Dormant Company Meaning: Section 455 of Companies Act 2013

Features of SAMRIDH Scheme

• The SAMRIDH scheme provides your startup which already has brilliant solutions and proof of concept for their product, better facilities to enhance the product using innovative technologies for the market with a solid business plan.
• The scheme provides a platform to enhance your products and secure investment for scaling your business.
• Once your startup gains traction, there is a gap in accessing the growth stage funding to scale up the operations,and the scheme is filling up this gap for startups.
• The scheme supports existing and upcoming Accelerators to select and accelerate potential IT-based startups to scale to solve India's problems and create positive social impact.

Eligibility for SAMRIDH Scheme

For Startups

• Must be recognized by DPIIT.
• Must be in the Early-growth stage.
• The product of the startup must be software-based.

For Accelerators

• Must have operations in India.
• Must have been in the business of incubation for more than three years and supported more than 50 startups.
• Must have the required infrastructure and targeted acceleration programs.

Application procedure for Startups

The application procedure primarily comprises the following steps:

• Visit https://meitystartuphub.in.
• On the homepage, click on “Register” under the Startup section.
• The registration page will appear. Fill in all the requisite details and click on the “Submit” button.
• Following registration, one can "log in" to the page for further access by filling in the username and password.

Benefits of SAMRIDH

• This scheme provides a platform for product development and business scaling in terms of investment.
• To provide customer connect, investor connect, and international connect services.
• Up to Rs 40 lakh will be provided to the startups according to their current valuation and growth stage through accelerators..
• Customized acceleration programs for startups and provided product and capacity enhancement services.

Post-Selection Process for SAMRIDH Scheme

The ​​MeitY SAMRIDH Scheme will be implemented through the MeitY Startup Hub (MSH). The selected Accelerator will be responsible for developing personalized acceleration programmes, and the budget for each startup is Rs. 2 lakh.

The services include- Co-learning, networking, expert diagnosis, and negotiation of investment funding from Angel Investors. A maximum of 10 businesses and a minimum of 5 startups working in the sphere of software products can be helped by a shortlisted accelerator.

MSH will take equity in startups for the government's contribution via Promissory/SAFE Note, the same as Accelerator, which will be utilized to sustain the program.The startup's exit may be executed by MSH or its appointed entity holding the company's equity, subject to approval from SMC. Biannual assessments of startups within the portfolio will be conducted, and the resulting reports will inform decisions regarding exiting from the startup.

Frequently Asked Questions

Difference Between Limited Liability Partnership and Private Limited Company

The fundamental difference between a Pvt Ltd and an LLP lies in ownership and management. While a Pvt Ltd company is governed by shareholders (owners) and directors (managers), an LLP is managed by partners who own and operate the business. Additionally, compliance requirements, taxation and funding options differ significantly between the two.

Here is a table outlining the difference between LLP and a private limited Company:

While the differences between LLPs and Private Limited Companies are numerous, they share similarities in key aspects:

• Limited Liability
• Separate Legal Identity
• Registration Process with the MCA
• Perpetual Succession

Let’s understand the key features and registration process in detail for both Private limited companies and LLPs.

What is a Private Limited Company?

A Private Limited Company (Pvt Ltd) is a privately held business entity that operates under the legal framework of the Companies Act of 2013 in India (or similar laws in other countries). It combines the benefits of limited liability protection for its shareholders with certain restrictions to maintain its private nature.

This structure is popular among startups and small to medium-sized enterprises due to its ability to attract investments while offering limited liability protection and operational flexibility.

Features of Pvt Ltd Company

Listing down some key advantages of a Private Limited Company below:

1. Limited Liability

The liability of Shareholders is limited. Personal assets are generally protected from business debts.

2. Separate Legal Entity

A Private Limited Company is considered a distinct legal entity from its owners (shareholders). It can enter into contracts, own property, and sue or be sued in its own name.

3. Ownership

Owned by shareholders who hold shares in the company. Transfer of ownership is facilitated through the buying and selling of shares.

4. Management

Managed by directors who are appointed by the shareholders. The day-to-day operations are overseen by the management team, while major decisions are often subject to shareholder approval.

5. Number of Shareholders

Requires a minimum of two shareholders and can have a maximum of 200 shareholders.

6. Regulation and Compliance

Governed by the Companies Act and regulated by the Ministry of Corporate Affairs in India. Compliance includes filing annual financial statements, conducting annual general meetings and maintaining statutory records.

7. Investment and Funding

Easier to attract investment and funding compared to other business structures due to the well-defined ownership structure and limited liability.

8. Perpetual Succession

The company continues to exist even if its shareholders or directors in private limited company change, retire, or pass away. Ownership can be transferred seamlessly through the sale of shares.

Private Limited Company Registration

The Ministry of Corporate Affairs (MCA) has introduced a streamlined process for incorporating companies called the Simplified Proforma for Incorporating Company Electronically Plus (SPICe+). It consists of two parts: Part A and Part B.

1. Step 1: Acquire a Digital Signature Certificate (DSC)

• A Digital Signature Certificate (DSC) is a digital method of verifying or attesting documents.
• It is typically issued with one or two-year validity and is mandatory for all witnesses in the Memorandum of Association (MOA) and Articles of Association (AOA).
• Class 2 or 3 DSCs can be obtained through listed Government Certifying Agencies (CAs).

2. Step 2: Apply for Name Approval using SPICe+ Part A

• Part A facilitates 'Name Reservation' with two proposed names and one re-submission (RSUB).
• In case of name rejection due to various reasons, a re-filing with the specified fee is required.

Note: Simultaneous application for name approval (Part A) and Incorporation (Part B) through SPICe+ is possible, but only one name can be reserved.

3. Step 3: Apply for Company Registration using SPICe+ Part B

After name approval, Part B completes the registration process, including:

• • Application for allotment of Director Identification Number (DIN)
  • Incorporation of the new company
  • Submission of e-MoA (INC-33) and e-AoA (INC-34)
  • Application for PAN and TAN (mandatory)
  • Application for EPFO registration (mandatory)
  • Application for ESIC registration (mandatory)
  • Application for Professional tax registration (only for Maharashtra)

The entered information in SPICe+ Parts A and B is automatically transferred to associated forms like AGILE-PRO, eAoA, eMoA, URC1, and INC-9, as applicable.

4. Step 4: Open a Bank Account

Open a current account for your company to facilitate seamless financial transactions and business operations, handling various aspects such as receiving payments, making supplier payments and managing payroll.

5. Step 5: File for the Commencement of Business Certificate

The Commencement of Business Certificate, filed through Form INC-20A within 180 days of incorporation, is a declaration by the Director of the Company submitted to the Registrar of Companies.

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After the SPICe+ Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, confirming the successful registration of your company.

This certificate includes vital information such as the Company's name, registration number (CIN), date of incorporation, registered office address, and so on.

Example of CIN: U72200KA2013PTC097389

Read more about what each letter in a CIN signifies here.

What is a Limited Liability Partnership?

A Limited Liability Partnership (LLP) is a business structure combining features of a traditional partnership and a limited company.

Limited Liability Partnerships are often chosen by professional services firms, small businesses and ventures where the partners want the flexibility of a partnership along with the protection of limited liability.

Features of LLP

A Limited Liability Partnership (LLP) is a business structure that combines features of both a traditional partnership and a limited company. Limited Liability Partnerships are often chosen by professional services firms, small businesses, and ventures where the partners want the flexibility of a partnership along with the protection of limited liability.

Some key characteristics of a Limited Liability Partnership are:

1. Limited Liability

Similar to a private limited company, partners in an LLP have limited liability.

2. Separate Legal Entity

An LLP is a distinct legal entity from its partners. It can own property, enter into contracts, and sue or be sued in its own name.

3. Ownership

Owned by partners, and the ownership structure is defined by the LLP agreement. Transfer of ownership usually requires the consent of other partners.

4. Management

Managed by partners or a designated management team, as specified in the LLP agreement. Each partner typically has an equal say in the management decisions, making it a more collaborative structure.

5. Number of Partners

Requires a minimum of two partners, and there is no maximum limit on the number of partners in an LLP.

6. Regulation and Compliance

Governed by the Limited Liability Partnership Act in India, with less stringent regulatory requirements compared to a private limited company. Compliance involves filing annual returns and maintaining statutory records.

7. Flexibility

Offers greater flexibility in terms of internal management and decision-making processes compared to a private limited company.

Limited Liability Partnerships Registration

Here's a simplified guide on the steps for Limited Liability Partnership (LLP) registration:

1. Step 1: Apply for DSC

• Obtain a Digital Signature Certificate (DSC) from Government Certifying Agencies with one or two-year validity.

2. Step 2: Name Reservation

• Reserve the LLP's name using the LLP-RUN form.

3. Step 3: Apply for Registration through FiLLiP

• Complete the FiLLiP (Form for Incorporation of Limited Liability Partnership) and submit it to the Registrar. Alongside FiLLiP, submit the Subscriber sheet and Partner's consent (Form 9) as additional documentation.

4. Step 4: File LLP Agreement

• File the LLP Agreement using Form 3 on the MCA portal within 30 days of LLP registration.

After the FiLLiP Form receives approval, the Registrar of Companies (ROC) issues the Certificate of Incorporation, a crucial legal document confirming the successful registration of your company.

This certificate includes vital information such as the LLP's name, registration number (LLPIN), date of incorporation, registered office address, and more.

Example of LLPIN: AAA-1234

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LLP vs Pvt Ltd Ownership

• Shareholders vs. Partners
  • Pvt Ltd Ownership: Shareholders own the company but may not be involved in day-to-day management. Primarily managed by Directors.
  • LLP Ownership: Partners typically manage the business and have a direct role in decision-making.
• Transfer of Ownership
  • Pvt Ltd: Shares can be easily transferred from private limited company members, making it simpler to onboard or exit shareholders.
  • LLP: Ownership transfer requires the consent of other partners, which can be complex.

LLP vs Pvt Ltd Compliance

• Compliance for Private Limited Companies
  • Hold the First Meeting of the Board of Directors within 30 days of the Incorporation of the Company. It is compulsory to host four meetings in a year with a gap not more than 120 days.
  • Hold an Annual General Meeting every year, on or before September 30^th, during business hours and in the registered office.
  • Appoint the company's first auditor within 30 days of incorporation, who will serve until the end of the first AGM.
  • File Form ADT 1 within 15 days of the appointment of the subsequent auditor.
  • File Annual Returns (AOC 4 and MGT 7) within 30 and 60 days of holding the AGM, respectively.
  • File Form ITR-6 for Income Tax Return annually.
  • File Form DIR-3 KYC to disclose details of the Directors.
• Compliance for Limited Liability Partnerships
  • File an LLP agreement within 30 days of incorporation. The penalty of ₹100/day will be levied if an LLP fails to comply with this condition.
  • File the form DIR3 for the DIN allotment in case of an existing company.
  • File two annual statements for Annual Return and Statement of Accounts and Solvency using Forms 11 and 8, respectively.
  • Sign, verify and file the Income Tax Return (ITR) annually.
  • Depending on their shareholding capacity, you and your partner must deposit their contribution into the relevant bank account within the specified time frame.
  • Get a GST registration since it is a legal compulsion per the GST Act.
  • Audit your accounts through CAs if the company's annual turnover exceeds Rs 40 lakhs or the contribution surpasses ₹25 lakhs of the threshold limit.
  For businesses that prefer a simpler and cost-effective compliance framework, LLPs are the better option. With fewer regulatory requirements, LLPs reduce the administrative burden, making them ideal for small businesses, professional firms and startups not seeking external funding. However, for companies planning rapid growth, attracting investors or requiring a formal structure for credibility, Pvt Ltd companies are worth the added compliance effort.

LLP vs Pvt Ltd Funding

• Equity Financing
  • Pvt Ltd Company funding: Easily attracts investors by issuing shares, making it suitable for startups seeking venture capital or private equity.
  • LLP funding: Equity financing is not possible since partners cannot issue shares.
• Debt Financing
  • Both structures can access loans, but Pvt Ltd companies have additional options like issuing debentures or convertible notes.

LLP vs Pvt Ltd Foreign Direct Investment (FDI)

• Pvt Ltd Company funding: Easily attracts investors by issuing shares, making it suitable for startups seeking venture capital or private equity.
• LLP: FDI in LLP is allowed only in sectors where 100% FDI is permitted and is subject to approval in other cases, making it less flexible.

LLP vs Pvt Ltd Taxation

• Taxation for Pvt Ltd CompaniesIncome tax for Pvt Ltd companies:
  • 25% if the turnover is up to ₹400 crore (as per recent provisions).
  • 30% for larger companies.
  A cess of 4% applies to the tax amount, along with surcharges for higher income levels.
• Taxation for LLPsLLP taxation rate is 30% on their total income plus a surcharge (if applicable) and cess.Both LLPs and Pvt Ltd companies are treated equally under the GST regime:
  • GST registration is mandatory for businesses with annual turnover exceeding ₹20 lakhs (₹40 lakhs for goods in some states).
  • Compliance includes filing monthly or quarterly GST returns, depending on turnover.

Company Registration with Razorpay Rize

You can experience a hassle-free, 100% online business registration process with Razorpay Rize, featuring the lowest professional fees and absolutely no hidden charges.

Explore the diverse range of services tailored to suit the needs of both startups and established businesses.

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Our package includes:

• Company Name Registration
• 2 Digital Signature Certificates (DSCs)
• 2 Directors’ Identification Numbers (DINs)
• Certificate of Incorporation(COI)
• MoA & AoA [Applicable for Private Limited Companies and OPCs]
• LLP Agreement [Applicable for LLPs]
• Company PAN & TAN

*Prices and documents can differ based on the company type.

Which Company Type Should You Register Your Business With?

Before proceeding with the registration of either an LLP or a company, it is crucial to evaluate the following factors carefully.

• Consider the nature and size of your business

• If you operate a small business with a limited workforce, opting for LLP registration might be more favourable, given the relatively lighter compliance requirements compared to a company. On the other hand, for larger businesses with substantial employee numbers and capital needs, registering as a company provides greater flexibility in raising capital.

• Fundraising requirements

• If your goal is to raise funds through equity, choosing a company structure is imperative. However, if your fundraising needs are more straightforward, the LLP structure may be a more suitable option.

• Tax rates

• It's essential to compare the tax rates applicable to both company and LLP structures, as there can be significant differences. Opt for the structure that aligns with your financial goals based on total income or turnover.

• Personal liability protection

• While an LLP offers limited liability protection, a company structure treats the company as a distinct legal entity, safeguarding shareholders' personal assets.

Ultimately, the choice between a company structure and an LLP structure hinges on the unique characteristics of your business, including its nature, size, and capital requirements.

Find Your Ideal Company Type

If you still need more help deciding which company type to register with, don't worry! We’ve got you covered with our latest tool - "Know Your Company Type."

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For the first time in India, simply answer a quick set of questions about your startup, and this tool will leverage your responses to identify the ideal company registration type. Find your perfect fit with just one click!

Explore side-by-side comparisons of popular company types for added clarity and make informed choices effortlessly!

Frequently Asked Questions

What is Form DPT-3?

Form DPT-3 is an annual return form that companies must file to report deposits and outstanding loan details. It is a statutory requirement under the Companies Act 2013, ensuring that businesses remain compliant and transparent in their financial dealings. The form covers:

• Deposits received by the company
• Non-deposit loans taken from directors, shareholders, or other sources
• Any other amounts that are classified as financial liabilities

The primary objective of this filing is to prevent malpractices related to undisclosed financial transactions and to strengthen corporate governance.

<H2> Applicability and Requirements for DPT-3 Form

Form DPT-3 filing applies to all companies except government companies. This includes:

• Private Limited Companies
• Public Limited Companies
• One Person Companies (OPCs)

Key requirements for DP3 include:

• Annual Filing Deadline: Companies must submit Form DPT-3 by June 30 each year, covering financial transactions for the previous fiscal year.
• Financial Year Coverage: The form includes details of financial liabilities up to March 31 of the relevant financial year.
• Auditor Verification: Companies must ensure that the reported figures are verified by auditors to maintain accuracy and compliance.

Penalties for Non-Compliance with Form DPT-3 Filing

Failure to file Form DPT-3 on time can result in significant penalties under the Companies Act 2013. The penalties include:

• A flat penalty of up to ₹5,000 for the company.
• Additional daily fines of ₹500 per day for continued non-compliance.
• Officers responsible for the filing may also be penalised with additional fines.

Ensuring timely submission is essential to avoid legal repercussions and unnecessary financial burdens.

Preparing for the DPT-3 Filing

To ensure a smooth DPT-3 filing process, companies should follow these steps:

1. Review Financial Transactions: Examine all deposits, loans, and non-deposit receipts received during the financial year.
2. Obtain Audit Reports: Work with auditors to verify and validate the data before submission.
3. Gather Necessary Documentation: Collect supporting documents such as loan agreements, receipts, and auditor reports.
4. Consult Experts: If there are complexities in reporting, seek advice from compliance professionals or legal experts.

Information Required to Fill DPT-3 Form

Companies need to provide the following details while filling out Form DPT-3:

• Corporate Identification Number (CIN)
• Name and registered address of the company
• Auditor certification and verification

Other financial liabilities as per the balance sheet-

• Net Worth of the Company: The net worth is calculated as total assets minus total liabilities based on the most recent financial year-end.
• Particulars of Charge (if any): Companies must disclose any charges or encumbrances on their assets. This includes mortgages, liens, or any other security interests held against company-owned properties or resources.
• Total Amount Outstanding as of March 31st, 2020 including-  

• Deposits received from individuals or entities.
• Loans borrowed from banks, directors, or other companies.
• Any other non-deposit receipts that need disclosure.

• Particulars of Credit Rating (If Applicable): Companies with an assigned credit rating should provide: Name of the credit rating agency (e.g., CRISIL, ICRA, CARE, etc.) and the rating assigned. 

Form DPT-3 Due Date

The due date for filing Form DPT-3 is June 30th of every financial year. Companies should ensure timely submission to avoid penalties and maintain regulatory compliance.

Documents Required to File DPT-3 Form

To complete the Form DPT-3 filing, companies must submit:

• List of Depositors
• Deposit Insurance Contract
• Copy of the Trust Deed
• Copy of the Instrument Creating Charge
• Details of Liquid Assets
• Outstanding Receipts of Money or Loans
• Auditor’s Certificate

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Conclusion

Form DPT-3 is a critical compliance requirement for companies in India. Filing this might feel like just another compliance task, but it’s actually a crucial step in keeping your business financially transparent and legally sound. Missing the deadline can lead to penalties, unnecessary stress, and last-minute scrambling. Instead of rushing at the last minute, take a proactive approach—review your records, coordinate with your auditors, and get your documents in order well in advance.

Frequently Asked Questions