Startups are playing a very important role in the development of India by generating employment within the country and also by reducing the dependency on other countries. A lot of startups are also able to raise millions of funding from the foreign investors and thereby making India an investment hub.
In this article I am going to share my views on the role of a Company Secretary as a Startup Consultant or How a Company Secretary plays a very important role in establishing Startups.
The Government of India (GOI) has been trying to make a lot of changes in various legislations to run a business smoothly or we can also say that they are trying to improve the ease of doing business in India.
Recently GOI, in order to boost and support various startups in the country has decided to give various benefits such as Tax Benefit, Easier Compliance, IPR fast-tracking and many more.
Startups under this initiative means an entity, which is incorporated and registered in India, which fulfils the below eligibility:
1. Period of existence should not be exceeding 10 years from the Date of Incorporation;
2. Entity should be incorporated as Private Limited Company, a registered Partnership firm or a Limited Liability Partnership;
3. Annual turnover of the entity should not be exceeding 100 Crore for any of the financial year since its incorporation;
4. Entity should not be incorporated by splitting up or reconstructing an already existing business;
5. Entity should have worked towards development or improvement of a product, process or service and/or have a scalable business model with high potential for creation of wealth and employment.
The above eligibility criteria is defined by DPIIT (Ministry of Commerce and Industry).
Company Secretaries are also known as Compliance Professional or an in-house legal expert and a compliance officer of the company. They are primarily responsible for the efficient and timely administration of the company and specifically ensuring statutory and regulatory compliance and to give effect to the decision of the Board of Directors in an efficient way. Let’s talk about why CS can be beneficial as a Startup Consultant:
1. Company Secretary plays an important role because as a professional they have studied in detail & in depth all about the Compliances including but not limited to Companies Act, 2013.
2. Company Secretaries can guide in better compliance and governance and ensure that all activities undertaken to achieve its aim are in compliance with legal, ethical and regulatory requirements.
3. Startups will be able to understand the importance of compliance because a company, who has better compliance and governance will have more chances of getting recognised by various Angel Investors, that will help the company to get funds for their startups.
4. Company Secretaries can provide further assistance to the startups in getting various registration such as Quality Certification, Compliance Audit and Business Planning & Monitoring etc.
5. Having a Company Secretary as a part of any organization provides a better image and gives an indication that the Company is complying with all the statutory requirements in true letter and spirit.
One of the important decisions for any individual who wants to start his own business is the medium by which he is going to start his own business. A CS should guide the individual on all the available mediums to establish his business with pros and cons of each and every available medium and try to mentor the individual, since he is not having the knowledge of the subject matter.
Company Secretary can help the startup in getting various registration under the different Acts that will enable the startup to get various incentives available to them which otherwise would be difficult for them to even know. A Company secretary help the startup to get
GSTIN under the Goods and Service Tax Act, 2017.
MSME registration under Micro, Small and Medium Enterprises Development Act, 2006.
Registration under The Employees Provident Funds And Miscellaneous Provision’s Act, 1952.
Registration under Employees’ State Insurance Act, 1948.
Above list is not an exclusive list and there are various other legislation which can be applicable on the startups depending upon the industry they are working in.
One of the most important aspects of a startup is “Shareholder Agreement” which talks about basically the rights of the shareholders or right of the investors who are actually going to invest in the Startup. A Company Secretary can play a vital role in drafting a shareholder agreement and he will make sure that the agreement is drafted in such a way that it safeguards the interest of the investors and making sure that the interest of the owner is also safe and the agreement is well balanced.
Every startup needs funds in order to run the business properly and considering most of the investment is coming through foreign countries through proper banking channels. The Reserve Bank of India (RBI) regulates or monitors all the funds which are being invested in India, Company Secretaries are very well versed with all the reporting which is required to be reported to the RBI.
In some of the reporting made to RBI such as FCGPR form, there is a mandatory requirement to take a Certificate from a Practicing Company Secretary and without that such form will not be approved.
Nowadays most of the startups are registering themselves as a Private Limited Company and here a CS can contribute to the company by helping them in their day to day compliances i.e. filling of various e-Forms such as DPT-3, MSME Return, forms related to charge, in case the company is taking some loan by way of charge on its assets and by filling of financial statements with the registrar of Companies.
They can also assist the Board in the decision making process by guiding and suggesting them and helping the Board to take efficient decisions.
If you have made it till here, Thanks a lot for taking your time and reading it. Please share your feedback on my email id Prakash1994joshi@gmail.com