Types of Business Licenses in India

What are Intellectual Property Rights?

Intellectual Property Rights (IPR) are legal protections granted to individuals or entities over their original creations of the mind. These include inventions, literary and artistic works, symbols, names, designs, and images used in commerce. The purpose of IPR is to encourage innovation, creativity, and fair competition by rewarding creators for their original work.

IPR find their legal basis in Article 27 of the Universal Declaration of Human Rights (UDHR) and are internationally recognised through treaties such as the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Works, both administered by the World Intellectual Property Organization (WIPO). In India, IPR are protected under various laws, including the Patents Act 1970, Copyright Act 1957, Trade Marks Act 1999, and Designs Act 2000.

Types of Intellectual Property Rights

India recognises several types of Intellectual Property Rights, each serving a specific purpose:

1. Copyright: Protects original literary, dramatic, musical, and artistic works, as well as cinematograph films and sound recordings. Copyright protection is automatic upon creation and lasts for 60 years after the author's death.
2. Patents: Grant exclusive rights to inventors for their novel, non-obvious, and industrially applicable inventions. Patents are valid for 20 years from the date of filing.
3. Trademarks: Distinguish the goods or services of one enterprise from another. Trademarks can be words, phrases, symbols, or designs. Registration is valid for 10 years and can be renewed indefinitely.
4. Geographical Indications: Identify goods originating from a specific geographical location, possessing qualities or reputation attributable to that origin. Examples include Darjeeling Tea and Basmati Rice. GI registrations are valid for 10 years and are renewable.
5. Industrial Designs: Protect the ornamental or aesthetic aspects of an article. Design registration is valid for 10 years, extendable by 5 years.
6. Plant Varieties: Safeguard the rights of plant breeders and farmers under the Protection of Plant Varieties and Farmers' Rights Act, 2001. Registration is valid for 15 years for annuals and 18 years for perennials with provisions for renewal.
7. Trade Secrets: Protect confidential business information that provides a competitive advantage. Trade secrets are not registered but can be protected through contracts and non-disclosure agreements.

What is the need for Intellectual Property Rights?

IPR registration is crucial for several reasons:

1. Promotes innovation by providing incentives to creators and inventors
2. Drives economic growth by encouraging investment in research and development
3. Protects creators' rights, ensuring they can reap the benefits of their work
4. Supports ease of doing business by enabling technology transfer through licensing and joint ventures
5. Fosters creativity and enables informed consumer choices by distinguishing genuine products from counterfeits

IPR Registration Eligibility Criteria in India

To be eligible for IPR registration in India, your intellectual property must meet certain criteria:

• Copyright: The work must be original and fixed in a tangible medium of expression.
• Patent: The invention must be novel, non-obvious, and industrially applicable.
• Trademark: The mark must be distinctive and not confusingly similar to existing marks.
• Design: The design must be new, original, and not previously disclosed.
• Geographical Indication: The product must have a specific geographical origin and possess qualities or reputation attributable to that origin.
• Plant Variety: The variety must be novel, distinct, uniform, and stable, as outlined under the Protection of Plant Varieties and Farmers’ Rights Act, 2001.

Required Documents for IPR Registration in India

The documents required for IPR registration vary depending on the type of intellectual property:

• Copyright:
  
  • Application Form IV
  • Copy of the work(literary, artistic, musical, etc.)
  • Identity and address proof of the applicant
  • Power of Attorney (if applicable)
• Patent:
  
  • Form 1: Application for grant of patent
  • Form 2: Complete or provisional specification
  • Form 3: Statement and undertaking under Section 8
  • Form 5: Declaration as to inventorship
  • Form 26: Power of Attorney, if applicable
  • Abstract of the invention
  • Drawings, if necessary
• Trademark:
  
  • Application Form TM-A
  • Representation of the trademark(logo, word, label, etc.)
  • Affidavit claiming prior use, if applicable
  • Goods/services description
  • Power of Attorney (if applicable)
• Design:
  
  • Application Form 1
  • Representation of the design
  • Power of Attorney (if applicable)
  • Priority document
• Geographical Indication:
  
  • Form GI-1: Application for registration of a GI
  • Statement of case describing the GI and its uniqueness
  • Proof of origin
  • Map of the geographical area
  • List of authorised users
  • Power of Attorney, if applicable
• Plant Variety:
  
  • Application Form PV-1
  • Technical Questionnaire
  • Denomination of the variety
  • Photographs/illustrations
  • Seed/propagating material
  • Power of Attorney (if applicable)

Step-by-Step Procedure for IPR Registration in India

The IPR registration process in India generally involves the following stages:

1. Filing: The applicant submits the required application form, documents, and fees to the appropriate authority (Copyright Office, Patent Office, Trade Marks Registry, or Geographical Indications Registry).
2. Examination: The application is examined by the concerned office for compliance with legal requirements and substantive criteria.
3. Publication: If the application is found to be in order, it is published in the official journal for public viewing and opposition, if any.
4. Grant: If no objections are raised or the objections are successfully overcome, the IPR is granted, and a registration certificate is issued.

Note: The specific steps may vary slightly depending on the type of IPR, but the overall process follows this general flow.

What is the fee for IPR Registration?

The fees for intellectual property registration in India vary depending on the type of IPR and the nature of the applicant (individual, small entity, or large entity). Here are some indicative fees:

Note that these fees are subject to change, and additional fees may apply for certain actions like expedited examination or renewal.

Benefits of IPR Registration in India

Intellectual property registration offers several benefits to creators and businesses:

• Legal exclusivity: Prevents unauthorised use or copying of your intellectual property
• Brand protection: Enhances brand reputation and helps differentiate your products/services in the market
• Monetisation: Enables licensing and commercialisation of your intellectual property
• Business value: Increases the value of your business and attracts investors
• International expansion: Facilitates the protection of your intellectual property in other countries through international agreements

Registering your IPR in India secures your research and development investments, fostering innovation and economic growth.

Conclusion

IPR registration is a vital step in protecting your intellectual creations from misuse or infringement. It provides legal rights and recognition, encouraging innovation and creative growth. Each category of IPR—patents, trademarks, designs, copyrights, and GIs—requires specific documentation and follows a structured process. Properly filed IPR ensures exclusive rights and helps in commercialising your ideas effectively. Hence, securing IPR is essential for safeguarding and leveraging your intellectual assets in India.

Frequently Asked Questions:

What is meant by Addition of Partner?

The addition of a partner involves introducing a new member into an existing partnership firm. This decision requires the unanimous consent of all current partners unless the partnership agreement stipulates otherwise. The incoming partner must possess the legal capacity to enter into a contract, as outlined in the Indian Contract Act, 1872. New partners bring specialised skills and industry expertise, enhancing operational efficiency. Their networks open doors to new business opportunities and markets. Overall, this flexibility enables firms to bring in fresh capital, skills, and expertise to support growth and expansion.

Process Of Addition Of Partners

The process of introducing a new partner involves several key steps:

1. Agreement on terms and conditions: The existing and incoming partners must mutually agree on aspects such as profit sharing ratio, capital contribution, roles and responsibilities.
   
2. Execution of deed of admission: A supplementary agreement containing the terms of admission should be drafted and signed by all partners, including the new entrant.
   
3. Capital contribution: The incoming partner must bring in the agreed capital.
   
4. Intimation to Registrar: Form 3 along with the prescribed fee should be filed with the Registrar within 30 days of the change.
   
5. Notification to stakeholders: The firm must inform its bank, tax authorities, and vendors/suppliers about the new partner's admission.
   

Documents Requirement For Addition of Partners

The following documents are typically required for the addition of a partner:

• A Digital Signature Certificate (DSC) is necessary for e-filing with the Registrar of Companies (ROC).
  
• Form 3 must be filed to update the LLP agreement, reflecting the new partner’s inclusion.
  
• Form 4 is used to notify the ROC about the appointment and obtain the partner’s consent.
  
• A Limited Liability Partnership Identification Number (LLPIN) is essential for all filings.
  These documents ensure the smooth onboarding of a new partner while maintaining regulatory compliance under the LLP Act, 2008. of Admission/Supplementary Partnership Deed
  

Advantages Of Adding Partners in Partnership Firms

The introduction of a new partner offers several benefits to a partnership firm:

• Capital infusion to support business growth and expansion
  
• Fresh expertise and skills to enhance the firm's capabilities
  
• Shared responsibilities and decision-making
  
• Potential for increased profitability and market share
  

What is meant by Removal of Partner?

Partner removal in a partnership firm or LLP occurs when an existing partner exits, either voluntarily or by a decision of other partners, as per the partnership agreement. The process must comply with the Indian Partnership Act, 1932, which allows removal only if expressly stated in the agreement and with the consent of all partners (except the one being removed). In LLPs, removal must also adhere to the Limited Liability Partnership Act, 2008 and LLP agreement terms.

Why Removal of a Partner May Become Necessary?

The removal of a partner may become necessary due to several reasons:

• Voluntary retirement or withdrawal
  
• Breach of partnership agreement or trust
  
• Incapacity or inability to perform duties
  
• Misconduct or negligence detrimental to the firm
  
• Insolvency or bankruptcy
  
• Death of the partner
  

Steps Involved In Removing a Partner

The process of removing a partner typically involves:

1. Serving notice: A notice of the proposed removal, specifying the grounds, should be served on the concerned partner.
   
2. Considering reply: The concerned partner must be allowed to submit a response to the notice.
   
3. Majority approval: Obtain at least 75% approval from the remaining partners through a resolution.
   
4. Executing deed of retirement/reconstitution: The change in partnership should be documented through a formal deed.
   
5. Intimating Registrar: Form 4 with the applicable fee should be filed with the Registrar within 30 days.
   
6. Settlement of accounts: The outgoing partner's accounts should be settled as per the partnership deed or mutual agreement.
   

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Section 31: Introduction of a New Partner

Section 31 of the Indian Partnership Act, 1932, governs the introduction of a new partner into an existing firm. It stipulates that a new partner can only be admitted with the consent of all existing partners unless the partnership agreement provides otherwise.

Rights and Liabilities of a New Partner

Upon admission, the new partner becomes entitled to share in the profits and is liable for the losses and debts of the firm from the date of their entry, unless agreed otherwise. They have the right to access the firm's books of accounts and to participate in the management of the business. However, they are not liable for any acts of the firm before their admission, unless they expressly assume such liability.

Section 32: Retirement of a Partner

Rights of Outgoing Partner

Section 36: Right to Conduct a Competing Business

Unless restricted by an agreement, a retiring partner has the right to carry on a business competing with that of the firm and to advertise such business. However, they cannot use the firm's name or represent themselves as carrying on the firm's business.

Right To Share

The retiring partner is entitled to receive their share of the firm's assets, including goodwill, as per the terms of the partnership agreement or mutual understanding. They also have the right to share in the profits of the firm until the date of their retirement.

Section 37: Entitled to Claim

The outgoing partner has the right to claim their due share from the continuing partners. If not paid outright, they are entitled to interest at 6% per annum on the amount due.

Liabilities of Outgoing Partner

Section 32(3) and (4): Liability to the third party

The retiring partner remains liable to third parties for all acts of the firm until public notice of their retirement is given. They are also liable for any obligations incurred by the firm before their retirement unless discharged by agreement.

Section 32(2): Agreement of Liability

The retiring partner and the continuing partners may agree to discharge the retiring partner from all liabilities of the firm, but such an agreement is not binding on third parties unless they are aware of it.

Section 33: Expulsion of a Partner

A partner may be expelled from the firm by a majority of partners if such power is conferred by an express agreement between the partners. The power to expel must be exercised in good faith. Unless agreed otherwise, the expelled partner can claim the value of their share as if the firm were dissolved on the date of expulsion.

Section 34: Insolvency of a Partner

If a partner is adjudicated as insolvent, they cease to be a partner from the date of the insolvency order. Their share in the firm vests with the Official Assignee or Receiver appointed by the court. The firm is dissolved unless the solvent partners buy the insolvent partner's share and continue the business with proper intimation.

Section 35: Death of a Partner

In the event of a partner's demise, their legal heirs or executors step into their shoes. The firm dissolves from the date of death unless the partnership deed provides for continuity. The deceased partner's share in the firm's assets, goodwill, and profits is settled as per the partnership agreement or mutual understanding.

Section 38: Continuing Guarantee Revocation

The estate of a deceased or insolvent partner, an expelled or retired partner, is not liable for the firm's debts contracted after their death, insolvency, expulsion or retirement. A continuing guarantee given to a firm or a third party in respect of the firm's transactions is revoked as to future transactions by any change in the firm's constitution.

Conclusion

Changes in the composition of a partnership firm through the addition or removal of partners are significant events. While new partners can infuse capital and expertise, the exit of partners due to retirement, expulsion, insolvency or death can impact the firm's continuity and harmony. The Partnership Act provides a framework for inducting and removing partners. The terms of entry and exit should be clearly documented in the partnership agreement to minimise disputes. Intimations to the Registrar and third parties should be made promptly. With some foresight and planning, partnership firms can manage changes in their constitution smoothly and continue their business journey.

Frequently Asked Questions

What is an Asset Reconstruction Company?

An Asset Reconstruction Company (ARC) is a specialised financial institution that buys NPAs or stressed assets from banks and other lenders. By transferring these assets to ARCs, banks can focus on fresh lending and growth, while ARCs work to recover value from distressed accounts.

The importance of ARCs lies in their ability to:

• Clean up bank balance sheets.
• Strengthen financial stability.
• Contribute to economic growth by reviving stressed businesses.

In simple terms, ARCs buy bad loans from banks and try to recover as much as possible, either by reviving the business or liquidating its assets.

Background of Asset Reconstruction Companies in India

The Narasimham Committee first recommended ARCs in India in 1998, recognising the growing problem of NPAs in the banking system. This led to the enactment of the SARFAESI Act, 2002 (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act), which provided the legal foundation for ARCs.

Key points about ARCs in India:

• ARCs must register with the Reserve Bank of India (RBI) under Section 3 of the SARFAESI Act.
• They primarily acquire secured NPAs from banks and financial institutions.
• Their role includes asset reconstruction and securitisation, simplifying lender balance sheets.

The Evolution of ARCs

Over the years, ARCs have evolved as a vital solution to the rising NPAs that hamper the profitability and liquidity of banks. By purchasing and managing these stressed assets, ARCs not only reduce risk exposure for banks but also:

• Create investment opportunities in the distressed debt market.
• Provide a structured framework for debt recovery.
• Support economic stability by reviving potentially viable businesses.

How Does ARC Work?

The ARC business model typically involves the following steps:

1. Acquisition of Assets: ARCs purchase NPAs from banks, usually at a discount, either in cash or through the issuance of Security Receipts (SRs) to the banks.
   
   
2. Management of Assets: Once acquired, ARCs restructure, reschedule, or attempt to revive the borrower’s operations.
   
   
3. Recovery Mechanisms: Recovery can happen via settlement with borrowers, enforcing collateral, selling assets, or bringing in new investors.
   
   
4. Return on Investment: ARCs earn returns by successfully recovering dues and distributing proceeds to banks or SR holders.

Note: ARCs must maintain a minimum Net Owned Fund (NOF) of ₹100 crore to operate legally.

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The Core of the ARC Business Model

The ARC business model is built on three core pillars:

1. Acquisition: Buying NPAs at a discounted value from banks and financial institutions.
2. Restructuring: Developing strategies to revive stressed businesses, including debt restructuring or converting debt into equity.
3. Recovery: Enforcing security interests, liquidating assets, or monetising businesses to recover maximum value.

These pillars determine the sustainability and profitability of ARCs.

Process of Asset Reconstruction by ARCs

The process of asset reconstruction typically involves:

• Management takeover of the borrower’s business.
• Sale or lease of part or entire business.
• Debt rescheduling to provide repayment flexibility.
• Enforcing security by selling collateral.
• Possession of secured assets for liquidation.
• Conversion of debt into equity, enabling ARCs to hold a stake in the borrower company.

This multi-step process maximises recovery and ensures balance sheet clean-up for lenders.

What are the Services Provided by Asset Reconstruction Companies?

ARCs provide a wide range of services, including:

• Acquisition and management of distressed assets.
• Debt restructuring and settlement.
• Recovery and asset monetisation.
• Investor management through security receipts.
• Advisory services for stressed asset management.

While they operate under the SARFAESI Act, 2002 and RBI guidelines, ARCs must adapt to challenges like economic downturns, legal delays, and shifting regulations. Technology adoption is also becoming critical in driving recovery efficiency and risk management.

Recent Changes in ARC Regulations by RBI

The RBI has introduced significant regulatory reforms to strengthen governance in the ARC sector. Recent updates include:

• Stronger corporate governance with mandatory independent directors.
• Enhanced transparency through periodic performance disclosures.
• Revised investment norms for security receipts (SRs), encouraging higher skin-in-the-game from ARCs.

Challenges Faced by ARCs

While ARCs play a vital role, they face multiple hurdles:

• Legal and Judicial Delays: Court proceedings and enforcement under SARFAESI or IBC can be time-consuming.
• Regulatory Changes: Frequent shifts in RBI and government policies impact operations.
• Capital Requirements: ARCs often struggle with limited capital for large NPA acquisitions.
• Economic Uncertainty: Market downturns can reduce asset valuation and recovery potential.

Best Practices for Aspiring ARCs

For ARCs to thrive, the following best practices are essential:

• Build a robust risk management framework.
• Continuously innovate restructuring strategies.
• Leverage technology and analytics for recovery.
• Develop strong relationships with regulators and stakeholders.
• Invest in training and upskilling teams.

Frequently Asked Questions (FAQs)