START-UP’s & THEIR COMPLIANCES
Today we talk about start-ups and the mistakes they do which cause them a big trouble to expand their business and yes sometimes more serious than that, they have negative remark on their goodwill. Also, in the present scenario government has become more conscious and strict about following the Corporate Laws and every day a new rule/regulation is coming out. Those who are not following good corporate governance are facing serious trouble in running their business.
So, if you are a start-up then this article is very useful for you, have a look and save your entity from troubles.
When we go for a start-up, at conceiving stage we try to operate at break-even. In that struggle, we forget to look at the related Compliance which becomes a great trouble at later stage when the organizations are seeking for funding from investors for expansion & growth. Without Due Diligence & Process Audits, No investor will be convinced to make a move & hand over his funds to a startup.
Let us discuss the trouble areas of non-compliance which becomes a major prick of the path:-
- No recorded meetings of the board of Directors and the Members i.e. No minutes are recorded for the meeting as per the Act.
- No Statutory Registers are maintained by the Company i.e. no official recording of loans, Related Party Transactions, Members etc. as per the Act.
- Non-compliance of the provisions of the Act.
- Non-filling of documents with in the stipulated timeline to the ROC and other regulatory bodies.
Apart from the applicability of the some Special Acts and other Regulations, the above stated are some of the common mistakes done by the start-ups which become a trouble for them to get funding.So along with growing the business one should be conscious toward the compliances related to it which will give him a green reporting & an image of responsible corporate.
Some tips to save the start-up from Compliance Troubles:-
- Duly convene the meetings and do proper recordings of the same. Along with recordings maintenance of the minutes is very important i.e. it should be preserved and kept in safe custody.
- Maintain the Statutory Registers, record every entry as per the format prescribed in the Act and place at the Registered Office of the Company. Maintenance of Statutory Registers also provides the detailed information of the act held in the Company.
- Always comply with the provisions of the various Corporate Laws and to prevent from forgetting the Due dates use the Compliance Calendar Software or having an experienced Company Secretary is advisable to the corporate to consult from time to time.
- File the required documents in the prescribed forms to the ROC or other Regulatory Authorities on time to save from penalties and non-punctual compliances.
- Always have expert’s advice before going for any new project or expansion.
- In case the startup is seeking investment from Foreign Investor always comply the RBI Guidelines and FEMA Regulations to have smooth funding.
Some Don’ts for the Start-ups are:
- Do not try to act smart by saving few bucks from non-compliance but try to engage with experienced consultants on full time or on Retainer ship.
- Avoid hearsay advices from a non-expert, sometimes they do not have root level knowledge and they may misguide.
- Compliances are not secondary things to manage; it is very important part of the business even in case of start-ups.
- Do not go for the new projects without verifying the legal scope of it in the Country.
Having some good advice and compliance schedule, one can have growing business and long term stability in the market. So, the Business buds! Be Compliance friendly and enjoy watching your business growing from a bud to a blossoming flower.
The author is a Company Secretary in Practice & can be reached at firstname.lastname@example.org