Setting Up of Business, Industrial & Labour Laws PDF

STUDY MATERIAL EXECUTIVE PROGRAMME SETTING UP OF BUSINESS, INDUSTRIAL & LABOUR LAWS GROUP 1 PAPER 3 (i)  © THE INSTITUTE OF COMPANY SECRETARIES OF INDIA Timing of Headquarters :...

STUDY MATERIAL EXECUTIVE PROGRAMME SETTING UP OF BUSINESS, INDUSTRIAL & LABOUR LAWS GROUP 1 PAPER 3 (i)  © THE INSTITUTE OF COMPANY SECRETARIES OF INDIA Timing of Headquarters : Monday to Friday Office Timings : 9.00 A.M. to 5.30 P.M. Public Dealing Timings : Without financial transactions – 9.30 A.M. to 5.00 P.M. With financial transactions – 9.30 A.M. to 4.00 P.M. Phones : 011-45341000 / 0120-4522000 Website : www.icsi.edu E-mail : [email protected] / [email protected] For Academic Updates please visit : https://www.icsi.edu/students/academic-portal/ For any suggestions/clarifications students may write to [email protected] Disclaimer Although due care and diligence have been taken in preparation of this Study Material, the Institute shall not be responsible for any loss or damage, resulting from any action taken on the basis of the contents of this Study Material. Anyone wishing to act on the basis of the material contained herein should do so after cross checking with the original source. Laser Typesetting by : AArushi Graphics, Prashant Vihar, New Delhi (ii)  EXECUTIVE PROGRAMME SETTING UP OF BUSINESS, INDUSTRIAL & LABOUR LAWS The main types of business entities in India include Sole Proprietorship, Partnership, Hindu Undivided Family (HUF) Business, Limited Liability Partnership (LLP), Co- operative Societies, various types of companies, Branch/ Liaison Office of foreign companies. It involves regulatory/procedural aspects in setting up of these entities under various authorities and also involve Initial Registrations like Shops & Establishment, FSSAI, ISO, MSME, licenses from the regulatory authorities like RBI, IRDA, GST, Income Tax, IPR, etc. as applicable. It is very important to understand registration process, funding options available for startups and MSMEs as part of skill enhancement. Accordingly this study material inter alia covers matters relating to startup policy different types of capitals available for startups, Udyam Registration, MSME Schemes etc. With the objective to provide the working knowledge and understanding of the various procedural requirements involved in the setting up of business entities and to give broad understanding and application of labour laws on various entities which are aligned with the concept of Setting up of business, this study material is divided into two Parts viz. Part I covering Setting up of Business and Part II, covering Industrial and Labour Laws. Part II of this study material covers aspects including Constitutional provision relating to Labour laws, Laws relating to welfare & working Conditions, Industrial relations, wags. Social security aspects, Prevention of Sexual Harassment and also the emerging labour code. The legislative changes made up to November, 2023 have been incorporated in the study material. The students are advised to refer to the updations at the Regulator’s website, Supplement relevant for the subject issued by ICSI and ICSI Journal Chartered Secretary and other publications. Specifically, students are advised to read “Student Company Secretary” e-Journal which covers regulatory and other relevant developments relating to the subject. In the event of any doubt, students may contact the Directorate of Academics at [email protected]. The amendments to law made up to 31st May of the Calendar Year for December Examinations and up to 30th November of the previous Calendar Year for June Examinations shall be applicable. Although due care has been taken in publishing this study material, the possibility of errors, omissions and/or discrepancies cannot be ruled out. This publication is released with an understanding that the Institute shall not be responsible for any errors, omissions and/or discrepancies or any action taken in that behalf. (iii)  EXECUTIVE PROGRAMME Group 1 Paper 3 SETTING UP OF BUSINESS, INDUSTRIAL & LABOUR LAWS SYLLABUS OBJECTIVES: Part I: To provide the working knowledge and understanding of the various procedural requirements involved in the setting up of business entities. Part II: To acquire working knowledge, understanding and application of Labour Laws. Level of Knowledge: Working Knowledge PART I: SETTING UP OF BUSINESS (60 MARKS) 1. Selection of Business Organization: l Key features of various Business Organizations and issues in choosing business organization including policy matters, identification of location, tax implications and other relevant aspects 2. Corporate Entities – Companies: Types of Corporate Business Entities: l Private Company l Public Company l One Person Company l Nidhi l Section 8 Company l Producer Company l Foreign Company. Drafting of Incorporation Documents: l Memorandum of Association and Articles of Association l Incorporation contracts, documents and forms. Formation and Registration: l Procedural Aspects with regard to Incorporation of corporate entities. 3. Limited Liability Partnership: l Concept of LLP l Formation and Registration l LLP Agreement l Alteration in LLP Agreement l Annual and Event Based Compliances. 4. Startups and its Registration: l Start-up India Policy l Registration Process l Benefits and other Government Policies l Different types of capital - Seed Capital l Venture Capital l Private Equity l Angel Investor l Entrepreneurship l Case Studies on Unicorn (iv)  5. Micro, Small and Medium Enterprises: l Classification of Enterprises l Memorandum l Measures for promotion and development l Udyam Registration Process l NSIC Registration l MSMEs Schemes. 6. Conversion of Business Entities: l Conversion of private company into public company and vice versa l Conversion of Section 8 company into other kind of Company l Conversion of Company into LLP and vice versa l Conversion of OPC to other type of company and vice versa l Companies authorized to registered under Chapter XXI of the Companies Act, 2013. 7. Non-Corporate Entities: l Partnership l Hindu Undivided Family l Sole Proprietorship l Multi State Co-operative Society l Trust and Society l Formation and registration l Partnership Agreement and Trust Deed l Mega Firms. 8. Financial Services Organisation: l NBFCs l Housing Finance Company l Asset Reconstruction Company l Micro Finance Institutions (MFIs) l Nidhi l Payment Banks l Mudra Bank l Registration l Chit Funds. 9. Business Collaborations: l Foreign Collaborations l Joint Venture l Special Purpose Vehicle 10. Setting up of Branch Office/ Liaison Office/ Wholly Owned Subsidiary by Foreign Company: l Formation and Registration 11. Setting up of Business outside India and Issues Relating thereto l Issues in choosing location l Structure and the processes of incorporation of business entities in UK l USA l Canada and Australia. 12. Identifying laws applicable to various Industries and their initial compliances: l Compliance of industry specific laws applicable to an entity at the time of setting up of the enterprise. 13. Various Initial Registrations and Licenses: l Mandatory Registration - PAN/TAN l GST Registration l Shops & Establishments l Additional Registration/License - ESI/PF l Pollution l Other registration as per requirement of sector l IE Code l FSSAI l Telecom l I & B l Industrial License, Industrial Entrepreneurs Memorandum (IEM) l Activities specific approvals/ permissions/licenses l Environmental & Pollution clearances l Sectoral approvals / permissions / licenses l State Level Approval from the respective State Industrial Department PART II: INDUSTRIAL AND LABOUR LAWS (40 MARKS) 14. Constitution and Labour Laws: l Fundamental rights vis-à-vis labour laws l Equality before law and its application in Labour Laws, Equal pay for equal work l Article-16 and reservation policies l Articles 19, 21, 23 and 24 and its implications. 15. Evaluation of Labour Legislation and need of Labour Code 16. Law of Welfare & Working Condition: l The Factories Act l Contract Labour (Regulation and Abolition) Act l The Child and Adolescent Labour (Prohibition and Regulation) Act (v)  17. Law of Industrial Relations: Industrial Disputes Act l Industrial Employment (Standing Orders) Act. 18. Law of Wages: Payment of Wages Act l Minimum Wages Act l Payment of Bonus Act l Equal Remuneration Act. 19. Social Security Legislations: Employees’ State Insurance Act l Employees’ Provident Funds and Miscellaneous Provisions Act l Maternity Benefit Act l The Payment of Gratuity Act l Apprentices Act, The Labour Laws (Simplification of Procedure for furnishing Returns and Maintaining Registers by Certain Establishments) Act. 20. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (vi)  ARRANGEMENT OF STUDY LESSONS SETTING UP OF BUSINESS, INDUSTRIAL & LABOUR LAWS GROUP 1 l PAPER 3 PART I: SETTING UP OF BUSINESS Sl. No. Lesson Title 1. Selection of Business Organization 2. Corporate Entities – Companies 3. Limited Liability Partnership 4. Startups and its Registration 5. Micro, Small and Medium Enterprises 6. Conversion of Business Entities 7. Non-Corporate Entities 8. Financial Services Organization 9. Business Collaborations 10. Setting up of Branch Office/ Liaison Office/ Wholly Owned Subsidiary by Foreign Company 11. Setting up of Business outside India and Issue Relating thereto 12. Identifying laws applicable to various Industries and their initial compliances 13. Various Initial Registrations and Licenses PART II: INDUSTRIAL AND LABOUR LAWS 14. Constitution and Labour Laws 15. Evaluation of Labour Legislation and need of Labour Code 16. Law of Welfare & Working Condition 17. Law of Industrial Relations 18. Law of Wages 19. Social Security Legislations 20. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (vii)  LESSON WISE SUMMARY SETTING UP OF BUSINESS, INDUSTRIAL & LABOUR LAWS PART I: SETTING UP OF BUSINESS (60 MARKS) Lesson 1 - Selection of Business Organization The choice of a business organization is driven by a combination of several factors such as nature of activity, capital requirement, degree of independence required, etc. There is no readymade formula for selecting the particular type of business organization. Tax implication is also an extremely important factor. Company Secretaries while playing advisory role would help the clients in deciding about the type of organization one may opt for when considering to start a business. This chapter will cover the factors which are taken into account in choosing a form of business organization alongwith the brief outline of the various forms of business organization. Lesson 2: Corporate Entities – Companies Companies may be classified on the basis of their incorporation, number of members, size, basis of control and motive. On the basis of incorporation of the companies, it may be classified into Charter Companies, Statutory Companies and Registered Companies. On the basis of liability, it may be Companies limited by shares/ guarantee and unlimited liability companies. Further, on the basis of number of members, they may be classified into One Person Company, private company and public company. On the basis of size, they may be divided into small companies and other companies. On the basis of control, they may be classified into holding company, subsidiary company and associate company. Besides these, companies may be nonprofit companies licensed under Section 8, Government companies, foreign companies, holding/subsidiary companies, investment companies, producer companies etc. This chapter covers the concepts of various types of companies, their legal basis, special provisions and privileges for some classes of companies, distinction between different types of companies etc. and procedural aspects with regard to the Incorporation of corporate entities. The chapters also cover the concept of drafting the Incorporation documents of the company. The memorandum and articles of association of a company are the most important documents for the formation of a company and for its functioning thereafter. The memorandum of association contains the name, situation of registered office, objects, capital and liability and subscription clauses. The articles are its bye-laws or rules and regulations that govern the management and internal affairs and the conduct of its business. Both the documents are required to be registered with the Registrar of Companies at the stage of incorporation of the company. Before dealing with a company, it is advisable to read the memorandum and articles of the company to understand aspects, such as powers of Board, scope of company’s activities etc. and its relationship with the outside world. Since Memorandum sets out the constitution of a company and is therefore the foundation on which the structure of the company is built. It defines the scope of the company’s activities and its relations with the outside world. (viii) Company Secretary in employment should work within the four walls of the MOA and also subject to the provisions of AOA. Lesson 3: Limited Liability Partnership Limited Liability Partnership is governed by the Limited Liability Partnership Act, 2008 and the Rules framed thereunder. In this Lesson we shall cover Limited Liability Partnership (LLP), its formation and registration; the features of an LLP agreement and the manner of alterations therein. LLP is required to make various compliances and file various forms with the Registrar which are on the basis of annual and event based compliances as and when applicable to the LLP. Being compliance professional, Company Secretary should be aware of all the compliance requirements of various business entities including Limited Liability Partnership. Lesson 4: Startups and its Registration Startups have emerged as a fast-growing business model. This chapter deals with the evolution of Startups in India, the Startup India Policy, the exemptions available to start-ups and their registration process. The Chapter also deals with the different kinds of Debt financing and Equity Financing which can be raised by Startups. It also includes the benefits/ exemptions given to start ups, different financing options available and the procedures involved for incorporation and registration as startups. The Lesson also explains the concept of unicorns and case studies on it. Unicorn is a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion. Lesson 5: Micro, Small and Medium Enterprises The lesson deals with the classification of Micro, Small and Medium enterprises. After 14 years since the MSME Development Act came into existence in 2006, a revision in MSME definition was announced in the Atmnirbhar Bharat package on 13th May, 2020. As per this announcement, the definition of Micro manufacturing and services units was increased to Rs. 1 Crore of investment and Rs. 5 Crore of turnover. The limit of small unit was increased to Rs. 10 Crore of investment and Rs 50 Crore of turnover. Similarly, the limit of medium unit was increased to Rs. 20 Crore of investment and Rs. 100 Crore of turnover. The Government of India on 01.06.2020 decided for further upward revision of the MSME Definition. For medium Enterprises, now it will be Rs. 50 Crore of investment and Rs. 250 Crore of turnover. The lesson also cover the topics like Udyam Registration Process, NSIC Registration and various MSMEs schemes launched by the Government. Lesson 6: Conversion of Business Entities Companies Act, 2013 provides for conversion of public companies to private companies vice versa, conversion of One Person Company into public/private Company, conversion of Section 8 companies (companies for charitable purpose) into any other class of companies. Companies (Incorporation) Rules, 2014 provides details of the procedural aspects. In addition the students will be able to understand the overall legal and procedural aspects relating to various conversions. Conversion of existing business entity to other form is a strategic decision which needs to be taken to get the benefits of one form of business entity over other form for a particular business at a particular point of time. Company Secretaries can help in taking such strategic decisions and implementation of the same. (ix)  Lesson 7: Non-Corporate Entities This Chapter deals with the concept of Non-Corporate Entities like Partnership, Hindu Undivided Families, Sole Proprietorship, Multi-State Cooperative Society, Trust and societies, formation and registration of NGOs, namely, Section 8 Company its features, exemptions available to them and registration process. Trust, difference between public trust and private trust, exemptions available to them, more specifically, under the Income Tax Act and formation process. Society, its advantages and disadvantages, consequences of non-registration, benefits of forming a Society and formation process. The lesson also explains the concept of Companies authorized to register under Chapter XXI of the Companies Act, 2013. Company Secretary should have clarity with regard to institutions which are not for profit, their features and formation process. Lesson 8: Financial Services Organization Different forms of Financial Services Organizations operating in India are Non-Banking Finance Companies (NBFC’S) and the various categories of such companies, Housing Finance Companies (HFC’s), Asset Reconstruction Companies (ARC’s), Micro Finance Institutions (MFI’s), Nidhi Companies, Payment Banks, Mudra Banks and Chit Funds. The lesson summarizes different forms of Financial Services Organizations and their features. This Chapter also explains the process of registering such entities. Lesson 9: Business Collaborations A Joint Venture (JV) is generally short lived for conducting specific business activities. It is a business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity. A Special Purpose Vehicle (SPV) is formed for a specific purpose. In this chapter, Joint Venture and Special Purpose Vehicle, their advantages and disadvantages, their characteristics and the process for registering these entities are covered. Lesson 10: Setting up of Branch Office/Liaison Office/ Wholly owned Subsidiary by Foreign Company This lesson helps in understanding how to establish branch and liaison office of Foreign Companies in India. Foreign company means any company or body corporate incorporated outside India which has a place of business in India whether by itself or through an agent, physically or through electronic mode; and conducts any business activity in India in any other manner. Establishment of branch office/ liaison office / project office or any other place of business in India by foreign entities is regulated in terms of Section 6(6) of Foreign Exchange Management Act, 1999 read with Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 and amended from time to time. Lesson 11: Setting up of Business outside India and Issues Relating Thereto In this lesson, the students will learn about the various forms of business organization, such as sole proprietorship, partnership, Hindu Undivided Family and Multi State Co-operative Societies, their respective merits and demerits and the manner in which they can be registered in India. The lesson also outlines the Issues in choosing location, structure and the processes of Incorporation of business entities in UK, USA, Canada and Australia. Company Secretaries, while playing advisory role, can guide and help in setting up of business outside India. (x)  Lesson 12: Identifying Laws applicable to Various Industries and their Initial Compliances Keeping in pace with the contemporary global market and emerging stand of Indian economy, government initiated various flagship programs to boost the entrepreneurship environment in the country. Few of the major flagships including Make in India” coupled with “Ease of Doing Business in India”, “Skill India”, “Digital India”, etc., are starred to build the interest and ease among various domestic and overseas stake holders to set up and advance the entrepreneurship in India. Indeed, when the entrance and advancement to Indian business market would be of ultimate fortune, there are various laws which need to be abided for successfully setting up and taking forward an enterprise in India. In this perspective, this chapter aims at proving a quick understanding laws applicable to various industries, their setting up along with the thorough details of their initial compliances. Lesson 13: Various Initial Registrations and Licenses A business entity is required to secure various registration and licenses for setting up their businesses in India. In India, there are plethora of laws which requires various registrations and licenses to be obtained for setting up the business unit in India along with ensuring state level compliances. In order to facilitate one spot understanding, this chapter deals with the list of Mandatory as well as Additional Registration and Licenses along with their detailed process. PART II: INDUSTRIAL AND LABOUR LAWS (40 MARKS) Lesson 14: Constitution and Labour Laws The Constitution of a country is the fundamental law of the land. It is under this fundamental law that all other laws are made and executed. Industrial relations affect not merely the interest of labour and management, but also the social and economic goals to which the State is committed to materialise. Therefore, it develops within the province and function of the State to regulate these relations in society desirable channels. The founding fathers of democratic Constitution of India were fully aware about these implications while they laid emphasis to evolve a welfare state embodying federal arrangement. Under the Constitution of India, Labour is a subject in the Concurrent List and, therefore, both the Central and the State governments are competent to enact legislations subject to certain matters being reserved for the Centre. The objective of the lesson is to familiarize the students with: l Labour Welfare provisions under Constitution of India. l Fundamental rights vis-à-vis labour laws. l Directive Principles of the State Policy of the Constitution vis-à-vis Labour Legislations. Lesson 15: Evaluation of Labour Legislation and need of Labour Code The need for better working conditions, the right to organise, and employer demands to limit employee rights in numerous groups and keep labour costs down led to the development of labour law. The law relating to labour and employment in India is primarily known under the broad category of “Industrial Law”. A plethora of labour laws have been established to ensure elevated health, safety, and welfare of workers; to protect workers against oppressive terms as individual worker is economically weak and has little bargaining power; to encourage and facilitate the workers in the organization; to deal with industrial disputes; to enforce social insurance and labour welfare schemes and alike. The objective of the lesson is to facilitate students to acquaint with: l History and evolution of Labour Legislations, internationally. (xi)  l Need and objective behind bringing in New Labour Codes l Features and reforms proposed by New Labour Codes l Salient features of New Labour Codes Lesson 16: Law of Welfare & Working Condition The improvement of labour welfare and increasing productivity with reasonable level of social security is one of the prime objectives concerning social and economic policy of the Government. Economic development means not only creation of jobs but also working conditions in which one can work in freedom, safety and dignity. To improving life and dignity of labour force of country by protecting & safeguarding the interest of workers, promotion of welfare and providing social security to the labour force both in Organized and Unorganized Sectors by enactment and implementation of various Labour Laws, which regulate the terms and conditions of service and employment of workers. The objective of the lesson is to familiarize the students with: l The Factories Act, 1948 l The Contract Labour (Regulation and Abolition) Act, 1970 l The Child and Adolescent Labour (Prohibition and Regulation) Act, 1986 Lesson 17: Law of Industrial Relations Industrial relations have to be so developed that the worker’s fitness to understand and carry out his responsibility grows and he is equipped to take an increasing share in the working of industry. There should be the closest collaboration through consultative committees at all levels between employers and employees for the purpose of increasing production, improving quality, reducing costs and eliminating waste. The worker’s right of association, organisation and collective bargaining as the fundamental basis of the mutual relationship. The attitude to trade unions should not be just a matter of toleration. They should be welcomed and helped to function as part and parcel of the industrial system. The objective of the lesson is to familiarize the students to acquaint with: l Industrial Disputes Act, 1947 l The Industrial Employment (Standing Orders) Act, 1946 l The legal frame work provided for law regulating Industrial Relation in India. Lesson 18: Law of Wages Wages are among the most important conditions of work and a major subject of collective bargaining. Wages in the organized sector is generally determined through negotiations and settlements between the employer and the employees. The main object of the these legislations is to eliminate all malpractices by laying down the time and mode of payment of wages as well as securing that the workers right to receive wages. They also provide for the effective remedy to workers against illegal deductions and/or unjustified delay caused in paying wages to them. It is expected that, at the end of this lesson, student will, inter-alia, be in a position to: l The Minimum Wages Act, 1948 l The Payment of Wages Act, 1936 l The Payment of Bonus Act, 1965 l The Equal Remuneration Act, 1976 (xii)  Lesson 19: Social Security Legislations The social security legislations in India derives their strength and spirit from the Directive Principles of the State Policy as contained in the Constitution of India. These provide for mandatory social security benefits either solely at the cost of the employers or on the basis of joint contribution of the employers and the employees. While protective entitlements accrue to the employees, the responsibilities for compliance largely rest with the employers. They aim at providing social security and timely monetary assistance to Industrial employees and their families when they are in distress and/or unable to meet family and social obligations and to protect them in old age, disablement, early death of the bread winner and in other contingencies. The objective of the lesson is to familiarize the students to acquaint with: l The Employees’ State Insurance Act, 1948 l The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 l The Maternity Benefit Act, 1961 l The Payment of Gratuity Act, 1972 l The Apprentices Act, 1961 l The Labour Laws (Simplification of Procedure for Furnishing Returns and Maintaining Registers by Certain Establishments) Act, 1988 Lesson 20: Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 Sexual harassment results in violation of the fundamental rights of a woman to equality under Articles 14 and 15 of the Constitution of India and her right to life and to live with dignity under Article 21 of the Constitution and right to practice any profession or to carry on any occupation, trade or business which includes a right to a safe environment free from sexual harassment. Sexual harassment of a woman in workplace is of serious concern to humanity on the whole. It cannot be construed to be in a narrow sense, as it may include sexual advances and other verbal or physical harassment of a sexual nature. The victims of sexual harassment face psychological and health effects like stress, depression, anxiety, shame, guilt and so on. The purpose of this lesson is to familiarize students with the need of recognising and understanding: l The legal framework provided for Prevention of Sexual Harassment of Women at Workplace. l The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013 (the “Rules”). l The important definitions. l The need of recognising the sensitivity attached to matters pertaining to sexual harassment. (xiii)  CONTENTS LESSON 1 SELECTION OF BUSINESS ORGANIZATION Types of Business Organizations 2 Sole Proprietorship 2 Features of Sole Proprietorship 2 Partnership Firm 3 Features of Partnership 3 Hindu Undivided Family (HUF) 3 Features of Hindu Undivided Family (HUF) 3 Limited Liability Partnership (LLP) 3 Features of Limited Liability Partnership 4 Co-operative Society 4 Features of Co-operative Society 4 Section 8 Company 4 Features of Section 8 Company 4 One Person Company 5 Private Company 5 Public Company 5 Selection of a Business Organization 5 Factors Governing the Decisions for Suitable form of Organization 6 Nature of Business Activity 7 Scale of Operations 7 Capital Requirements 8 Managerial Ability 8 Degree of Control and Management 9 Degree of Risk and Liability 9 Stability of Business 9 Flexibility of Administration 10 Division of Profit 10 (xiv) Costs, Procedure and Government Regulation 10 Tax Implication 11 Geographical Mobility 11 Transferability of Ownership 11 Managerial Needs 11 Secrecy 11 Independence 11 Synopsis for Consideration of Form of Organization 12 Company as a Choice of Business Organization for Start-Ups 12 Lesson Round-Up 12 Test Yourself 13 List of Further Readings 13 Other References (Including Websites/ Video Links) 13 LESSON 2 CORPORATE ENTITIES - COMPANIES Regulatory Framework 16 Introduction 16 Private Company 19 Public Company 20 One Person Company 21 Characteristics of One Person Company 21 NIDHI 22 Characteristics of Nidhi 22 Section 8 Company 25 Characteristics of Section 8 Company 27 Producer Company 27 Objects of Producer Companies 27 Foreign Company 28 Drafting of Incorporation Documents 30 Memorandum of Association 30 Forms of Memorandum of Association 31 Contents of Memorandum of Association 31 (xv) Provision in the memorandum or articles is void 40 Articles of Association 40 Entrenchment provisions of Articles 41 Contents of Articles 41 Drafting of Articles of Association 42 Formation and Registration of Corporate Entities 43 Precaution to be taken by Professionals 48 Process of Incorporation of a Public Limited Company 48 Steps for Incorporation of Public Company 49 Process of Incorporation of a One Person Company (OPC) 49 Process of Incorporation of Nidhi 49 Requirements for Minimum Number of Members and Net Owned Funds 50 Return of Statutory Compliances by Nidhi 50 General restrictions or prohibitions 51 Process of Incorporation of Section-8 Company 51 Application for Incorporation 52 Certificate of Incorporation 54 Lesson Round-Up 54 Test Yourself 55 List of Further Readings 56 Other References (Including Websites/ Video Links) 56 LESSON 3 LIMITED LIABILITY PARTNERSHIP Regulatory Framework 58 Introduction 58 Limited Liability Partnership Act, 2008 58 Salient Features of “Limited Liability Partnership” or “LLP” 59 Important Definitions 60 Body Corporate 60 Business 61 Designated Partner 61 Entity 61 (xvi) Financial Year 61 Foreign Limited Liability Partnership 61 Limited Liability Partnership 61 Limited Liability Partnership Agreement 61 Partner 61 Small Limited Liability Partnership 61 Nature of Limited Liability Partnership 62 Limited Liability Partnership to be Body Corporate 62 Partners 62 Minimum Number of Partners 62 Designated Partners 62 Liabilities of Designated Partners 63 Changes in Designated Partners 63 Incorporation of Limited Liability Partnership 63 Incorporation by Registration 65 Registered Office of Limited Liability Partnership and Change therein 65 Effect of Registration 65 Partners and their Relations 65 Eligibility to be Partners 65 Relationship of Partners 65 Cessation of Partnership Interest 67 Registration of Changes in Partners 68 Extent and Limitation of Liability of Limited Liability Partnership and Partners 68 Partner as Agent 68 Extent of Liability of Limited Liability Partnership 68 Unlimited Liability in case of Fraud 69 Whistle Blowing 69 Contributions 70 Form of Contribution 70 Obligation to Contribute 70 Financial Disclosures 70 Maintenance of Books of Account, other Records and Audit 70 Annual Return 73 (xvii) Compounding of Offences 73 Lesson Round-Up 74 Test Yourself 75 List of Further Readings 75 Other References (Including Websites/ Video Links) 75 LESSON 4 STARTUPS AND ITS REGISTRATION Regulatory Framework 78 Introduction 78 Startup Landscape in India 79 Issue of Sweat Equity Shares by Startup Companies 82 Recognition as Startups 82 Certification of the Inter-Ministerial Board for availing the Tax Benefit under Section 80-IAC 83 Eligibility Criteria for applying to Income Tax exemption (80IAC) 83 Tax Exemption under Section 56 of the Income Tax Act (Angel Tax) 84 Indian States with Startup Policies 85 State Startup Ranking 85 Evolution across the Years 86 States’ Startup Ranking 2021 Results: 86 Exemptions for Startups 86 Benefits / Exemptions to Start-ups under the Companies Act, 2013 88 Life Cycle of Start-Up 89 Registration Steps 91 Important Points for a Start-up 94 Financing Options available for Startup Companies 97 Seed Capital 98 Equity Financing 98 Sources of Funds 100 Structure 100 Debt Financing 102 Public Offering (IPO) to raise the funds or increase the magnitude of the business operations 103 Unconventional modes of financing options which are now becoming popular in India 103 (xviii) Entrepreneurship 104 Case Studies on Unicorn 105 Unicorns Startups 105 Next Stage: Going Beyond the Unicorn 106 Case Study on Zomato – India’s First Listed Unicorn 106 Study on Delhivery – E-Commerce-Focused Logistics Platform 107 Lesson Round-Up 109 Glossary 109 Test Yourself 109 List of Further Readings 110 Other References (Including Websites/ Video Links) 110 LESSON 5 MICRO, SMALL AND MEDIUM ENTERPRISES Regulatory Framework 112 Introduction 112 The Micro, Small and Medium Enterprises Development Act, 2006 112 Important Definitions 112 Establishment of National Board for Micro, Small and Medium Enterprises 113 Classification of Enterprises 114 Memorandum of MSME 116 Measures for Promotion and Development 116 Registration Process 116 Benefits of taking Udyam Registration 117 NSIC Registration 117 MSME Schemes 118 Prime Minister’s Employment Generation Programme (PMEGP) 118 2nd Loan for Up-Gradation of The Existing PMEGP/Mudra Units 118 Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE) 118 Micro & Small Enterprises Cluster Development Programme (MSE-CDP) Scheme 118 Scheme of Fund for Regeneration of Traditional Industries (SFURTI) 119 Entrepreneurship and Skill Development Programme (ESDP) Scheme 119 Assistance To Training Institutions (ATI) Scheme 119 (xix) Coir Vikas Yojana - Umbrella Scheme (Skill Upgradation and Mahila Coir Yojana) 119 Procurement and Marketing Support (PMS) Scheme 119 International Cooperation (IC) Scheme 120 National SC-ST Hub Scheme 120 A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship (ASPIRE) 120 Credit Guarantee Scheme for Subordinate Debt (CGSSD) for Stressed MSMES 120 Self reliant India (SRI) Fund 120 MSME Sambandh 121 Reference to Micro and Small Enterprises Facilitation Council 121 Composition of Micro and Small Enterprises Facilitation Council 121 Lesson Round-Up 122 Test Yourself 123 List of Further Readings 123 Other References (Including Websites and Video Links) 123 LESSON 6 CONVERSION OF BUSINESS ENTITIES Regulatory Framework 126 Introduction 126 Conversion of a Private Company into a Public Company 126 Benefits of Conversion of Private Company into a Public Company: 127 Procedure for Conversion of a Private Company into a Public Company 127 Post Conversion requirements to be arranged by the company 129 Conversion of a Public Company into a Private Limited 130 Procedure for Conversion of a Public Limited Company into a Private Limited 131 Post Conversion requirements to be arranged by the company 134 Conversion of Section 8 Company into other kind of Company 135 Procedure for Conversion of a Section 8 Company into any other kind 136 Conversion of Company into LLP 138 Procedure for Conversion of Company into Limited Liability Company 139 Conversion of LLP into Company 141 Procedure for Conversion of Limited Liability Company into Company 141 Conversion of One Person Company into a Public Company or a Private Company 143 (xx) When conversion is necessary into a Private Company or Public Company 144 Procedure for Conversion of One Person Company into other Company 144 Conversion of Company into One Person Company 146 Procedure for Conversion of Private Company into One Person Company 146 Companies Authorised to Register under the Companies Act, 2013 148 Effect of Registration under Part XXI of the Act 149 Essential pre-conditions of companies for Registration under Part XXI of the Act 150 Lesson Round-Up 150 Glossary 151 Test Yourself 151 List of Further Readings 151 Other References (Including Websites/ Video Links) 152 LESSON 7 NON-CORPORATE ENTITIES Regulatory Framework 154 Introduction 154 Partnership 154 Features of Partnership 156 Types of Partnership 156 Types of Partners 157 Minor admitted into the benefits of partnership 157 Merits of Partnership 158 Limitations of Partnership 158 Partnership Deed 159 Benefits of Partnership Deed 160 Registration Procedure 161 Consequences of Non-Registration 161 Registration under Income Tax 162 Hindu Undivided Family (HUF) 162 Meaning of Joint Hindu Family Business 162 Characteristics of a Joint Hindu Family Business 162 Benefits of HUF 163 (xxi) Limitations of HUF 164 Hindu Undivided Family (HUF) - Formation 165 Sole Proprietorship 167 Merits of Sole Proprietorship 167 Limitations of Sole Proprietorship 168 Procedure for Formation of Sole Proprietorship Firm 169 Multi State Co-Operative Society 169 Benefits of Multi State Co-Operative Society 170 Formation of Multi State Co-Operative Society 170 Registration Procedure 171 Registration certificate 172 Trust 172 Objectives of a Trust 173 Persons who can create a Trust 173 Persons who can be a Trustee 174 Difference between Public Trust and Private Trust 174 Exemptions available to Trusts 174 Tax exemption for a Private Trust 175 Formation of Trust 175 Registration of Trust 177 Partnership Agreement & Trust Deed 177 Society 177 Advantages of Society 178 Disadvantages of Society 178 Formation of Society 179 Benefits of forming a Society 180 Registration of a Society in India 180 Selection of a Name 180 Memorandum of Association 180 Consequences of Registration / Non-Registration of a Society 182 Accounts and Audits 182 Litigation 182 Mega Firm 183 (xxii) Pre-requisites 184 Benefits 184 Process of Constitution 186 Risks Involved 186 Lesson Round-Up 186 Test Yourself 187 List of Further Readings 188 Other References (Including Websites/Video Links) 188 LESSON 8 FINANCIAL SERVICES ORGANISATION Regulatory Framework 190 Introduction 190 Non Banking Financial Company 191 Systemically important NBFCs 191 Regulatory and Supervisory Framework 192 Scale Based Regulatory Framework for NBFCs 192 Types/Categories of NBFCS 193 Benefits of Incorporating an NBFC 196 Difference Between Banks & NBFCs 197 Incorporation of NBFCS 198 Registration Process with Reserve Bank of India 198 Registration Procedure 199 Procedure for filing application with Reserve Bank of India 200 Documents required for registration as Type I - NBFC-ND 201 Housing Finance Companies 201 Benefits of incorporating a Housing Finance Company 204 Housing Finance Company: Registration Process 205 Net Owned Fund 206 Conditions pertaining to the cancellation of the Housing Finance Company License 206 Asset Reconstruction Company (ARC) 207 Asset Reconstruction 208 Benefits of incorporating an Asset Reconstruction Company (ARC) 208 (xxiii) Asset Reconstruction Company – the Registration Process 208 Micro Finance Institutions (MFI) 210 Characteristics of a Micro Finance Institution 211 Incorporation of MFI 211 Nidhi 213 Characteristics of a Nidhi Company 214 General restrictions or prohibitions on Nidhis (Rule 6) 214 Benefits of incorporating a Nidhi Company 215 Incorporation of a Nidhi Company 215 Payment Banks 216 Regulations 217 Mudra Banks 219 Procedure for loan 220 Mudra Card 222 Types of funding support from Mudra 222 Chit Funds 223 Lesson Round-Up 226 Test Yourself 228 List of Further Readings 228 Other References (Including Websites and Video Links) 228 LESSON 9 BUSINESS COLLABORATIONS Regulatory Framework 230 Business Collaboration 230 Types of Business Collaboration 230 Foreign Collaboration 230 Meaning of Foreign collaboration 230 Examples of Foreign Collaboration 231 Features of Foreign Collaboration 232 Objectives of Foreign Collaboration 233 Types of Foreign Collaboration 234 Foreign Collaboration in India 234 Joint Venture 235 (xxiv) Definition 235 MNC’s in different forms including Joint Ventures 236 Advantages of Forming Joint Venture 236 Disadvantages of Joint Venture 237 Strategies of entering into a Joint Venture 238 Formation of Joint Ventures 239 Restrictions under FDI Policy of the Government of India 242 Documents for Joint Ventures 243 Essential Features of a Shareholders’ Agreement (SHA) /Joint Venture Agreement / Partnership 243 Agreement (PA) Essential components of a Joint Venture Agreement 244 Special Purpose Vehicle (SPV) 245 Meaning of Special Purpose Vehicle (SPV) 245 Benefits of Special Purpose Vehicle (SPV) 245 Purpose of Special Purpose Vehicle 246 Difference between a Special Purpose Vehicle (SPV) and a Company 246 How is an SPV established? 247 SPV as preferred vehicle for funds raising by Infrastructure Sector 247 LLP Firm as a Special Purpose Vehicle 247 Lesson Round-Up 248 Test Yourself 249 List of Further Readings 249 Other References (Including Websites and Video Links) 249 LESSON 10 SETTING UP OF BRANCH OFFICE/ LIAISON OFFICE/ WHOLLY OWNED SUBSIDIARY BY FOREIGN COMPANY Regulatory Framework 252 Introduction 252 Important Terms 253 Key Provisions 253 Provisions pertaining to name 255 Establishment of Branch Office (BO)/ liaison office (LO)/ project office (PO) in India 255 Branch Office 255 Eligibility for setting up a Branch Office 256 (xxv) Permitted Activities 256 Registration of a Branch Office in India 256 Funding of the BO by the Foreign Company 257 Liaison Office 257 Eligibility for setting up a Liaison office 257 Permitted Activities 258 Extension of the validity period for Liaison Office 258 Project Office 259 Parameters of project office 259 Cases in which RBI Approval is required for Setting up BO, PO and LO in India 260 Master Direction - Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) in 260 India by foreign entities Procedure for Establishment of BO/LO/PO 262 Opening of bank account by BO/LO/PO 263 Annual Activity Certificate by BO/LO/PO 264 Extension of validity period of the approval of LO and PO 264 Registration with police authorities 265 Application for additional offices and activities 265 Extension of Fund and Non-Fund Based Facilities 265 Remittances of Profits/ Surplus 265 Closure of BO/PO/LO 266 Checklist for BO/LO/PO 267 Lesson Round-Up 269 Glossary 269 Test Yourself 269 List of Further Readings 270 Other References (Including Websites/ Video Links) 270 LESSON 11 SETTING UP OF BUSINESS OUTSIDE INDIA AND ISSUES RELATING THERETO Regulatory Framework 272 Introduction 272 Evolution 273 Investments & Developments 274 Laws /Authority governing Setting up of Business outside India 274 Foreign Exchange Management Act, 1999 274 (xxvi) OI Rules v/s OI Regulations 275 Overseas Investment 276 Eligibility (Entities are referred to as “Indian Entity”) 277 Non-Applicability 277 Prohibitions 277 Automatic Route 278 Approval Route 279 No Objection Certificate 280 Method of Funding 280 Foreign Direct Investment Policy 281 Reporting Requirements 281 Issues in Choosing Location Outside India 282 Setting up of a Business in New Zealand 284 Business Reforms in New Zealand (World Bank Doing Business Report 2020) 286 Setting up of Business in Singapore 287 Initiatives in Singapore for Setting up of Business (World Bank Doing Business Report 2020) 289 Setting up of a Business in Hong Kong SAR, China 290 Business Reforms in Hong Kong SAR, China (World Bank Doing Business Report 2020) 291 Setting up of Business in New York City 293 Business Reforms in New York City 296 Setting up of a Business in United Kingdom 296 Business Reforms in United Kingdom (World Bank Doing Business Report 2020) 298 Setting up of a Business in Canada 299 Setting up of a Business in Australia 299 Lesson Round UP 300 Test Yourself 300 List of Further Readings 300 Other References (Including Websites/ Video Links) 300 LESSON 12 IDENTIFYING LAWS APPLICABLE TO VARIOUS INDUSTRIES AND THEIR INITIAL COMPLIANCES Compliance of Industry Specific Laws Applicable to an Entity at the Time of Setting Up of the Enterprise 302 Introduction 302 Formalizing and Deciding the Business Structure 302 Here is a quick look into the legal implications for the major business types in India 303 (xxvii) Section 8 Company 305 Eligibility to apply for Section 8 Company License 305 Parameters for Deciding Business Structure 307 Formation of a Company 309 Documents required for Company Registration 311 Applying for Business Licenses 315 Understanding Taxation and Accounting Laws 317 Adhering to Labour Laws 317 Adherence to Laws relating to Intellectual Property 319 Ensuring Effective Contract Management 320 Laws relating to Industries Specific Laws 321 Trading & Retail Industry 321 IFSC & Bullion Exchange Industry 322 Start-ups 322 Non-Banking Financial Company (NBFC) 322 Pharma Industry 323 Banking Industry 324 Insurance Industry 325 Housing Finance Companies 325 Real Estate Companies 326 Telecom Industry 328 Information & Technology Industry 328 Media and Communication Industry 329 Infra Industry 330 Environment Laws 330 Lesson Round-Up 331 Test Yourself 332 LESSON 13 VARIOUS INITIAL REGISTRATIONS AND LICENSES Regulatory Framework 334 Introduction 334 Business Entity Registration 334 (xxviii) Mandatory Registration 335 PAN 335 Significance of PAN for Setting up of Business 336 Application and Registration of PAN 336 TAN 337 Persons liable to apply for TAN 337 Relevance of TAN 338 Procedure to Apply for TAN 338 Where to get the Physical Application Forms 338 Documents to be submitted along with TAN application 338 Communication 338 Status track 339 Fee 339 GST Registration 339 GST Registration 339 Persons not liable to register 340 Compulsory registration 340 GSTIN 341 Procedure for Registration 342 Composition Scheme under GST 343 Persons not eligible for Composition Scheme 343 Persons not eligible for Composition Scheme 344 Registration Under Shops & Establishments Act 346 Purpose of Shop and Establishment Act 346 License under Shop and Establishment Act 347 Registration of Shops & Establishments 347 ESI Registration 348 Applicability 348 ESI Registration Procedure for both Employer & Employee 349 Registration of Employee 349 Employee Provident Fund Meaning and Registration Procedure 349 Pollution Control 350 Procedure for obtaining NOC from Pollution Control Board: 351 Compliances under Environment Laws 352 Environmental Laws & Applicable Regulatory Authorities 352 (xxix) Other Registration as per Requirement of Sector/ Activities 352 Import Export Code 353 Application for IE Registration 353 Drug License 354 Classification of Drug License 354 Prerequisites for obtaining Drug License 354 Documents required for obtaining Drug License 355 FSSAI 355 FSSAI Registration 356 FSSAI License 356 Non-Bank Finance Company Registration 357 Financial Companies exempt NBFC License 358 Requirement for Obtaining NBFC License 358 Calculating Net Owned Funds as per RBI Definition 358 Types of NBFC License 359 Applying for NBFC License 359 Banking 360 IRDA (Insurance Regulatory and Development Authority) 362 Introduction 362 Industry Licensing Policy 365 Telecom License 367 Process 368 Mandatory Documents required for OSP License 368 State Level Approval from the respective State Industrial Department 368 Lesson Round-UP 369 Test Yourself 370 List of Further Readings 371 Other References (Including Websites/ Video Links) 371 LESSON 14 CONSTITUTION AND LABOUR LAWS Regulatory Framework 374 Introduction 374 Constitutional Bearing on Industrial Laws and Industrial Relations 374 Social Justice and Industrial Laws 376 (xxx) Constitutional Remedies 376 Fundamental Rights and Industrial Relations 377 Article 14: Equality before law 377 Article 16: Equality of opportunity in matters of public employment 378 Article 19(1)(c) of the Constitution: Right to form Association & Union 379 Article 21 of the Constitution: Right to Life 380 Article 23 and Article 24: Right against Exploitation 381 Labour Laws and Reference to Directive Principles of State Policy 382 Social Order Based on Socio-Economic Justice 383 Equal Pay for Equal Work 384 Social Security Provisions 385 Working Conditions 386 Living Wage 386 Workers Participation In Management 386 Lesson Round-Up 387 Glossary 387 Test Yourself 388 List of Further Readings 388 Other References (Including Websites/ Video Links) 388 LESSON 15 EVALUATION OF LABOUR LEGISLATION AND NEED OF LABOUR CODE Regulatory Framework 390 Introduction 390 History of Labour Laws 390 Need to Bring in New Legislations 391 Purpose of labour legislation 392 Classification of Labour Laws in India 392 Objective of New Labour Codes 394 Features of new Labour Codes 395 Acts Subsumed by the Four Labour Codes 396 Reforms Proposed by New Labour Codes 397 Code on Social Security, 2020 397 (xxxi) Occupational Safety, Health and Working Conditions Code, 2020 398 Code on Wages, 2019 399 Industrial Relations Code, 2020 400 Lesson Round-Up 402 Glossary 403 Test Yourself 404 List of Further Readings 404 Other References (Including Websites and Video Links) 404 LESSON 16 LAW OF WELFARE & WORKING CONDITION UNIT I – FACTORIES ACT, 1948 Regulatory Framework 406 History of the Legislation 406 Object of the Act 407 Applicability of the Act 407 Scheme of the Act 408 Definitions 408 “Worker” {Section 2(I)} 410 “Factory” {Section 2(m)} 410 “Occupier” {Section 2(n)} 411 Exemption of occupier or manager from liability in certain cases 412 Group/Relay/Shift {Section 2(r)} 412 Statutory Agencies and their powers for enforcement of the Act 412 Duties of Occupier / Manufacturer 416 Measures to be taken by factories for health, safety and welfare of workers 418 Health 418 Summary 422 Safety 423 Summary 429 Provisions relating to Hazardous Processes 431 Constitution of Site Appraisal Committees (Section 41A) 431 Compulsory disclosure of Information by the Occupier (Section 41B) 431 Specific responsibility of the occupier in relation to hazardous processes (Section 41C) 432 Power of Central Government to appoint Inquiry Committee (Section 41D) 432 (xxxii) Emergency Standards (Section 41E) 432 Permissible limits of exposure of chemical and toxic substances (Section 41F) 433 Workers’ participation in safety management (Section 41G) 433 Right of workers to warn about imminent danger (Section 41H) 433 Welfare 433 Washing Facilities (Section 42) 433 Facilities for storing and drying clothing (Section 43) 433 Facilities for sitting (Section 44) 434 First-aid appliances (Section 45) 434 Canteens (Section 46) 434 Shelters, rest-rooms and lunch-rooms (Section 47) 434 Creches (Section 48) 435 Lesson Round-Up 435 Test Yourself 437 UNIT II – THE CONTRACT LABOUR (REGULATION AND ABOLITION) ACT, 1970 Regulatory Framework 440 History of the Legislation 440 Object and Scope of the Act 440 Definitions 441 The Advisory Boards 443 Registration of Establishments Employing Contract Labour 444 Welfare and Health of Contract Labour 446 Penalties and Procedures 447 Inspecting Staff 448 Registers and other Records to be Maintained 449 Lesson Round-Up 449 Glossary 450 Test Yourself 450 UNIT III – THE CHILD AND ADOLESCENT LABOUR (PROHIBITION AND REGULATION) ACT, 1986 Regulatory Framework 452 Introduction 452 Definition 452 (xxxiii) Prohibition of Employment of Children in any Occupations and Processes 452 Prohibition of Employment of adolescents in hazardous Occupations and Processes 453 Hours and Period of Work 453 Weekly Holidays 453 Notice to inspector 453 Maintenance of Register 454 Display of Notice Containing Abstract of Sections 3A and 14 454 Penalties 454 District Magistrate to Implement the Provisions 455 Lesson Round-Up 455 Glossary 455 Test Yourself 456 LESSON 17 LAW OF INDUSTRIAL RELATIONS UNIT I – INDUSTRIAL DISPUTES ACT, 1947 Regulatory Framework 458 Introduction 458 Object and Significance of the Act 458 Important Definitions 459 Industry 459 Industrial Dispute 461 Workman 462 Strike 462 Types of Strike and their Legality 463 Legality of Strike 464 Lock-out 465 Lay-off 465 Retrenchment 467 Award 467 Appropriate Government 467 Average Pay 468 Closure 468 (xxxiv) Controlled Industry 468 Employer 468 Public Utility Service 468 Settlement 469 Trade Union 469 Unfair Labour Practice 469 Wages 469 Authorities under the Act and their Duties 470 Reference of Disputes 472 Voluntary reference of Disputes to Arbitration 476 Strikes and Lock-Outs 476 Unfair Labour Practices 478 Penalties 478 Lesson Round-Up 480 Glossary 480 Test Yourself 481 UNIT II – THE INDUSTRIAL EMPLOYMENT (STANDING ORDERS) ACT, 1946 Regulatory Framework 484 Object and Scope of the Act 484 Important Definitions 484 Appellate Authority 484 Appropriate Government 485 Certifying Officer 485 Employer 485 Industrial Establishment 485 Standing Orders 485 Wages and Workmen 485 Certification of Draft Standing Orders 486 Submission of draft Standing Orders by employers to the certifying officer 486 Conditions for certification of Standing Orders 486 Fairness or reasonableness of Standing Orders 486 Certification of Standing Orders 486 Appeals 487 (xxxv) Date of Operation of Standing Orders 487 Posting of Standing Orders 487 Duration and Modification of Standing Orders 487 Payment of Subsistence Allowance 488 Interpretation of Standing Orders 488 Temporary Application of Model Standing Orders 488 Matters to be provided in Standing Orders under this Act 488 Lesson Round Up 489 Glossary 490 Test Yourself 490 LESSON 18 LAW OF WAGES UNIT I – PAYMENT OF WAGES ACT, 1936 Regulatory Framework 492 Object and Scope 492 Definitions 492 Responsibility for payment of wages 493 Fixation of wage period 493 Time payment of wages 493 Wages to be paid in current coin or currency notes or by cheque or crediting in bank account 494 Deductions from the wages of an employee 494 Fines 494 Maintenance of registers and records 495 Claims arising out of deductions from wages or delay in payment of wages and penalty for 495 malicious or vexatious claims. Lesson Round-Up 497 Glossary 497 Test Yourself 497 UNIT II – MINIMUM WAGES ACT, 1948 Regulatory Framework 500 Object and Scope of the Legislation 500 (xxxvi) Important Definitions 500 Appropriate Government [Section 2(b)] 500 Employee [Section 2(i)] 500 Employer [Section 2(e)] 500 Scheduled employment [Section 2(g)] 501 Wages [Section 2(i)] 501 Fixation of Minimum Rates of Wages [Section 3(1)(A)] 502 Revision of Minimum Wages 502 Manner of Fixation/Revision of Minimum Wages 502 Minimum Rate of Wages (Section 4) 503 Procedure for Fixing and Revising Minimum Wages (Section 5) 503 First Method [Section 5(1)(a)] 503 Second Method [Section 5(1)(b)] 504 Advisory Board 504 Central Advisory Board 504 Minimum Wage — Whether to be paid in cash or kind 504 Payment of Minimum Wages is Obligatory on Employer (Section 12) 504 Fixing Hours for a Normal Working Day (Section 13) 505 Payment of Overtime (Section 14) 505 Wages of a Worker who works less than Normal Working Day (Section 15) 505 Minimum Time – Rate Wages for Piece Work (Section 17) 506 Maintenance of Registers and Records (Section 18) 506 Authority and Claims (Section 20-21) 506 Offences and Penalties 506 Lesson Round-Up 507 Glossary 507 Test Yourself 508 UNIT III – PAYMENT OF BONUS ACT, 1965 Regulatory Framework 510 Object and Scope of the Act 510 Application of the Act 510 Act not to apply to certain Classes of Employees 511 Important Definitions 512 Accounting Year 512 (xxxvii) Allocable Surplus 512 Available Surplus 512 Award 513 Corporation 513 Employee 513 Employer 513 Establishment in Private Sector 513 Establishment in Public Sector