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Producer Company Registration in Patna Bihar Muzaffarpur Ranchi Jharkhand India

Producer Company Registration

 

 Meaning of the Producer Company

 

A producer company means a body corporate registered as Producer Company under Companies Act, 2013 and having objects under section 581B of Company Act, 2013 such as:- (a) production, harvesting, processing, procurement, grading, pooling, handling, marketing, selling, export of *primary produce of the Members or import of goods or services for their benefit : (b) rendering technical services, consultancy services, training, education, research and development and all other activities for the promotion of the interests of its Members; (c) generation, transmission and distribution of power, revitalization of land and water resources, their use, conservation and communications relatable to primary produce; (d) promoting mutual assistance, welfare measures, financial services, insurance of producers or their primary produce; *Primary produce has been defined as a produce of farmers arising from agriculture including animal husbandry, horticulture, floriculture, pisciculture, viticulture, forestry, forest products, re-vegetation, bee raising and farming plantation products: produce of persons engaged in hand-loom, handicraft and other cottage industries: by – products of such products; and products arising out of ancillary industries.”Producer institution” means a Producer Company or any other institution having only producer or producers.

How to incorporate Producer Company in India

Any of the following combination of producers or institutions can incorporate a producer company:
• Ten or more producers (individuals); or
• Two or more producer institutions; or
• Combination of the above two (10+2).

 

Registration of the producer company

  • In a Producer Company, only persons engaged in an activity connected with, or related to, primary produce can participate in the ownership. The members have necessarily to be primary producers.
  • These companies shall be termed as “Companies with Limited Liability” and the liability of the members will be limited to the amount, if any, unpaid on the shares.
  • The name of the company shall end with the words “Producer Company Limited”
  • On registration, the producer company shall become as if it is a private limited company for the purpose of application of law and administration of the company (however it shall comply with the specific provisions of part IXA).
  • The maximum number of 50 members is not applicable to these companies.

Voting Right and Share Capital

  • The share capital of a Producer Company shall consist of equity shares only.
  • Members’ equity cannot be publicly traded but only transferred.
  • Voting when membership is
    • Only of individuals then voting rights shall be based on a single vote for every member.
    • Only of producer institutions then voting rights on the basis of their participation.
    • Combination of both individual and producer institutions then voting rights shall be based on a single vote for every member.

Composition of The Management of the producer company

  • Every producer company is to have at least five and not more than 15 directors.
  • A full time chief executive should be appointed by the board and shall be entrusted with substantial powers of management as the board may determine.

 

Overview of Status of Producer Companies in India Patna Bihar Jharkhand UP Maharashtra

Primary producers‟ organisations or collectivities are being argued to be the only institutions which an protect small farmers from ill-effects of globalization or make them participate successfully in modern competitive markets (Trebbin and Hassler, 2012). Producers‟ organizations not only help farmers buy or sell better due to scale benefits but also lower transaction costs for sellers and uyers, besides providing technical help in production and creating social capital. In Mozambique, where 80% farmers are small holders and only 7.3% were members of any farmer organization in 2005, the membership in a farmers‟ organisation led to 50% increase in profits for small farmers from the crops handled by the organization (Bachke, n.d.). It is also argued that co-operatives or such collectivities are needed for small farmers as they help realize better output prices and credit terms and, thus, can help eliminate interlocking of factor and product markets into which small farmers are generally trapped (Patibandla and Sastry, 2004). In India, there are many legal forms of organisations into primary producer can organise themselves.

A Producer Company (PC) is one such and relatively new legal entity of the producers of any kind, viz., agricultural produce, forest produce, artisanal products, or any other local produce, where the members are primary producers. PC as a legal entity was enacted in 2003 as per section IXA of the Indian Companies Act 1956. Since the above enactment, the PC has been hailed as the rganizational form that will empower and improve the bargaining power, net incomes, and quality of life of small and marginal farmers/producers in India. While each member in a PC can have only one vote, he/she can contribute different amounts of share capital to the PC. The shares of the PC members cannot be transferred outside the membership. A PC should have a minimum of 10 members or two producer entities or a combination thereof can form a PC. By virtue of assigning equal voting rights to each member, the issues of management control by small and marginal producers has been resolved in the design of PC. In spirit, the current PC design also takes into account the efficiency of the community of producers rather than the efficiency of shareholders/financiers of a profit seeking company.

Producer Companies (hereafter Producer Companies) were tried in Sri Lanka during the 1990s under the Companies Act in non-plantation sector (92 in 2003) where they were called farmer companies. These Producer Companies, by and large, failed as they were promoted by the state (or its agencies like Department of Agriculture, Ministry of Irrigation, and Economic Development Board) and had large membership ranging from 215 to 2234. They were involved in input supply, credit supply, crop/produce purchase, contract farming, and manufacture of tea. Most of them suffered from poor capital base, lack of farmer participation, restriction on shareholding, and poor perception of these entities by the farmers as service providers (Esham and Usami,2007).As of mid-2011, there were over 156 Producer Companies in India. Of these registered Producer Companies, the Producer Companies of District Poverty Initiative Project-Madhya Pradesh (DPIP-MP) are the most cited (Singh, 2008). The above Producer Companies sell their produce to any large national and international buyers/processors or to their promoters. In its attempt to aggregate the produce from the marginal producers, the above PC model focuses on the common interest groups (CIGs) or self-help groups (SHGs) as the basic units for aggregation with no limit on the size of membership and size of cluster/operational area.

The major research questions regarding role of Producer Companies include: how far Producer Companies are an improvement over the existing co-operative or other models of producer organization? How relevant and appropriate are the Producer Companies in the context of globalised markets? What is the competitive edge of Producer Companies over other modes of farmer or primary producer organization? What kind of policy treatment do the Producer Companies need to grow as vibrant producer entities and to make an impact on the livelihoods of small producers?

While there are some unresolved questions in the current design and context , the PC as an enterprise of small and marginal farmers/producers nevertheless appears to be a powerful vehicle to empower small farmers/producers and improve their quality of life leading to better rural development in India. It is an appropriate time to assess the functioning of the Producer Companies and their impact on the small and marginal farmers/producers in India as they have been in existence for almost a decade now.

 

 

Topic of Article/Page: Producer Company Registration in India Patna Bihar Muzaffarpur Ranchi Jharkhand

Author/ Writer: Prince Kunal
Profession: Company Secretary

Website: Best Company Registration Consultants in Patna

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What is Tan | How to apply for Tan | Checklists-Documents needed for new Tan | Form 49B free download | FAQ | Frequently Asked Questions about Tan |Fees for New Tan | Purpose of Tan | Who are required to obtain Tan |

What is Tan | How to apply for Tan | Checklists-Documents needed for new Tan | Form 49B free download | FAQ | Frequently Asked Questions about Tan |Fees for New Tan | Purpose of Tan | Who are required to obtain Tan |

 

Overview

TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. Under Section 203A of the Income Tax Act, 1961, it is mandatory to quote Tax Deduction Account Number (TAN) allotted by the Income Tax Department (ITD) on all TDS returns.

Since last few years ITD has revised the structure of TAN. It is a unique 10 digit alphanumeric code. Accordingly, they have issued TAN in this new format to all existing TAN holders.

To facilitate deductors find their new TAN, ITD has now introduced a search facility in their website (www.incometaxindia.gov.in). Through this facility deductors can search on their name and old TAN to find the new TAN. Deductors are advised to find the new TAN from this site before it is incorporated in their e-TDS return file to avoid any inconvenience at the time of furnishing e-TDS return.

Types of TAN Application

There are two types of TAN Applications

This application form should be used when the deductor has never applied for a TAN or does not have a TAN.

This application form should be used by the deductors in case they want a Change or Correction in data associated with their TAN.

 

How to Apply

A deductor may either make an online application through this website or submit physical TAN Application to any TIN-Facilitation Center (TIN-FC) of NSDL.

Applicants should go through the instructions and guidelines provided in the application form before filling the form.

Where to get the physical application forms

Applicants may obtain the application forms from TIN-FCs, any other vendors providing such forms or can freely download the same from this website.

Communication

These applications are digitised by NSDL and forwarded to ITD. ITD will issue the TAN which will be intimated to NSDL online. On the basis of this NSDL will issue the TAN letter to the applicant.

Status track

The applicants may track the status of their TAN application using 14 digit unique Acknowledgment Number after three days of application using the status track facility. Alternatively, applicant may call TIN Call Centre on 020 – 2721 8080 to enquire about the status of application. The status of the TAN application can also be tracked by sending an SMS – NSDLTAN <your 14 digit acknowledgement number> to 57575.

Fee

The processing fee for the both the applications (new TAN and change request) is 63 (including service taxes).

FAQ

What is the procedure to obtain a TAN?

An application for allotment of TAN is to be filed in Form 49B and submitted to any TIN-FC. Addresses of TIN-FCs are available at NSDL-TIN website. Alternatively, you can apply for TAN online at the NSDL-TIN website.

From where can I obtain Form 49B?

Form 49B is freely downloadable from NSDL-TIN website. It is also available at TIN-FCs. Legible photocopies of Form 49B or forms legibly printed exactly as per the format prescribed by ITD are also allowed to be used.

Who will allot TAN?

TAN is allotted by the Income-tax Department on the basis of the application submitted online at NSDL-TIN website or to TIN-FCs managed by NSDL. NSDL will intimate the TAN to the applicant at the address provided in the application.

Can an application for TAN be made on a plain paper?

No. TAN Application can be made only on Form 49B. The application form can be downloaded from ITD website or NSDL-TIN website or may be obtained from any other source. The application is also available at TIN-FCs.

Can Form 49B be filled on a typewriter?

Yes. But typing should be in capital letters with good impression.

What documents should be submitted alongwith the TAN application?

No documents are required to be submitted along with the application for allotment of TAN. However, where the application is being made online, the signed acknowledgment which is generated after filling up the form should be forwarded to NSDL. Detailed guidelines for submission of application are available on NSDL-TIN website.

Is a separate TAN required to be obtained for the purpose of Tax Collection at Source (TCS)?

No. TAN which was allotted for Tax Deduction at Source (TDS) can be used for the purpose of TCS. However, if no TAN has been allotted, a duly filled in Form 49B, alongwith the application fees should be submitted at any TIN-FC.

What if incomplete form 49B is submitted?

If you are submitting the form at a TIN-FC, the TIN-FC will assist you in correctly filling up Form 49B. Incomplete or deficient applications will not be accepted.

Are there any charges to be paid while submitting application for TAN?

A fee of Rs. 55 + service tax (as applicable) should be paid as processing fee at the TIN-FC at the time of submitting Form 49B. If you are applying for TAN online, then the payment can be made vide cheque, demand draft or credit card as per the guidelines given in the NSDL-TIN website.

How will the new TAN number be intimated to the applicant?

An allotment letter is dispatched by NSDL at the address provided in Form 49B.

How can I enquire about the status of my application?

You can inquire the status of your application by accessing NSDL-TIN website at the “Status track” option and quoting your unique 14-digit acknowledgement number after three days of your application.

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How to choose right form of business | Merit- demerits of different forms of business | Which form of business is suitable for you ??

How to choose right form of business???

Merit demerit of different forms of business |||

Which form of business is suitable for you??

व्यापार किस तरह शुरू करें??

किस फॉर्म में  शुरू हो आपका बिज़नेस???

क्या हैं व्यापार शुरू करने के विभिन्न तरीके???

जानिए हमारे साथ…..
हम आपको बिज़नेस शुरू करने के विभिन्न तरीको के लाभ और हानि के बारे में विस्तार से बताते हैं |

किसी भी व्यापार को स्टार्ट करने के कई तरीके होते हैं | व्यापार को स्टार्ट करने से अभिप्राय आपके बिज़नेस को सेट अप करने से है | मगर सभी तरीको में कुछ अंतर होते हैं जो की उनमे लगने वाले पैसे, समय, और उनसे जुड़े लीगल कंप्लायंस के अनुसार बांटे जाते हैं.|
बिज़नेस स्टार्ट के करने के मुख्य तरीके इस प्रकार के होते हैं |

बिज़नेस स्टार्ट के करने के मुख्या तरीके इस प्रकार के होते हैं |

१. सोल -प्रोप्रिएटरशिप (एकल स्वामित्व)
२. पार्टनरशिप (साझेदारी)
३. कंपनी
४. गैर सरकारी संगठन पंजीकरण

१. सोल -प्रोप्रिएटरशिप (एकल स्वामित्व)

यह बिज़नेस स्टार्ट करने का सबसे आसान तरीका है | इसमें खर्चे, समय की बचत होती है इसलिए यह काफी प्रसिद्ध भी है | इस तरह के बिज़नेस में एक व्यक्ति अपना व्यापार अकेला ही स्टार्ट करता है | इसमें किसी की साझेदारी नहीं होती है | वह अकेला ही अपने व्यापार में लगने वाले खर्च को वहन करता है और उससे  होने वाले लाभ को अर्जित करता है | इस तरह व्यापार को शुरू करने में कम खर्च लगता है | और फायदे अन्य बिज़नेस के तरीको जैसे ही हैं | व्यापार करने के इस तरीके के लाभ और हानि के इस प्रकार हैं: –

इसके लाभ:-

१. व्यापार में मालिक को कोई भी फैसला लेने से पहले किसी की सहमति लेने की जरुरत नहीं होती है |
२. यह बिज़नेस का सबसे सरल एवं सबसे जल्द बनने वाला और बंद किये जा सकने वाला प्रकार है |
३. इसमें मालिक तीर्व निर्यय ले सकते हैं |
४. इसमें लीगल कंप्लायंस के खर्चे बहोत कम होते हैं |
५. इसमें मालिक का अपने बिज़नेस पर पूरा नियंट्रण होता है |
६. मालिक ही बिज़नेस से होने वाले लाभ का अकेला ही हिताधिकारी होता है |
७. इसमें बिज़नेस के अन्य प्रकार के वनिष्पद बहोत कम टैक्स पय करना होता है |

इससे हानि :–
१. मालिक के पास पूंजी की कमी हो सकती है, क्यूंकि वह अकेला ही बिज़नेस में पूंजी लगता है |
२. ज्यूंकि इसका रजिस्ट्रेशन लोकल गवर्नमेंट के डिपार्टमेंट में होता है इसलिए इसे देश भर में वह इमेज और ब्रांड पोजिशनिंग नहीं नहीं मिल पाती है जो कंपनी या रजिस्टर्ड पार्टनरशिप को मिलती है | जैसे : आप किसी भी कंपनी के बारे में देश के किसी भी कोने से जान सकते हैं मगर इसमें (एकाकी स्वामित्व) में यह सुविधा नहीं मिल पाती है |
३. व्यापार से होने वाले हानि का पूरा वहन मालिक को अकेला ही करना होता है | अगर हानि सम्पति से ज्यादा हो वह मालिक के पर्सनल प्रॉपर्टी को बेच कर भी वसूली जा सकती है |

२. पार्टनरशिप ( साझेदारी)

पार्टनरशिप व्यापार का वह फॉर्म है जिसमे दो या दो से अधिक व्यक्ति किसी प्रॉफिटेबल कार्य को करने के लिए साथ में काम करने के लिए एग्रीमेंट करते हैं | यह करारनामा पार्टनरशिप एग्रीमेंट कहलाता है | पार्टनरशिप एग्रीमेंट पार्टनरशिप के रूल्स एंड  रेगुलेशन का वर्णन करता है | पार्टनरशिप के कार्यकलाप पार्टनर्स के हाथ में होते हैं | पार्टनर्स भी मुख्यतः दो प्रकार के हो सकते हैं | एक्टिव पार्टनर और स्लीपिंग पार्टनर | एक्टिव पार्टनर पार्टनरशिप को चलाने के लिए के लिए जिम्मेदार होते हैं | जिनके लिए ओन्हे सैलरी दी जाती है | वही स्लीपिंग पार्टनर सैलरी नहीं ले सकते क्यूंकि वे काम नहीं करते बल्कि सिर्फ नाम के पार्टनर होते हैं | जैसे की कई पार्टनरशिप फर्म सिर्फ नाम के लिए फिल्मी स्टार्स को अपना पार्टनर बना के रखती हैं |

एकाकी स्वामित्व और पार्टनरशिप में अंतर:
१. पार्टनशिप में पूंजी के उपलब्ध्ता एकाकी स्वामित्व से ज्यादा होती है |
२. पार्टनरशिप बिज़नेस और पार्टनर दो अलग अलग पर्सन्स होते हैं कानून की नजर में | एकाकी स्वामित्व और उसका मालिक एक ही माने जाते हैं कानून की नजर में |
३. पार्टनरशिप का अलग से पैन कार्ड बनता है मगर एकाकी बिज़नेस में मालिक के ही पैन से काम चल जाता है |
४. पार्टनरशिप में डिसिशन मेकिंग एकाकी बिज़नेस के वनिस्पत स्लो होती है | क्यूंकि कोई भी डिसिशन सभी पार्टनर्स के सहमति के साथ ही लिया जाता है |

पार्टनरशिप के लाभ:-
१. एकाकी स्वामित्व की अपेक्षा ज्यादा पूंजी उपलब्ध होती है |
२. पार्टनरशिप और पार्टनर्स कानून की नजर में दो अलग अलग पर्सन्स होते हैं | अगर पार्टनरशिप रजिस्टर्ड हो या एलएलपी (पार्टनरशिप का मॉडर्न फॉर्म ) हो तोह पार्टनरशिप के नुक्सान को पार्टनर्स से नहीं वसूला जा सकता है (कुछ एक्सेप्शनल केसेस को छोर के )
३. पार्टनरशिप बनाने में आसान होता है |
४. कर्मचारी हमेशा मोटिवटेड रहते हैं क्यूंकि अच्छा काम करने पर उन्हे पार्टनर्स बनने का मौका मिलता है |

पार्टनरशिप से हानि :-
१. पार्टनरशिप में डिसिशन मेकिंग स्लो होती है वनिस्पद एकाकी स्वामित्व के |
२. पार्टनर्स के बीच में ट्रस्ट, भरोशे के कमी पार्टनरशिप के असफलता का कारण  बन सकती है |
३. पार्टनर्स पार्टनरशिप के कर्ज, नुक्सान के प्रति जिम्मेवार होते हैं | एलएलपी को छोर के अन्य पार्टनरशिप फॉर्म्स के कर्ज की भरपाई न हो पाने पर ओसे पार्टनर्स की निजी सम्पति को बेच कर भी वसूला जा सकता है|

 

 

 

 

 

 

 

 

 

Article topic: How to choose right form of business | Merit- demerits of different forms of business | Which form of business is suitable for you ??

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Nidhi Rules, 2014, Special Provisions relating to Nidhi Companies in Company Act, 2013

Guidelines for Nidhi Companies

Nidhi Rules, 2014, Special Provisions relating to Nidhi Companies in Company Act,  2013

 

 A. What to do?????

 (What a nidhi company is mandatorily required to do, what it must do???)

  1. Within ninety days from the close of the first financial year after its incorporation and where applicable, the second financial year, Nidhi shall file a return of statutory compliances in Form NDH-1 along with such fee as provided in Companies (Registration Offices and Fees) Rules, 2014 with the Registrar duly certified by a company secretary in practice or a chartered accountant in practice or a cost accountant in practice.
  2. Every Nidhi shall issue equity shares of the nominal value of not less than ten rupees each.
  3. Every Nidhi shall allot to each deposit holder at least a minimum of ten equity shares or shares equivalent to one hundred rupees.

Exception: (Provided that a savings account holder and a recurring deposit account holder shall hold at least one equity share of rupees ten.)

  1. Every Nidhi shall ensure that its membership is not reduced to less than two hundred members at any time.
  2. Every Nidhi shall maintain Net Owned Funds (excluding the proceeds of any preference share

capital) of not less than ten lakh rupees or such higher amount as the Central Government may specify from time to time.

  1. Nidhi shall not accept deposits exceeding twenty times of its Net Owned Funds (NOF) as per its last audited financial statements.
  2. Every Nidhi shall invest and continue to keep invested, in unencumbered term deposits with a Scheduled commercial bank (other than a co-operative bank or a regional rural bank), or post office deposits in its own name an amount which shall not be less than ten per cent of the deposits outstanding at the close of business on the last working day of the second preceding month:

Exception: (Provided that in cases of unforeseen commitments, temporary withdrawal may be permitted with the prior approval of the Regional Director for the purpose of repayment to depositors, subject to such conditions and time limit which may be specified by the Regional Director to ensure restoration of the prescribed limit of ten per cent.)

  • Nidhi shall charge the same rate of interest on the borrowers in respect of the same class of loans.
  • The rates of interest of all classes of loans shall be prominently displayed on the notice board at the registered office and each branch office of Nidhi.
  • a. The Notes on the financial statements of a year shall disclose-

 

(i) the total amount of provisions, if any, to be made on account of income reversal and non-performing assets remaining unrealised;

(ii) the cumulative amount provided till the previous year;

(iii) the amount provided in the current year; and

(iv) the balance amount to be provided.

 

b.Such disclosure shall continue to be made until the entire amount to be

provided has been provided for.

 

  1. In respect of loans against gold or jewellery:

 

(a) the aggregate amount of loan outstanding against the security of gold or jewellery shall either be recovered or renewed within three months from the due date of repayment;

(b) if the loan is not recovered or renewed and the security is not sold within the aforesaid period of three months, the company shall make provision in the current year’s financial statements to the extent of unrealised amount or the aggregate outstanding amount of loan including interest as applicable;

(c) no income shall be recognised on such loans outstanding after the expiry of the three months period specified in (a) above or sale of gold or jewellery, whichever is earlier; and

(d) the loan to value ratio shall not exceed 80 per cent.

Explanation.- For the purposes of this rule, the term ‘loan to value ratio’ means the ratio between the amount of loan given and the value of gold or jewellery against which such loan is given.

 

B. What not to do?????

 (What a nidhi company is not supposed to do, what it can not do???)

  1. On and after the commencement of the Act, no Nidhi shall issue preference shares.
  2. If the failure to comply with sub-rule (1) of this rule extends beyond the second financial year, Nidhi shall not accept any further deposits from the commencement of the second financial year till it complies with the provisions contained in C (1) besides being liable for penal consequences as provided in the Act.
  3. No Nidhi shall—
    1. carry on the business of chit fund, hire purchase finance, leasing finance, insurance or acquisition of securities issued by any body corporate;
    2. issue preference shares, debentures or any other debt instrument by any name or in any form whatsoever;
    3. open any current account with its members;
    4. acquire another company by purchase of securities or control the composition of the Board of Directors of any other company in any manner whatsoever or enter into any arrangement for the change of its management, unless it has passed a special resolution in its general meeting and also obtained the previous approval of the Regional Director having jurisdiction over such Nidhi;
    5. carry on any business other than the business of borrowing or lending in its own name:

(Provided that Nidhis which have adhered to all the provisions of these rules may provide locker facilities on rent to its members subject to the rental income from such facilities not exceeding twenty per cent of the gross income of the Nidhi at any point of time during a financial year.)

F.  accept deposits from or lend to any person, other than its members;

G.  pledge any of the assets lodged by its members as security;

H.  take deposits from or lend money to any body corporate;

I.  enter into any partnership arrangement in its borrowing or lending activities;

J. issue or cause to be issued any advertisement in any form for soliciting deposit:

 

Exception: (Provided that private circulation of the details of fixed deposit Schemes among the members of the Nidhi carrying the words “for private circulation to members only” shall not be considered to be an advertisement for soliciting deposits.)

K. pay any brokerage or incentive for mobilising deposits from members or for deployment of funds or for granting loans.

 

  1. No service charge shall be levied for issue of shares.
  2. A Nidhi shall not admit a body corporate or trust as a member.
  3. Nidhi shall not declare dividend exceeding twenty five per cent or such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing.
  4. A minor shall not be admitted as a member of Nidhi:

Exception: (Provided that deposits may be accepted in the name of a minor, if they are made by the natural or legal guardian who is a member of Nidhi.)

 

 

C. Genaral conditions relating to operation of Nidhi companies

 

  1. Every Nidhi shall, within a period of one year from the commencement of these rules, ensure that it has—
  2. not less than two hundred members;
  3. Net Owned Funds of ten lakh rupees or more;
  4. unencumbered term deposits of not less than ten per cent of the outstanding deposits as specified in rule 14; and
  5. ratio of Net Owned Funds to deposits of not more than 1:20.

(If a Nidhi is not complying with clauses (a) or (d) of sub-rule (1) above, it shall within thirty days from the close of the first financial year, apply to the Regional Director in Form NDH-2 along with fee specified in Companies (Registration Offices and Fees) Rules, 2014 for extension of time and the Regional Director may consider the application and pass orders within thirty days of receipt of the application.)

 

D. Branches:

 

(1) A Nidhi may open branches, only if it has earned net profits after tax continuously during the preceding three financial years.

(2) Subject to the provisions contained in sub-rule (1), a Nidhi may open up to three branches within the district.

(3) If a Nidhi proposes to open more than three branches within the district or any branch outside the district, it shall obtain the prior permission of the Regional Director and an intimation is to be given to the Registrar about opening of every branch within thirty days of such opening.

(4) No Nidhi shall open branches or collection centres or offices or deposit centres, or by whatever name called outside the State where its registered office is situated.

(5) No Nidhi shall open branches or collection centres or offices or deposit centres, or by whatever name called unless financial statement and annual return (up to date) are filed with the Registrar.

(6) A Nidhi shall not close any branch unless it—

(a) publishes an advertisement in a newspaper in vernacular language in the place where it carries on business at least thirty days prior to such closure, informing the public about such closure;

(b) fixes a copy of such advertisement or a notice informing such closure of the branch on the notice board of Nidhi for a period of at least thirty days from the date on which advertisement was published under clause (a) ; and

(c) gives an intimation to the Registrar within thirty days of such closure.

 

 E. Deposits:

 

(1) The fixed deposits shall be accepted for a minimum period of six months and a maximum period of sixty months.

(2) Recurring deposits shall be accepted for a minimum period of twelve months and a maximum period of sixty months.

(3) In case of recurring deposits relating to mortgage loans, the maximum period of recurring deposits shall correspond to the repayment period of such loans granted by Nidhi.

(4) The maximum balance in a savings deposit account at any given time qualifying for interest shall not exceed one lakh rupees at any point of time and the rate of interest shall not exceed two per cent above the rate of interest payable on savings bank account by nationalised banks.

(5) A Nidhi may offer interest on fixed and recurring deposits at a rate not exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking Financial Companies can pay on their public deposits.

(6) A fixed deposit account or a recurring deposit account shall be foreclosed by the depositor subject to the following conditions, namely:—

(a) a Nidhi shall not repay any deposit within a period of three months from the date of its acceptance;

(b) where at the request of the depositor, a Nidhi repays any deposit after a period of three months, the depositor shall not be entitled to any interest up to six months from the date of deposit;

(c) where at the request of the depositor, a Nidhi makes repayment of a deposit before the expiry of the period for which such deposit was accepted by Nidhi, the rate of interest payable by Nidhi on such deposit shall be reduced by two per cent from the rate which Nidhi would have ordinarily paid, had the deposit been accepted for the period for which such deposit had run:

Provided that in the event of death of a depositor, the deposit may be repaid prematurely to the surviving depositor or depositors in the case of joint holding with survivor clause, or to the nominee or to legal heir with interest up to the date of repayment at the rate which the company would have ordinarily paid, had such deposit been accepted for the period for which such deposit had run.

 

F. Loans:

 

(1) A Nidhi shall provide loans only to its members.

(2) The loans given by a Nidhi to a member shall be subject to the following limits, namely:—

(a) two lakh rupees, where the total amount of deposits of such Nidhi from its members is less than two crore rupees;

(b) seven lakh fifty thousand rupees, where the total amount of deposits of such Nidhi from its members is more than two crore rupees but less than twenty crore rupees;

(c) twelve lakh rupees, where the total amount of deposits of such Nidhi from its members is more than twenty crore rupees but less than fifty crore rupees; and

(d) fifteen lakh rupees, where the total amount of deposits of such Nidhi from its members is more than fifty crore rupees:

Provided that where a Nidhi has not made profits continuously in the three preceding financial years, it shall not make any fresh loans exceeding fifty per cent of the maximum amounts of loans specified in clauses (a), (b), (c) or (d).

Provided further that a member shall not be eligible for any further loan if he has borrowed any earlier loan from the Nidhi and has defaulted in repayment of such loan.

(3) For the purposes of sub-rule (2), the amount of deposits shall be calculated on the basis of the last audited annual financial statements.

(4) A Nidhi shall give loans to its members only against the following securities, namely:—

(a) gold, silver and jewellery:

Provided that the re-payment period of such loan shall not exceed one year.

(b) immovable property:

Conditions: Provided that the total loans against immovable property [excluding mortgage loans granted on the security of property by registered mortgage, being a registered mortgage under section 69 of the Transfer of Property Act, 1882 (IV of 1882)] shall not exceed fifty per cent of the overall loan outstanding on the date of approval by the board, the individual loan shall not exceed fifty per cent of the value of property offered as security and the period of repayment of such loan shall not exceed seven years.

(c) fixed deposit receipts, National Savings Certificates, other Government Securities and insurance policies:

Provided that such securities duly discharged shall be pledged with Nidhi and the maturity date of such securities shall not fall beyond the loan period or one year whichever is earlier:

Provided further that in the case of loan against fixed deposits, the period of loan shall not exceed the unexpired period of the fixed deposits.

(d) Rate of interest: The rate of interest to be charged on any loan given by a Nidhi shall not exceed seven and half per cent above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method.

 

G. Rules relating to Directors:

 

(1) The Director shall be a member of Nidhi.

(2) The Director of a Nidhi shall hold office for a term up to ten consecutive years on the Board of Nidhi.

(3) The Director shall be eligible for re-appointment only after the expiration of two years of ceasing to be a Director.

(4) Where the tenure of any Director in any case had already been extended by the Central Government, it shall terminate on expiry of such extended tenure.

(5) The person to be appointed as a Director shall comply with the requirements of sub-section (4) of Section 152 of the Act and shall not have been disqualified from appointment as provided in section 164 of the Act.

 

H. Dividend:

 

Nidhi shall not declare dividend exceeding twenty five per cent or such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing and further subject to the following conditions, namely:—

(a) an equal amount is transferred to General Reserve;

(b) there has been no default in repayment of matured deposits and interest; and

(c) it has complied with all the rules as applicable to Nidhis.

 

I. Auditor:

 

(1) No Nidhi shall appoint or re-appoint an individual as auditor for more than one term of five consecutive years.

(2) No Nidhi shall appoint or re-appoint an audit firm as auditor for more than two terms of five consecutive years:

Condition: Provided that an auditor (whether an individual or an audit firm) shall be eligible for subsequent appointment after the expiration of two years from the completion of his or its term.

 

J. Auditor’s certificate:

 

The Auditor of the company shall furnish a certificate every year to the effect that the company has complied with all the provisions contained in the rules and such certificate shall be annexed to the audit report and in case of non-compliance, he shall specifically state the rules which have not been complied with.

 

K. Power to enforce compliance:

 

(1) For the purposes of enforcing compliance with these rules, the Registrar of companies may call for such information or returns from Nidhi as he deems necessary and may engage the services of chartered accountants, company secretaries in practice, cost accountants, or any firm thereof from time to time for assisting him in the discharge of his duties.

(2) In respect of any Nidhi which has violated these rules or has failed to function in terms of the Memorandum and Articles of Association, the concerned Regional irector may appoint a Special Officer to take over the management of Nidhi and such Special Officer shall function as per the guidelines given by such Regional Director:

 

(Provided that an opportunity of being heard shall be given to the concerned Nidhi by the Regional Director before appointing any Special Officer.)

 

L. Information to be shown in the application form:

 

1) Every application form for placing a deposit with a Nidhi shall contain the following particulars, namely:—

(a) Name of Nidhi;

(b) Date of incorporation of Nidhi;

(c) The business carried on by Nidhi with details of branches, if any;

(d) Brief particulars of the management of Nidhi (name, addresses and occupation of the      directors, including DIN);

(e) Net profits of Nidhi before and after making provision for tax for the preceding three financial years;

(f) Dividend declared by Nidhi during the preceding three financial years;

(g) Mode of repayment of the deposit;

(h) Maturity period of the deposit;

(i) Interest payable on the deposit;

(j) The rate of interest payable to the depositor in case the depositor withdraws the deposit prematurely;

(k) The terms and conditions subject to which the deposit may be accepted or renewed;

(l) A summary of the financials of the company as per the latest two audited financial statements as given below:

(i) Net Owned Funds

(ii) Deposits accepted

(iii) Deposits repaid

(iv) Deposits claimed but remaining unpaid

(v) Loans disbursed against—

(a) immovable property;

(b) deposits; and

(c) gold and jewellery

(vi) Profit before tax

(vii) Provision for tax

(viii) Profit after tax

(ix) Dividend per share

(m) any other special features or terms and conditions subject to which the deposit is accepted or renewed.

2) The application form shall also contain the following statements, namely:—

(a) in case of Non-payment of the deposit or part thereof as per the terms and conditions of such deposit, the depositor may approach the Registrar of companies having jurisdiction over Nidhi;

(b) in case of any deficiency of Nidhi in servicing its depositors, the depositor may approach the National Consumers Disputes Redressal Forum, the State Consumers Disputes Redressal Forum or District Consumers Disputes Redressal Forum, as the case may be, for redressal of his relief;

(c) a declaration by the Board of Directors to the effect that the financial position of Nidhi as disclosed and the representations made in the application form are true and correct and that Nidhi has complied with all the applicable rules;

(d) a statement to the effect that the Central Government does not undertake any responsibility for the financial soundness of Nidhi or for the correctness of any of the statement or the representations made or opinions expressed by Nidhi;

(e) the deposits accepted by Nidhi are not insured and the repayment of deposits is not guaranteed by either the Central Government or the Reserve Bank of India; and

(f) a verification clause by the depositor stating that he had read and understood the financial and other particulars furnished and representations made by Nidhi in his application form and after careful consideration he is making the deposit with Nidhi at his own risk and volition.

(3) Every Nidhi shall obtain proper introduction of new depositors before opening their accounts or accepting their deposits and keep on its record the evidence on which it has relied upon for the purpose of such introduction.

(4) For the purposes of introduction of depositors, a Nidhi shall obtain documentary evidence of the depositor in the form of proof of identity and address as under:

(a) Proof of Identity (any one of the following)

(i) Passport

(ii) Unique Identification Number

(iii) Income-tax PAN card

(iv) Elector Photo Identity Card

(v) Driving licence

(vi) Ration card

(b) Proof of address (any one of the following)

(i) Passport

(ii) Unique Identification Number

(iii) Elector Photo Identity Card

(iv) Driving licence

(v) Ration card

(vi) Telephone bill

(vii) Bank account statement

(viii) Electricity bill

 

 

Let us recapitulate some of the important provisions of Nidhi Company:

  1. Fixed deposit can be accepted for atleast 6 months and sixty months maximum(Half year to 5 years).
  2. Recurring deposit can be accepted for atleast 12 months and sixty months maximum(1 year to 5 years).
  3. A Nidhi may offer interest on fixed and recurring deposits at a rate not exceeding the maximum rate of interest prescribed by the Reserve Bank of India which the Non-Banking Financial Companies can pay on their public deposits, which is 12.5% at current.
  4. The rate of interest on saving accounts shall not exceed two per cent above the rate of interest payable on savings bank account by nationalised banks, which is 4% at current.
  5. The rate of interest to be charged on any loan given by a Nidhi shall not exceed seven and half per cent above the highest rate of interest offered on deposits by Nidhi and shall be calculated on reducing balance method(up to maximum 7.5% above rate of interest being paid on deposit by the nidhi company).
  6. Nidhi shall not declare dividend exceeding twenty five per cent or such higher amount as may be specifically approved by the Regional Director for reasons to be recorded in writing.
  7. A Nidhi may open branches, only if it has earned net profits after tax continuously during the preceding three financial years and a Nidhi may open up to three branches within the district.
  8. If a Nidhi proposes to open more than three branches within the district or any branch outside the district, it shall obtain the prior permission of the Regional Director and an intimation is to be given to the Registrar about opening of every branch within thirty days of such opening.
  9. No Nidhi shall open branches or collection centres or offices or deposit centres, or by whatever name called outside the State where its registered office is situated.

This is one of the Best Article ever written on special provisions relating to Nidhi Companies in India. The Article describes main provisions of Nidhi Rules, 2014 and provisions relating to Nidhi companies as mentioned in Company act, 2013.

{Topic discussed in the this article covers Nidhi Rules, 2014, Special Provisions relating to Nidhi Companies in Company Act,  2013, nidhi company registration, what a nidhi comapny must do, what a nidhi company must not do, all about nidhi companies, provisions relating to mutual benefit companies in India, Best nidhi company registration consultant in Patna, Bihar, Jharkhand, India, Download nidhi rules, 2014, download memorandum of association of nidhi companies, main objects of nidhi companies}

 

Download a copy of Nidhi Rules, 2014 from here:

Nidhi Rules, 2014

THis article is written, compiled and presented by Prince Kunal. He is a company secretary working at Meerad business Solutions, the best company registration company of Patna, Bihar, India.

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FSSAI license laws in India: How to get FSSAI license & Food License in India

How to apply for fssai license in Patna, Bihar, Jharkhand, India, how to get food license, how to get fssai registration, how to get food license, fssai central license, fssai state license, fssai registration, fee structure, documents required, eligibility criteria, who is reuired to fet fssai license, fssai license applicability.

fssai license in patna, bihar, india

The process of application starts with identification of eligibility of your premise. Depending upon the installed capacity (in case of manufacturers) and/or turnover (for other Kind of businesses) and/or location, your premise may be eligible for any of the following categories:

Central License State License Registration

In case, you want to apply for state license/registration, click here to view the list of states accepting applications through FLRS.

To know the detailed process for filing application click here

  1. Central License

 

Eligible Food Business Operators like importers, 100% EoUs, manufacturers, operators in Central Govt. agencies, airports, seaports, etc. need to take a License from the Central Authority

After issuance of the license, any Modification / Renewal / Request for Duplicate license can be done through the online system. Central License is issued by the FSSAI Regional Offices operating across the nation. This is in pursuant to the FSS Regulations, 2011.

 

  • a. Eligiblity criteria

Food Safety and Standards Authority of India (FSSAI) lays down the eligibility criteria for food business operators under different kind of businesses. Please click on the link below to check the list of food business falling under the purview of Central Licensing Authority.

Depending upon the eligibility criteria if FBO is dealing with different Kind of Business with different eligibilities in a single premises, food business operator can opt for a single highest license for all the businesses

View Eligibility

 

  • b. Fee Structure

The payment shall be made by the Food Business Operator through online transfer. The fee paid by any applicant for a licence shall not be refundable under any circumstances. Please click on the link to check the fees schedule.

  • New License:- INR 7500/Year
  • Renewal License:- INR 7500/Year
  • Modification License:- INR 7500/Modification
  • Duplicate License:- 10% of the Applicable License Fee
Note:- License can be issued / renewed for maximum 5 years

 

  • c. List of Documents Required

Please click on link below to check the list of documents to be enclosed for New/Conversion/Renewal & Modification of applications for license to Central Licensing Authority.

         2. State License

Eligible Food Business Operators like manufacturers, storage, transporters, retailers, marketers, distributors , etc. need to take a License from the State Authority.The list of States accepting the applications online is highlighted below and links to the respective state pages. After issuance of the license, any Modification / Renewal / Request for Duplicate license can be done through the online system. State License is issued by the State Authorities operating in each state. This is in pursuant to the FSS Regulations, 2011.

Depending upon the eligibility FBO may fall under State License or Registration. FBOs may go through the eligibility criteria, Fee Structure, Documents details before start using the system. FBOs can also check out the HOW TO APPLY link to understand process of filing the application online.
View Map
Andaman and Nicobar Islands Andhra Pradesh Arunachal Pradesh
Assam Bihar Chandigarh
Chattishgarh Dadar and Nagar Haveli Daman and Diu
Delhi Goa Gujarat
Haryana Himachal Pradesh Jammu & Kashmir
Jharkhand Karnataka Kerala
Lakshadweep Madhya Pradesh Maharashtra
Manipur Meghalaya Mizoram
Nagaland Orissa Pondicherry
Punjab Rajasthan Sikkim
Tamil Nadu Telangana Tripura
Uttar Pradesh Uttarakhand West Bengal
  • a. Eligiblity criteria

Food Safety and Standards Authority of India (FSSAI) lays down the eligibility criteria for food business operators under different kind of businesses. Please click on the link below to check the list of food business falling under the purview of State Licensing Authority

View Eligibility

  • b. Fee Structure

The payment shall be made by the food business operator through demand draft / treasury challan / cash. Please click on link’s to check the fees schedule.

 

  • c. List of Documents Required

Please click on link below to check the list of documents to be enclosed for New/Conversion/Renewal & Modification applications for license to State Licensing Authority.

            3. Registration

Eligible Food Business Operators like manufacturers, storage, transporters, retailers, marketers, distributors , etc. need to take a License from the State Authority.The list of States accepting the applications online is highlighted below and links to the respective state pages. After issuance of the license, any Modification / Renewal / Request for Duplicate license can be done through the online system. State License is issued by the State Authorities operating in each state. This is in pursuant to the FSS Regulations, 2011.

Depending upon the eligibility FBO may fall under State License or Registration. FBOs may go through the eligibility criteria, Fee Structure, Documents details before start using the system. FBOs can also check out the HOW TO APPLY link to understand process of filing the application online.
Andaman and Nicobar Islands Andhra Pradesh Arunachal Pradesh
Assam Bihar Chandigarh
Chattishgarh Dadar and Nagar Haveli Daman and Diu
Delhi Goa Gujarat
Haryana Himachal Pradesh Jammu & Kashmir
Jharkhand Karnataka Kerala
Lakshadweep Madhya Pradesh Maharashtra
Manipur Meghalaya Mizoram
Nagaland Orissa Pondicherry
Punjab Rajasthan Sikkim
Tamil Nadu Telangana Tripura
Uttar Pradesh Uttarakhand West Bengal
  • Eligiblity criteria

Food Safety and Standards Authority of India (FSSAI) lays down the eligibility criteria for food business operators under different kind of businesses. Please click on the link below to check the list of food business falling under the purview of State Licensing Authority

View Eligibility

  • b. Fee Structure

The payment shall be made by the food business operator through demand draft / treasury challan / cash. Please click on link’s to check the fees schedule.

 

  • c. List of Documents Required

Please click on link below to check the list of documents to be enclosed for New/Conversion/Renewal & Modification applications for license to State Licensing Authority.

 

 

Information courtesy: Meerad Business Solutions

 

Topic of this page: how to apply for fssai license in Patna, Bihar, Jharkhand, India, how to get food license, how to get fssai registration, how to get food license, fssai central license, fssai state license, fssai registration, fee structure, documents required, eligibility criteria, who is reuired to fet fssai license, fssai license applicability

 

This article is written by: ACS Prince Kunal
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Franchisee Laws & Rules in India

Today, India is one of the biggest emerging markets for various goods and services, ranging from bare necessities to expensive luxuries. Until 1991 due to the archaic Foreign Exchange Regulation Act, 1973 (FERA), almost all sectors of goods and services relating to the consumer markets in India were secure from the grasp of foreign investors. After the repeal of FERA and the coming into force of the Foreign Exchange Management Act, 1999 (FEMA), foreign investors found their passage into India with rules for entry becoming far more favourable. Today, a convenient medium of entry by foreign companies into the Indian market is franchising. Franchising also exists as a successful business module for local companies in India within various sectors.
The United States of America stands at the forefront of the franchise boom. Today, the legal environment in the United States is highly conducive to the healthy growth and evolution of franchising. With more than 50% of total retail businesses in the United States, 45% in Canada and 26% in Australia choosing a franchise model for expansion the impact of franchising on retail industries across the globe is considerable. To foster the rapid and sustained growth that this channel brings it is critical that laws to regulate the franchising business exist.
However, there are no laws enacted solely for the purpose of regulating the growing business of franchising in India, even though many nations across the world have enacted such laws. The result is that when franchisors enter India they are governed by a number of different statutes and codes rather than a single comprehensive enactment.
Franchise Laws across the Globe.
There are many countries which have developed comprehensive legislation to cover franchising in their respective dominions. At the federal level in the United States, the Federal Trade Commission ’s Rules on Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (1979) regulate the information a franchisor is required to supply the prospective franchisee in order to enable the franchisee to make an informed decision on the prospects of venturing into the business. The North American Security Administration Association (NASSA) has adopted a Uniform Franchise Offering Circular (UFOC) which delineates the information required to be disclosed to a prospective franchisee. Disclosure requirements under franchising are well-defined in the USA.
In 2000, the Ontario Legislature in Canada adopted the Arthur Wishart Act which deals comprehensively with disclosure requirements as well as important aspects of the franchisee-franchisor relationship such as fair dealing by each party to a franchise agreement as regards its performance and enforcement, and the right of action for damages for breach of the duty of fair dealing.

In the United Kingdom, there exists no operative franchise-related legislation. However different aspects are governed by norms laid down by the British Franchise Association (BFA), the regulatory body of the franchise industry in the United Kingdom. These include a code of ethical conduct, disciplinary procedure, complaints procedure and appeals procedure.

The Australian government has adopted a mandatory code of conduct and has also modified the Trade Practice Act 1974 to provide for franchising. The new code imposes comprehensive disclosure requirements and provides for mandatory mediation of franchising disputes and minimum standards for franchise agreements including, inter alia, a cooling period, refrain from seeking from a franchisee a general release liability, disclosing material facts and refrain from unreasonably withholding consent to transfer of the business.

In April 2002, the Japan Fair Trade Commission (JFTC), the competition authority of Japan, published new guidelines on franchising. These guidelines contain three parts – a general description of franchising, provisions for the disclosure of necessary information (such as details of the assistance to be offered to franchisees, the nature, amount and conditions of repayment, if any, of the fee to be paid at the time of entering into a franchise agreement, etc.) at the time of the offer of a franchise and a part on vertical restraints between a franchisor and its franchisees. Under the guidelines, the failure to provide necessary information shall constitute deceptive customer inducement, which is considered an unfair trade practice.

On 31 December 2004 the Ministry of Commerce of the People’s Republic of China promulgated the Measures for the Regulation of Commercial Franchises which became the sole legal framework for franchising in China. The measures became operative on 1 February 2005 and provide detailed regulations for franchising, comprising of 42 articles over nine chapters covering a wide span of areas from the franchise agreement to disclosure requirements, special rules for foreign invested enterprises and legal liabilities.

Need for a Franchise Law in India

A healthy legal environment is of great importance for franchising and should include provisions pertaining to all areas that fall within the ambit of franchising. This includes, inter alia, commercial law relating to contracts and joint ventures and intellectual property law for protection of trade marks and know-how. Franchise arrangements are subject to an array of laws and regulations in addition to those regulating commercial contracts and intellectual property rights. There are no specific laws governing franchising in India. As a result a franchise agreement may be governed by different laws.

Primarily a franchise agreement is a contract between the franchisor and the franchisee. The first law which comes into the picture is the Contract Act 1872 which governs contracts in India. A franchise agreement will be governed by the Indian Contract Act, 1872 and the Specific Relief Act, 1963 which provides for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract. If a party to the franchise agreement commits a breach of contract, the aggrieved party has the option to initiate a suit for specific performance in Indian courts and apply for relief in the form of a temporary or permanent injunction, which may be granted at the discretion of the court considering the balance of convenience and the interests of justice. An order granting or rejecting an injunction may be appealed by an aggrieved party.

Laws relating to taxation, property laws, insurance law and labour laws also apply to franchise transactions. Additionally, laws and regulations applying to specific sectors of goods and services will also apply depending on the franchised.

The following are the reasons why a comprehensive franchise law is required in India:

Application of Multiple Legislation

A well-defined legal structure is indispensable for the effective functioning of any business operation. The international business environment demands a well-defined suitable legislation that is complete in all respects. The lack of a comprehensive legislation on franchising in India leads to the applicability of multiple laws to a franchise transaction.

This poses the following problems:

Complexities: Parties to a contract normally prefer agreements with a simple approach and encompassing all the required law procedures and rules required to be complied with. However the application of different laws to one agreement makes it complex to decide various issues arising from the agreement.
Ambiguities: Due to the necessary application of multiple legislation, ambiguities are created as to certain issues. For example, a franchisor would imagine that a certain issue is the franchisee’s responsibility under one law, whereas the franchisee would think the opposite based on a different law.
Time-Consuming: Referring to multiple laws consumes a lot of time at the initial stages of a transaction as well as other points of time when the agreement is sought to be enforced. This proves to be detrimental to the smooth functioning of franchising operations in India and also makes time-bound operations involving new enterprises difficult.

Absence of Disclosure Requirements

Countries with specific franchising legislation make it imperative for parties to a franchise agreement to disclose certain factual information pertaining to the business of the parties. This ensures transparency and facilitates an informed decision. A franchisor should be required, by law, to make certain disclosure to the prospective franchisee wherein he is supposed to reveal detailed information regarding himself, his litigation and bankruptcy history, his financial position, the facilities he offers etc. In India, in the absence of effective disclosure norms, a prospective franchisee is rendered helpless as the franchisor is under no statutory obligations to make disclosures.
In the absence of a specific statute governing the franchise agreement, the franchisor refrains from providing any information that is likely to prejudice or make a franchisee reconsider the business proposition of the franchisor. The lack of proper disclosure requirements provides a golden opportunity to a franchisor to abuse his position of importance as he is virtually under no statutory obligation to make the requisite disclosure.

Applicability of Laws of other Countries
Normally, the absence of franchise laws enables foreign franchisors to make the laws of their own country applicable to the agreements entered into with the franchisees in India. The same is the case with franchisors who enter into franchising agreements with franchisees from other countries. This proves to be an additional burden on the parties, particularly the franchisee.

Lack of Proper Format for Franchising Agreements
Due to lack of a specific format, franchisors from other countries draft agreements which are in the same format as is approved or followed in their countries. Such agreements are made to suit the specific environment of their respective countries and hence are not suitable for Indian environment.

Liability of Parties Uncertain
Due to the lack of specific legislation, the liability of either party is either determined by the agreements entered into between them or on the basis of general prevailing law. The liability clause is different in different countries, and this leads to a great discrepancy among the courts which try such disputes on liabilities.

The Central Government is currently considering a franchise law aimed at fast resolution of disputes; the proposal is expected to be placed before a sub-committee of the National Development Council. The aforesaid problems surrounding franchising in India necessitate the enactment of a specific legislation pertaining to franchising in India and providing for the gamut of activities that franchising encompasses. A special franchise law would greatly accelerate dispute resolutions and fortify the Indian retail industry.

The Franchise Association of India is the country peak industry body and franchise advisory committed to strengthening and promoting the best practices in franchising. Franchise Association of India members are businesses and service providers united by their common concerns for the wellbeing of the franchise marketplace.

Source: Meerad Business Solutions
Website: http://www.meerad.in