equity respectively to arrive at the present value. In General, the DCF method is strong and widely accepted valuation tool, as it concentrates on cash generation potential of a business.

Valuation Analysis:

As per the FEMA Regulations, we have considered the DCF method for valuation of ATL Networks Limited.

The Future Free Cash Flows to the Company, FFCFC have been calculated based on the financial projections for the period from 2015 to 2025 as provided by the Management. Based on the discussions, we understand that a heavy capital expenditure would be required in the initial years and the revenue will be dependent on the initial capacity building. The Company will break even only after 18 months.

The future growth percentage is promising based on market penetration solely in the Telecom Industry, in particular the growth in the broadband connections. Hence, the growth in the domestic market & competition in the domestic market alone is factored in the above valuation analysis.

Discounting Factor:

The Discounting Factor considered for arriving at the present value of free cash flows to the company is weighted average cost of capital. The cost of debt is post tax interest cost for debt and cost of equity is calculated based on Capital Asset Pricing Model (CAPM). We have considered domestic comparable companies to calculate the Beta utilized in the CAPM model to estimate the Cost of Equity.

Valuation of ATL Networks Limited using DCF method:

Under DCF Method, the sum of Present Value of Free Cash Flows of the entity in the explicit period is arrived at in Annexure – A. ATL Networks Limited, being an unlisted company and a company of moderate size, a liquidity discount and size of discount of 10% has been applied to derive the fair value of future earnings / cash flows.

Based on the method discussed above and subject to the assumptions and limitations stated separately in the annexure to the report and in our engagement letter, we have calculated the valuation of the business entity under the DCF Method of Valuation.

Sources of information

The valuation analysis is based on a review of the documentation provided by the Management. The sources of information include:

  1. Foreign Exchange Management Regulations 2000
  2. Audited consolidated financials for the period up to 31.03. 2015
  3. Provisional financial statement of the company as on 15.05.2015
  4. Projected financials received from the client for the 10 years from 2015-16
  5. Other industry related information from the World Wide Web and various publicly available sources, etc.
  6. Discussions with the Management of ATL Networks Limited
  7. Information from financial publications on Telecom industries, some of which are listed below.

 

http://articles.economictimes.indiatimes.com/2014-11-10/news/55955622_1_digital-india-broadband-growth-google-india

http://www.nextbigwhat.com/broadband-penetration-in-india-in-2012-297/

http://www.ibef.org/industry/telecommunications.aspx

http://www.trai.gov.in/WriteReadData/ConsultationPaper/Document/4.pdf

Caveats

Provision of valuation recommendations and considerations of issues described herein are the areas of our regular corporate advisory practice. The services do not represent accounting, audit and financial due diligence review, consulting, transfer pricing or domestic tax related services that may otherwise be provided by us as Chartered Accountants. We have relied on explanation and information provided by the management and accepted their information provided to us as accurate. Although we have reviewed such data for consistency and reasonableness, we have not independently investigated or otherwise verified the data provided. Therefore, we assume no liability for the accuracy of the data. The valuation analysis recommendation contain herein is not intended to represent the value at anytime other than the date of this report. We have no present or planned future interest in either the company or its subsidiaries if any, and the fee for this report is not contingent upon the value reported herein. Our valuation analysis should not be construed as investment advice, specifically we do not express any opinion on the suitability or other wise of entering into this consolidation of business transaction.

Distribution of report:

The valuation analysis is confidential and has been prepared exclusively for the management of ATL Networks Limited for Company Law requirements in India. It should not be used, reproduced or circulated in whole or in part, without the consent of the undersigned to any other person and any other purpose other than mentioned earlier in this report.

 

Sd/-

For Sundar.K. F.C.A., A.C.S.,

Chartered Accountants

Ease of doing business: No need for certificate of commencement of business for companies

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Ease of doing business:

No certificate of commencement of business required for companies

The government has done away with this requirement, taking another step to ease doing business in India.

The Cabinet, chaired by Prime Minister Narendra Modi, had approved the 14 changes in various provisions of the new Companies Act, 2013 under the Companies (Amendment) Act, 2015.

One of the changes brought with reference to Commencement of Business Certificate is as below:

SECTION EARLIER PROVISION

 PROVISIONS AFTER AMENDMENT

11

 Commencement of Business. No requirement of Commencement of Business Certificate. Section 11 shall be omitted.

 

Many promoters have been asking for the clarification as, earlier companies having share capital shall not commence any business or exercise any borrowing powers unless –

Declaration shall be filed in Form No INC 21 by a Director and the content of the form shall be verified by Practising Professional (CS/CA/CWA) stating that every subscriber has paid the value of shares agreed to be taken and paid up capital is not less than statutory limit;

and

Following documents needs to be attached with the Form No INC 22

  • Registered document of the title in name of Company; or
  • Notarised copy of Lease/rent agreement along with rent paid receipt (Rent receipt shall not be older than 1 month); or
  • Authorisation from Owner to Company along with proof of ownership for use of premises as Registered Office (NOC can be submitted for this); and

Proof of evidence of any utility service like gas, electricity, telephone etc. in the name of owner (not older than 2 months)

The Cabinet, chaired by Prime Minister Narendra Modi, has made the meaningful change in various provisions of the new Companies Act, 2013, which came into force with effect from April 1, 2014, inter-alia, about the Commencement of Business Certificate and now, the government has done away with this requirement, taking another step to ease doing business in India.