What is a Shelf Prospectus? Meaning & Provisions Under the Companies Act, India

Format of a Partnership Deed

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The format of a partnership deed may vary based on the specific requirements of the partners and the nature of the business. However, a typical partnership deed includes the following essential elements:

• Name of the Partnership:
  The official business name under which the partnership operates is stated, along with the physical address where the primary business activities occur. This section also highlights the duration of the partnership firm alongside the date of the commencement.
• Details of the Partners:
  This section includes the full name, address, and relevant particulars of the Individuals participating in the Partnership.
• Purpose:
  Here, the nature and scope of the business activities conducted by the partnership is clearly stated. The firm shall have the power to fulfill the objectives of thecompany and conduct any such lawful business activities.
• Capital Contribution:
  The total capital of the firm and the individual share contributed by each partner are to be mentioned here. The contribution can be in cash, goods, or property on agreed values.
• Profit and Loss Sharing:
  ‍It clearly articulates the agreed-upon ratio or percentage in which profits and losses will be distributed among the partners.
• Financial Decisions:
  It includes information such as the partners' salary and commission, permissive drawings from the firm for each partner, the interest payable to the firm on these drawings, partnership loans, and other relevant details.
• Admission and Retirement of Partners:
  ‍This part outlines the criteria and process for admitting new partners into the business. Similarly, it details the procedures for the retirement or withdrawal of existing partners.
• Dispute Resolution:
  Procedures for resolving disputes among partners are established. This may include mechanisms for mediation or arbitration to address conflicts and maintain a harmonious partnership.
• Dissolution:
  It states the conditions and procedures for the dissolution of the partnership which highlights the distribution of assets, settlement of liabilities, and the overall process of winding up the business.
• Witnesses and Signatures:
  The partnership deed is formally executed with the signatures of all partners, and done in the presence of witnesses.

How to draft a Partnership Deed?

A partnership deed can be a verbal or written agreement outlining the rights, responsibilities, profit-sharing, and other obligations of the partners.

While it can be recorded verbally, it is highly advisable to formalize a written partnership deed with the Registrar of Firms as it aids in resolving potential disputes. It also proves beneficial for tax purposes and ensures the formal registration of the partnership firm.

• The Partnership Deed, formulated by the partners, must be executed on stamp paper with a minimum value of Rs. 200, as per the Indian Stamp Act.
• Each partner should retain a copy of the partnership deed for future reference.
• Once stamped, the Partnership deed is attached with the application to the Registrar of Firms for formal registration and legal validation.

As per the Partnership Act, Registration of Partnership Firms is optional, but if you still choose to register your firm-

The application should be accompanied by essential documents, including a duly filled affidavit, a certified true copy of the Partnership Deed, and proof of ownership or a rental/lease agreement for the main business location.

Validity of the Partnership Deed

The validity of the firm is mentioned in the deed, whether it's for a limited period, for a specific project or for an unlimited period.

Note: A partnership deed that has been notarized alone does not hold legal validity in the event of legal disputes. However, if the partnership firm is formally registered with RoF, the partnership deed will be recognized as having legal standing.

Fees for the Partnership Deed in India

The Partnership Deed must be executed on a stamp paper with a minimum value of Rs. 200, as per the Indian Stamp Act.

However, Partnership registration fees vary among states due to different compliance requirements and stamp duty rates. The cost for registering a Partnership Firm ranges from Rs. 500 to Rs. 3000.

Note: Stamp duty is calculated based on partner contributions and follows state-specific regulations.

Alterations in the Partnership Deed

Partners have the flexibility to modify, alter, or change the partnership deed through mutual agreement. All partners are required to sign the amended deed.

Subsequently, the modified partnership deed should be registered at the Sub-Registrar's office, where the original deed was registered. Additionally, it is necessary to submit the modified deed to the Registrar of Firms for record-keeping purposes.

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Overview of One-Person Company Registration

A One-Person Company (OPC) is a business entity that allows a single individual to establish a company with limited liability. Unlike traditional business structures, OPCs provide entrepreneurs with a legal framework that protects personal assets while offering the flexibility of single ownership. This model bridges the gap between sole proprietorship and traditional multi-member companies.

Eligibility Criteria for the Incorporation of One-Person Company

To register an OPC in India an individual must be an Indian resident and can be both the director and shareholder. The company requires a minimum authorised share capital of ₹1 lakh, and the proposed company name must be unique. Also, the individual can be a member of only one OPC and they should not have any criminal record.

One-Person Company Registration Steps

OPC registration process has following steps:

Step 1: Initial Preparation

Obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) using the MCA portal. Select a unique company name that complies with Companies (Incorporation Rules) 2014.

Step 2: Nominee Appointment

Identify and secure consent from a nominee who can become a director in case of the original promoter's incapacitation. Ensure the nominee meets legal and professional eligibility criteria.

Step 3: OPC Documentation

Compile essential documents including proof of registered office, director identification, address proof, and business plan. Maintain the mandatory minimum authorized capital of ₹1 lakh.

Step 4: Online Registration

Complete registration through the MCA portal by uploading the required documents, verifying DIN, and submitting all necessary forms.

Step 5: Certificate and Compliance

Receive the Certificate of Incorporation within 3-5 days after verification. Subsequently, maintain ongoing regulatory compliance like annual filings and adherence to OPC-specific requirements.

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Documents Required for One-Person Company Registration

• Identity proof (PAN card, Aadhaar card)
• Residence proof (utility bills, bank statements)
• Proof of registered office (rent agreement or ownership documents)
• Nominee consent documents
• Digital Signature Certificate

Timelines for OPC registration

You can obtain their Digital Signature Certificate (DSC) and Director Identification Number (DIN) within one day. The Certificate of Incorporation typically takes between 3 to 5 days to process. From start to finish, the entire incorporation process can be completed in approximately 10 days.

Post-Incorporation Formalities for OPC

After registering an OPC company, you must complete several key steps as highlighted below:

• Open a dedicated company bank account and deposit share capital within 60 days.
• Issue share certificates to shareholders within two months as proof of ownership.
• Register for GST if goods or service supply exceeds thresholds.
• Maintain statutory registers to document company activities.
• Prepare for annual tax return filing and ensure ongoing regulatory compliance.

Features of One-Person Company (OPC)

1. Single Ownership: Allows a single individual to form a company, providing complete control and ownership under Section 3(1)(c) of the Companies Act.
2. Innovative Nominee System: Requires a nominee who can take over company ownership in case of the original member's death or incapacitation, ensuring business continuity.
3. Flexible Management: Permits 1-15 directors, with minimal administrative complexity and no minimum paid-up capital requirement.
4. Limited Liability Protection: Separates personal assets from business risks, offering entrepreneurs crucial financial security.
5. Simplified Compliance: Provides a streamlined approach to business registration and management, making corporate structure accessible to individual entrepreneurs.

Advantages of One-Person Company Registration

• One of the biggest advantages of an OPC company is that the OPC structure provides a separate legal entity status that helps protect the individual's personal assets from business liabilities.
• This model enables easier fundraising opportunities, as banks and financial institutions typically prefer lending to registered companies over sole proprietorships.
• OPCs also provide a clear path for business continuity through the mandatory nominee appointment, ensuring the potential for perpetual succession.
• The simplified management structure allows for quick decision-making.

Disadvantages of OPC

While One-Person Companies present numerous benefits, they also come with certain limitations that you should carefully consider:

• The OPC structure is primarily suitable for small business operations, with strict restrictions on expanding ownership or raising additional capital.
• There are notable limitations on business activities, particularly prohibiting non-banking financial investment activities.
• The close alignment between ownership and management can create potential challenges, as the sole member may have unchecked control over business decisions.
• As the business grows, the OPC model may become restrictive, potentially requiring a transition to a more complex business structure.

Frequently Asked Questions

What is Form ADT-1?

Form ADT-1 is a mandatory filing under the Companies Act, 2013, used to inform the Registrar of Companies (ROC) about the appointment of an auditor in a company.

Key Points on Auditor Appointment & Filing Requirements

1. Appointment of First Auditor (New Companies)

For companies (excluding government companies):

The Board of Directors must appoint the first auditor within 30 days of incorporation.

If the Board fails to do so, the members must appoint the first auditor within 90 days at an Extraordinary General Meeting (EGM).

The first auditor holds office until the conclusion of the first Annual General Meeting (AGM).

Note: Filing Form ADT-1 is NOT required for the first auditor’s appointment. However, companies may choose to file it for compliance and record-keeping purposes.

2. Appointment of Subsequent Auditors

After the first AGM, companies must appoint an auditor for a five-year term (for private and public companies) or as per shareholder approval.

Form ADT-1 must be filed within 15 days of the auditor’s appointment to inform the ROC.

Timely filing of Form ADT-1 is crucial for companies to:

• Comply with legal requirements under the Companies Act
  
• Avoid penalties and legal consequences
  
• Maintain transparency in auditor appointments
  
• Ensure proper oversight of financial reporting
  

Who Needs to File Form ADT-1?

Is Form ADT-1 mandatory for all companies?

All companies incorporated under the Companies Act, 2013, are required to file Form ADT-1, including:

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

What happens if a company fails to file Form ADT-1?

Failure to file Form ADT-1 within the prescribed time can result in penalties and legal consequences for the company and its directors. The company may be fined between ₹25,000 to ₹5,00,000, and every defaulting officer may be punishable with imprisonment of up to 1 year, a fine between ₹10,000 to ₹1,00,000, or both.

Law Governing the Form ADT-1

The filing of Form ADT-1 is mandated under Section 139(1) of the Companies Act, 2013. This section requires companies to file the form with the ROC to inform them about the auditor's appointment, which is done after the AGM. The form contains essential details about the appointed auditor, such as their name, address, membership number, and date of appointment. Companies must submit Form ADT-1 within 15 days of the AGM to fulfil their legal obligations and avoid potential penalties for non-compliance.

Requirements for Filing Form ADT-1

• The company has appointed an auditor as per the provisions of the Companies Act, 2013
  
• The appointed auditor has provided written consent to act as the auditor
  
• The auditor has issued a certificate confirming they are not disqualified under Section 141 of the Act
  
• The company has obtained a Director Identification Number (DIN) for the signing director
  
• The signatory has a valid Digital Signature Certificate (DSC)
  

Companies must attach the necessary supporting documents, such as the board resolution for auditor appointment, auditor's consent letter, and certificate of eligibility while filing the form. Failing to meet these requirements can lead to the rejection of the form by the ROC.

Fees for Filing Form ADT-1

The filing fees for Form ADT-1 depend on the company's authorised share capital, as per the table below:

For LLP Companies without share capital, the filing fee is a flat ₹200.

Late filing of Form ADT-1 attracts additional fees, which increase based on the delay duration:

• Up to 30 days delay: 2 times the normal fees
• 31 to 60 days delay: 4 times the normal fees
  
• 61 to 90 days delay: 6 times the normal fees
  
• 91 to 180 days delay: 10 times the normal fees
  
• More than 180 days delay: 12 times the normal fees
  

Due Date For Filing MCA Form ADT-1

The due date for filing Form ADT-1 depends on whether the company is newly incorporated or existing:

For newly incorporated companies:

• ADT-1 for the first auditor must be filed within 15 days of the first Board Meeting
• This Board Meeting must be held within 30 days of incorporation, where the first auditor is appointed
  

For existing companies:

• Form ADT-1 should be filed within 15 days of the AGM where the auditor was appointed or reappointed
• Example: If the AGM was held on September 30, 2023, the ADT-1 due date would be October 14, 2023
  

While filing the form, companies must provide the following details about the appointed auditor:

1. Auditor's category (individual or firm)
2. Membership number of the auditor or firm's registration number
   
3. Address and email ID of the auditor
   
4. Permanent Account Number (PAN) of the auditor
   
5. Period of appointment
   
6. Membership number of the previous auditor in case of vacancy
   
7. Date of appointment and AGM date
   
8. Details of any casual vacancy (date and reason)
   

Along with these details, companies must attach the following supporting documents:

1. Certified copy of the Board Resolution for auditor appointment
2. Written consent of the auditor to act as such
   
3. Certificate by the auditor confirming their eligibility under Section 141
   
4. Copy of the intimation letter sent by the company to the auditor regarding their appointment
   

Penalty on Delayed Filing of Form ADT-1

Delayed filing of Form ADT-1 attracts penalties, which increase based on the duration of the delay:

• Up to 30 days delay: Twice the normal filing fees
• 31 to 60 days delay: Four times the normal filing fees
  
• 61 to 90 days delay: Six times the normal filing fees
  
• 91 to 180 days delay: Ten times the normal filing fees
  
• More than 180 days delay: Twelve times the normal filing fees
  

Companies must be mindful of the ADT-1 due date and ensure timely filing to avoid these escalating penalty fees. Repeated non-compliance can also lead to more severe consequences, such as fines and legal action against the company and its officers.

Important Points to Consider Regarding Form ADT-1

• Filing Form ADT-1 is mandatory for all types of companies, including private, public, and one-person companies.
• The responsibility of filing the form lies with the company and its directors, not the auditor.
  
• Form ADT-1 must be filed even in case of filling casual vacancies in the auditor's office.
  
• Companies should file Form ADT-1 for the appointment of the first auditor as well.
  
• Timely filing of the form with all necessary details and documents is crucial to avoid penalties and legal complications.
  

Process for Filing Form ADT-1

1. Obtain a Digital Signature Certificate (DSC) for at least one Director of the company from a licensed Certifying Authority
2. Ensure the signing director has a valid Director Identification Number (DIN)
   
3. Download Form ADT-1 from the MCA portal
   
4. Fill in the required company and auditor details accurately
   
5. Attach the necessary supporting documents (Board Resolution, auditor consent, eligibility certificate, etc.)
   
6. Verify the form using the director's DSC
   
7. Submit the form electronically on the MCA portal
   
8. Pay the requisite filing fees online using a credit card, debit card, or net banking
   
9. Receive an acknowledgement email from MCA as proof of filing
   

Frequently Asked Questions