Procedure of company incorporation and commencement of business
Company registration certificate application
1)An application to grant a company registration certificate in the form of a repository shall be made to the Board along with the prescribed fee paid in a prescribed manner.
2)The application shall be submitted along with a document of the company’s laws i.e. bye-laws of the repository which is suggested to be set up.
Application of requirements confirmation
An application which does not satisfy all the requirements and instructions specified are most likely to be rejected:
1)Before rejection, the sponsor of the company will be notified regarding the grievances declared by the Board and the sponsor is supposed to correct them within thirty days of time in this case.
2)Time for this correction shall be extended only if the Board is satisfied with fact that its is essential for the applicant to remove grievances.
Equipment of information, personal representation and clarification
1)The Board shall require the sponsor to provide necessary further details or clarification for the sake of repository procedures in order to consider the application.
2)If required the sponsor or his legal representative shall appear before the Board for a personal depiction for the certificate of company registration.
Consideration of application for the grant of certificate of registration
The Board shall not consider the application for grant of certificate of company registration regardless of grievances unless it belongs to any these categories:
1)a public financial institution as per the Companies Act, 1956.
2)a bank which is merged just for a while to the Reserve Bank of India Act, 1934.
3)a foreign bank with the approval of Reserve Bank of India operating in India.
4)an acknowledged stock exchange approved by the Securities Contracts (Regulation) Act, 1956.
5)a corporate body intended to provide financial services where more than seventy-five percent of the equity capital is owned by a public financial institution, bank, foreign bank operating in India, stock exchange jointly or severally.
6)a corporate body which is recognised and a part under any law in a foreign country providing custodial, clearing or settlement services in the securities market that is approved by the Central Government.
7)a corporate body intended to provide financial services in a foreign country approved by the Central Government.
Grant of certificate of company registration
After considering the application of grant of company registration certificate under regulation 3, with respect to the qualifications specified and if the Board is satisfied that the sponsor of the company is eligible for a repository, it shall grant a company registration certificate subjected to the following:
- a) the repository shall pay the prescribed fee in the prescribed manner within fifteen days of notice from the Board.
b)the repository shall comply with the provisions of the Act, the Depository Act, the laws of company, agreements and the following regulations:
c)the repository shall not engage in any other activity except that of a company unless it is an incidental activity of the company.
d)the sponsor shall own fifty-one percent of the equity share capital of the company and the rest shall be owned by the participants of the company.
e)no participant of the company can hold more than five percent of the equity capital of the company.
1)no foreign individual solely or collectively shall hold more than twenty percent of the equity capital either as a sponsor or as a participant or together as participant and sponsor. In other words a foreign entity shall be considered as a company only if more than fifty one person of its equity is owned by person who is not from Indian origin.
f)if any details provided by the company or sponsor is false or ambiguous, or in case of any change in the details provided , the company shall inform the Board in a written form.
g)the company shall aid the objections of the participants within a period of thirty days after receiving a complaint from the participant and shall keep the board informed regarding the details of redressal.
h)the company shall apply for commencing the business within one year from the date of grant of company registration certificate under regulation 14.
i)the company shall alter its laws as per the direction of the Board from time to time.
Payment of annual fee
A company which has been granted a company registration certificate shall pay the annual fees as prescribed in a prescribed manner under the regulation 7.
Cases where certificate of company registration is not granted
1)If the application for grant of certificate of company has not fulfilled the requirements mentioned in regulation 7, the Board shall reject the application after a hearing from the applicant.
2)If the Board has decided to reject the application, it shall be notified to the applicant along with the details like on which grounds the application was rejected.
Certificate of commencement of business
Application for grant of certificate of commencement of business
A company which has received the grant of company registration certificate shall apply for the certificate of commencement of business within one year from the date of issue of certificate.
Application to confirm the requirements
An application which does not satisfy all the requirements and instructions specified are most likely to be rejected:
1)Before rejection, the sponsor of the company will be notified regarding the grievances declared by the Board and the sponsor is supposed to correct them within thirty days of time in this case.
2)Time for this correction shall be extended only if the Board is satisfied with fact that its is essential for the applicant to remove grievances.
Equipment of information, personal representation and clarification
1)The Board shall require the sponsor to provide necessary further details or clarification for the sake of repository procedures in order to consider the application.
2)If required the sponsor or his legal representative shall appear before the Board for a personal depiction for the certificate of commencement of business.
Consideration of application for the grant of certificate of commencement of business
1) The Board shall consider the company for grant of commencement of business after considering all the aspects of the company relating to the proper functioning of the company and also the following categories:
a)The repository shall have a net worth of more than one hundred crores;
b)the laws of the company shall be approved by the Board.
c)the automated data processing systems of the company should be protected against illegal access, modification, damage and disclosure of details and preserve the integrity of information.
d)the network of electronic communication among the participants, issuers and their agents should be protected from unauthorized access or alteration.
e)the company should have a proper encryption technique for the electronic communication among issuers and agents of issuers, participants.
f)all the means of physical and virtual access to the premises, data processing systems, features, data storage, back up sites and the communication network connecting the company, participants, issuers and its agents.
g)the company shall have a comprehensive manual explaining all functions and operations inclusive of the interface mode of communication or transmission of details among the company, issuers, agents of issuers and participants and beneficial owners.
h)the company should make all necessary back up procedures in case of data loss, destruction or alteration in a location apart from the company.
i)the company shall have all the required insurance measures to compensate for the beneficial owners for the loss incurred due to any wrong act or any carelessness of the company or its participants or employee towards the beneficial owners.
j)the grant of commencement of business for a company is based upon the interest of investors in the securities market.
2)Before granting the commencement of business certificate to any company, the Board would make a physical check on the infrastructure details, facilities and systems of the company.
Grant of certificate of commencement of business
After considering the application under the Regulation 13 and making a physical verification of the infrastructure under sub-regulation(2), if the Board is satisfied that the company is eligible enough to start the business, then it shall grant the commencement of business certificate.
Cases where certificate of company registration is not granted
1)If the application for grant of certificate of company has not fulfilled the requirements or failed the physical verification under the regulation 13, the Board shall reject the application after a hearing from the applicant.
2)If the Board has decided to reject the application, it shall be notified to the applicant along with the details like on which grounds the application was rejected.
Registration of participant
Application for grant of certificate of company registration
1) An application can be made to the Board for the certificate of company registration by the applicant proposing to act as the participant accompanied by the prescribed fee paid in the prescribed manner.
2)The company shall send the application to the Board within one month of time accompanied by the recommendations suggesting that the participant is eligible to inclusive of all regulations and the bye-laws of the company.
Application to confirm the requirements
An application which does not satisfy all the requirements and instructions specified are most likely to be rejected:
1)Before rejection, the sponsor of the company will be notified regarding the grievances declared by the Board and the sponsor is supposed to correct them within thirty days of time in this case.
2)Time for this correction shall be extended only if the Board is satisfied with fact that its is essential for the applicant to remove grievances.
Equipment of information, personal representation and clarification
1)The Board shall require the sponsor to provide necessary further details or clarification for the sake of repository procedures in order to consider the application.
2)If required the sponsor or his legal representative shall appear before the Board for a personal depiction for the certificate of company registration.
Consideration of application for the grant of certificate of registration
The Board shall consider the application for grant of certificate of participant registration if the applicant complies with the following:
The applicant shall belong to any one of the categories
1)a public financial institution as per the Companies Act, 1956.
2)a bank which is merged just for a while to the Reserve Bank of India Act, 1934.
3)a foreign bank with the approval of Reserve Bank of India operating in India.
4)a State financial corporation established under the provisions of State Financial Corporations Act, 1951.
5)an institution rendering financial services promoted by a public financial institution, a bank, a foreign bank approved by Reserve Bank of India, a State financial corporation either jointly or separately.
6)a custodian of securities with a certificate of registration.
7)A clearing house of stock exchange and a stock broker with a certificate of registration and having a net worth of fifty lakhs as aggregate.
Also, if the stock broker proposes to act as a participant in more than one company then he shall satisfy the criteria of the provisions accordingly.
8)For a non-banking finance company, more than fifty lakhs shall view the below cases:
Such company shall act as a participant only if on behalf of any other person if it has a net worth of fifty crore.
the applicant shall be accepted as a participant through the application made to the Board
the applicant shall have ample infrastructure, systems and safety measures to carry out activities.
the grant of the certificate of company registration in on the interests of the investors.
Grant of certificate of registration
After considering the application of grant of company registration certificate under regulation 16, with respect to the qualifications specified and if the Board is satisfied that the sponsor of the company is eligible for a repository, it shall grant a participant registration certificate subjected to the following:
- a) the repository shall pay the prescribed fee in the prescribed manner within fifteen days of notice from the Board.
b)the repository shall abide by the provisions of the Act, the Depository Act, the laws of company, agreements and the following regulations:
c)the company which has forwarded the certificate of registration shall hold a certificate of commencement of business.
d)if any of the details submitted to the Board is likely to be false or ambiguous or any alteration, the participant shall inform the Board in a written document.
e)the company shall aid the objections of the participants within a period of thirty days after receiving a complaint from the participant and shall keep the board informed regarding the details of redressal.
Payment of annual fee
A company which has been granted a company registration certificate shall pay the annual fees as prescribed in a prescribed manner.
Participants to comply by Code of Conduct
The participant who has received a certificate of company registration shall continue to comply with the code of conduct as specified at all times.
Validity of the certificate of registration
The certificate issued under the Regulation 20 or renewed under Regulation 22, shall be valid for a time period of five years from the date of issue of the certificate of registration or renewal.
Renewal of certificate of participant registration
1)The applicant if desires, shall make an application for the renewal through the company within thirty days of the expiry date of the company registration certificate.
2)The application for renewal under the sub-regulation (1) shall be accompanied with the fee equivalent to that of a certificate registration fee and shall be dealt in the same way as the new application.
Conditions of renewal of certificate of registration
The Board shall renew a certificate of registration as per the provisions and conditions specified under Regulation 22.
Cases where certificate of company registration is not granted
1)If the application for grant of certificate of company registration or renewal of the certificate has not fulfilled the requirements or failed the physical verification under the regulation 22, the Board shall reject the application after a hearing from the applicant.
2)If the Board has decided to reject the application, it shall be notified to the applicant along with the details like on which grounds the application was rejected.
Effect of refusal to renew a certificate of registration
Any participant whose application of renewal has been rejected by the Board under Regulation 24, shall cease all sort of activities after the period of expiry
The company shall be permitted to carry out activities which was undertaken before the intimation of refusal of renewal under the specified conditions of the Board.
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