In India new business practices have shot up faster than the vaccine doses available in each city. In 2021, companies from different backgrounds, in both public and private sectors, have seen a growth rate like never before. The fast-paced environment has pulled all the entrepreneurs into the limelight where they present their ideas to the world and seal their success. These businesses are the backbone of the country’s economy and their trademark imprints on their company’s validity. Hence, every business needs to set up its legalities at a test stage to avoid clashes in the future from competitors. It is a must for every Indian citizen to possess the Aadhar card without which we do not have an identity. Similarly, businesses require a specific set of resources to set up their company successfully. Read on to learn about the specific documents required and where to find them in this article.
1. List of Legal Documents Required for a Business Setup
- Shareholders’ Agreement – The stockholder’s agreement is drafted amongst the company’s shareholders to conduct the rules and regulations of the holders over their rights and obligations. This agreement protects the shareholder’s confidential information and gives them the right to impart their share in the future or safeguard it from outsiders. All the minor positions of stockholders in the agreement are safeguarded as well. The deal includes the numbers of shares and percentage divided, the restrictive measures against other shares, the date of the contract and details on the scale of the payments. The agreement is drafted by a business lawyer or a legal expert.
- Founder’s Agreement – Brilliant minds think alike, so you and your friend come up with next-level startup ideas and collaborate to bring them to life. Both of you become the co-founders of your company but agree to keep your work life on a professional level. This is the time you draft a Founder’s Agreement. This business document requirement binds a legal contract on the founders’ rights, roles, responsibilities, ownership and liability. This helps the founders elucidate on their roles and avoid any disputes. Two or more people can jointly agree on this form of business, making them co-parties. This agreement would come in handy in the case of a sudden death of a co-founder which could affect the smooth functioning of the business. The agreement can be drafted by a business lawyer or a legal expert.
- Certificate of Incorporation – This certificate signifies your company’s existence and is even more necessary than the funding offer certificate. Through this certificate, the company can get their trademark and name reservation registered and obtain DSC and DIN certificates for proof of identification. The certification comprises the statement of purpose of your business, the company’s name and residential address, and details of the shares allocated. The Ministry of Corporate Affairs conducts the Certificate of Incorporation and the registration of your company online.
- (NOC) No Objection Certificate – College Flashback! Yes, we have signed and begged for NOC forms multiple times in our life. Guess we are back to square one where we require this legal document to clear out any objection from anyone else as well. This is a legal document signed to clear out any complaints held by the signee. This document is vital in the business setup as it can also be used for/against in the court of law. Hence, here is an important reminder to go through all the clauses you agree to, negotiable on paper but not in life.
- Non Disclosure Agreement – This is an agreement signed by two parties or more to not disclose any confidential information about the company to any other party. This legally binding contract can be used to sue the other party in case of breach of trust in a business setup. The NDA can be built upon the holder’s terms and conditions and drafted by a legal expert. The NDA needs to be drawn on a stamp paper along with the company’s letterhead and get it signed in the presence of a witness and notarised by the government.
- Company PAN Card – A Permanent Account Number is a ten-character alphanumeric identifier issued by the government in the form of a laminated card. Documents required for a PAN Card application are Identity proof/Address proof, Certification of Incorporation and NOC by the Ministry of Corporate Affairs. A PAN card is a mandatory identity tag for every corporation and being.
- (TIN Number) Tax Identification Number – The commercial tax department of each state issues a unique number for the application filed. It is added under the Value Added Tax to identify the number in case of goods and services trade. The documents required for the Tax identification are Identity proof, Address proof of the business, Pan card of the company and photographs of the concerned party. The legal documents required to set up the TIN are available on the VAT portal in your respective state.
- (GSTIN) – A taxpayer is given a separate Goods and Tax Identification Number to file for taxes if the annual turnover exceeds 20 lakh. It’s a PANn-based 15-digit identification number that can be registered in the GST portal. All the requisite forms are available in the GST government portal.
2. Human Resources Required by a Company To Set Up Its Business
- Business Plan – A business plan is set up to target the company’s main objectives with the surety of its future. This is not a legal document to be carried out but it is required for building a business. The business plan must contain a detailed plan for investors to know everything they can. A business plan template can enunciate the marketing plan, target market and customers, sales plan and delivery, strategy and product package details. This gives a sense of transparency to the investors and helps in instant decision-making for the company’s benefit.
- Employee Offer Letter – An offer letter contains the terms and conditions for an individual to enter the company along with their job description. The offer letter is drafted based on the company’s letterhead as proof of a genuine offer. The candidate is supposed to accept the offer in a simulated period if they are satisfied with the proposal. This is an integral part of a business requirement as it has the signature of acceptance to a company’s terms and conditions.
- Minutes Report – Minutes are the crucial moments spent during an important meet where the board of directors discuss rules and regulations. These essential points need to be recorded or written in an official record. These would help during the original draft of a business requirement.
- Employment Contract and Manpower Requirements – To set up a business, the Human Resources department ensures the transparency of the contract by drawing up the terms and conditions for a company and a non-disclosure agreement to its employees. The manpower requirements outline the number of employees chosen for a particular job force and their benefits. All these statutory reports are kept in line by HR to ensure a smooth onboarding process for the first time when they set up a business and provide the clarity of a job description.
All these physical and human resources dictate a fair and negotiable process to be recognised on an official platform. A business setup requires all the above documents submitted through various government portals for approvals and notarised forms. These norms and steps only help the business to maintain a transparent process so that the legal procedures can be transferred without a hitch and startups can go on booming about their business.