West Bengal-Ease of Doing Business for MSME Sector
Author: Unknown
Date: 2017-06-19T10:23:01+00:00

West Bengal

Ease of Doing Business
for MSME Sector

BACKGROUNDER

June 2017

Price : Rs. 150/- ( Excluding postage)

© THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

All rights reserved. No part of this book may be translated or copied in any
form or by any means without the prior written permission of The Institute
of Company Secretaries of India.

Published by :

THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

ICSI House, 22, Institutional Area, Lodi Road

New Delhi - 110 003

Phones : 45341000, Fax : 24626727

E-mail : info@icsi.edu; Website : www.icsi.edu

ISBN

: 9789382207931

Printed at Chandu Press/100/June 2017

(ii)

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K. K. Jalan
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Secretary

GOVERNENT OF INDIA

MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

UDYOG BHAWAN, RAFI MARG, NEW DELHI - 110 011

FOREWORD

MSMEs play a crucial role in promoting equitable socio-economic development of the country
by creating job, creating opportunities for poverty reduction and balanced economic growth.

The performance of MSMEs in any particular region largely depends upon its business
environment and commitment towards promotion of inclusive growth. The Government has
taken number of initiatives in providing a business friendly and pro investment environment
to encourage entrepreneurship.

West Bengal has the potential to become the leading state in terms of MSME productivity. With
a vision to create a sustainable ecosystem in the MSME sector which can maximize the
utilization of resource and widen the area of operation to make the state emerge as the MSME
leader in the country in the next ten years, Government of West Bengal issued The MSME

Policy.

I am happy to note that the Institute of Company Secretaries of India as part of its capacity
building initiatives, to support the skills development initiatives of the Government is playing
pivotal role in enhancing the compliance status for strengthening the Governance of MSME’s
in India. Apart from this, Institute is organizing seminars and workshops in promoting awareness about the role of MSME’s in the inclusive development of economy; facilitating in
establishing MSME’s and providing exacting solutions to issues being faced by this sector.

I have been gone through this document and found the contents very informative written in
simple language. The emphasizes on the ease of doing business in the State of West Bengal
with special reference to MSMEs and insight into the registration process of MSMEs, raising
of finances, as well as compliances with various regulatory obligations for MSMEs would help

MSME Entrepreneurs in West Bengal in management and administration of their business in
a sustainable manner.

I am confident that MSME Entrepreneurs in West Bengal will find this book quite informative
and useful in ensuring Good Governance of their enterprises.

(K K JALAN)

169, UDYOG BHAWAN, NEW DELHI - 110 011. Tel. : +91-11-23062107 Fax : 2306 3045, E-mail : secretary-msme@nic.in; www.msme.gov.in

(iii)

PREFACE

In the entrepreneurial ecosystem the journey of an entrepreneur
begins from conceiving an idea to developing it into a project
proposal for starting a business. To promote self-employment as a
means of job-creation and to promote entrepreneurship for further
job creation, the Micro, Small and Medium Enterprises Development

Act was enacted to facilitate the promotion, development and
enhancing the competitiveness of micro, small and medium
enterprises.

This publication of the Institute of Company Secretaries of India titled

“West Bengal-Ease of Doing Business for MSME Sector’’ covers basics
of Micro, Small and Medium Enterprises Act, Entrepreneurship

Development and the MSME Sector in West Bengal, West Bengal

MSME Policy 2013-18,West Bengal Incentive Scheme for Micro, Small
and Medium Enterprises, Procedure for availing Incentive Scheme,

Udyog Aadhaar Memorandum, Micro, Small And Medium

Enterprises Development (Furnishing of Information) Rules, 2016,

Corporatisation of MSME, and the Role of Company Secretaries in

MSME Sector.

I commend the dedicated efforts put in by Mr. Chittaranjan Pal,

Assistant Director, Directorate of Professional Development,

Perspective Planning & Studies, ICSI in preparing the manuscript of
this publication and CS Saurabh Jain for finalizing the manuscript for
printing.

I am confident that this publication will prove to be of immense
benefit to MSMEs, professionals and students.

In any publication, there is always scope for further improvement. I
would personally be grateful to users and readers for offering their
suggestions for further refinement.

Place : New Delhi CS (Dr.) Shyam Agrawal

Date : 09th June, 2017 President The Institute of Company Secretaries of India

(iv)

C O N T E N T S

Introduction

1

Entrepreneurship Development and the MSME

Sector in West Bengal

5

West Bengal MSME Policy 2013-18

18

West Bengal Incentive Scheme for Micro, Small
and Medium Enterprises

24

Procedure for Availing Incentive Scheme

42

Udyog Aadhaar Memorandum

45

Micro, Small And Medium Enterprises Development

(Furnishing of Information) Rules, 2016

51

Corporatisation of MSME

55

Role of Company Secretaries

107

(v)

Introduction

Micro, Small and Medium Enterprises (MSMEs) Sector has emerged as a
highly vibrant and dynamic sector of the Indian economy. MSMEs not
only play a crucial role in providing large employment opportunities at
comparatively lower capital cost than large industries but also help in
industrialization of rural and backward areas. MSMEs reduce regional
imbalances, assuring more equitable distribution of national income and
wealth. MSMEs are complementary to large industries as ancillary units
and this sector contributes enormously to the socio economic development
of the country.

Globally, Micro, Small and Medium Enterprises (MSMEs) play a vital role
in the economic development of a nation. MSMEs are the nursery where
small existing businesses have the potential to become Global Enterprises.

MSMEs have the inherent characteristics of being innovative and quickly
responsive to changing market conditions. And it is because of these
qualities, SMEs contributes substantially to any economy and are widely
acknowledged as the engine of economic growth.

Major contribution of MSMEs is as follows:

1. It provides opportunities at comparatively lower cost;

2. It helps in industrialization of rural and backward areas;

3. Reduce Regional imbalances through the optimum utilization of
their resources;

4. More equitable distribution of national income and wealth;

5. Major partner in the process of inclusive growth.

Legal Framework on MSMEs

The Micro, Small and Medium Enterprises Development Act, 2006,
provides for facilitating the promotion and development and enhancing
the competitiveness of micro, small and medium enterprises and for
matters connected therewith or incidental thereto.

In terms of Section 2(e) of the MSMED Act, an industrial undertaking or
a business concern or any other establishment, by whatever name called,
engaged in the manufacture or production of goods, in any manner,

1

2

West Bengal : Ease of Doing Business for MSME Sector
pertaining to any industry specified in the First Schedule to the Industries

(Development and Regulation) Act, 1951 or engaged in providing or
rendering of any service or services is known as “enterprise”.

The Micro, Small and Medium Enterprises have been defined under MSME

Act, 2006. According to the Act, MSME have been broadly classified in
two categories:

1. Enterprises engaged in the manufacturing and production of goods
pertaining to any industry;

2. Enterprises engaged in providing or rendering services

(a) Manufacturing Enterprises : The enterprises engaged in the
manufacture or production of goods pertaining to any industry
specified in the first schedule to the industries (Development
and Regulation) Act, 1951 and are defined in terms of
investment in Plant & Machinery.

(b) Service Enterprises : The enterprises engaged in providing or
rendering of services and are defined in terms of investment in
equipment.

Accordingly, the Section 7 of the Act, the ceiling on investment to be
classified as micro, small or medium enterprises is as under:

Manufacturing Sector

Enterprises

Investment in Plant & Machinery

Micro Enterprises

Does not exceed twenty five lakh rupees

Small Enterprises

More than twenty five lakh rupees but does not
exceed five crore rupees

Medium Enterprises More than five crore rupees but does not exceed
ten crore rupees

Service Sector

Enterprises

Investment in Equipments

Micro Enterprises

Does not exceed ten lakh rupees:

Small Enterprises

More than ten lakh rupees but does not exceed
two crore rupees

Medium Enterprises More than two crore rupees but does not exceed
five core rupees

Introduction

3

Computation of Investment limit in Plants & Machineries or in

Equipments for the purpose of MSMED Act, 2006

In exercise of the powers conferred by sub-section (1) of Section 7 of the

MSMED Act, 2006, the Central Government vide notification S.O. 1722(E)

dated 5th October, 2006, the cost of which shall be excluded while
calculating the investment in plant and machinery in the case of the
enterprises mentioned in Section 7(1)(a) of the said Act, namely:

(i) equipment such as tools, jigs, dyes, moulds and spare parts for
maintenance and the cost of consumables stores;

(ii) installation of plant and machinery;

(iii) research and development equipment and pollution controlled
equipment;

(iv) power generation set and extra transformer installed by the
enterprise as per regulations of the State Electricity Board;

(v) bank charges and service charges paid to the National Small

Industries Corporation or the State Small Industries Corporation;

(vi) procurement or installation of cables, wiring, bus bars, electrical
control panels (not mounted on individual machines), oil circuit
breakers or miniature circuit breakers which are necessarily to be
used for providing electrical power to the plant and machinery or
for safety measures;

(vii) gas producer plants;

(viii) transportation charges (excluding sales-tax or value added tax
and excise duty) for indigenous machinery from the place of their
manufacture to the site of the enterprise;

(ix) charges paid for technical know-how for erection of plant and
machinery;

(x) such storage tanks which store raw material and finished products
and are not linked with the manufacturing process; and

(xi) firefighting equipment.

2. While calculating the investment in plant and machinery referred to
in paragraph 1, the original price thereof, irrespective of whether the
plant and machinery are new or second hand, shall be taken into
account provided that in the case of imported machinery, the following
shall be included in calculating the value, namely;

(i) Import duty (excluding miscellaneous expenses such as

4

West Bengal : Ease of Doing Business for MSME Sector
transportation from the port to the site of the factory, demurrage
paid at the port);

(ii) Shipping charges;

(iii) Customs clearance charges; and

(iv) Sales tax or value added tax.

***

Entrepreneurship Development and
the MSME Sector in West Bengal

Information Source

Department of Information & Cultural Affairs (I&CA), Government of West Bengal

West Bengal is situated on the eastern part of India stretching from the

Himalayas in the north to the Bay of Bengal in the south. The state has a
total area of 88,752 square kilo meters (34,267 sq. mile). It is bounded by

Sikkim and Bhutan on the north, by Nepal on the northwest, by

Bangladesh and Assam on the east, by Bihar, Jharkhand and Orissa on
the west and southwest and by Bay of Bengal on the south. The northern
part of the state has a hilly region. The narrow Terai region separates this
region from the plains, which in turn transitions into the Ganges delta
towards the south. The Rarh region intervenes between the Ganges delta
in the east and the western plateau and high lands. A small coastal region
is on the extreme south, while the Sundarbans mangrove forest form
geographical area at the Ganges delta.

Because of its location, West Bengal offers definite advantage as the
traditional domestic market in eastern India, the Northeast and the land-
locked countries of Nepal and Bhutan, which are easily accessible. The
state is also an entry point to markets in Southeast Asia, via the north
eastern states. West Bengal offers excellent connectivity to the rest of India

5

6

West Bengal : Ease of Doing Business for MSME Sector
in terms of railways, roadways, ports and airport. Major stretches of the
golden quadrilateral (highway project connecting Chennai, Kolkata, Delhi
and Mumbai) also pass through the northern districts of the state.

West Bengal has abundant natural resources of minerals and suitable
agro-climatic conditions for agriculture, horticulture and fisheries. West

Bengal also has a prosperous hinterland of some mineral rich states like

Jharkhand, Bihar and Orissa.

A major agricultural producer, West Bengal is the sixth largest contributor
to India's net domestic product. It is noted for its cultural activities and
the presence of cultural and educational institutions; the state capital

Kolkata is known as the "cultural capital of India". It is the main business,
commercial and financial hub of eastern India and the North eastern
states. The other prominent cities of West Bengal are Siliguri, Asansol,

Durgapur, Raniganj, Haldia, Kharaghpur, Darjeeling, Malda, Midnapore,

Cooch Behar and Howrah. Siliguri the commercial nerve centre of North

Bengal. It is also the transit point for air, road and rail traffic to the
neighbouring countries of Nepal, Bhutan and Bangladesh. Asansol, coal
mining and industrial metropolis and one of the busiest commercial centres
in India, is the second largest city in West Bengal, after Kolkata. Durgapur
is an industrial city and is West Bengal’s third-largest city after Kolkata
and Asansol. The city houses a number of power plants, chemical and
engineering industries. Raniganj, located in the Bardhaman district is
known for its coalfields. Darjeeling is internationally famous for its tea
industry and the Darjeeling Himalayan Railway is a UNESCO world
heritage site. Cooch Behar is a planned town in North Bengal region with
remnants of royal heritage; it is a tourist destination.

Facts and Figures - West Bengal

Title

Description

Country

India

Region

East India

Capital

Kolkata

Largest city

Kolkata

Districts

23

Government

Body

Government of West Bengal

Legislature

Unicameral

Entrepreneurship Development and the MSME Sector in West Bengal

7

High Court

Calcutta High Court

Area

Total

88,752 sq km (34,267 sq mi)

Area rank in India

14th

Population (2011)

Total

91,347,736

Rank

4th

Density

1,000/sq km (2,700/sq mi)

Literacy

77.08%

Official languages

Bengali • English

Information Source

Department of Information & Cultural Affairs (I&CA), Government of West Bengal

Establishment of MSME in West Bengal

The process of setting up an enterprise often originates in the form of a
business idea or perception of an entrepreneurial opportunity and a
consideration of its desirability and feasibility. While it is not mandatory,
the process invariably involves filing of entrepreneurship memorandum
under the provisions of the Micro Small & Medium Enterprise

Development Act (MSMEDA), 2006. Then there are a host of
requirements placed under the State Industrial Development

Corporations Act, State Finance Corporations Act, Municipalities,

Utilities and the like. Should there be a need for enterprise’s incorporation
under the Partnership Act, Limited Partnership Act, the Companies

Act, and the Co-operative Societies Act, there are additional formalities
to be complied with.

The essence of Ease of Doing Business lies in provision of one stop shop or
single window- and in today’s context- a digital window- for knowing,
fulfilling and obtaining the various regulatory approvals and clearances.

The Department of Micro, Small and Medium Enterprises and Textiles,

Government of West Bengal has developed an interactive portal

(www.myenterprisewb.in) that serves this purpose (see Figure -1).

8

West Bengal : Ease of Doing Business for MSME Sector

Figure- 1: Screen Shot of Government of West Bengal’s Portal for MSMES

Source: myEnterprise.wb (Government of West Bengal )

There is an online pro forma seeking answer to the compliance questions
that the entrepreneur needs to fill in. Once the fully filled-in pro forma is
submitted a checklist of statutory compliances required for that particular
enterprise is provided.

Determining Statutory Compliances Expected of an Entrepreneur

Please select your enterprise location

District

Block/Municipality/Corporation

Indicate the constitution of your enterprise

Please select the sector where your enterprise will belong?

Manufacturing Sector

Service Sector

Entrepreneurship Development and the MSME Sector in West Bengal

9

Did you obtain Trade License?

Yes

No

Do you want to know the category of your Enterprise Under

Environment Clearance [Protection] Act?

Yes

No

Do you require Electrical Power Connection for your Enterprise?

Yes

No

Do you intend to install/operate Generator Sets for your

Enterprise?

Yes

No

Did you obtain Fire Safety Certificate?

Yes

No

Did you obtain Fire License?

Yes

No

Find out & select the category of your enterprise under West

Bengal Fire Safety Act, 1950?

For Class A : the building above 14.5 meters in height or more
than 5000 Cu. Meters.

For Class B : High risk building for minimum height of 7 meters
and maximum 14.5 meters with coverage area of maximum

5000- 2000 Cu. Meters.

For Class C : below 7 meters higher or below 2000 Cu.meters

Do you use Steam Boilers in your enterprises?

Yes

No

Do you engage in manufacturing, possession, use, sale, transport
and import of explosive?

Yes

No

10

West Bengal : Ease of Doing Business for MSME Sector

What is your expected employment?

Will Section 85 of Factories Act, 1948 be applicable to your

Industrial Unit?

Section 85

In terms of Sec. 85 of Factories Act, 1948 read with no. 781-LW/

1F-11/06 Dt. 03.10.2007, an enterprise cannot carry on the
following manufacturing process with or without the aid of power
irrespective of numbers of persons employed unless a license is
issued by Directorate of Factories under Factories Act, 1948

1. Manufacture of rubber and plastic products,

2. Manufacturing process involving repair of Motor Vehicles
and Motor Cycles,

3. Manufacturing process using or producing explosive or
highly inflammable articles or substances,

4. Fire-works manufacturing and its packaging units,

5. Manufacturing of Leather goods,

6. Manufacturing of Ice using ammonia as refrigerant,

7. Pesticides formulation units,

8. Manufacturing, handling & processing of asbestos & its
products.

Do you intend to perform your business with inter-state Sale
and purchase under CST Act, 1956?

Yes

No

Do you intend to carry on your business within the state (both
procurement and sale) and your gross annual turnover is above

Rs. 5.00 Lakh (under VAT)?

Yes

No

Do you manufacture excisable goods?

Yes

No

Is your enterprise exempted under CENVAT exemption scheme?

Yes

No

Do you provide any taxable service as per clause 105 of section

65 in chapter V of Finance Act, 1994 applicable for service tax?

Yes

No

Entrepreneurship Development and the MSME Sector in West Bengal

11

Do you manufacture/carry on business for import/export
purpose?

Yes

No

Do your enterprise fall under ESI notified area?

Yes

No

Did you acquire land for your enterprise?

Yes

No

What is the classification of land in the name of your enterprise?

Do you use ground water for your enterprise?

Yes

No

Source: (http://www.myenterprisewb.in)

Documentation

The portal inter alia also provides for the necessary documentation
applicable to MSMEs as downloads (See Figure -2).

Figure-2 : Documentation Applicable to MSME

Source : http://myenterprise.wb.gov.in/msseAppGateway/Credit
facilities to MSMEs

12

West Bengal : Ease of Doing Business for MSME Sector

Credit facilities to MSMEs

Conventionally, in India state finance corporations provide term finance

(Debt and Equity) and banks provide working capital finance to the MSME
sector. In West Bengal it is the West Bengal State Finance Corporation

(WBSFC) which lends to any individual, partnership firm, corporate body
or registered co-operative society covered under the MSME sector for
amounts up to Rs. 20 Crore (Figure -3). The WBSFC has its active presence
through 14 Branch Offices located at the District Head Quarters. Its

Regional Offices at Kolkata, Siliguri and Durgapur are duly equipped to
coordinate the activities in the North Bengal and South Bengal. Figure -3:

MSME Funding By WBSFC

Source : (WBSFC, 2016)

The WBSFC has streamlined the process of availing loan right from the
submission of loan application to disbursement (See Figure-4). It takes
generally 30 days to approve the loan subject of course to receipt of
comprehensive documentation and clarifications from the customer. In
case of loans above Rs. 3 crore, it may take slightly longer, depending on
the schedule of the board meeting.

Entrepreneurship Development and the MSME Sector in West Bengal

13

Figure -4: Loan Process Flow

Source : (WBSFC, 2016)

Apart from normal project finance, referred to as Normal Loan

Application by it, the WBSFC also provides funding under the Small

Industries Bank of India (SIDBI)’s Equipment Refinance Scheme (ERS)

and its own Loan Against Mortgaged Property (LAMP).

Bank Loans

In West Bengal, commercial banks are the main lending institutions.

Regional rural banks and co-operative banks take the second place in
providing credit. This has been possible due to various steps taken by
both Central & State Governments to bring banking to the doorsteps of
the people by expansion of branch network in the rural and semi-urban
areas. After nationalization of major banks, expansion of branch network
got momentum. At present, almost all the blocks have nationalized bank
branches. There were 7427 bank branches as on 31st March 2015. Out of
this, branches of Commercial Banks were 6084, Regional Rural Banks

913, West Bengal Co-operative Bank Branches 321 and West Bengal State

Co-operative & Rural Development Bank 109. Commercial Banks had

1820 branches in rural areas and 771 branches in semi-urban areas, 1056
branches in urban areas and 1262 branches in metropolitan areas of West

Bengal. The branches of Regional Rural Bank in rural, semi-urban and
urban areas were 754, 125 and 32 respectively with 2 branches in
metropolitan areas.

It would not be out of place to mention the continuing importance of

Lead Bank Scheme in coordinating the activities of banks and other
developmental agencies through various fora in order to achieve the
objective of enhancing the flow of bank finance to priority sector/ MSMEs

14

West Bengal : Ease of Doing Business for MSME Sector
in the state. It may be recalled that for coordinating the activities in the
district, a particular bank is assigned the lead bank responsibility of the
district. The lead bank is expected to assume leadership role for
coordinating the efforts of the credit institutions and Government for
promoting and supporting the MSMEs. Figure -5 lists the lead banks for
the various districts of West Bengal.

Figure 5: District-wise Lead Banks in West Bengal

Name of the Banks

District

United Bank of India

Bankura, Dakshin Dinajpur, Uttar Dinajpur,

Malda, Murshidabad, Nadia, Purulia, 24-

Pargans (South), Purba Medinipur, Paschim

Medinipur (10 Districts)

UCO Bank

Howrah, Hooghly, Birbhum, Burdwan

(4 Districts)

Central Bank of India

Jalpaiguri, Darjeeling, Coochbehar Alipurduar

(4 Districts)

Allahabad Bank

24-Parganas (North) (1 District)

State Bank of India

Kolkata (1 District)

The lead banks also facilitate consortium funding or loan syndication for
relatively larger projects. The state government is committed to promote

MSMEs in the state by creating a sustainable financial ecosystem for the
sector. Considering the rapid growth of MSMEs in the state, the MSME &

Textiles Department has already launched an Rs 200-crore Venture Capital

Fund.

Loan Syndication / Consortium Financing

Whilst the funding requirements of the individual MSMEs may not be so
large as to call for loan syndication/ consortium financing, the task of the
industrial development of the state necessitates pooling of the financial
resources across a host of institutions- both in public as well as private
sectors. The mega projects such as those in in industrial infrastructure
and related sectors such as power, telecommunication, construction of
airport, seaport, industrial park, Iron & Steel, Cement, etc. are usually
funded through this mode. These projects may be promoted by corporates
in public, private and joint sectors, private limited companies, trusts and
societies etc. The emphasis has been on Public-Private-Partnership mode

Entrepreneurship Development and the MSME Sector in West Bengal

15
for speeding up the infrastructure development for accelerated industrial,
agricultural and economic growth.

Schemes for MSME

Directorate of MSME, Government of West Bengal is the state level apex
agency for introducing and implementing the various schemes for MSME
and entrepreneurship development.

Pre-investment Stage

Assistance in the form of

•

Motivational programmes/seminars/campaigns to attract new
entrepreneurs.

•

Interaction with Officers/Field Level Officers

•

Introduction to PMEGP and other self-employment generating
programmes

•

Consultancy for preparing Schemes

•

For getting Pollution Clearance.

•

To facilitate Inter-departmental linkages
with WBSEB/CESC/

Bank/WBFC/Telephone/PCB etc.

•

Training support-EDP/Training to the Artisans.

•

Sponsoring of loan cases to different financial institution.

Investment Stage

•

Infrastructural support through WBSIDC; RURAL HAAT;

URBAN HAAT; KARMATIRTHA etc.

•

Other types of fiscal support like share capital support to

Industrial./Handicrafts Co-opp. Society, managerial support etc.

For venture capital support Visit www.msmebengalinvest.in

Post-investment Stage

•

Application for Udyog Aadhaar Memorandum

•

To provide subsidy

•

Marketing support, participation in industrial fairs

•

Counselling support – on delayed payment issues.

•

Support for technology, modernization, R&D through Micro, Small

& Medium Enterprises TFC. Visit www.msmetfc.in

16

West Bengal : Ease of Doing Business for MSME Sector

•

Support for Quality control facility

•

Support for expansion/Ancillarisation

•

Buyers sellers meet in collaboration with MSMEDI

District Level Set-up

At the grass root level, the District Industries Centres (DICs) assume the
responsibility for attending to the needs of the entrepreneurs and providing
assistance and escort services to them.

•

Technical support for preparation of Project Report

•

Information on sources of machinery and equipment

•

Priority in Power supply/Telephone connection

•

Assistance of getting Land/shed in Industrial Estates

•

Promotion of New Industrial Estates/Growth centres

•

Approval of Project Reports of Noble/Special types

•

Promotion of Electronic Industries

•

Training through Entrepreneurship Development Programmed

•

Financial Assistance through Bank/WBFC

•

Financial Assistance under Self Employment Schemes

•

Assistance under Equipment Leasing Scheme and Hire Purchase
of Machinery Scheme of the NSIC Ltd.

•

Marketing linkage with Central Govt./State Govt. organisations/

Undertakings

•

Marketing Assistance through WBSIDC/NSIC Ltd./CEO

•

Ancillary Industry tie-up with Government undertakings.

•

Marketing Information

•

Marketing Assistance through Participation in Exhibitions, Trade

Fairs/Buyers-Sellers Meet etc.

•

Marketing Assistance of Handicrafts artisans through participation
in Handicrafts Expo/Exhibition both inside and outside the State

•

Linkage with organisation like WBHDC/WB State Handicrafts

Coop. Society Ltd./Development Commissioner (Handicrafts)

•

Attending problems related to SSI Registration/Bank Loan/

Marketing of Products etc.

•

Linkage with Research Institute like CMERI/CGCRI/NML/

CFTRI/JTRL/IJIRA etc. for Technology Up gradation and

Innovation

•

Financial Assistance for Modernisation through WBFC/SIDBI/

Scheduled Bank

Entrepreneurship Development and the MSME Sector in West Bengal

17

•

Skill Development Training with the help of organisation like RTC etc.

•

Management qualities improvement through Training, Workshop,

Seminars

•

Export Assistance

•

In- plant study of SSI units

•

Standardisation of products, implementation of ISO-9000 quality
system and certification

•

Sick unit Revitalisation

•

National Level Awards for innovative products/outstanding
growth/exports etc.

•

Promotion of products towards exploitation of Non-conventional

Energy Sources

•

Assistance under Coir Development Schemes

•

Registration of Industrial Cooperative and extending Financial
assistance to them

•

Pollution Control measures and Assistance for obtaining pollution
clearances

•

Assistance under Schemes promoted by W.B. Minority Dev.

Finance Corporation/KVI Board/other Govt. Department.

•

Design and Production Development for Handicrafts

•

Awards to Handicrafts artisans

•

Development of Lac Industries

•

Awards to SSI units for Export

•

Implementation of Households Electrical appliance (Quality

Control) Order 1981

•

Assistance under West Bengal Incentive Scheme, 2013

•

Information/Assistance towards setting up of Downstream

Petrochemical Units under SSI Sector

•

Old age Pension to Handicrafts Artisans

•

MMTRTC Training

•

Micro & Small Enterprises Cluster Development Programme

•

Setting up of Urban Haat for providing marketing assistance to

Handicraft artisans

•

Handicrafts Museum at EZCC, Salt Lake

•

Participation in Foreign Trade Fairs

•

Conducting Market studies for handicrafts in foreign countries.

***

West Bengal MSME Policy 2013-18

Preamble

West Bengal has the potential to become the leading state in coming
future in terms of MSME productivity within India. This is not only
because of huge number of MSME units but also the diversified
approach from production to services. The varied segments are food
processing, agro industries, leather, gems and jewellery, mineral based,
iron and steel, handicrafts, manufacturing industries and service sector.

One of the largest employments can be created in this segment within
next five years. The facilitative interventions will be in the areas of
creating an enabling eco-system, skill development, technology
intervention, and marketing.

Vision

To create a sustainable ecosystem in the MSME sector which can
maximize the utilization of resource and widen the area of operation to
make the state emerge as the MSME leader in the country in the next ten
years.

Mission

The MSME Policy of Government of West Bengal aims to increase
the ancillarization and vendor linkage of MSME from the present
about 2% to 10% over the next five years with government facilitating
the process supported by a public procurement policy. This may lead
to increase the volume of the market of the MSME products by atleast

25%. Supported by an enabling business environment and a synergistic
approach facilitated by the government this will create scale up
operation for the MSMEs in the state. Incentives for energy efficient
and cutting edge technology coupled with thrust on skill development
as provided by this Policy will accelerate the process making MSMEs of
the state attain the desired standards of quality and cost.

Cluster development and regional innovation approach will be the
thrust areas supported by additional flow of funds and other fiscal
interventions. MSME sector would be able to create additional employment
for about 10 million in next ten years in the state.

18

West Bengal MSME Policy 2013-18

19

Enabling Business Environment

The state government shall:

1. Provide a better and more conducive business environment for

MSME sector.

2. Keep simplifying the business regulatory environment in the state.

3. Develop web-enabled common application gateway.

4. Progressively make clearances by the state authorities web-enabled.

5. Introduce timelines defined in respect of all clearances.

6. Enhance the quality of human resource through training and skill
development packages.

7. Promote pooling of common services and functions (common
facility centre) under cluster approach for the benefit of smaller
players.

8. Strengthen participation of and support to SHGs and cooperatives
in the production and marketing in micro enterprise sector with
special focus on handicrafts and village industries.

9. Encourage joint ventures with private sector in the entire value
chain of the MSME sector.

10. Set up Technology Facilitation Centre involving technological
institutions and experts for technology upgradation and transfer
support to MSMEs in the state.

11. Set up a State level inter-departmental Task Force on MSME.

12. Set up adequate number of industrial estates for providing basic
infrastructure to MSMEs.

13. Facilitate setting up MSE clusters in each district of the state.

14. Create marketing infrastructure and support through setting up
haats/parks and facilitation participation of state’s MSME sector
in fairs/expo/exhibitions.

15. Create institutional arrangement for design support to handicraft
sector.

Commencement and Duration

The West Bengal MSME Policy-2013-2018 will be in effect on and from
the 1 April 2013 in the whole of West Bengal and remain valid for the
period ending on 31st March, 2018.

20

West Bengal : Ease of Doing Business for MSME Sector

FISCAL INCENTIVES

Capital Investment Subsidy

•

For new Micro & Small Enterprise in Zone C & D

–

Micro enterprise in Zone C – 25%

–

Micro enterprise Zone D – 40%

–

Small enterprise in Zone C – 15%

–

Small enterprise in Zone D – 30%

(a) Subject to a ceiling of Rs 50 Lakh for Small Enterprise.

(b) 20% additional subsidy on admissible subsidy for all enterprises
wholly owned by women, SC/ST and minority community
entrepreneurs.

(c) These entrepreneurs will also get incentive for setting up of
units in Zone A & B as follows :

-

Micro Unit – 15%

-

Small Unit – 10%

(d) This incentive would be in addition to what the units get
from GoI under any other scheme.

Interest Subsidy on Term Loan

Micro & Small Enterprise

•

Subvention of 6% for all units and 7.5 % for units set up in
the C and D Zone districts for 5 years.

Medium Enterprise

•

Zone B & C – 25% of total Term Loan Interest subject to ceiling of

Rs. 175.00 Lakh per year for 5 years.

•

Zone D – 25% of total Term Loan Interest subject to ceiling of Rs.

175.00 Lakh per year for 7 years.

Electricity Duty

Micro & Small Enterprise

•

50% waiver for 5 yrs for Zones A & B & 75% for Zones C & D.

•

The units set up in any zone and wholly owned by women, SC/

ST and minority community entrepreneurs will be eligible for 100%
waiver for 5 years.

West Bengal MSME Policy 2013-18

21

Medium Enterprise

•

Zone B & C - 100% waiver of electricity on the electricity
consumption for 5 years subject to maximum of Rs. 25.00 Lakh
per year or Rs. 1.25 Crore for 5 years.

•

Zone D – 100% waiver of electricity duty on the electricity
consumption for 5 years and 75% waiver from the sixth year upto
tenth year subject to maximum of Rs. 50.00 Lakh per year or Rs.

2.5 Crore in 5 years.

Power Subsidy

Micro & Small Enterprise

•

Subsidy of Rs. 1.00 / Kwh for Zone A & B

•

Subsidy of Rs. 1.50 / Kwh for units in Zone C & D

For 5 years; subject to a ceiling of Rs 20 Lakh per annum for small
enterprises and Rs 30 Lakh for medium enterprises.

Incentive for Energy Efficiency

Micro & Small Enterprise

•

50% re-imbursement of the cost of energy audit undertaken
by an certified agency to be available after implementation of
the recommendations.

•

25% reimbursement of the cost of installations for energy
conservation as per energy audit subject to a ceiling of Rs 2

Lakh.

Stamp Duty & Registration Fee

Micro & Small Enterprise

•

100% for units in Zone D, 75% for Zone C, 50% for Zone B and

25% for Zone A.

Medium Enterprise

•

B, C & D Zone refund @ 75% of Stamp Duty.

Entry Tax

•

Reimbursement of ET on plant and machinery available after
beginning of commercial production by the unit.

•

Reimbursement of ET on procurement of raw materials for the
initial 3 years.

22

West Bengal : Ease of Doing Business for MSME Sector

VAT

Micro, Small & Medium Enterprises

•

Zone B & C – 80% VAT refund paid for 8 years or 75% of fixed

Capital Investment whichever reached earlier

•

Zone D – 90% VAT refund paid for 8 years or 75% of fixed

Capital Investment whichever reached earlier.

CST

Total refund for 3 years from the date of commencement of commercial
production.

Water Conservation/Environment Compliance

Micro & Small Enterprise

•

Assistance upto 50% or Rs. 2 Lakh maximum for water conservation/
pollution control measures.

Cluster Development

•

Support upto Rs. 5 crore for common infrastructure such as road,
power etc for each micro and small industrial cluster in Zone B
and C.

•

Support upto Rs. 10 crore for common infrastructure such as road,
power etc for each micro and small industrial cluster in Zone D.

Skilled HR

•

Undertake measures in collaboration with the industry to provide

10 million skilled HR over a period of 5 years.

Standard Quality Compliance

Micro & Small Enterprise

•

50% of cost upto a maximum of Rs. 5 lakh for obtaining
certification accreditation like ISO-9000, ISO-14000, ISO-18000,

Social Accountability Standards, OEKO-TEX etc.

Work Force Welfare Assistance

•

Reimbursement of 100% in 1st year & 75% in next remaining years
expenditure incurred towards Employees State Insurance (ESI)

and Employees Provident Fund (EPF) as follows : Zone B-5 yrs.,

Zone C-7 yrs., Zone D-9 yrs.

GI / Patent Registration

•

State Government will provide consultancy and facilitation services for
identification and registration of Geographical Indicators (GI) of items.

• Reimbursement of 50% of expenditure for obtaining patent
registration subject to a maximum of Rs. 5 lakh.

West Bengal MSME Policy 2013-18

23

GRADED SLABS OF INCENTIVES

The districts of the state have been divided into 4 Zones for differential
treatment under this Policy. Considering the needs of inclusive growth,
the policy provides additional incentives for investment in backward
regions of the state.

Zone–A : Kolkata Municipal Corporation area, all Municipal areas of

North 24 Parganas, all municipal areas of South 24 Parganas, all municipal
areas of Howrah.

Zone–B : District of Hooghly, North 24 Parganas (excluding
municipalareas and Sunderban areas, South 24 Parganas (excluding
municipal areas and Sunderban areas), Howrah (excluding municipal
areas), Siliguri Municipal Corporation,Municipal corporation/municipal
areas of Paschim Medinipur, Purba Medinipur, Burdwan & Nadia.

Zone–C : District of Burdwan (excluding Municipal Corporation/
municipal areas), Purba Medinipur (excluding Municipal corporation/
municipal areas), Nadia (excluding Municipal Corporation/municipal
areas), Murshidabad, Malda, Jalpaiguri and Darjeeling (excluding Siliguri

Municipal Corporation)

Zone–D : District of Birbhum, Purulia, Bankura, Paschim Medinipur

(excluding Municipal corporation/municipal areas), Uttar Dinajpur,

Dakshin Dinajpur, Cooch Behar and Sunderban areas of South and North

24 Parganas districts.

Conditions/eligibility of the units for availing incentives /financial
assistance under this policy

•

Modern/Hi-tech plant & Machinery to be installed that conform
to the standard productivity.

•

Unit will have to strictly observe requisite pollution control
compliances.

•

Regular Energy Audit is to be conducted and standard energy
efficiency to be ensured wherever applicable.

•

Unit will have to follow/maintain labour laws.

•

Unit will have to commit to remain in production for at least 5
years from the date of commercial production.

•

A unit defaulting in payment of any government dues/FI dues
will not be eligible for assistance under this policy.

***

West Bengal Incentive Scheme for Micro, Small

and Medium Enterprises

WHEREAS, the Governor is of the opinion that it is necessary to modify
certain provisions and procedural aspects of the West Bengal Incentive

Scheme 2013 for Micro, Small and Medium Enterprises notified under

No. 59-MSET(III)/15S-07/2011 Dated the 3rd February, 2014 of the

Department of Micro, Small and Medium Enterprises and Textiles for
further simplification in the context of ease of doing business in the State
and for extending more fiscal incentives to the Micro, Small and Medium

Enterprises set up in Cooch behar district.

AND WHEREAS, it is felt necessary to notify the modified Scheme in a
single volume for ease of implementation and for the benefit of Micro,

Small and Medium Enterprises.

Now, therefore, the Governor is pleased to modify the notification bearing

No. 59-MSET(III)/15S-07/2011 Dated the 3rd February, 2014 of the

Department of Micro, Small and Medium Enterprises and Textiles in terms
of power conferred under para 22 of the said Scheme and to publish the
modified Scheme in a single volume.

1. Short Title

The Scheme may be called the West Bengal Incentive Scheme 2013
for Micro, Small and Medium Enterprises as modified up to

22.05.2015 (hereinafter referred to as WBIS 2013 for MSMEs as
modified up to 22.05.2015)

2. Object

The object of the Scheme is to extend fiscal incentives to encourage
entrepreneurs to set up Micro, Small and Medium Enterprises with
a view to focusing on development of MSMEs in the backward
region of the State and creating a sustainable ecosystem in the

MSME sector which can maximize the utilization of resource and
widen the area of operation to make the State emerge as the MSME
leader in the country.

3. Commencement and Duration

Unless specifically mentioned against the respective items of
incentives sanctioned under the Scheme, it comes into effect on
and from the 1st day of April, 2013 in the whole of West Bengal

24

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

25
and shall remain in force for a period of five years ending on 31st

March 2018, if not withdrawn/ amended earlier by a Notification
in the official Gazette to that effect.

4. Definitions

In the WBIS 2013 for MSMEs as modified up to 22.05.2015, unless
the context otherwise requires

(i) “Approved Location” means location mentioned in the
approved project.

(ii) “Approved Project” means the industrial project of a unit in
the manufacturing sector which should be approved before
implementation of the project by any Directorate under the

Deptt. of Micro, Small & Medium Enterprises and Textiles,

Govt. of West Bengal or concerned DIC or Micro, Small &

Medium Enterprises Development Institute (MSMEDI), Govt.

of India or Food Processing Industries & Horticulture Deptt.,

Govt. of West Bengal or Commercial Banks/ Financial

Institution (Central and State)/ Cooperative Banks/ scheduled
banks approved by RBI/ RRBs financing the project.

(iii) “Central Government” means the Government of India.

(iv) “DIC” means the District Industries Centre, which also includes
the Sub-DIC, Durgapur/Siliguri.

(v) “Eligible Unit/Enterprise” means a micro, small or medium
enterprise which has filed Entrepreneurs Memorandum (Part-

II) and subsequently been found eligible as per terms and
conditions of WBIS-2013 for MSMEs as amended up to

22.05.2015.

(vi) “Existing Industrial Unit” means a micro, small or medium
enterprise which has started production before 1st April,2013
and filed EM (Part-II).

(vii) “New Industrial Unit” means a micro, small or medium
enterprise in the manufacturing sector which has started
production on or after the 1st April, 2013 and filed EM(Part-

II). If an existing industrial unit sets up a branch as second/
third unit etc. in different locations in the State and
manufactures new items, its second/ third unit etc. will only
be treated as a new industrial unit provided EM(Part-II) is filed
for the same.

(viii) “Factory ” means any premises including the precincts thereof:

(a) Wherein ten or more workers are working or were working

26

West Bengal : Ease of Doing Business for MSME Sector
in any part of which a manufacturing process is being
carried out with the aid of power or is ordinarily so carried
on, Or

(b) Wherein twenty or more workers are working or were
working on any of the preceding twelve months and in
any of which a manufacturing process is being carried on
without the aid of power or is ordinarily so carried on but
does not include a mine, subject to the operation of the

Mines Act, 1952 (35 of 1952) or a railways running shed.

(c) “Factory Worker” means a person employed, directly or
through any agency, whether for wages or not, in any
manufacturing process for cleaning any part of the
machinery or equipment or premises used for
manufacturing process or in any other kind of work
incidental to or connected with the manufacturing process
or the subject of the manufacturing process.

(ix) “Term Loan” means a loan secured from any Bank or Financial

Institution for acquiring fixed capital assets in the form of land,
building, plant and machinery, tools & implements, appliances
etc.

(x) “Working Capital” means capital required for running any
industrial unit and includes cash credit and / or any other
short term loan actually utilized as working capital.

(xi) “Fixed Capital Investment” means investment made in plant
and machinery in an approved project of the eligible unit/
enterprise on or after 1st April, 2012 subject to other conditions
laid down in paragraph-7 of WBIS-2013 for MSMEs as
modified up to 22.05.2015. .

Explanation – I

The “fixed capital investment” shall be calculated as follows:-

Plant and Machinery:

It shall be calculated as follows:-

The cost of plant and machinery as found installed at the approved
location, excluding the cost of any second hand plant and
machinery purchased and installed for the purpose of
implementation of the project. The cost of the following items shall

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

27
be excluded while calculating the investment made in Plant &

Machinery:

a. Equipments such as tools, jigs, dies, moulds and spare parts
for maintenance and the cost of consumable stores.

b. Installation of Plant and Machinery.

c. Research and development equipments and pollution control
equipments.

d. Power generation set and extra transformer installed by the
enterprise as per the regulations of the State Electricity Board.

e. Bank charges and service charges paid to the National Small

Industries Corporations or the State Small Industries Corpn.

f.

Procurement or installation of cables, wiring, bus bars, electrical
control panels (not mounted on individual machines), oil
circuit breakers or miniature circuit breakers which are
necessarily to be used for providing electrical power to the

Plant and Machinery or for safety measures.

g. Gas producer plant.

h. Transportation charges (excluding Sales Tax or value added
tax and excise duty) for indigenous machinery from the place
of their manufacture to the site of the enterprise.

i.

Charges paid for technical knowhow for erection of Plant and

Machinery.

j.

Such storage tanks which store raw materials and finished
products only and are not linked with the manufacturing
process
k. Fire fighting equipments.

Explanation-II

Advances paid to suppliers of plant and machinery for the
approved project of the eligible unit on or after 1st April 2012 will
be taken into account in calculating the total fixed capital
investment.

(xii) “Micro Unit / Enterprise” in the manufacturing sector means
a unit/enterprise classified as such in MSMED Act ,2006.

28

West Bengal : Ease of Doing Business for MSME Sector

(xiii) “Small unit/enterprise” in the manufacturing sector means a
unit/enterprise classified as such in MSMED Act ,2006.

(xiv) “Medium unit/enterprise” in the manufacturing sector means
a unit/enterprise classified as such in MSMED Act ,2006.

(xv) “State Financial Institution” means the West Bengal Financial

Corporation.

(xvi) “State Government” means the Government of West Bengal

(xvii) “Unit”/“Enterprise” means any industrial project in the micro,
small and medium sector including industrial cooperatives and
industrial self- help groups, which has filed Entrepeneurs

Memorandum (Part-II).

(xviii) Wherever in the West Bengal Incentive Scheme 2013 for Micro

Small & Medium Enterprises as amended up to 22.05.2015 ,
the words ‘General Manager of District Industries Centre’

appears they shall be synonymous with the words ‘Deputy

Director of Micro & Small Scale Enterprises(Anc.) of Sub-DIC,

Durgapur’ and ‘Officer-in-Charge of Sub-DIC, Siliguri’.

(xix) “Year” means, unless otherwise specifically mentioned/stated
and not repugnant to the context, the financial year
commencing from the 1st April and ending on 31st March
following.

5. Applicability of WBIS 2013 for MSMEs.

5.1 The WBIS 2013 for MSMEs as modified up to 22.05.2015 shall
generally be applicable to all micro, small and medium enterprises
in the manufacturing sector which have started production on or
after 1st day of April 2013.

5.2 The units may be in the private sector, cooperative sector and joint
sector undertaking as also companies/undertakings owned and
managed by the State Government and the Industrial SHGs.

6. Non-applicability of WBIS 2013 for MSMEs.

The WBIS 2013 for MSMEs as modified up to 22.05.2015 s h a l l
not be applicable to the industrial units/enterprises;

(i) That have been registered and for which eligibility certificates
have been issued/incentives have been sanctioned and/ or
disbursed under the respective Incentive Scheme of the State.

This will continue to be governed by the respective Incentive

Scheme of the State.

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

29

(ii) That have been registered and for which eligibility certificate
have been issued in terms of the respective Incentive Scheme
of the State but no sanction or disbursement of incentive has
been made. The claim will be governed by the respective

Incentive Scheme of the State.

(iii) That have been registered and for which eligibility certificates
have been issued in terms of the respective Incentive Scheme
of the State but no claim has been made. The claim will be
governed by the respective Incentive Scheme of the State.

(iv) That have commenced production before 01.04.2013 and
applied for registration and EC under the respective Incentive

Scheme of the State within the stipulated date. The claim will
be governed by the respective Incentive Scheme of the State.

(v) That are engaged in manufacture of textiles, apparel/garment,
technical textile and enterprises in hosiery, textile, handloom
and powerloom sector and have commenced production on
or after 01.09.2013.

7. Eligibility criteria for incentives under WBIS 2013 for MSMEs
as modified up to 22.05.2015.

7.1 Any micro, small or medium unit/enterprise in the manufacturing
sector shall be eligible for incentives under WBIS-2013 for the

MSMEs as modified up to 22.05.2015 excluding those mentioned
in the negative list of industries at Annexure-IV subject to the
fulfillment of the conditions specified below :

(i) A micro, small or medium enterprise shall commence its
commercial production within the period of the Scheme and
shall submit its first incentive application in prescribed form
to the General Manager, District Industries Centre within 12

(twelve) months from the date of commencement of commercial
production.

Explanation

A micro, small or medium enterprise which will commence its
production on 29.03.2018 shall submit its first incentive
application in prescribed form within 28.03.2019 to the General

Manager, District Industries Centre concerned.

(ii) The unit/enterprise shall file Entrepreneurs Memorandum

(Part - II).

(iii) The project will be covered by a detailed feasibility report /
project prepared for the purpose and approved in terms of

Sub-para 7.1 (iv).

30

West Bengal : Ease of Doing Business for MSME Sector

(iv) A new project should be approved before its implementation
by any Directorate under the Department of Micro, Small &

Medium Enterprises and Textiles, Government of West Bengal
or concerned DIC or Micro Small and Medium Enterprises

Development Institute (MSME-DI), Government of India or

Food Processing Industries and Horticulture Department, Govt.

of West Bengal or Commercial Banks /Financial Institution

(Central and State ) / Co-Operative Banks/Scheduled Banks
approved by RBI/ RRBs financing the project. In case of
projects with arrangement of finance from own resources.

Eligibility of the unit / enterprise shall be considered provided
the General Manager, District Industries Centre is satisfied
about the arrangement of such finance.

(v) An eligible enterprise which has availed of incentive/ subsidy
in respect of any of the items specified under any other

Incentive/Subsidy Scheme of Govt. of India / State Govt. shall
also be eligible to get the benefits of other items only under

WBIS-2013 for MSMEs as modified up to 22.05.2015 subject
to fulfillment of terms and conditions of the Scheme.

(vi) The enterprise will submit a ‘self- declaration’ affirming:

(a) That the unit /enterprise has installed Modern/Hi-tech
plant & machinery that conform to the standard
productivity.

(b) That the unit/enterprise will strictly observe requisite
pollution control compliances.

(c) That the unit/enterprise will conduct regular Energy Audit
and ensure standard energy efficiency wherever applicable.

(d) That the unit /enterprise will follow/maintain labour laws.

(e) That the unit / enterprise will remain in production for at
least five years from the date of commencement of
commercial production.

(f) That the unit/enterprise has not defaulted in payment of
any government dues /dues of Financial Institutions.\

(g) That the enterprise has not misrepresented or withheld any
information and not suppressed any fact/ information
related to the claim submitted.

(h) That all documents like approved project report, bills/
vouchers of the plant and machinery etc. submitted by the
enterprise with the claim are genuine.

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

31

(i) That the terms and conditions of WBIS -2013 for MSMEs
as modified up to 22.05.2015 are binding on the enterprise.

(j) That the enterprise will not divert/ utilize the loan amount
disbursed by the bank / financial institution for carrying
out any activity / project other than the implementation
of the approved project.

7.2 The Unit/Enterprise will make application in prescribed form to
the General Manger of District Industries Centre after
commencement of commercial production for grant of incentives
under the Scheme.

8. Classification of developed areas and backward areas.

8.1 For the purpose of determination of type and quantum of
incentives available under this scheme for the approved projects,
according to their locations, the State has been classified into the
following zones:-

Zone-A : Kolkata Municipal Corporation Area, All municipal areas
of North 24-Parganas, All municipal areas of South 24-Parganas,

All municipal areas of Howrah.

Zone-B : Districts of Hooghly, North 24 Parganas (excluding
municipal areas and Sundarban areas), South 24 Parganas

(excluding municipal areas and Sundarban areas), Howrah

(excluding municipal areas), Siliguri Municipal Corporation,

Municipal Corporations/Municipal Areas of Paschim Medinipur,

Purba Medinipur, Burdwan and Nadia .

Zone-C : Districts of Burdwan ( excluding municipal corporation/
municipal areas), Purba Medinipur (excluding municipal
corporation/municipal areas), Nadia (excluding municipal
corporation/municipal areas), Malda, Jalpaiguri, Murshidabad
and Darjeeling (excluding Siliguri Municipal Corporation).

Zone-D : Districts of Birbhum, Purulia, Bankura, Paschim

Medinipur(excluding municipal corporation/ municipal areas),

Uttar Dinajpur, Dakshin Dinajpur and Sundarban Areas of South
and North 24 Parganas districts .

Zone-E : Cooch Behar District

9. State Capital Investment Subsidy

9.1 An eligible micro or small enterprise located in Zone C , D & E

32

West Bengal : Ease of Doing Business for MSME Sector
area will be entitled to State Capital Investment Subsidy for its
approved project as follows :-

Micro Enterprise

Zone C – 25% of the Fixed Capital Investment

Zone D – 40% of the Fixed Capital Investment

Zone E – 60% of the Fixed Capital Investment

Small Enterprise

Zone C – 15% of the Fixed Capital Investment

Zone D – 30% of the Fixed Capital Investment

Zone E – 40% of the Fixed Capital Investment

9.2 An additional subsidy of 20% on State Capital Investment Subsidy
normally admissible will be provided to all eligible micro and small
enterprises wholly owned by women, SC/ST, and minority
community entrepreneurs.

9.3 An eligible micro or small enterprise wholly owned by women,

SC/ST, and minority community entrepreneurs and set up in

Zone–A and B area will be entitled to State Capital Investment

Subsidy as follows:

Micro Enterprise :- 15% of the Fixed Capital Investment

Small Enterprise :- 10% of the Fixed Capital Investment

9.4 The subsidy normally admissible and additional subsidy taken
together will not exceed Rs.50 Lakh for a Small Enterprise located
in Zone C & D area and will not exceed Rs. 75 Lakh for a Small

Enterprise located in Zone E area.

10. Interest Subsidy on Term Loan

10.1 An eligible micro, small or medium enterprise will be entitled to

Interest Subsidy on annual interest liability on the Term Loan
borrowed from a Commercial Bank/ Cooperative Bank/

Scheduled Banks approved by RBI/ RRBs/ Financial Institution

(Central and State) for implementation of the approved project as
follows .

Micro & Small Enterprise –

Zone A & B – Subvention of 6% for 5 years.

Zone C, D & E– Subvention of 7.5% for 5 years.

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

33

Explanation:

The interest subsidy admissible for an eligible micro or small
enterprise in Zone – A & B area will be calculated in the following
manner :-

Annual interest liability on Term Loan paid by the enterprise x 6

Rate of Interest charged by the Bank/ F.I.

Medium Enterprise

Zone – B & C - The interest subsidy will be 25% of total Term Loan
interest paid by the enterprise subject to a ceiling of Rs. 175 lakh
per year for 5 years.

Zone – D & E - The interest subsidy will be 25% of total Term Loan

Interest paid by the enterprise subject to a ceiling of 175 lakh per
year for 7 years.

Explanation

The Interest Subsidy admissible for an eligible medium enterprise
will be calculated in the following manner :

Annual i
nterest l iability o
n T
erm L
oan p
ai
d by th
e e
nterprise 2

x

5

100

10.2 The interest subsidy will be payable annually subject to submission
of a statement / certificate (in annexure-II) by the lending Bank /

Financial Institution to substantiate that the unit has paid the due
interest to the institution on the due dates and has not defaulted
in payment of interest at any time during the period .

11. Waiver of Electricity Duty

An eligible micro, small or medium enterprise for its approved
project will be entitled to waiver of electricity duty on the electricity
consumed for the manufacturing activity as follows :

Micro & Small Enterprise

Zone A & B – 50% waiver of electricity duty on the electricity
consumption for 5 years from the date of commencement of
commercial production.

Zone C, D & E – 75% waiver of electricity duty on the electricity
consumption for 5 years from the date of commencement of
commercial production.

An eligible micro or small enterprise wholly owned by women,

SC/ST and minority community entrepreneurs will be entitled to

34

West Bengal : Ease of Doing Business for MSME Sector

100% waiver of electricity duty on the electricity consumed for 5
years from the date of commencement of commercial production
of its approved project irrespective of location.

Medium Enterprise

Zone – B & C - 100% waiver of electricity duty on the electricity
consumption for 5 years from the date of commencement of
commercial production subject to a maximum of Rs.25.00 lakh
per year or Rs.1.25 crore in 5 years.

Zone – D &E – 100% waiver of electricity duty on the electricity
consumption for 5 years and 75% waiver from the 6th year upto

10th year from the date of commencement of commercial
production subject to a maximum of Rs.50.00 lakh per year or

Rs.2.50 crore in 5 years.

12. Power Subsidy

An eligible micro, small or medium enterprise for its approved
project will be entitled to power subsidy on the electricity consumed
for the manufacturing activity as follows:

Micro, Small and Medium Enterprise

Subsidy of Re.1.00 / Kwh for enterprises located in Zone – A & B
area and Rs.1.50/ Kwh. for enterprises located in Zone – C, D &

E area for five years from the date of commencement of commercial
production.

The power subsidy will not exceed Rs.20 Lakh per year for a small
enterprise and Rs.30 Lakh per year for a medium enterprise and
will be payable annually.

13. Subsidy for Energy Efficiency

13.1 An eligible micro or small enterprise for its approved project will
be entitled to a reimbursement of 50% of the cost of energy audit
undertaken by a certified agency. The reimbursement will be made
after implementation of the recommendations.

13.2 An eligible micro or small enterprise for its approved project will
be entitled to a reimbursement of 25% of the cost of installations
for energy conservation as per energy audit subject to a maximum

Rs. 2 Lakh.

14. Subsidy on Stamp Duty and Registration Fee

14.1 An eligible micro or small enterprise will be entitled to a

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

35
reimbursement of stamp duty and registration fee paid by it for
the purpose of registration of documents within the State relating
to purchase of land and/ or buildings for setting up of the
approved project at the following rates :-

Micro & Small Enterprise

Zone – A -

25%

Zone – B

-

50%

Zone – C

-

75%

Zone – D & E -

100%

14.2 An eligible medium enterprise located in Zone – B, C, D and E
area will be entitled to a reimbursement of 75% of Stamp Duty
paid by it for the purpose of registration of documents within the

State relating to purchase of land and/ or buildings for setting up
of the approved project.

14.3 The amount admissible will be calculated proportionately based
on the percentage of land / buildings used for setting up of the
unit / enterprise for implementation of the approved project.

15. Refund of Entry Tax

15.1 An eligible micro , small or medium enterprise will be entitled to
refund of Entry Tax paid by it to the Govt. of West Bengal for
procurement of plant and machinery for the approved project.

The refund will be made available after commencement of
commercial production by the enterprise.

15.2 An eligible micro , small or medium enterprise will be entitled to
refund of Entry Tax paid by it to the Govt. of West Bengal for
procurement of raw materials for the initial three years for
implementation of the approved project. The refund will be made
available after commencement of commercial production by the
enterprise.

16. Refund of Value Added Tax (VAT)

An eligible micro, small or medium enterprise for its approved
project will be entitled to refund of VAT paid to the Govt. of West

Bengal as follows :-

Zone – B & C – 80% VAT refund paid for eight years from the date
of commencement of commercial production or 75% of Fixed

Capital Investment whichever reaches earlier.

36

West Bengal : Ease of Doing Business for MSME Sector

Zone – D & E - 90% VAT refund paid for eight years from the date
of commencement of commercial production or 75% of Fixed

Capital Investment whichever reaches earlier.

17. Refund of Central Sales Tax (CST)

An eligible micro, small or medium enterprise for its approved
project will be entitled to refund of CST paid by it for three years
from the date of commencement of commercial production.

18. Subsidy for Water Conservation/Environment Compliance

An eligible micro or small enterprise for its approved project will
be entitled to a reimbursement of 50% of expenditure incurred by
it towards cost of captive Effluent Water Treatment Plant for
wastewater recycling and cost of pollution control devices subject
to a maximum of Rs.2 Lakh.

19. Subsidy for Standard Quality Compliance

An eligible micro or small enterprise shall be reimbursed 50% of
the expenditure incurred subject to a maximum of Rs.5 Lakh for
obtaining ISI / BIS certification / ISO 9000/ ISO 14000 / ISO

14001/ ISO 18000 certification from approved Institutions /

Research Laboratories.

20. Work Force Welfare Assistance

20.1 An eligible micro, small or medium enterprise for its approved
project will be entitled to a reimbursement of 100% in first year
and 75% in the remaining years of expenditure incurred by it for
paying its contribution towards Employees State Insurance (ESI)

and Employees Provident Fund (EPF) if at least 50% of the
employees in the enterprise are recruited from amongst the persons
registered with Employment Bank of the State. The period of
assistance will be as follows :-

Zone – B - 5 years.

Zone – C - 7 years.

Zone – D & E - 9 years.

20.2 The reimbursement of expenditure specified in sub-para 20.1 above
will be payable annually based on minimum statutory limit subject
to the condition that the enterprise has paid its contribution
towards ESI and EPF on due dates.

20.3 ‘Employee’ will have the same meaning as defined under

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

37

“Employees’ Provident Fund Act,1952” and “Employees’ State

Insurance Act, 1948”.

21. Subsidy for Patent Registration

An eligible micro, small or medium enterprise for its approved
project will be entitled to a reimbursement of 50% of expenditure
incurred by it for obtaining Patent Registration for its products
subject to a maximum of Rs.5 Lakh.

22. Power to amend and/or relax

Notwithstanding anything contained in any of the provisions of

WBIS 2013 for MSMEs as modified up to 22.05.2015 , the State

Government may at any time-

(i) modify, vary, alter, amend or withdraw any of the provisions made
here in above in this Scheme and such modifications, variations,
alterations, amendments and withdrawal shall be effective from
the date specified in the order so made in this behalf.

(ii) make any relaxation in applying the provisions of this Scheme but
such relaxation shall be made on merits of the approved project in
each case, as the State Government may consider necessary and
appropriate.

(iii) may issue instructions and guidelines to facilitate implementation,
to remove anomalies and to clarify the interpretations of the
provisions of this Scheme.

23. Repeal and Saving

23.1 The West Bengal Incentive Scheme, 2007 for Micro & Small Scale

Enterprises shall stand repealed except in respect of para 6 of the
present Scheme.

23.2 The benefits extended to the units/enterprises under any previous

Incentive Scheme shall continue to be governed under the
respective Scheme.

23.3 If an enterprise falling under any of the three categories of
enterprises as defined in the MSMED Act, 2006, graduates to a
higher category or beyond the purview of the act from its original
category shall only continue to avail of Non-Tax benefits of its
original category for a period of three (3) years from the date of
such graduation to the higher category or original eligible years
which ends earlier

23.4 In the event of WBST Act, 1956/WBVAT Act, 2003/CST Act,

38

West Bengal : Ease of Doing Business for MSME Sector

1956/W.B. Entry Tax Act 2012 being replaced by any other Act,
the provision of the Scheme will apply mutatis mutandis even
after the new Act comes into force.

The West Bengal Incentive Scheme 2013 for Micro, Small and

Medium Enterprises issued with the concurrence of the Finance

Department vide their U.O.No 408 dated 20-01-2014 and notified
under No. 59-MSET(III)/15S-07/2011 Dated the 3rd February,

2014 of the Department of Micro, Small and Medium Enterprises
and Textiles is modified on approval of the Standing Committee
of the Cabinet on Industry, Infrastructure and Employment in its

45th meeting held on 07.05.2015 and with the concurrence of the

Finance Department vide their U.O.No Group C/2014-2015/0323
dated 23.03.2015 with regard to creation of Zone E relevant to

Coochbehar district.

By Order of the Governor

RAJIVA SINHA

Principal Secretary to the Government of West Bengal

OPERATIONAL PROCEDURES OF WEST BENGAL INCENTIVE

SCHEME 2013 FOR MICRO, SMALL AND MEDIUM ENTERPRISES

AS MODIFIED UPTO 22.05.2015

1. A micro, small or medium enterprise claiming to be eligible for
incentive under WBIS2013 for MSMEs as modified up to

22.05.2015 shall duly apply to the General Manager, District

Industries Centre concerned in Form-A except for Waiver of

Electricity Duty for which it shall apply to the Director, Directorate
of Electricity Duty in Form-C.

The industrial units/enterprises which have already applied for

Eligibility cum Registration Certificate in Form-I or which have
been issued Eligibility cum Registration Certificate under WBIS

2013 for MSMEs shall also apply to the General Manager, District

Industries Centre concerned in Form-A for incentive.

2. On receipt of application for incentive from an enterprise the

General Manager, District Industries Centre shall make, as
expeditiously as possible, scrutiny of/enquiry into particulars
furnished by the enterprise and cause physical inspection of the
enterprise to ascertain the actual date of commencement of
commercial production and Fixed Capital Investment made in

Plant and Machinery by it and on being satisfied that the same is

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

39
in order in terms of the provisions of the Scheme, the General

Manager, District Industries Centre concerned (i) shall issue a

Certificate in Form-B for date of commencement of commercial
production and fixed capital investment in favour of the enterprise
and (ii) shall also recommend the case to the Director, Directorate
of Electricity Duty in Form-F when the enterprise expresses its
intention to apply for Waiver of Electricity Duty to the Director,

Directorate of Electricity Duty. The General Manager, District

Industries Centre concerned shall also approve admissible amount
of incentive as early as possible and inform the applicant on
quantum of admissible amount of incentive. If any application is
found to be not eligible for incentives under the WBIS 2013 for

MSMEs as modified up to 22.05.2015 the General Manager, District

Industries Centre will issue a letter of rejection to the applicant
enterprise.

3(a) An eligible enterprise shall apply to the Commissioner of

Commercial Taxes, West Bengal in Form-D at the close of each
year requesting him to certify the total amount of Entry Tax paid
by it in respect of procurement of plant & machinery as well as
raw materials for implementation of the approved project during
the year in respect of which the application has been made.

(b) On receipt of the application, the Commissioner of Commercial

Taxes, West Bengal, would verify the payments of Entry Tax and
other particulars as contained in the application and issue a
certificate to the General Manager, District Industries Centre/Dy.

Director of M&SSE(Anc)/Officer-in-Charge, Sub District Industries

Centre concerned certifying amount of Entry Tax paid by the
enterprise during the year under consideration alongwith details
of plant and machinery/raw materials.

(c) The enterprise shall maintain the accounts in such a manner that
at any time as may be necessary it can show clearly the amount of

Entry Tax paid in respect of procurement of plant & machinery as
well as raw materials to which it is entitled to refund of Entry Tax
under WBIS-2013 for MSMEs as modified up to 22.05.2015.

4(a) An eligible enterprise shall apply to the Commissioner of

Commercial Taxes, West Bengal in Form-E at the close of each
year requesting him to certify the total amount of VAT & CST
paid by it in respect of goods manufactured and sold during the
year in respect of which the application has been made.

On receipt of the application, the Commissioner of Commercial

Taxes, West Bengal, would verify the payments of VAT & CST

40

West Bengal : Ease of Doing Business for MSME Sector
and other particulars as contained in the application and issue a
certificate to the General Manager, District Industries Centre/ Dy.

Director of M&SSE(Anc.)/Officer-in-Charge, Sub District

Industries Centre concerned certifying the amount of VAT & CST
paid by the enterprise during the year under consideration along
with production details .

(c) The enterprise shall maintain the accounts in such a manner that
at any time as may be necessary it can show clearly the amount of

VAT & CST paid in respect of sales made by it of the item(s)

manufactured as per approved project to which it is entitled to
refund of VAT & CST under WBIS-2013 for MSMEs as modified
up to 22.05.2015 .

5. The General Manager, District Industries Centres shall work out
the admissibility of the enterprise for refund of Entry Tax, VAT &

CST after receiving the certificates from the Commissioner of

Commercial Taxes, West Bengal in the manner specified in 3 & 4
above.

6. The General Manager, District Industries Centre will place the
requisition of funds to the Director, MSME, West Bengal, for
approved amount of incentives.

7(a) On receiving the allotment of funds for the purpose of
disbursement of approved incentive to an enterprise, the General

Manager, District Industries Centre shall require the enterprise
concerned to submit a ‘self- declaration’ to the effect that the
enterprise shall be liable to refund the entire amount of incentive
and in case of failure to refund, the entire amount shall be
recoverable under the Public Demands Recovery (PDR) Act if

(i) the incentive has been claimed by misrepresentation as to an
essential factor by furnishing false information,

(ii) the enterprise shifts itself from Zone-D & E area to anywhere
in the State or from this State to outside the State,

(iii) the enterprise discontinues production in respect of its
approved project within 5 (five) years from the date of
commencement of commercial production,

(iv) the enterprise is sold out,

(v) the loan amount disbursed by Bank/Financial Institution for
the approved project is found to be diverted/utilized for some
other activities/projects

West Bengal Incentive Scheme for Micro, Small and Medium Enterprises

41

AND

If any amount of subsidy/ incentive is paid in excess of the
entitlement of the enterprise detected afterwards, the enterprise
will be liable to refund the same failing which the amount shall be
recoverable under the PDR Act.

(b) After satisfaction as to submission of ‘self-declaration’ as stated
hereinabove the General Manager, District Industries Centre shall
formally issue sanction order in favour of the enterprise with
endorsement to the Drawing and Disbursing Officer of the District

Industries Centre.

8. The Drawing and Disbursing Officer in the District Industries

Centre shall in turn draw the amount of incentive sanctioned by
the General Manager, District Industries Centre, obtain an advance
stamped receipt for the amount to be disbursed and disburse the
same to the enterprise concerned through its Bank/ Financial

Institution under an intimation to the enterprise.

9. The General Manager, District Industries Centre will maintain a
separate register for the purpose of diarising and recording all
applications received under WBIS 2013 for MSMEs as modified
up to 22.05.2015.

10. The General Manager, District Industries Centre will also maintain
a disbursement register for the purpose of keeping enterprise wise
records of all disbursement made under WBIS 2013 for MSMEs as
modified up to 22.05.2015.

***

Procedure for Availing Incentive Scheme

Application for incentives (Form A) under the West Bengal Incentive

Scheme-2013 for Micro, Small & Medium Enterprises as modified up
to 22.05.2015 (to be submitted in duplicate) along with following
documents to be enclosed with the Application:

1. A copy of the Memorandum of Association and Articles of

Association authenticated by the Registrar of Companies/
partnership deed (wherever applicable).

2. A statement on the name and address of the Directors/Partners/

Owners of the enterprise/Members of Co-operative or Self Help

Groups, as applicable.

3. Copy of approved project report.

4. A copy of loan sanctions letter and disbursement letter issued by
financial institutions/banks.

5. A copy of audited balance sheet for last 2 years wherever
applicable.

6. A list of plant and machinery with original value along with copies
of the bills, money receipts.

7. Existing manufacturing activities in West Bengal stating items,
annual approved capacity, annual production during last three
years (in quantity and value in Rs. Lakh), if applicable.

8. Copy of the land deed (wherever applicable). In case of rented/
leasehold land/buildings, copy of rent agreement and receipt /
lease agreement.

9. Copy of mutation & conversion certificate of land/ buildings,
wherever applicable.

10. Copy of valid consent to operate certificate from the WBPCB.

11. Copy of VAT, CST, Entry Tax registration certificate.

12. Copy of trade licence.

13. Copies of other statutory licenses (wherever applicable).

14. Copy of first electricity bill (wherever applicable).

15. Copy of acknowledgement of EM Part-II.

16. Copy of SC/ST certificate wherever applicable.

42

Procedure for Availing Incentive Scheme

43

17. Any other documents, if necessary.

18. Self –declaration.

Additional documents to be enclosed

1. State Capital Investment Subsidy

(i) Self certification on fixed assets as per Annexure-I

2. Interest Subsidy on Term Loan

(i) A certificate from Bank/FI as per Annexure-II

3. Power Subsidy

(i) Copy of documents regarding supply of electricity to the unit/
enterprise

(ii) Copies of all Electricity Bills and corresponding money receipts
for which the claim is made

4. Subsidy for Energy Efficiency

(i) Copies of relevant bills, money receipts for expenditure incurred
towards cost of Energy Audit and installations for energy
conservation

(ii) Copy of Energy Audit Report/Recommendations of the

Certified Agency related to the claim in question.

(iii) Details of installations for energy conservation

5. Subsidy on Stamp Duty and Registration Fees

(i) Scheduled of the land

(ii) Sketch map of the land/building purchased

(iii) Documents showing payment of Stamp Duty and Registration

Fee

6. Refund of Entry Tax

(i) A receipted copy of the application submitted to the

Commissioner, Commercial Tax, West Bengal in Form-D

7. Refund of VAT & CST

(i) A receipted copy of the application submitted to the

Commissioner, Commercial Tax, West Bengal in Form-E

8. Subsidy for Water Conservation/Environment Compliance

(i) Copies of relevant bills, money receipts for expenditure incurred
towards cost of Captive Effluent Water Treatment Plant and

Pollution Control Devices

(ii) Details of Captive Effluent Water Treatment Plant and Pollution

Control Devices

44

West Bengal : Ease of Doing Business for MSME Sector

9. Subsidy for Standard Quality Compliance

(i) Copies of ISI/BIS/ISO9000/ISO14000/ISO 14001/ISO 18000

Certificate

(ii) Copies of relevant bills, money receipts for expenditure incurred
for obtaining ISI/BIS/ISO9000/ISO14000/ISO 14001/ISO 18000

Certificate

10. Work Force Welfare Assistance

(i) Copies of documents regarding contributions made to ESI/EPF

(ii) A statement showing the names of workers, their age, date of
appointment, nature of appointment and nature of work

(iii) Certificate from the Regional Provident Fund Commissioner

(iv) Certificate from the Director, ESI as per Annexure-III

(v) Documents showing the recruitment from Employment Bank of
the State

11. Subsidy for Patent Registration

(i) Copy of documents on fees paid for Patent registration

(ii) Copy of Patent Registration Certificate.

***

Udyog Aadhaar Memorandum

Ministry of Micro, Small and Medium Enterprises vide Notification S.O.

85(E) dated 10th January, 2017 in exercise of the powers conferred by
sub-section (2) of the section 8 of the Micro, Small and Medium Enterprises

Development Act, 2006 (27 of2006) and in supersession of the notification
of the Government of India in the Ministry of Micro, Small and Medium

Enterprises number S.O.2576(E), dated the 18th September, 2015,
published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-
section(ii), dated the 21 September, 2015 except as respects things done
or omitted to be done before such supersession, the Central Government
after undertaking a review of the implementation of Udyog Aadhaar

Memorandum, hereby specifies that any micro, small and medium
enterprise shall file Udyog Aadhaar Memorandum, referred to as the
memorandum) in Form I in accordance with the following procedure,
namely:-

(1) The memorandum shall be filed online on the website of the

Ministry of Micro, Small and Medium Enterprises, Government of

India at http://udyogaadhar.gov.in

(2) Every micro, small and medium engaged in the manufacturing of
goods or rendering of services with total investment in plant and
machinery below the limit specified in section 7 of the said Act,
shall file the memorandum;

(3) The memorandum shall be filed only after establishing the unit,
obtaining all regulatory approvals and starting commercial
operations;

(4) Any number of activities including manufacturing or service or
both may be specified in the memorandum;

(5) The proprietor in the case of a proprietorship firm, managing
partner in the case of a partnership firm and a karta in the case of
a Hindu Undivided Family (HUF), shall provide his Aadhaar

Number in the memorandum;

(6) In case of a company or a limited liability partnership or a
cooperative society or a society or a trust, Permanent Account

Number (PAN) of the organisation along with Aadhaar number
of the authorised signatory shall be specified in the memorandum;

45

46

West Bengal : Ease of Doing Business for MSME Sector

(7) A 'one time password (OTP) for verification of the fresh
memorandum as well as amending of the existing memorandum
shall be sent on mobile phone linked to the Aadhaar Number of
the applicant and the applicant shall enter the OTP in the form
before submitting the memorandum;

(8) The memorandum shall be filed on self certification basis and no
additional document is required to be uploaded at the time of such
filing: Provided that the Central Government or the State

Government or such person as may be authorized in this behalf
may seek documentary proof of the information provided in the
memorandum, wherever necessary;

(9) Udyog Aadhaar Acknowledgement in Form [I to this notification along
with a unique Udyog Aadhaar Number (UAN) shall be generated
and mailed to the email address provided in the memorandum;

(10) There shall be no fee for filing the Udyog Aadhaar Memorandum;

(11) In case an applicant or the authorised signatory does not have

Aadhaar Number or in cases where online filing is not possible for
any reason, a hard copy of the duly filled form I, shall be submitted
to the concerned District Industries Center (D[C) or to the Office
of the Micro, Small & Medium Enterprise - Development Institute

(MSME-DI) under the Development Commissioner, MSME and
the concerned DIC or MSME-OI shall file the Udyog Aadhaar

Memorandum online, on the behalf of such enterprise;

(12) Existing enterprises which have filed Entrepreneurship

Memorandum-II or the holders of Small Scale Industry registration,
prior to the coming into force of the Micro, Small and Medium

Enterprise Development Act 2006 (27 of 2006) shall not be required
to file Udyog Aadhaar Memorandum, but if they so desire they
may also file the Udyog Aadhaar Memorandum;

(13) No enterprise shall file more than one memorandum;

(14) In case of change in address or addition or deletion of activities by
the enterprises or for other changes, the proprietor or the managing
partner or an authorized person may apply for amendment of the
existing memorandum in accordance with the guidelines for filing
the online Udyog Aadhaar Form provided in the website of the

Ministry of Micro, Small and Medium Enterprises, at http://
udyogaadhaar.gov.in. The procedure for amendment in the Udyog

Aadhaar Memorandum would be same as that for filing new

Memorandum;

Udyog Aadhaar Memorandum

47

(15) General Manager of the District Industries Center of the concerned
district shall be authorised to undertake enquiry for verifying the
memorandum submitted by the enterprise and in case of any
discrepancy, he shall issue a notice to the enterprise, giving it an
opportunity to present its case and based on the findings, the
authorised officer may amend or cancel the memorandum;

(16) UAM registration has replaced Entrepreneurship Memorandum-

If (EM-II) and Small Scale Industry Registration for all purposes.

Central or State Government regulatory bodies, tax authorities,
utilities providing water, power, etc. banks and other financial
institutions and similar organisations should accept UAM in place
of EM - II for all purposes. Earlier there was a provision to take

Enterprise Memorandum-I (EM-I) registration before setting up
an enterprise. Applicants used to file applications for obtaining
utilities, building plan approval from local bodies, consent to
establish from State Pollution Control Board or applying for term
loan from bank or a financial institution to set up the enterprise
along with a copy of EM-I. UAM registration is given after an
enterprise starts commercial operations. Now there is no
registration before establishing an enterprise. The practice of EM-

I registration is stopped. There is no counterpart document to EM-

I. Therefore, utilities, local bodies, regulatory bodies, tax authorities,
banks and financial institutions and other similar bodies should
not ask for EM-I from the applicants who want to set up an
enterprise.

[F. No. A-541l12014-CDN]

MANOJ JOSHI, Jt. Secy.

48

West Bengal : Ease of Doing Business for MSME Sector

FORM-I

UDYOG AADHAR

Type of Enterprise

Micro Small Medium

Manufacturing

A

B

C

Service

D

E

F

UDYOG AADHAR MEMORANDUM

1. Aadhaar Number

2. PAN Number*

3. Name of Entrepreneur

4. Social Category

SC

ST

OBC

General

5. Gender

Male

Female

6. Physically Handi-
capped

Yes

No

7. Name of Enterprise

8. Type of Organisation **

9. Location of Plant(s) /

Flat/Door/

Enterprise(s)

Block No.

Name of

Premises/Building/

Area/Locality

Village

Road/Street/ Lane

Pin Code

City

District

State

10. Official Address of

District

State

Pin

Enterprise

Please enter mobile

Mobile No:

Email:

number as in aadhaar
for which

OTP to be sent

11. Date of commencement

12. Previous Registration

SSI

Number-if any

EM-I

EM-2

Udyog Aadhaar Memorandum

49

13. Bank Details

IFS Code:

Bank Account:

14. Major Activity

Manufacturing

Service

15. National Industry

Classification Code

16. Persons employed

17. Investment

(Plant and Machinery/

Equipment's)

18. District Industries

Centre

Declaration

I hereby declare that information given above is true to the best of my knowledge.

Any information, that may be required to be verified, shall be provided
immediately before the concerned authority.

Submit

* In case of a company or a limited liability partnership or a cooperative society
or a society or a trust.

**(1) Proprietary, (2) Hindu Undivided Family (HUF), (3) Partnership, (4) Co-

Operative, (5) Private Limited Company, (6)Public Limited Company, (7) Self

Help Group, (8) Others

50

West Bengal : Ease of Doing Business for MSME Sector

UDYOG AADHAR

Type of Enterprise

Micro Small Medium

Manufacturing

A

B

C

Service

D

E

F

Udyog Aadhaar Acknowledgement

Udyog Aadhaar Number

Name of Enterprise

Location of Plant(s)/

Enterprise(s)

Flat/Door/

Block No.

Name of premises/

Building/Village

Road/Street/Lane

Area/Locality

City

Pin Code

State

District

Official Address of

Enterprise

District

State

Pin

Mobile No.:

Email:

Date of Commence-
ment

Major Activity

Manufacturing

Service

Enterprise Type

Micro

Small

Medium

National Industry

Classification

Code(s)

Previous Registration

Number-if any

SSI

EM-I

EM-2

Acknowledgement

Date of Filing

Date of Printing

Disclaimer : This is computer generated statement no signature
required. Printed from udyogaadhaar.gov.in

Micro, Small and Medium Enterprises

Development (Furnishing of Information)

Rules, 2016

In exercise of powers conferred by clause (e) of subsection (2) of

Section 29 of the MSMED Act, 2006 and in supersession of the

MSMED (Furnishing of Information) Rules, 2009, Ministry of Micro,

Small and Medium Enterprises has notified MSMED (Furnishing of
information) Rules, 2016 vide Gazette Notification of. GSR 750(E)

dated 29 July 2016.

Details of the MSMED (Furnishing of information) Rules, 2016 are as
under:

Rule 2.

Definitions

(1) In these rules, unless the context otherwise requires,-

(a) "Act" means the Micro, Small and Medium Enterprises

Development Act, 2006 (27 of 2006);

(b) "information" means any information furnished by an
enterprise under rule 3 and includes any data or document in
hard copy or soft copy.

(2) Words and expressions used in these rules and not defined but
defined in the Act shall have the meanings respectively assigned
to them in the Act.

Rule 3.

All micro, small and medium enterprises shall furnish the information
relating to their enterprise to the Government in the Form annexed to
these rules.

Rule 4.

The information referred to in rule 3 shall be furnished online to
the Central Government in the data bank maintained by it at
www.msmedatabank.in.

51

52

West Bengal : Ease of Doing Business for MSME Sector

FORM

(See rule 3)

Data Bank

Basic Details

•

Aadhaar Number* :

____________

•

Udyog Aadhaar Number : *Get Udyog Aadhaar

____________

•

PAN Number* :

____________

•

Button to Validate and Get Details : *Validate UAN

____________

•

Enterprise Name : *

____________

•

Category Unit Size : *

____________

•

Organization Type: *

____________

•

Major Activity: *

____________

•

State:*

____________

•

District: *

____________

•

Pin code: *

____________

•

Commencement Date: *

____________

•

Email ID: *

____________

•

Mobile Number: *

____________

•

Communication address: *

____________

•

Enterprise Social Category: *

____________

•

Authorised Person Name: * ____________

•

Nature of Operation: *

____________

•

Cluster Name ( If Any): ____________

•

Website:

•

Any Special Category of Entrepreneur

( ) Ex-Serviceman

( ) Person with Disability ( ) Woman ( ) Minority

•

( ) Registered in the Factory Act 1948?

•

( ) Unit is an Ancillary?

•

( ) Registered in Shop and Establishment Act?

If any, other, please specify ____________

Factory and Product Details

•

Enterprise Address: *

____________

State: *

____________

District *____________

Pin Code :

____________

Micro, Small and Medium Enterprises Development

53

•

Person Employed: *

____________

Installed Capacity (Per Annum): *

Quantity : ____________

Unit : ____________

•

Investment on Machinery/Plant (Rs. in lacs): *

____________

•

Power load: *

H.P. ____________

K.W.: ____________

•

Enterprise Product Description : ____________

•

Major Raw Material used:

1. ____________

2. ____________ 3. ____________

•

Major Buyers:

•

Turnover Last year (Rs. in lacs): *

____________

•

Upload more products: (Upload pdf/doc file max size limit is 1 MB)

Add Product Details

Product Name

____________

Product Code ____________

Production Capacity ____________

Production measurement unit ____________ (Add)

Please provide valid unit

For 'Verification and Capacity Certification', Please click here

Other Details

Bank Name : ____________

Bank Account No. ____________

IFSC Code : ____________

Add Assistance Details

Taken From

___________________ Scheme Name ____________ on
date____________ (Add)

Add Association Details

Association Name ____________ Since date ----------------------------(Add)

Select Office Name: _______________________

Add Appreciation/Award Details

Appreciation/Award Name ____________

Details____________

On Date ____________

(Add)

Additional Requirements

1. Are you using Solar Energy in your organisation/Factory?

____________ (H.P.) ____________ (K.W.)

54

West Bengal : Ease of Doing Business for MSME Sector

If No, do you wish to use it? ____________ (H. P.) ____________

(K.W.)

2. Have you got energy audit done for your unit ? ____________

3. Do you have Joint Venture?

If YES, Please provide details.____________

If No, Do you wish to plan, Joint Venture ? ____________

4. Are you exporting? ____________

If Yes, Please provide country name 1.________ 2. ____________

3.____________

5. Will you be interested in foreign fairs ? ____________

6. Do you have our own brand ? ____________

If yes please provide Brand name ____________

7. Will you be interested in availing Marketing Assistance Scheme?

____________

8. Do you intend to participate in Public procurement ? ____________

9. Do you wish to upgrade Technology ____________

If Yes please specify ____________

10. Do you wish to import Technology? ____________

If YES, Please specify country. ____________

Details ________________________

11. Do you intend to transfer your Technology to other MSEs?

____________ Please specify ____________

12. Is your enterprise ISO certified'? ____________

13. Is your enterprise has quality certification? ____________ Please
specify ____________

14. Will you be interested in Credit facilitation? ____________

15. Have you ever been Black listed? ____________

All (*) marked fields are mandatory

*____________ This is to certify that the information furnished in
the Data bank is true and correct to the best of my knowledge and
belief.

____________Would you like to avail insurance with discounted
premium?

***

Corporatisation of MSME

Hon’ble Minister of Finance, Arun Jaitley in his Budget Speech 2017-18
stated that “156. In order to make MSME companies more viable and
also to encourage firms to migrate to company format, I propose to
reduce the income tax for smaller companies with annual turnover upto

Rs. 50 crore to 25%. As per data of Assessment Year 2015-16, there are

6.94 lakh companies filing returns of which 6.67 lakh companies fall in
this category and, therefore, percentage-wise 96% of companies will get
this benefit of lower taxation. This will make our MSME sector more
competitive as compared to large companies. The revenue forgone estimate
for this measure is expected to be Rs. 7,200 crore per annum.”

More than 90% of MSMEs are proprietorship or partnership enterprise.

Therefore, it is imperative to strive towards corporatisation of Small &

Medium Enterprises for good corporate governance as well as energise
the economy as a whole.

MSME may be incorporated as:

Sole Proprietorship

Partnership

One Person Company (OPC)

Limited Liability Partnership (LLP)

Private Limited Company

Public Limited Company

Starting a business in India requires one to choose a type of business entity.

In India one can choose from different types of legal entities to conduct
business. These include Sole Proprietorship, One Person Company,

Partnership Firm, Limited Liability Partnership, Private Limited Company
and Public Limited Company. The choice of the business entity is
dependent on various factors such as taxation, owner liability, compliance
burden, and investment and funding and exit strategy.

55

5 6

West Bengal : Ease of Doing Business for MSME Sector

Choosing a form of business organization for Start-ups:

Criteria

Most beneficial

Least beneficial

Cost of formation

Sole Proprietorship

Company

Ease of formation

Sole proprietorship

Company

Transfer of Ownership

Public Ltd Company

Partnership

Continuity

Company

Sole
proprietorship

Regulations

Sole Proprietorship

Company

Flexibility

Sole proprietorship

Company

Availability of capital

Company

Sole
proprietorship

Liability

Company and LLP

Sole
proprietorship

Sole Proprietorship

A sole proprietorship is a business that is owned, managed and controlled
by one person. It is one of the most common forms of business in India,
used by small businesses operating in the unorganized sectors.

Proprietorships are very easy to start and have very minimal regulatory
compliance requirement for getting started. However, after the start-up
phase, proprietorship's do not offer the promoter a host of other benefits
such as limited liability, separate legal entity, independent existence,
transferability, etc., which are desirable features for any business.

Therefore, proprietorship's are suited for unorganized, small businesses
that will have a limited existence.

There is no mechanism provided by the Government of India for the
registration or incorporation of a Proprietorship. Therefore, the existence
of a proprietorship is established only by tax registrations and other
business registrations that a Proprietorship is required to have as per the
rules and regulations.

Registration of

Service Tax

MSME Registration

Proprietorship Firm

Registration

Proprietorship firm can

The identity of a

The identity of a
be done in 7 to 14 days,

Proprietorship can be

Proprietorship can be
subject to Government
established through
established by MSME
processing time.

Service Tax Registration

Registration (if

(if applicable)

applicable) mentioning

Corporatisation of MSME

57

Registration of

Service Tax

MSME Registration

Proprietorship Firm

Registration
mentioning the business the business name.

name. Service tax regis-

MSME Registration can
tration takes 10 to 15
be completed in 10 to 15
days, subject to Govern-
days, subject to
ment processing time.

Government processing
time.

Incorporation of Sole Proprietorship

To start a sole proprietorship in India, all we need is a bank account, a

Pan Card number and few licenses.

1. For bank Account, we have to go to a bank and then we can open
a bank account in the name of the company that we wish to
operate in.

2. For PAN card we have apply online to the website of Income Tax
department and a Pan Card will be issued to us.

3. Following Licenses to be taken depending on the kind of business

•

Service Tax / GST Registration

•

VAT / GST Registration

•

IEC,

•

Shops & Establishment license,

•

Importer Exporter Code,

•

ESI,

•

Professional Tax,

•

Central Excise Duty/ GST Registration,

•

CST Registration/GST Registration,

•

Employee Provident Fund Registration and many more.

After getting the respective licenses as per the sole proprietorship business;
one can commence with his her sole proprietorship firm in India.

Annual Compliances of Sole Proprietorship

Proprietorship will have to file their annual tax return with the Income

Tax Department. Other tax filings like service tax filing or VAT/CST/

5 8

West Bengal : Ease of Doing Business for MSME Sector

GST filing as may be necessary from time to time, based on the business
activity performed. However, annual report or accounts need not be filed
with the Ministry or Corporate Affairs, which is required for Limited

Liability Partnerships and Companies.

Partnership Firm

A business registered in the name of an individual is called Sole

Proprietorship. A single person is completely responsible for the entire
business with the business and the owner not being separate from each
other. The owner funds the business, takes any profits and bears any
losses.

It does not involve any complex rules or accounting. Personal assets and
business assets are not separated from each other. Any profits from the
business are just added to the business owner’s income for taxation
purposes.

Similarly, any losses become the personal losses of a business owner. In
case the business starts incurring losses and additional money is needed
to compensate those losses, the personal assets of the owner itself are put
at risk. Partnership business entities are quite similar to sole proprietorship.

The basic difference between partnership and sole proprietorship is that
more than one individual is involved in a partnership.

The roles, responsibilities and the share of each partner are specifically
defined in a legal partnership agreement. Any profit earned by the
business is shared between partners according to the legal partnership
agreement. In case there are losses, each of the partners is personally
responsible. Personal assets of partners may be used to compensate the
losses incurred, if any.

A Partnership Firm is a popular form of business constitution for businesses
that are owned, managed and controlled by an Association of People for
profit. Partnership firms are relatively easy to start and are prevalent
amongst small and medium sized businesses in the unorganized sectors.

With the introduction of Limited Liability Partnerships in India,

Partnership Firms are fast losing their prevalence due to the added
advantages offered by a Limited Liability Partnership.

There are two types of Partnership firms, registered and un-registered

Partnership firm. It is not compulsory to register a Partnership firm;
however, it is advisable to register a Partnership firm due to the added
advantages. Partnership firms are created by drafting a Partnership deed
amongst the Partners.

Corporatisation of MSME

59

Registration of

Partnership Deed

Partnership Deed

Tax Registration

Partnership firm

Registration

Registration of a

Partnership Deed

Based on require-

PAN and TAN

Partnership firm
that is acceptable
ments and the
registration can

Can be done start-
to all Partners
service level register issued once the
up a Partnership
the Partnership

Partnership Firm is
in 7 to 14 days.

Deed with the
registered.

relevant authori-
ties to make the

Partnership a

Registered

Partnership Firm.

Incorporation of Partnership Firm

A partnership firm can be registered whether at the time of its formation
or even subsequently. Partners need to file an application with the Registrar
of Firms of the area in which business is located.

Application for partnership registration should include the following
information:

1. Name of the firm

2. Name of the place where business is carried on

3. Names of any other place where business is carried on

4. Date of partners joining the firm

5. Full name and permanent address of partners

6. Duration of the firm

7. Every partner needs to verify and sign the application

Following documents and prescribed fees are enclosed with the registration
application:

1. Application for Registration in the prescribed Form

2. Duly filled Specimen of Affidavit

3. Certified copy of the Partnership deed

4. Proof of ownership of the place of business or the rental/lease
agreement thereof

Compliances of Partnership Firm

Partnership is simple to form and manage compared to company and

LLP. However there are requirement of filing various forms in case of

6 0

West Bengal : Ease of Doing Business for MSME Sector
change in address, addition / removal of partner, change in firm name
or business place etc.

S.No. Subject

Section

1.

Registration of Partnership Firm

58(1) & (1A)

2.

Change in Principal Place/nature
of business / firm name

60(1)

3.

Opening and closing of branches

61

4.

Change in the name (person/
limited company and address of
the partner)

62

5.

Change in Constitution-

Admission/Retirement/

Dissolution/Death of Partner/
minor partner

63

6.

Minor attaining majority and
elects to become/ not to
become a Partner

63(2)

7.

Appeal against refusal by

58(4)

registrar to register the firm
under a particular name

One Person Company

The introduction of OPC in the legal system is a move that would encourage
corporatization of micro businesses and entrepreneurship with a simpler
legal regime so that the small entrepreneur is not compelled to devote
considerable time, energy and resources on complex legal compliances.

This will not only enable individual capabilities to contribute economic
growth, but also generate employment opportunity. One Person

Company of sole-proprietor and company form of business and has been
provided with concessional /relaxed requirements under the Companies

Act, 2013. With the implementation of the Companies Act, 2013, a single
national person can constitute a Company, under the One Person

Company (OPC) concept.

As per section 2(62) of the Companies Act, 2013, “One Person Company”

means a company which has only one person as a member.

Corporatisation of MSME

61

ONE PERSON COMPANY V/S SOLE PROPRIETORSHIP

ONE PERSON COMPANY

SOLE PROPRIETORSHIP

Separate Legal entity

Not a Separate Legal Entity

Limited Liability

Unlimited liability

Perpetual succession

No perpetual succession

Loan-not the sole responsibility

Loan-sole responsibility of the
of the owner
owner

Registration required

Registration not required

Finance–credit record of

Finance – credit record of the
the OPC

Owner

OPC structure would be similar to that of a proprietorship concern without
the ills generally faced by the proprietors. One most important feature of

OPC is that the risks mitigated are limited to the extent of the value of shares
held by such person in the company. This would enable entrepreneurial
minded persons to take the risks of doing business without the botheration
of litigations and liabilities getting attached to the personal assets. One

Person Company has a separate legal identity from its shareholders, i.e.,
the company and the shareholders are two different entities for all
purposes. On the other hand proprietorship does not have a separate
legal identity from its members. The existence of a One Person Company
is not dependent upon its members and hence, it has a perpetual
succession, i.e., death of a member does not affect the existence of the
company and the Sole proprietorship is an entity whose existence depends
on the life of its members and death or any other contingency may lead to
the dissolution of such an entity.

In OPC the business head is the decision maker, he is not dependent on
others for suggestions or implementation of suggestions etc., resulting in
quicker and easier decision making. He is the sole person who runs the
business and hence, the question of consensus or msajority opinion etc.,
does not arise.

COMPANY V/S OPC

COMPANY

Common Seal

OPC

Perpetual Succession

Separate legal entity

Limited Liability

Separate Ownership

Management and Control

6 2

West Bengal : Ease of Doing Business for MSME Sector

Salient Features of OPC

The salient features of OPC are:

•

Desire for personal freedom that allows the Professional skilled
person to adopt the business of his choice.

•

Personality driven passion and implementation of a business plan.

•

The desire of the entrepreneurial person to take extra risk and
willingness to take additional responsibility.

•

Personal commitment to the business which is a sole idea of the
person and close to his heart.

•

It is run by individuals yet OPCs are a separate legal entity similar
to that of any registered corporate.

•

A One Person Company is incorporated as a private limited
company.

•

It must have only one member at any point of time and may have
only one director.

•

The member and nominee should be natural persons, Indian

Citizens and resident in India. The term "resident in India" means
a person who has stayed in India for a period of not less than 182
days during the immediately preceding one calendar year.

•

One person cannot incorporate more than 1 OPC or become
nominee in more than 1 OPC.

•

If a Member of OPC becomes a member in another OPC by virtue
of his being nominee in that OPC then within 180 days he shall
have to meet the eligibility criteria of being Member in one OPC.

•

OPC to lose its status if paid up capital exceeds Rs. 50 Lakhs or
average annual turnover is more than 2 crores in 3 immediately
preceding consecutive years.

•

No minor shall become member or nominee of the One Person

Company or hold share with beneficial interest.

•

Such Company cannot be incorporated or converted into a
company under section 8 of the Companies Act, 2013.

•

Such Company cannot carry out Non Banking Financial

Investment activities including investment in securities of any body
corporate.

•

No such company can convert voluntarily into any kind of
company unless 2 years have expired from the date of
incorporation, except in cases where capital or turnover threshold
limits are reached.

Corporatisation of MSME

63

•

An existing private company other than a company registered
under section 8 of the Act which has paid up share capital of Rs.

50 Lakhs or less or average annual turnover during the relevant
period is Rs. 2 Crores or less may convert itself into one person
company by passing a special resolution in the general meeting.

Privileges Available to OPC

Some of the privileges and benefits identified with OPCs are:

•

OPCs would provide the start-up entrepreneurs with new business
idea.

•

OPC provides an outlet for the entrepreneurial impulses among
the professionals.

•

The advantages of limited liability. The most significant reason for
shareholders to incorporate the ‘single-person company’ is
certainly the desire for the limited liability.

•

OPCs are not proprietorship concerns; hence, they give a dual
entity to the company as well as the individual, guarding the
individual against any pitfalls of liabilities. This is the fundamental
difference between OPC and sole proprietorship.

•

Unlike a private limited or public limited company (listed or
unlisted), OPCs need not bother too much about compliances.

•

Business currently run under the proprietorship model could get
converted into OPCs without any difficulty.

•

OPCs require minimal capital to begin with. Being a recognized
corporate, could well raise capital from others like venture capital
financial institutions etc., thus graduating to a private limited
company.

•

Mandatory rotation of auditor after expiry of maximum term is
not applicable.

•

The annual return of a One Person Company shall be signed by
the company secretary, or where there is no company secretary,
by the director of the company.

•

The provisions of Section 98 and Sections 100 to 111 (both
inclusive), relating to holding of general meetings, shall not apply
to a One Person Company.

•

A One Person Company needs to have minimum of one director.

It can have directors up to a maximum of 15 which can also be

6 4

West Bengal : Ease of Doing Business for MSME Sector
increased by passing a special resolution as in case of any other
company.

•

For the purposes of holding Board Meetings, in case of a one person

Company which has only one director, it shall be sufficient
compliance if all resolutions required to be passed by such a

Company at a Board meeting, are entered in the minutes-book,
signed and dated by the member and such date shall be deemed
to be the date of the Board Meeting for all the purposes under this

Act. For other One Person Companies, at least one Board Meeting
must be held in each half of the calendar year and the gap between
the two meetings should not be less than 90 days.

•

The financial statements of a one person company can be signed
by one director alone. Cash Flow Statement is not a mandatory
part of financial statements for a One Person Company. Financial
statements of a one person company need to be filed with the

Registrar, after they are duly adopted by the member, within 180
days of closure of financial year along with all necessary documents.

•

Board’s report to be annexed to financial statements may only
contain explanations or comments by the Board on every
qualification, reservation or adverse remark or disclaimer made
by the auditor in his report.

Types of OPC

•
a company limited by shares; or

•
a company limited by guarantee; or

•
an unlimited company.

Memorandum of OPC

The memorandum of a company shall state—

•
the name of the company with the last word “Private Limited”;

•
the State in which the registered office of the company is to be
situated;

•
the objects for which the company is proposed to be incorporated
and any matter considered necessary in furtherance thereof;

•
the liability of members of the company, whether limited or
unlimited, with details

•
the amount of share capital with which the company is to be
registered and the division thereof as specified;

Corporatisation of MSME

65

•
the number of shares each subscriber to the memorandum intends
to take, indicated opposite his name;

•
in the case of One Person Company, the name of the person who,
in the event of death of the subscriber, shall become the member
of the company.

Directors of OPC

•

Articles of a company may provide for the appointment of the
first directors

•

If articles are silent then the subscriber to the memorandum who
is an individual shall be deemed to be the first director of the
company

•

May have a single director

•

Maximum-15 directors and more than 15 directors after passing

Special Resolution

•

Director must have stayed in India for a total period of not less
than 182 days in the previous calendar year.

Meetings of board of OPC

•

At least one meeting of the Board of Directors to be conducted in
each half of a calendar year

•

Gap between the two meetings should not be less than ninety days

•

Exemption – if company has only one director.

Contract by OPC

•

One Person Company limited by shares or by guarantee enters
into a contract with the sole member of the company who is also
the director of the company, the terms of contract or offer are in
writing or contained in a memorandum or recorded in the minutes
of the Board meeting held next after entering into the contact.

•

Inform the Registrar about every contract entered into by the
company within a period of fifteen days from the date of approval
by the Board of Directors.

•

Contracts in ordinary course of business not required to comply
with the above.

Financial statement of OPC

•

The financial statement, signed by one director, for submission to
the auditor for his report thereon.

6 6

West Bengal : Ease of Doing Business for MSME Sector

•

The report of the Board of Directors to be attached to the financial
statement.

•

Board of Directors Report of OPC means a report containing
explanations or comments by the Board on every qualification,
reservation or adverse remark or disclaimer made by the auditor
in his report.

•

Filed with ROC within 180 days from the closure of the financial
year.

•

Financial statement may not include the cash flow statement.

Exemption available to OPC

•

Section 96. Option to dispense with the requirement of holding an

AGM

•

Section 98. Power of Tribunal to call meetings of members

•

Section 100. Calling of extraordinary general meeting.

•

Section 101. Notice of meeting.

•

Section 102. Statement to be annexed to notice.

•

Section 103. Quorum for meetings.

•

Section 104. Chairman of meetings

•

Section 105.Proxies

•

Section 106. Restriction on voting rights

•

Section 107. Voting by show of hands

•

Section 108. Voting through electronic means

•

Section 109. Demand for poll

•

Section 110.Postal ballot

•

Section 111. Circulation of members’ resolution

Incorporation of One Person Company

Obtain Digital Signature Certificate [DSC] for the proposed Director(s)

Obtain Director Identification Number [DIN] for the proposed
director(s).

Select suitable Company Name, and make an application to the

Ministry of Corporate Affairs for availability of name.

Corporatisation of MSME

67

Draft Memorandum of Association and Articles of Association

[MOA & AOA]

Sign and file various documents including MOA & AOA with the

Registrar of Companies electronically.

Payment of Requisite fee to Ministry of Corporate Affairs and also

Stamp Duty.

Scrutiny of documents at Registrar of Companies [ROC].

Receipt of Certificate of Registration/Incorporation from ROC.

Reservation of name

An application for the reservation of a name shall be made in Form No.

INC.1 along with the fee as provided in the Companies (Registration offices
and fees) Rules, 2014.

The model articles as prescribed in Table F, G, H, I and J of Schedule I
may be adopted by a company as may be applicable to the case of the
company, either in totality or otherwise.

Application for incorporation of companies

An application shall be filed, with the Registrar within whose jurisdiction
the registered office of the company is proposed to be situated, in prescribed
form along with the fee as provided in the Companies (Registration offices
and fees) Rules, 2014 for registration of a company:

Signing of Memorandum and Articles of Association

The memorandum and articles of association of the company shall be
signed by each subscriber to the memorandum, who shall add his name,
address, description and occupation, if any, in the presence of at least
one witness who shall attest the signature and shall likewise sign and
add his name, address, description and occupation, if any and the witness
shall state that “I witness to subscriber/subscriber(s), who has/have
subscribed and signed in my presence (date and place to be given); further

I have verified his or their Identity Details (ID) for their identification and
satisfied myself of his/her/their identification particulars as filled in”.

Affidavit of Subscriber and first directors

The affidavit shall be submitted by each of the subscribers to the
memorandum and each of the first directors named in the articles in Form

No.INC.9

6 8

West Bengal : Ease of Doing Business for MSME Sector

Particulars of Subscriber

Particulars of every subscriber to be filed with the Registrar at the time of
incorporation

Nomination by the subscriber or member

(1) The subscriber to the memorandum of a One Person Company
shall nominate a person, after obtaining prior written consent of
such person, who shall, in the event of the subscriber’s death or
his incapacity to contract, become the member of that One Person

Company.

(2) The name of the person nominated shall be mentioned in the
memorandum of One Person Company and such nomination in

Form No. along with consent of such nominee obtained in Form

No INC.3 and fee as provided in the Companies (Registration
offices and fees) Rules, 2014 shall be filed with the Registrar at the
time of incorporation of the company along with its memorandum
and articles.

Declaration by professionals

The declaration by an advocate, a Chartered Accountant, Cost accountant
or Company Secretary in practice shall be in Form No. INC-8.

Important Instructions - Filing of e-Form for Incorporation of OPC

— For incorporation of One Person Company required filing the
prescribed form

— It is suggested that e-Form DIR-12 should be filed if the member is
not the sole director of the company.

— In case the address for correspondence is not the address of the
registered office of the Company, user is required to file INC-22
within 30 days of its incorporation.

— Stamp duty on incorporation form, Memorandum of Association

(MoA) and Articles of Association (AoA) can be paid electronically
through the MCA portal.

— Payment of stamp duty electronically through MCA portal is
mandatory in respect of the States which have authorized the

Central Government to collect stamp duty on their behalf. Now e-

Stamp duty payment is to be done online through MCA portal for
all the states.

— Refund of stamp duty, if any, will be processed by the respective

Corporatisation of MSME

69
state or union territory government in accordance with the rules
and procedures as per the state or union territory stamp Act.

— Scan the photograph of every subscriber with MOA and AOA.

— The company can have its registered office from the date of
incorporation or on and from the 15th day of its incorporation.

Till the same is established and intimated to the RoC, company
can have its correspondence address capable of receiving and
acknowledging all communications and notices as may be
addressed to it.

— Details of registered office address of the company if the company
is having its registered office from the date of its incorporation.

— Valid email id of the company. Ensure that this email ID is valid
as intimation regarding processing of the eForms, important
communication from RoC office shall also be communicated
electronically at the email ID being mentioned here.

— Details of the address of the police station under whose jurisdiction
the registered office of the company is to be situated.

— Details of authorized and subscribed share capital break up in
case of a company having share capital.

— Minimum and maximum number of members for One Person

Company is one only.

— The subscriber to the Memorandum shall ensure that the payment
for the total amount of shares subscribed by him is made to the
company upon incorporation.

— Enter the number of shares, total amount of shares and nominal
amount per share for each type of share. At least one type of share
capital (Equity/ Preference) should be greater than zero.

— In case company has shares of multiple nominal amounts per share,
then multiple nominal values per share separated by comma in
the field Nominal amount per share.

— Main division of industrial activity of the company.

— Details of promoter.

— User is required to file e-Form DIR-12 in case promoter and director
are not the same persons.

— DIN or Income-tax PAN. In case DIN is entered it should be an
approved DIN.

7 0

West Bengal : Ease of Doing Business for MSME Sector

— For cases of PAN, name and address of the promoter is required
to be entered. System shall verify the name of the promoter based
on PAN entered.

— Surname or family name in the field Family Name.

— Other relevant particulars of the promoter including duration of
stay at present address. If duration of stay is less than a year at
present address, enter the details of previous residence of the
promoter. Ensure that Promoter to One Person company is always
an Indian citizen and resident in India and promoter shall be
eligible to incorporate only one OPC.

— Every One Person Company is required to indicate the name of
other person as nominee to the sole member in the memorandum
and nominee for the subscriber should be an individual who is an

Indian citizen and resident in India.

— The name of such nominee.

— Enter the details of nominee by entering approved DIN or valid

Income-tax PAN. In case DIN is entered, the system shall
automatically display the name, middle name, surname, father’s
name and gender of such person.

— Provide details of stamp duty already paid.

— Ensure the e-Form is digitally signed by the same person whose
designation is reflected in the declaration section of the e-Form.

— In case the person digitally signing the e-Form is a Director - Enter
the approved DIN. In case the person digitally signing the e-Form
is Company Secretary - Enter valid membership number. In case
the person digitally signing the e-Form is Manager - Enter approved

DIN or valid income-tax PAN.

— It is mandatory to attach Memorandum of Association, Articles
of Association, proof of identity of the member and the nominee,
residential proof of the member and the nominee, copy of PAN
card of member and nominee, consent of nominee in Form INC-3
along with enclosures, affidavit from the subscriber and first
director to the memorandum in Form No. INC-9.

— It is mandatory to attach Specimen Signature in Form INC-10 in
case company is 'Not having share capital'.

— It is mandatory to attach Entrenched Articles of association if any
of the articles are entrenched.

Corporatisation of MSME

71

— Proof of registered office address and copies of the utility bills not
older than two months are required to be attached in case of
address of correspondence is the address of registered office of the
company.

— It is mandatory to attach proof that the company is permitted to
use the address of the registered office of the company if the same
is owned by director/any other entity/ Person (not taken on lease
by company).

— It is mandatory to attach consent to act as a director in case
subscriber and director are the same persons.

— List of all the companies (specifying their CIN) having the same
registered office address, if any.

Or

Company can be incorporated through integrated route by filing SPICe-

Form INC-32 Procedure for Filing SPICe- FORM INC-32

Form INC-32 must be accompanied by supporting documents including
details of Directors and Subscribers, affidavits, declarations, identity proof,
address proof, MOA, AOA etc. Once the e-form is filed, its process by

MCA’s Central Processing Centre. If found complete, Company would
be registered and CIN would be allotted. Also DINs gets issued to the
proposed directors who do not have a valid DIN. Maximum three

Directors are allowed for using this integrated form for filing application
of allotment of DIN while incorporating a company.

In addition to allotment of DIN and providing of Incorporation Certificate,
the Company’s PAN, TAN and ESIC registration can also be obtained
easily in a single step while using Form INC-32.

Declaration by Professional

The digital signature of a professional (Chartered Accountant/ Company

Secretary/ Cost Accountant/ Advocate) is require to file Form INC-32.

The professional must declare that all information presented in the form
is correct and enter his/her membership number and certificate number.

Documents required for SPICe FORM INC-32

The following documents must be filed with SPICe Form INC-32 for
incorporation of Company:

1. Memorandum of Association – Applicable and mandatory only in
case of Section 8 company or company with foreign subscribers
not having DIN

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2. Articles of Association – Applicable and mandatory only in case of

Section 8 Company or company with foreign subscribers not
having DIN

3. Affidavit and declaration by first subscriber(s) and director(s) –

Mandatory in all cases

If the address for correspondence is the address of registered office
of the company, then following attachments are mandatory:

4. Proof of office address

5. Copies of utility bills that are not older than two months.

If proposed name require approval of Central government then
attach the following:

6. Copy of approval in case the proposed name contains any word(s)

or expression(s) which requires approval from central government

If the proposed name is based on a registered trademark or is
subject matter of an application pending for registration under
the Trade Marks Act, then it is mandatory to attach:

7. Approval of the owner of the trademark or the applicant of such
trademark for registration of Trademark

If the promoters are carrying on any Partnership firm, sole
proprietary or unregistered entity in the name as applied for, then
it is mandatory to attach:

8. NOC from the sole proprietor/ partners/other associates/ existing
company

If proposed name requires approval from any sectoral regulator,
then it is mandatory to attach (if already received):

9. In principle approval from the concerned regulator

If any subscriber to the proposed company is Foreign company
and/or company incorporated outside India, then it is mandatory
to attach:

10. Copy of certificate of incorporation of the foreign body corporate
and resolution passed

Note : It is optional to attach Copy of certificate of incorporation
in case the subscriber to the proposed company is Body Corporate.

If any subscriber to the proposed company is a Company itself,
then it is mandatory to attach:

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73

11. Resolution passed by promoter company

In case the name is similar to any existing company, then it is
mandatory to attach:

12. A certified true copy of No objection certificate by way of board
resolution/resolution

In case any of the director has any interest in the proposed
company, then it is mandatory to attach:

13. Interest of first director(s) in other entities

In case of an OPC, it is mandatory to attach:

14. Consent of nominee

15. Proof of identity and residential address of the nominee

If any one of the subscriber does not have a DIN, it is mandatory
to attach:

16. Proof of identity and residential address of the subscribers

If any of the director (including subscriber cum director) does not
have DIN, then it is mandatory to attach:

17. Proof of identity and residential address of such director

If SRN of INC-1 is mentioned in the form and any of the person
mentioned in INC-1 as promoter is not subscribing to MOA, then
attach:

18. NOC in case there is change in the promoters (first subscribers to

Memorandum of Association)

Any other information can be provided as an optional attachment. A
separate declaration in format of INC-8 is not required to be attached.

This is recommended to name the attachments with proper name. For
e.g. If PAN is attached as proof of identity then recommended name of
the attachment is “PAN – Proof of Identity”. This should be followed
while attaching any attachment.

Certificate of Incorporation

Registrar after being satisfied issue Certificate of Incorporation.

Annual Compliances for One Person Companies

In addition to the compliances under MSMED Act, Labour Law,

Environmental Law etc., MSME incorporated in the form of One Person

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Company has to comply following compliances prescribed under

Companies Act, 2013:

Particular of Compliance

— Every Director of the Company in First Meeting of the Board of

Director in each Financial Year will disclose his interest in other
entities (Form MBP-1)

— Every Director is required to submit with the company fresh MBP-

1 whenever there is change in his interest from the earlier given

MBP-1.

— Every Director of the Company in each Financial Year will file
with the Company disclosure of non-disqualification. (Form DIR-

8)

— Meaning of AGM for the OPC mean “Resolution passed for the
ordinary Business entered into the Minutes Book. In case of OPC,
there is no need to hold AGM. Because there is only one Member.

— Annual Return : OPC will file its Annual Return within 60 days
of entry of ordinary resolution in Minute Book. Annual Return
will be for the period 1st April to 31st March. In Case of OPC,
there is no need to hold AGM. (Form MGT-7)

— Financial Statement : The Company is required to file its Balance

Sheet along with statement of profit and Loss account and

Directors’ Report in this form.

— Attachment : Balance Sheet, Statement of Profit & Loss account,

Directors’ Report, Auditors’ Report and Notice of AGM. (Form

AOC-4)

— Directors’ report shall be prepared by mentioning of all the
information required for Small company under Section 134.

— It should be signed by only One Director.

— Company shall send to the Members of the Company approved
financial statement, Directors’ report and auditors’ Report at least

21 clear days before the date of AGM.

— OPC shall hold a minimum number of Two Meetings of its Board
of Directors every year in such a manner that Minimum gap
between both the Meetings, should be not less than 90 (Ninety)

days.

— Auditor will be appointed for the 5 (Five) year and form ADT-1
will be file for 5-year appointment.

— After that every year in AGM, Shareholder will ratify the Auditor
but there is no need to file form ADT-1.

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75

LIMITED LIABILITY PARTNERSHIP

A limited liability partnership can at best be described as a hybrid between
a company and partnership that provides the benefit of limited liability
but allows its members the flexibility of organising their internal structure
as a partnership based on a mutually arrived agreement.

As the famous saying goes, “Everything is good in a limit “. The same
holds true for liability as well. A limited liability partnership (LLP) is viewed
as an alternative business vehicle in which the liability of its partners is
limited to the extent of their capital contribution or as agreed as per the

Limited Liability Partnership Agreement. The primary intention of LLP is
that its external structure should mirror that of the limited company but
in terms of conduct of internal affairs it would be similar to traditional
partnership.

The existing business organization structures in India, which are most
commonly used – like proprietary concerns, partnerships and companies
are subject to varying regulatory and tax requirements and are not suitable
for some businesses and professions. In India, several professionals are
barred from forming companies with limited liability. The LLP Act, 2008
does not restrict the benefit of LLP structure only to certain classes of
professionals and will be available for use by any enterprise that fulfils
the requirements of this Act. Owing to flexibility in its structure and
operations, the LLP would be a suitable vehicle for Professionals, Service

Providers, Traders and Manufacturers, small enterprises and for
investment by venture capital.

A limited liability partnership (LLP) is a body corporate, with a distinct
legal entity separate from that of its partners. It has perpetual succession
and a common seal. A limited liability partnership, which is a separate
legal person, will be liable to the third parties independent of the other
partners. Any change in its partners, will not affect the existence, rights
or liabilities of the limited liability partnership. Like a company, a limited
liability partnership can do all the things an individual or company can
do. It can make contracts, sue or be sued, hold property or become
insolvent.

A limited liability partnership can at best be described as a hybrid between
a company and a partnership that provides the benefits of limited liability
but allows its members the flexibility of organizing their internal structure
as a partnership based on a mutually arrived agreement. An LLP is formed
pursuant to a "Limited Liability Partnership agreement" which means
any written agreement between the partners of the limited liability
partnership or between the limited liability partnership and its partners,
which determines the mutual rights, and duties of the partners and their

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rights and duties in relation to that limited liability partnership. This form
of business structure has been prevalent in many countries including USA,

UK, Japan, and Singapore.

Key Characteristics of LLP

— Separate Legal Entity : LLP is a separate legal entity from its partners.

— Limited liability : Liability of the partner is limited to the extent of
his contribution in the LLP. No exposure of personal assets of the
partner, except in cases of fraud.

— Right to manage business : Unlike corporate shareholders, the
partners have the right to manage the business directly.

— Perpetual succession : It has perpetual succession. It means LLP has
existence, no matter how many changes occur in membership.

— Profit motive : It should be 'for profit' business.

— Agreement : The rights and duties of partners in LLP will be
governed by the agreement between partners and the partners
have the flexibility to devise the agreement as per their choice.

— Legal proceedings : It is a legal entity which can sue and be sued.

— Compliances : There are minimum compliances required to be
complied with under LLP Act.

— Related Party Transactions : There is no restriction for entering into
contracts with related parties.

— Tax benefit : Profit will be taxed only in the hands of LLP and not
in the hands of its partners. Thus, it helps avoiding double taxation.

— No requirement for Minimum Capital Contribution : There is a
requirement for a minimum capital contribution from the partners,
which then shall be available for the Creditors of the LLP or for a
guarantee from the partners for the obligations of the LLP.

— Rights of Partners are transferable : LLP Act, 2008 provides that the
rights of a partner to a share of the profits and losses of the LLP
and to receive distributions in accordance with the LLP agreement
are transferable either wholly or in part.

— Partner can enter into transactions and give loan to the LLP : LLP Act
provides that a partner may lend money to and transact other
business with the LLP and has the same rights and obligations
with respect to the loan or other transactions as a person who is
not a partner.

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77

— Contributions may be given in Instalments : The Act does not prevent
a partner from making his contributions in instalments. However
the Partner shall remain liable for the full amount that he has
agreed to contribute but has not been paid up.

LLP alternative to traditional form of Partnership

LLP is defined as a partnership firm registered under the Act. It shall
have a written agreement either between partners or between partners
and LLP. Such agreement to provide for mutual rights and duties of the
partners amongst themselves and in relation to LLP. A traditional
partnership firm can be brought into existence either by an oral or by a
written agreement. It may be registered (with written agreement) under
the Indian Partnership Act, 1932. Unlike an incorporated company, a
traditional partnership does not have a legal personality of its own and,
therefore, the partners are liable for the debts of the firm.

An alternative is available under Indian law to register a partnership
under the LLP Act, 2008. LLP is a body corporate, separate from its
partners. It shall have perpetual succession, meaning, partners may come
and partners may go, but LLP continues. Any change in partners shall
not affect the existence, rights and liabilities of the LLP. Where a
partnership is registered under the LLP Act, then the provisions of the

Partnership Act 1932 shall not apply to it.

Advantage of LLP over traditional form of Partnership

In traditional partnerships, the partners are fully liable for the debts of
the firm. Each partner's personal asset is at risk irrespective of culpability.

Indian traditional partnerships are, therefore, restricted to persons who
know each other closely. With the enactment of the LLP Act, such liability
of partners will no longer be unlimited. Limited partners are liable only to
the extent of their investment. Just like an incorporated company, LLP
have a legal personality of its own and, therefore, partners are not liable
for the debts of the LLP firm. LLP can sue in its own name and be sued by
others. LLP can own property in its own name. Where a partner of LLP
does any wrongful act or omits to do an act, in the course of business of

LLP or where such act or omission of a partner is in exercise of authority
of LLP, then in such cases, liability if any, shall be that of LLP only and
not of the partner who did or omitted any act. This is similar to a private
limited company, where for any wrong done, generally the private limited
company would be liable and not its directors.

Like private limited company, LLP is considered as a separate legal entity,
different from its partners. However where such an act (wrongful act) or
omission (to do) is not in the course of the business of LLP or not under

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the authority of LLP, then such partner who acts or omits to do any act,
shall alone be liable and not any other partner of LLP. This is different
from traditional partnership where act of one partner binds the other
and hence makes all partners liable. An obligation of LLP, whether arising
in contract or otherwise, shall solely be the obligation of the LLP only.

Since partners of LLP are not liable, those who deal with LLP need to
take adequate precautions, which may comprise of knowing. Liabilities
of the LLP shall be met out of the property of the LLP.

Thus, LLP is different from traditional partnership, amongst other things,
in the sense that property of the partners is not affected in discharging
obligation of LLP.

— Limited liability - reduced risk to personal wealth from creditors’

claims;

— Internal flexibility - facilitates participation in management and
maintenance of ethos of partnership.

Advantages of LLP form

LLP form is a form of business model which:

— is organized and operates on the basis of an agreement.

— provides flexibility without imposing detailed legal and procedural
requirements

— enables professional/technical expertise and initiative to combine
with financial risk taking capacity in an innovative and efficient
manner.

Comparative Analysis-Partnership vs. LLP

Partnership

Limited Liability Partnership

Partnership under Indian

Limited Liability Partnership under

Partnership Act

LLP Act

Unlimited personal liability of

Liability limited to the properties of
each partner for dues of the

LLP except in case of unauthorized
partnership firm.

acts, fraud and negligence of
partner(s) when the delinquent
partner will be personally liable.

Registration of partnership is

Incorporation of partnership as LLP
not mandatory
is mandatory.

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Partnership

Limited Liability Partnership

Not a legal entity separate from

Legal entity separate from its
its partners. Firm cannot hold
partners. The firm may hold property
property in its own name
in its own name and sue or be sued

(only in the names of the
in its own name.

partners); cannot sue or be
sued in its own name.

Partnership deed is executed.

Incorporation Document' is executed.

LLP

Agreement/First Schedule governs
the mutual rights and duties of
partners inter se and between the
partners and the LLP.

Minimum 2 partners

Minimum 2 partners

Documents are required to be

Documents are required to be MCA/
filed with Registrar of firms

ROC LLP is the administrative
authority

Partners are liable for statutory

Only Designated Partners are liable
compliances.

for statutory compliances except
when LLP has only one Designated

Partner (when all the partners are
liable).

Partner cannot enter into

Partners may enter into contracts
business with firm since the
with their LLP including lending of
latter is not a separate legal
money; they have rights and
entity.

obligations therefore as in the case
of third parties/outsiders.

Every partner of a firm is an

Every partner of LLP is an agent only
agent of the firm and also of
of the firm and not of the other
other partners.

partner(s).

No filing of Accounts or

Accounts, Solvency Statement and

Solvency Statement or Annual

Annual Return are to be filed with

Return with Registrar of Firms.

RoC each year.

Partnership firm can be dis-

LLP to be wound up and dissolved
solved as per Act/Partnership
as per LLP Act.

Deed.

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Comparative Analysis - Limited Company v. LLP

Limited Company

Limited Liability Partnership

Memorandum & Articles of

Incorporation document and LLP

Association to be filed with RoC.

Agreement to be filed. First

Table A applies in the absence of

Schedule applies in the absence

Articles.

of LLP Agreement.

Name to end with 'Limited or

Name to end with 'Limited

'Private Limited' (Government

Liability Partnership or 'LLP'.

Companies are exempted).

Managing Director / Manager

Management rests with those
vested with powers of day to day

Partners (including designated
administration subject to the
partners) who are authorised by
supervision, control and direction

LLP agreement (As Designated
of the Board of directors.

Partners they are responsible only
for legal compliances).

Certain restrictions on remune-

No legal restriction on remune-
ration payable to the Directors,
ration to partner. Partners will be
their relatives etc.

eligible for remuneration as per

LLP Agreement.

Charges / mortgages to be valid

No such provision for LLPs.

should be registered with RoC.

AGM of shareholders mandatory

No AGM of partners.

Restrictions exist on inter-corpo-

No such restrictions
rate investments and loans.

Incorporation fee and Document

Moderate fee for incorporation

Registration fees are high - also
and Filing of documents - sonly
many forms to be filed.

annual filing.

Partners for an LLP

Every LLP shall have:

— at least two partners. Both of them shall be individuals. In case
where an LLP has only body corporate as partners, atleast two of
its nominee shall be individuals. If, for a period of more than six
months, the number of partners of the LLP is reduced below two,
it may be wound up.

— at least two designated partners (who shall be individuals. Body

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corporate cannot be designated partner of LLP. However
individual nominee of body corporate can be designated partner).

— one of the designated partners, shall be resident in India (i.e. stayed
in India for atleast 182 days during previous one year. Term 'year'

is not defined and hence shall have its meaning as per the General

Clauses Act – i.e. calendar year as per Georgian Calendar i.e. from

January to December).

Who can be partner in LLP

— An individual (other than one who has been found to be of
unsound mind by Court, an un discharged insolvent; has applied
to be adjudged insolvent and application is pending)

— Indian private and/or public company

— foreign company

— any other LLP

— LLP registered outside India

Who cannot be partner in a LLP?

— a corporation sole

— a co-operative society

— a HUF or its karta

Disqualification of a Partner

LLP Act specifies the disqualifications that will prevent an individual
from becoming a Partner. Accordingly, an individual shall not be capable
of becoming a partner of a limited liability partnership, if —

(a) he has been found to be of unsound mind by a Court of competent
jurisdiction and the finding is in force;

(b) he is an un discharged insolvent; or

(c) he has applied to be adjudicated as an insolvent and his application
is pending.

The LLP Act, 2008 has not specified the qualifications to be a partner but
has specified the above three disqualifications in respect of an individual.

It is to be noted that these are apart from the eligibility by the conditions
and requirements as may be prescribed by the Central Government in
respect of designated partners as laid down in the LLP Rules and Forms,

2008 as well as the requirements in LLP Agreement.

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Designated Partners

“Designated partner” means any partner designated as such pursuant to
section 7 of the said Act .Every LLP should have at least 2 designated
partners and at least 1 should be resident in India.

The term “resident in India” means a person who has stayed in India for
a period of not less than one hundred and eighty-two days during the
immediately preceding one year.

The Incorporation document of the LLP can specify the names of the
designated partners and if so, they will become designated partners. The

Incorporation Document can also state that every person who from time
to time is Partner will be Designated Partner.

The Individual should have given his consent to act as a designated partner
in the form and manner prescribed and every designated partner of a
limited liability partnership will have to obtain a Designated Partner

Identification Number (DPIN) from the Central Government. The
designated partner shall be answerable for doing of all acts, matters and
things as are required to be done by LLP pursuant to the Act and will be
responsible for filing of documents, returns, statements and the like
pursuant to the provisions of this Act and as may be specified in the LLP
agreement. The designated partners are liable to all penalties imposed on
the LLP for any contravention of the specified provisions. Notice has to
be filed with the Registrar when changes occur in the partnership and/
or designated partnership of a LLP within 30 days of the change.

Where an LLP does not have a Designated Partner or has only one

Designated Partner, every partner of LLP shall be treated as designated
partner. Any partner of LLP can become and cease to be its 'designated
partner' as per LLP agreement. The First Schedule to the Act contains
mutual rights and duties of (i) partners and (ii) LLP and partners. In the
absence of LLP agreement as to any matter, provisions of the first schedule
shall apply. The First Schedule does not contain any provision pertaining
to manner of becoming/appointing and cease to be 'designated partner'.

Hence, the LLP agreement shall contain provisions for making a partner
as 'designated partner' as well as for cessation of 'designated partner'.

Prior consent of an individual shall be obtained to make him 'designated
partner'. 'Designated partner' shall have a DPIN (Designated Partner

Identification Number).

Designated Partner shall ensure compliance of the LLP Act and are liable:

— for penalties imposed under the Act on them and

— for penalties imposed under the Act on LLP.

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Capital/Contribution of LLP

Partners of LLP can contribute in cash and/or kind or even by agreeing
to perform services. LLP agreement to specify about nature and amount
of contribution. The law does not prescribe any minimum or maximum
amount of capital/contribution. Liability of partners of LLP is to the extent
of contribution agreed in the LLP agreement.

Pre-incorporation Contracts

Prior to registration of LLP, a contract can be entered into by persons
who become partners of LLP upon its registration. Such contract can
become binding on LLP if after its registration, all partners of LLP Rules
such agreement.

Name of LLP

Elaborate provisions have been made regarding the name and
incorporation requirements. The name of LLP shall end with "Limited

Liability Partnership" or "LLP".

The name of LLP shall be such that in the opinion of the Central

Government is not:

— undesirable,

— identical or too nearly resembles to name of:

— other partnership firm, or

— LLP, (Indian or foreign), or

— company (Indian or foreign), or

— other body corporate, or

— registered trade mark of other person or

— a trade mark of other person, whose registration is applied for
registration and is pending for registration.

Registered Office

Every LLP shall have a registered office in India.

Limitation of liability

A limited liability partnership is not bound by anything done by a partner
in dealing with a person if—-

(a) the partner in fact has no authority to act for the limited liability
partnership in doing a particular act; and

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(b) the person knows that he has no authority or does not know or believe
him to be a partner of the LLP.

The LLP is liable if a partner of the LLP is liable to any person as a result
of the wrongful act or omission on his part in the course of the business of
the LLP or with its authority. The LLP will have unlimited liability when
any activity is carried out with intent to defraud creditors of the limited
liability partnership or any other person, or for any fraudulent purpose,
unless it is proved that such acts were without the knowledge or authority
of the LLP. An obligation of the LLP whether arising in contract or
otherwise, is solely the obligation of LLP. The liabilities of the limited
liability partnership shall be met out of the property of the limited liability
partnership.

Limited Liability Partnership agreement

Partners in a limited liability partnership are not obliged to enter into a
formal LLP agreement. In practice, however, they will almost certainly
get together to decide on the structure and regulation of all aspects of
their limited liability partnership, in just the same way as prospective
partners in a traditional partnership. The agreement they make is then
binding on them after the limited liability partnership has been properly
registered. According to section 2(1)(o) of the LLP Act 2008, Limited

Liability Partnership Agreement means any written Agreement between
the partners of the LLP, or between the LLP and its Partners, which
determines the mutual rights and duties of the partners and their rights
and duties in relation to the LLP. It is not mandatory by law to enter into
a formal LLP agreement, but it should be done as it avoids unnecessary
disputes in the future.

Where no LLP agreement has been executed between the partners of LLP
or the agreement is silent on certain issues, the provisions of the First

Schedule to the LLP Act 2008 shall apply. LLP Agreement is the most
important document and execution of LLP agreement and any changes
made therein should be filed with the Registrar in Form 3 annexed to the

LLP Rules 2009 within 30 days from the date of incorporation of LLP/
date of change made in LLP agreement, as the case may be, along with
the filing fee as per Annexure A of the LLP Rules 2009.

The LLP Agreement is important for the following reasons:

— The effect of LLP Agreement is that it defines the rights, duties
and liabilities between partners inter se and of partners with the

LLP, and helps in avoiding any disputes

— Execution of a LLP agreement provides for efficient running of
the company.

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— Among other things, the LLP Agreement defines the form of
contribution and liability for contribution of the partners.

— A written LLP agreement will assist in assessing the profitability
of partners for taxation purposes under the Income Tax Act 1961.

Content of LLP Agreement

— Mutual rights and duties of the partners

— Mutual rights and duties of the limited liability partnership and
its partners.

— Entitlement of partners to share in the capital, profits and losses
of the limited liability partnership

— Indemnity of partner

— Participation of partner in the management of the limited liability
partnership.

— Partner remuneration

— Change in the nature of business of the limited liability partnership

— Decisions taken by it are recorded in the minutes

— Consent of the limited liability partnership, if any partner carries
on any business of the same nature

— Expulsion of partner

— Arbitration mechanism

Books of Accounts and Audit

LLP to maintain prescribed books of accounts. Basically books showing
receipt, payment, assets and liabilities are to be maintained. Book keeping
can be on cash (suitable for professionals) or accrual basis on double entry
system of accounting. It shall be maintained at the registered office of the
company. Books to be preserved for eight years. LLP whose turnover
does not exceed, in any financial year, Rs. 40,00,000, orwhose contribution
does not exceed Rs. 25,00,000 shall not be required to get its accounts
audited. However it may voluntarily get the accounts audited.

Forms and Fees

Every LLP shall use the forms annexed to the LLP Rules 2009 for the
purpose of the LLP Act 2008, and shall specify therein its limited liability
partnership identification number (LLPIN). The electronic form shall be
authenticated by authorized signatories using digital signatures. “Digital

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signature” means authentication of any electronic record by a subscriber
by means of an electronic method or procedure.

The fees payable in pursuance of the various provisions of the Act and
the rules shall be as mentioned in Annexure ‘A’ to the LLP Rules 2009,
and shall be paid into the Public Account of India. However, where the
amount involved does not exceed 50/-, the fees payable to the Registrar
may be paid also through postal orders or through bank drafts payable at
and/or drawn on post offices or banks, as the case may be, located at the
same city or town where the office of the Registrar is situated. Such fee
shall not be deemed to have been paid unless and until the relevant postal
orders or drafts are encashed and the amount credited.

Where an application is filed through electronic media or through any
other computer readable media, the user may choose any one of the
following payment options namely,

(i) Credit Card; or

(ii) Internet Banking; or

(iii) Remittance at the Bank Counter; or

(iv) Any other mode as approved by the Central Government.

Business Activities of LLP

Section 11(1) of the LLP Act 2008 states that two or more persons
associated for carrying on a lawful business with a view to profit can
incorporate an LLP. Therefore, an LLP cannot be created for non-profit
making activities and existence of business is a pre-requisite for the legal
existence of LLP.

There is no universal definition of the term ‘business’. However generally
in its most broadest meaning it includes all activity by the community of
suppliers of goods and services. The expression ‘business’ is defined in
the Income Tax Act, 1961, as any trade, commerce, manufacture or any
adventure or concern in the nature of trade, commerce or manufacture.

Section 2(1) (e) of the LLP Act 2008 has defined the term ‘Business’ to
include ‘every trade, profession, service and occupation’. However, the

Act does not define the terms trade, profession, service and occupation.

Incorporation of Limited Liability Partnership

1. Deciding the Partners and Designated Partners

A LLP can be incorporated with a minimum of at least two partners
who can be Individuals or bodies Corporate through their nominees.

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Further for incorporating an LLP, of the total number of partners, at
least two shall be Designated Partners, of which at least one must be
an Indian Resident.

Parameters for deciding the Partners and Designated Partners

— At least Two Partners; Individual or Body Corporate through
individual nominees.

— Minimum of Two Individuals as Designated Partners, of total no.

of Partners.

— At least One Designated Partner to be Resident Indian.

A person 'Resident in India' means a person who has stayed in India
for a period of not less than one hundred and eighty two days during
the immediately preceding one year.

'Designated Partner' means a partner who is designated as such in
the incorporation documents or who become a designated partner by
and in accordance with the Limited Liability Partnership Agreement.

2. To obtain Director Identification Number (DIN) & Digital Signature

Certificate

— All designated partners of the proposed LLP shall obtain "Director

Identification Number (DIN)" by filing an application individually
online in Form - DIN 1.

— Partner/Designated partner of LLP/proposed LLP, whose
signatures are to be affixed on the e-forms has to obtain class 2 or
class 3 Digital Signature Certificate (DSC) from any authorized
certifying agency.

3. To Apply for Name of LLP

— To file Form-1 for reservation of name and fill in the details.

— Any partner or designated partner in the proposed LLP may submit

Form-1.

— Details of minimum two designated partners of the proposed LLP,
one of them must be a resident of India, is required to be filled in
the application for reservation of name. Only individuals or
nominees on behalf of the bodies corporate as partners can act as
designated partners.

The name of the limited liability partnership shall not be similar or
identical with Company or LLP already registered in India and it
should not contain words prohibited under the 'Emblems and Names

8 8

West Bengal : Ease of Doing Business for MSME Sector

(Prevention of improper use) Act, 1950 or which are also not

'Undesirable' in the opinion of Central Government or which satisfies
the conditions prescribed under rule 18(2).

In case any Body Corporate is partner, copy of Board resolution
authorizing the incorporation of LLP shall be attached.

4. After Name Approval following procedure is to be followed

— To file Form-2 "Incorporation Document and Statement" & Pay
the prescribed registration fee as per the slab given in Annexure A
of the LLP Rules, 2009, based on the total monetary value of
contribution of partners in the proposed LLP.

— Statement in the e-form is to be digitally signed by a person named
in the incorporation document as a designated partner having
permanent DIN and also to be digitally signed by an advocate/
company secretary/chartered accountant/ cost accountant in
practice and engaged in the formation of LLP.

— On submission of complete documents the Registrar after satisfying
himself about compliance with relevant provisions of the LLP Act
will register the LLP, maximum within 14 days of filing of Form-2
and will issue a certificate of incorporation in Form-16.

5. To File LLP agreement (i.e. Form-3) and Partners' details (i.e. Form-4)

— Form 3 - Information with regard to LLP agreement and changes,
if any made therein In case the LLP Agreement is executed outside

India, then it must be notarized and consularized.

— Form-4 (Notice of Appointment of Partner/Designate Partner, his
consent etc.)-Consent of each partner to become a partner of

Limited Liability Partnership along with their address and identity
proof to be filed with the Registrar of Companies in Form 4 with
the prescribed fee simultaneously at the time of filing Form-2 or
within 30 days of the date of incorporation.

6. Subscription Sheet

— Just like in case of Company formation, the partners are required
to subscribe their names along with signatures to the subscription
sheet, which shall be witnessed by any chartered Accountant/

Company Secretary/Advocate in practice.

— In case the subscription sheet is executed outside India, then it
must be notarized and consularized.

7. Stamp Duty

The Stamp Duty payable of LLP Agreement is a State subject and
same may be paid as per the State Stamp Act. Till the time specific

Corporatisation of MSME

89

Stamp Duty is prescribed in respective Stamp Act, the Stamp duty on

LLP Agreement may be paid as per the stamp duty payable on
partnership agreement in view of the Finance Bill, 2009.

Annual Compliances for LLP

In addition to the compliances under MSMED Act, Labour Law,

Environmental Law etc., MSME incorporated in the form of LLP has to
comply following compliances prescribed under LLP Act, 2008:

Filing with Registrar of LLP

1. Filing of Annual Return

An LLP is required to file the Annual Return with the Registrar of

LLP (Form 11) within 60 days of closure of its financial year. An LLP
has to close its financial year on every 31st March. So, the Annual

Return is to be filed on or before 30th May Every year.

2. Filing of Annual Accounts

Every LLP has to maintain books of accounts as per double entry
system of accounting and prepare a Statement of Accounts and

Solvency (Accounts) every year ending on 31st March. LLP has to file
such Accounts to the Registrar of LLP (Form 8) within 30 days from
the end of 6 months of such financial year. So, the filing of Accounts
is to be filed on before 30th October every year.

In case of an LLP whose annual turnover exceeds Rs. 40 lakhs or
whose contribution exceeds Rs. 25 lakhs, shall be required to get its
accounts audited by a qualified Chartered Accountant.

Income Tax

As per Income Tax Act, LLP has to close its financial year as on 31st

March ever year and has to file the returns with Income Tax Department.

In Case of LLP whose annual turnover is more than 60 Lakhs, the accounts
have to be audited as required under Income Tax Act as well.

A LLP have to file its Income tax Returns on or before the due dates as
follows:

LLP whose accounts are not required 31st July of every year
to be audited under any Law

LLP whose accounts are subject to

30th September of every year

Audit under any Law
or such other date as may be
notified by the Income Tax
authorities.

9 0

West Bengal : Ease of Doing Business for MSME Sector

Other Statutory Compliances

A. To maintain financial affairs and file accounts

(a) To maintain proper books of accounts relating to its affairs for
each year on cash or accrual basis and according to the double
entry system of accounting and shall maintain the same at the
registered office of the company.

(b) The accounts of LLP shall be audited by an auditor.

B. Returns and records required by LLP

Books of Account

LLP should maintain proper books of
account.

Minute Book

Minute book should be maintained to record
minutes of meetings of partners and
managing/executive committee of partners.

Change in partners

Any change in partner and designated
partner (admission, resignation, cessation,
death, expulsion) should be filed
electronically in e-form 4 within 30 days of
change with fees.

Supplementary LLP

Such admission and cessation will alter
agreement
mutual rights and duties of partner shall
change. Hence, supplementary LLP
agreement will be required which is also
required to be filed in e-form 3 within 30
days of change with fees

Statement of Account

Statement of Account and Solvency (SAS)

and solvency
is to be filed annually in e-form 8 with
required fees. It is to be filed within 30 days
from expiry of 6 months from end of each
financial year i.e. by 30th October.

Annual Return

Annual Return should be filed with ROC in
e-form 11with filing fees, within 60 days
from close of financial year i.e. by 30thMay

Heavy penalty

Heavy penalty of Rs 100 per day for late
filing of returns

Inspection of

Incorporation document (form 2), Annual
documents

Return (form 11), Statement of Account and

Solvency (SAS) (form 8 ) and Name of

Corporatisation of MSME

91
partners and changes, if any, made therein

(form 4) are available for public inspection
on payment of fees but LLP agreement is
not available for public inspection.

C. Compliance of Meetings of LLP as per LLP agreement

Sr. No.

Nature of Meeting

Number of

Period
meetings

1.

First General Meeting

N.A

Within 30 days of
incorporation

2.

General Meeting

1

In 1 Financial

Year

3.

Executive Committee

2

In 1 Financial

Year

PUBLIC COMPANY/PRIVATE COMPANY

Categories of Companies

•

Public Company

•

Private Company
o

One Person Company
o

Small Company

The above said companies may be classified as [Section 3(2)]:

•

Company limited by shares [as defined in Section 2(22)]: a company
having the liability of its members limited by the memorandum to
the amount, if any, unpaid on the shares respectively held by them.

•

Company limited by guarantee [as defined in Section 2(21)]: a
company having the liability of its members limited by the
memorandum to such amount as the members may respectively
undertake to contribute to the assets of the company in the event
of its being wound up.

•

Unlimited Company [defined in section 2(92)]: a company not
having any limit on the liability of its members.

Public Limited Company

•

No Minimum paid-up share capital

•

Minimum Subscribers-7

9 2

West Bengal : Ease of Doing Business for MSME Sector

•

Minimum Directors-3

Private Limited Company including Small Companies

•

No Minimum paid-up share capital

•

Minimum Subscribers-2

•

Minimum Directors-2

One Person Company

•

No Minimum paid-up share capital

•

Minimum & Maximum Subscriber-1

•

Minimum Director-1

Memorandum of Association

•

The Memorandum of Association is the charter of a Company. It
is a document, which amongst other things defines the area within
which the company can operate.

•

As per section 2(56) “memorandum” means the memorandum of
association of a company as originally framed or as altered from
time to time in pursuance of any previous company law or of this

Act.

•

The Memorandum of a company shall be in respective forms
specified in Tables, A, B, C, D and E in Schedule I as may be
applicable to such company.

•

The Memorandum of a limited company must state the following

Six clauses i.e.

— Name Clause : The name will be the name which got reserved
with ROC. The Last word of the name of company will include

“Limited“ in case of Public Company and “Private Limited”

in case of Private Company

— Registered Office Clause (also called Situation Clause)

— Object Clause

— Liability clause

— Capital Clause

— Subscriber’s clause

— Nominee Clause (In case of OPC)

Corporatisation of MSME

93

Articles of Association

•

The articles of association of a company are bye-laws or rules and
regulations that govern the management of internal affairs and
the conduct of business. The articles deals with the rights of the
members of the company inter se. They are subordinate to and
are controlled by the memorandum of association.

•

According to Section 2(5) of the Companies Act, 2013, ‘articles’

means the articles of association of a company as originally framed
or as altered from time to time or applied in pursuance of any
previous company law or of this Act.

•

As per section 5(3) of the Companies Act, 2013, an entrenchment
provision in Articles enables a company to follow a more restrictive
procedure than passing a special resolution for altering a specific
clause of articles of association. A private company can include
entrenchment provisions only if agreed by all its members or, in
case of a public company, if a special resolution is passed.

•

The articles of a company shall be in respective forms specified in

Tables, F, G, H, I and J in Schedule I as may be applicable to such
company.

Signing of MOA & AOA

•

The Memorandum and Articles of the company would be signed
by subscribers as per section 7(1)(a) read with Rule 13 of

Companies (Incorporation) Rules, 2014.

•

Subscribers Clause will have to take into consideration and mention
following:-

— Name

— Fathers name

— Occupation

— Residential Address

— Share subscribed

— Affix one Passport Size Photo graph

— Signed in given column

— One person will act as witness and will sign in the witness
column along with mentioning following details:

o

Name
o

Address
o

Description
o

Signature

9 4

West Bengal : Ease of Doing Business for MSME Sector

Difference between Public and Private Company
as per Companies Act, 2013

Private Limited Company

Public Limited Company

Minimum Capital - NIL

Minimum Capital - NIL

Right to transfer the shares :

Right to transfer of shares are

Restricted
allowed

Minimum members 2 (Two)

Minimum members 7 (Seven)

Maximum members 200 (Two

Maximum members No Limits

Hundred)

Public offer is not applicable

In case of public offer of
and no requirement of demate-
securities, the securities have to
rialization of securities
be in Dematerialized Form

Listing of securities on Stock

Securities offered in Public Offer,
exchange
to be listed in Recognized Stock

Exchanges

Not Applicable

Quorum of Meetings

Quorum of Meetings

Two members personally present

Five in case of Members up to

1000;

Fifteen in case of Members more
than 1000 up to 5000;

Thirty in case of Members exceed

5000.

No restriction on amount of

Managerial Remuneration is
managerial remuneration
restricted to 11% of Net profit

(subject to conditions); OR at
least Rs. 30 lakh p. a. depending
upon paid up capital

Retire by rotation

At least two-third of total number

Not Applicable
of directors be liable to retire by
rotation and eligible of being re-
appointed in AGM

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95

Incorporation of Company (Private/Public)

There are two routes to Incorporate Companies:

(a) Through various stage wise forms.

(b) Simplified Proforma for Incorporating Company Electronically

(Spice) E-Form

A. Through various stage wise forms.

Incorporation of Public /Private Company

Application for Director Identification Number and Digital Signature

Certificate

— Every person intended to be appointed as Director must first obtain

Digital Signature Certificate and then apply to the Central

Government for grant of Director Identification Number in Form

DIR-3 pursuant to section 152 read with rule 9(1) of Companies

(Appointment and Qualification of Directors) Rules, 2014.

Reservation of Name with ROC

— File e-Form INC-1 under Section 4(4) of the Companies Act, 2013
read with Rule 8 & 9 of Companies (Incorporation) Rules, 2014
with ROC with payment of prescribed fees.

— The name should not be undesirable i.e. identical, resembling,
restricted or prohibited as per the conditions specified in Rule 8.

— The name shall stand reserved for a period of 60 days from the
date of application for reservation of name. (Section 4(5))

Drafting of MOA & AOA

— MOA & AOA shall be drafted in accordance with the formats
prescribed in Schedule I as may be applicable. Both shall be signed
by Subscribers. [MOA-Tables A, B, C, D, E; AOA-Tables F, G, H,

I, J]

— The names of First Directors are mandatory to be given in AOA.

It should be noted that the main objects should match with the
objects shown in e-Form INC.1, i.e., Name Approval

Filing of Forms*

— File e-form INC-7 for incorporation of company with ROC
pursuant to Section 7 (1) of the Companies Act, 2013 read with

Rule 10, 12, 14 and 15 of Companies (Incorporation) Rules, 2014.

9 6

West Bengal : Ease of Doing Business for MSME Sector

— File e-Form INC-22 for notice of Registered Office of the Company
with ROC pursuant to Section 12 (2) & 12 (4) of the Companies

Act, 2013 read with Rule 25 & 27 of the Companies (Incorporation)

Rules, 2014.

— File e-Form DIR-12 for Appointment of Directors with ROC
pursuant to section 7(1)(c) read with Rule 17 of the Companies

(Incorporation) Rules, 2014.

Issue of Certificate of Incorporation by Registrar

— Registrar on being satisfied with the documents submitted under
section 7(2) will grant the Certificate of Incorporation in e-form

INC-11.

— A Certificate of Incorporation given by the Registrar shall be the
conclusive evidence that all requirements of the Act have been
complied with.

Allotment of Corporate Identification Number

— The Registrar would allot distinct Corporate Identification Number

(CIN) which shall be mentioned on the Certificate of Incorporation.

Attachments
e-Form INC-1 (Application for reservation of name)

o

Trademark or authorization to use trade mark, if the name of the
company is based on trade mark or application for deed of
assignment or a copy of application of registered trademark.

o

In case the proposed name contains such word or expression for
which the approval of Central Government is required, a copy of

Central Government’s approval.

o

Proof of relation is required to be attached if the proposed name(s)

include(s) the name of relatives.

o

In principal approval from the concerned regulator wherever is
applicable.

o

NOC from sole proprietor/ partners/ other associates.

o

NOC from existing company
o

Copy of affidavit in case of proposed name includes phrase

‘Electoral Trust’

o

NOC as required in Rule 8(4) if proposed name includes name of
promoters or their closed relatives.

Corporatisation of MSME

97
e-Form INC-7 [Application for Incorporation of Company (other than OPC)]

o

Copy of Memorandum of Association and Articles of Association
o

Declaration by Professionals (CA/CS/CWA) in form INC-8.

[Section 7(1) (b) and rule 14 of the Companies (Incorporation)

Rules, 2014]

o

Affidavit from the subscriber to the memorandum in Form No.

INC-9 [Section 7(1)(c) read with rule 15 of the Companies

(Incorporation) Rules, 2014]

o

Proof of residential address which should not be older than two
months, and proof of identity of subscribers.

o

Specimen Signature in Form INC-10. [Rule16(1)(q) of Companies

(Incorporation) Rules, 2014]

o

Entrenched Articles of association if any of the articles are
entrenched.

o

NOC in case there is change in the promoters (first subscribers to

Memorandum of Association)

o

Proof of nationality in case the subscriber is a foreign national
o

PAN card (in case of Indian national)

o

Copy of certificate of incorporation of the foreign body corporate
and proof of registered office address
o

Certified true copy of board resolution/consent by all the partners
in case subscriber is Body Corporate.

o

Principal approval taken from RBI for carrying NBFC activity as
the case may be.

— Trademark or authorization to use trade mark, if the name of
the company is based on trade mark or application for deed of
assignment or a copy of application of registered trademark.

— In case the proposed name contains such word or expression
for which the approval of Central Government is required, a
copy of Central Government’s approval.

— Proof of relation is required to be attached if the proposed
name(s) include(s) the name of relatives.

— In principal approval from the concerned regulator wherever
is applicable.

— NOC from sole proprietor/ partners/ other associates.

9 8

West Bengal : Ease of Doing Business for MSME Sector

— NOC from existing company

— Copy of affidavit in case of proposed name includes phrase

‘Electoral Trust’

— NOC as required in Rule 8(4) if proposed name includes name
of promoters or their closed relatives.

e-Form INC-22 (Notice of situation or change of situation of registered
office)

•

Proof of registered office’s address (Conveyance/ Lease deed/ Rent

Agreement etc. along with the rent receipts).

•

Copies of the utility bills (proof of evidence of any utility service
like telephone, gas, electricity etc. depicting the address of the
premises not older than two months).

•

Proof that the company is permitted to use the address as the
registered office of the Company (Authorization from the owner
or occupant of the premises along with proof of ownership or
occupancy and it is mandatory if registered office is owned by
any other entity/ person (not taken on lease by company).

•
e-Form DIR-12

•

Declaration by first director in Form INC-9

•

Interest in other entities of director in case number of entities entered
is more than one.

•

Declaration of the appointee director in Form No. DIR-2.

•

Proof of identity and Address.

B. Simplified Proforma for Incorporating Company Electronically

(SPICE) E-form

The Ministry of Corporate Affairs has taken another bold initiative in

Government Process Re-engineering (GPR) and launched Simplified

Proforma for Incorporating Company Electronically (SPICe) e-Form,
on the occasion of Gandhi Jayanthi 2016, with the specific objective
of providing speedy incorporation related services within stipulated
time frames which are in line with international best practices.

SPICe’s is as follows: -

•

Simplified and completely Digital form for Company Incorporation

•

Standard format of e-Memorandum of Association as per

Companies Act, 2013

Corporatisation of MSME

99

•

Standard format of e-Articles of Association as per Companies

Act, 2013

•

Memorandum and Articles will now be filed as linked e-forms

(except for Section 8 companies)

•

Provision to apply for Company Incorporation with a preapproved

Company Name

•

Mandatory DSCs of Subscribers and Witnesses (max 7+1) in SPICe

MOA and SPICe AOA

•

Back Office productivity gains due to faster review of e-MOA and
e-AOA by approving authories.

•

Resulting in doing away of filing of the following e-forms:

— Form DIR-3 (Application for allotment of DIN in case proposed

Directors have no DIN)

— Form INC-1 (Application for Reservation of name)

— Form INC-7 (Application for incorporation of a company other
than OPC)

— Form DIR-12 (Details of Directors)

— Form INC-22 (Details of registered office) (Optional at the time
of incorporation)

•

Filing Fees:- Fee for Integrated Incorporation Form is Rupees 2,000

(Two Thousand Only)

•

Scope of E-Form INC-32:- The following types of companies can
be registered:

— Private Limited Company

— Public Limited Company

— One Person Company

— Section 8 Company

— Procedure Company

Procedure for Filing SPICe - FORM INC-32

Form INC-32 must be accompanied by supporting documents including
details of Directors and Subscribers, affidavits, declarations, identity proof,
address proof, MOA, AOA etc. Once the e-form is filed, its process by

MCA’s Central Processing Centre. If found complete, Company would

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West Bengal : Ease of Doing Business for MSME Sector
be registered and CIN would be allotted. Also DINs gets issued to the
proposed directors who do not have a valid DIN. Maximum three

Directors are allowed for using this integrated form for filing application
of allotment of DIN while incorporating a company.

In addition to allotment of DIN and providing of Incorporation Certificate,
the Company’s PAN, TAN and ESIC registration can also be obtained
easily in a single step while using Form INC-32.

Declaration by Professional

The digital signature of a professional (Chartered Accountant/ Company

Secretary/ Cost Accountant/ Advocate) is require to file Form INC-32.

The professional must declare that all information presented in the form
is correct and enter his/her membership number and certificate number.

Documents required for SPICe FORM INC-32

The following documents must be filed with SPICe Form INC-32 for
incorporation of Company:

1. Memorandum of Association – Applicable and mandatory only in
case of Section 8 company or company with foreign subscribers
not having DIN

2. Articles of Association – Applicable and mandatory only in case of

Section 8 Company or company with foreign subscribers not
having DIN

3. Affidavit and declaration by first subscriber(s) and director(s) –

Mandatory in all cases

If the address for correspondence is the address of registered office
of the company, then following attachments are mandatory:

4. Proof of office address

5. Copies of utility bills that are not older than two months.

If proposed name require approval of Central government then
attach the following:

6. Copy of approval in case the proposed name contains any word(s)

or expression(s) which requires approval from central government

If the proposed name is based on a registered trademark or is
subject matter of an application pending for registration under
the Trade Marks Act, then it is mandatory to attach:

7. Approval of the owner of the trademark or the applicant of such
trademark for registration of Trademark

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101

If the promoters are carrying on any Partnership firm, sole
proprietary or unregistered entity in the name as applied for, then
it is mandatory to attach:

8. NOC from the sole proprietor/ partners/other associates/ existing
company

If proposed name requires approval from any sectoral regulator,
then it is mandatory to attach (if already received):

9. In principle approval from the concerned regulator

If any subscriber to the proposed company is Foreign company
and/or company incorporated outside India, then it is mandatory
to attach:

10. Copy of certificate of incorporation of the foreign body corporate and
resolution passed

Note : It is optional to attach Copy of certificate of incorporation
in case the subscriber to the proposed company is Body Corporate.

If any subscriber to the proposed company is a Company itself,
then it is mandatory to attach:

11. Resolution passed by promoter company

In case the name is similar to any existing company, then it is
mandatory to attach:

12. A certified true copy of No objection certificate by way of board
resolution/resolution

In case any of the director has any interest in the proposed
company, then it is mandatory to attach:

13. Interest of first director(s) in other entities

In case of an OPC, it is mandatory to attach

14. Consent of nominee

15. Proof of identity and residential address of the nominee

If any one of the subscriber does not have a DIN, it is mandatory
to attach:

16. Proof of identity and residential address of the subscribers

If any of the director (including subscriber cum director) does not
have DIN, then it is mandatory to attach:

17. Proof of identity and residential address of such director

If SRN of INC-1 is mentioned in the form and any of the person
mentioned in INC-1 as promoter is not subscribing to MOA, then
attach:

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West Bengal : Ease of Doing Business for MSME Sector

18. NOC in case there is change in the promoters (first subscribers to

Memorandum of Association)

Any other information can be provided as an optional attachment.

A separate declaration in format of INC-8 is not required to be
attached.

This is recommended to name the attachments with proper name.

For e.g. If PAN is attached as proof of identity then recommended
name of the attachment is “PAN – Proof of Identity”. This should
be followed while attaching any attachment.

Certificate of Incorporation

Registrar after being satisfied issue Certificate of Incorporation.

Annual Compliances for Private Limited Company

In addition to the compliances under MSMED Act, Labour Law,

Environmental Law etc., MSME incorporated in the form of Private

Company has to comply following compliances prescribed under

Companies Act, 2013:

Particular of Compliance

— Every Director of the Company in First Meeting of the Board of

Director in each Financial Year will disclose his interest in other
entities (Form MBP-1)

— Every Director is required to submit with the company fresh MBP-

1 whenever there is change in his interest from the earlier given

MBP-1.

— Every Director of the Company in each Financial Year will file
with the Company disclosure of non-disqualification. (Form DIR-

8)

— Annual Return : Every Company will file its Annual Return within

60 days of holding of Annual General Meeting. Annual Return
will be for the period 1st April to 31st March. (Form MGT-7)

— Financial Statement : The Company is required to file its Balance

Sheet along with statement of profit and Loss account and

Directors’ Report in this form.

— Attachment : Balance Sheet, Statement of Profit & Loss account,

Directors’ Report, Auditors’ Report, Cash Flow Statement and

Notice of AGM. (Form AOC-4)

— Private Company : Having paid up share capital of 10 Crore or

Corporatisation of MSME

103
more or turnover of Rs. 50 crore or more shall be certified by a

Company Secretary in Practice. (Form MGT-8)

— Directors’ report shall be prepared by mentioning of all the
information required for Small company under Section 134.

— It should be signed by the “Chairperson” authorized by the Board,

Where he is not so authorized by at least 2 Directors.

— Company will send to the Members of the Company approved
financial statement (including consolidated Financial Statement),
cash flow statement, Directors’ report and auditors’ Report at least

21 clear days before the Annual General Meeting.(Except in case
of AGM is called on Shorter Notice).

— Every Notice of Annual General Meeting will be prepared as per

Section 101 of Companies Act 2013 and Secretarial Standard – II.

— Notice of Annual General Meeting will be send to followings:

•

All Directors, Members, Statutory Auditor.

— Every Company shall hold a minimum number of FOUR Meetings
of its Board of Directors every year in such a manner that maximum
gap between two Meetings should not be more than 120 (One
hundred Twenty) days. Company should hold at least 1 (one)

Board Meeting every quarter of calendar year.

— Auditor will be appointed for the 5 (Five) year and form ADT-1
will be file for 5-year appointment.

— After that every year in AGM, Shareholder will ratify the Auditor
but there is no need to file form ADT-1.

— Company will maintain the following mandatory Registers:

•

Register of Director, Director Shareholding, Members.

— Annual Return of Every Private Company (Except Small

Company) should be signed by Company Secretary in Practice.

Annual Compliances for Unlisted Public Limited Companies

In addition to the compliances under MSMED Act, Labour Law,

Environmental Law etc., MSME incorporated in the form of Unlisted Public

Company has to comply following compliances prescribed under

Companies Act, 2013:

Particular of Compliance

— Every Director of the Company in First Meeting of the Board of

Director in each Financial Year will disclose his interest in other
entities (Form MBP-1)

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West Bengal : Ease of Doing Business for MSME Sector

— Every Director is required to submit with the company fresh MBP-

1 whenever there is change in his interest from the earlier given

MBP-1.

— Every Director of the Company in each Financial Year will file
with the Company disclosure of non-disqualification. (Form DIR-

8)

— Every Company will file its Annual Return within 60 days of
holding of Annual General Meeting. Annual Return will be for
the period 1st April to 31st March.(Form MGT-7)

— The Company is required to file its Balance Sheet along with
statement of profit and Loss account, Cash Flow Statement and

Directors’ Report in this form.

— Balance Sheet, Statement of Profit & Loss account (Including

Consolidated Financial Statement), Director Report, Auditors’

Report, Cash Flow Statement and Notice of AGM(Form AOC-4)

— Company will file MGT-14 along with copy of Board Resolution
within 30 days of Board Meeting.

— Every Company Having paid up share capital of 10 Crore or more
or turnover of Rs. 50 crore or more shall be certified by a Company

Secretary in Practice. (Form MGT-8)

— Directors’ report will be prepared by mention of all the information
required for Small company under Section 134.It should be signed
by the “Chairperson” authorized by the Board, Where he is not so
authorized by at least 2 Directors; one of them should be Managing

Director if any.

— Company will send to the Members of the Company approved
financial statement (including consolidated Financial Statement),
cash flow statement, Directors’ report and auditors’ Report at least

21 clear days before the Annual General Meeting.(Except in case
of AGM is called on Shorter Notice).

— Every Notice of Annual General Meeting will be prepared as per

Section 101 of Companies Act 2013 and Secretarial Standard – II.

If there is more than 200 Members then Company will give e-
voting Facility.

— Notice of Annual General Meeting will be send to followings:

•

All Directors, Members, Statutory Auditor.

•

Secretarial Auditor, If any.

Corporatisation of MSME

105

•

Debenture Trustee, if any

— Every Company shall hold a minimum number of FOUR Meetings
of its Board of Directors every year in such a manner that maximum
gap between two Meetings should not be more than 120 (One
hundred Twenty) days. Company should hold at least 1 (One)

Board Meeting every quarter of calendar year.

— Auditor will be appointed for the 5 (Five) year and form ADT-1
will be file for 5-year appointment.

— After that every year in AGM, Shareholder will ratify the Auditor
but there is no need to file formADT-1.

— Company will maintain the following mandatory Registers:

— Register of Director, Director Shareholding, Members.

— Register of Loan, Guarantee, Investment made by the Company.

— Register of Contract with Related Parties.

— Annual Return of Every Private Company (Except Small

Company) should be signed by Company Secretary in Practice.

Annual Compliance for Unlisted Public Companies (Based on Paid-
up share capital/turnover)

Particular of Compliance

— Company if accept deposit during the year then required to file
return of deposit within 30 days of end of financial year. (Form

DPT- 3)

— Return of appointment and re-appointment of Managing Director
or Whole time Director or Manager or KMP. ( Form MR-1)

— Appointment of Independent Director. (Form DIR-12)

— Appointment of Women Director. (Form DIR-12)

— Appointment of Internal Auditor. (Form MGT-14)

— All below mentioned company are required to get Secretarial Audit
of the Company from the Practicing Company Secretary and
report of PCS will be part of Directors’ Report (MR-3).

a) All Listed Companies
b) Every Public Company having;

— Paid-Up Share Capital of Rs. 50 Crore (fifty crore rupees) or more;
or

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West Bengal : Ease of Doing Business for MSME Sector

— Every Public Company having a Turnover of Rs. 250 Crore (two
hundred fifty crore rupees) or more.

— All below mentioned companies are required to constitute a Audit

Committee and meetings of Committee will be as per Secretarial

Standard- I:

•

All public companies with a paid up capital of ten crore rupees
or more;

•

All public companies having turnover of one hundred crore
rupees or more;

•

All public companies, having in aggregate, outstanding loans
or borrowings or debentures or deposits exceeding fifty crore
rupees or more.

— All below mentioned companies are required to constitute a

Nomination & Remuneration Committee

•

All public companies with a paid up capital of ten crore rupees
or more;

•

All public companies having turnover of one hundred crore
rupees or more;

•

All public companies, having in aggregate, outstanding loans
or borrowings or debentures or deposits exceeding fifty crore
rupees or more

— All below mentioned companies are required to constitute a Vigil

Mechanism:

•

The Companies which accept deposits from the Public;

•

The Companies which have borrowed money from banks and
public financial institutions in excess of fifty crore rupees.

***

Role of Company Secretaries

India is witnessing a phenomenal growth and expansion in the corporate
sector. The growing demand for specialists in almost every sphere of the
corporate functions has led to emergence of professionals who can perform
specialized skills with near perfection in their respective fields. A company
secretary is one such professional who is responsible for efficient
management of the corporate sector. He ensures compliance of various
company legislations and advises directors on statutory requirements of
the company. Apart from carrying out these functions, he also looks after
finance, accounts, legal, secretarial, personnel and administrative functions
in private as well as public sectors.

The Companies Act, 2013 confers a special status to Company Secretary
as the key managerial personnel and has bracketed him along with

Managing Director (MD) or Chief Executive Officer (CEO) or Manager,

Whole-time director(s) or Chief Financial Officer (CFO). Every listed
company and every other public company having a paid up share capital
of ten crore rupees or more has to appoint a whole time Key Managerial

Personnel. Whole time Company Secretary is also required to be appointed
in other companies which have a paid up share capital of five crore rupees
or more.

Almost every kind of organization whose affairs are conducted by boards,
councils or other corporate structures, be it a company, trust, association,
federation, authority, commission or the like, find it useful to appoint a
person who holds the qualification of Company Secretaryship in key
administrative position. Practising Company Secretaries have been
authorized to issue Certificate regarding compliance of conditions of

Corporate Governance. Practising Company Secretaries have also been
recognized to appear before various Tribunals such as NCLT, NCLAT,

Securities Appellate Tribunal, Competition Commission of India, Telecom

Disputes Settlement and Appellate Tribunal, Consumer Forums, Tax

Tribunals etc. Reserve Bank of India has also recognized the Practising

Company Secretaries to undertake Diligence Report for Banks.

The rapid corporatisation has brought about a sea change in the role and
profile of a company secretary. They are now being seen as corporate
development planners. Besides embarking upon traditional areas of
practice, Company Secretaries in Practice are increasingly required to

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advise and guide on legal aspects of business which intimately concern
areas such as production, sales, marketing and administration for
identifying expansion opportunities, issuing due diligence or comfort
certificate, arranging foreign collaborations, amalgamations, mergers,
acquisition, takeovers, setting up of subsidiaries and joint ventures within
and outside India etc. The new opportunities offered by the growing
capital markets and financial services have greatly contributed to the
development of the practice side of the profession.

Company Secretaries - One Stop Professional Advisory Services to

SMEs

Company Secretaries can offer One Stop Professional Advisory Services
to SMEs in the following areas:

— Legal Setting up of SMEs - Getting Basic Registrations for startup-

PAN-TAN-VAT-GST-MSME etc.

— Selection of Organization Structure for SME - Sole Proprietor,

Partnership, LLP, Limited Liability Company (Private-Public), OPC

— Incentives available to SMEs

— Financial Advisory Services for SMEs

— Funding Options for SMEs

— Labour Laws aspects for SMEs

— Taxation aspects for SMEs

— Listing of SMEs

— Legal & Regulatory Compliances

— Corporate Governance for SMEs

Thus, a Company Secretary can help SMEs and its directors operate within
the law.

Company Secretaries - Single Window Services to SMEs

Some other ways in which a company secretary can help the SMEs include:

— Obtaining Project Financing and Term Loans.

— Co-ordinating the process of obtaining funds from Angel Investors/

Venture Capital Funds / Private Equity.

— Conducting Secretarial Audit / Due Diligence which will of great
help before approaching for funds.

Role of Company Secretaries

109

— Providing Compliance Certificate to ensure compliance of various
regulatory prescriptions in case of listing in SME Exchange.

— Helping in converting Sole Proprietor / Partnerships to Companies

— Management of the public issue if a company goes public

— Maintaining Statutory Registers;

— Monitoring changes in the share ownership of the company;

— Ensuring that the company files statutory information promptly;

— Monitoring changes in the relevant legislation and the regulatory
environment and taking appropriate action;

— Developing and overseeing the systems that ensure that the
company complies with all applicable codes as well as its legal
and statutory requirement.

— Drafting documents and filing with RBI under FDI guidelines and

ECB norms.

— Act as legal advisor and representative

— Sign the annual returns of the company, as also represent the
company when a situation demands it.

— Handle matters related to central/state sales tax, GST, excise laws,
labour laws and corporate laws

— Handle matters related to obtaining institutional finance.

Responsibilities in this regard would include getting project
approvals, obtaining relevant licences and permits, zeroing in on
all requirements under the Competition Act and FEMA (Foreign

Exchange Management Act) and any other relevant legislation.

Company Secretaries - Guide and Support in MSME Financing

Financing is the lifeblood of Small and Medium Enterprises and Practising

Company Secretary can effectively guide and support SMEs as follows:

— Timely & adequate availability of finance

— Reasonable cost

— Simple delivery process

— Single window for all financing requirements

— Transparency in dealings

— Awareness of schemes of Banks

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West Bengal : Ease of Doing Business for MSME Sector

— Support and Handholding services

— Company Secretaries - SME Exchange

In order to provide better, focused and cost effective financing service to
the SMEs, SEBI set up dedicated exchanges and/or dedicated platforms
of the exchanges for listing and trading of securities issued by SMEs.

Certain relaxations are provided to the issuers whose securities are listed
on SME exchange in comparison to the listing requirements in Main Board.

Some of the services that could be provided by Company Secretaries (both
in employment and practice) with regard to SME Exchange include:

— Advisor/consultant for SMEs on listing at SME Exchange

— Advisor to Public Issue by SME

— Compliance Officer for SME

— Compliance Certificate for issue / listing of shares by SMEs. The
purpose of this certification is to provide comfort and assurance
to the Regulator and Stock Exchanges to the effect that the
proposed listing of SMEs conforms to all regulatory prescriptions.

This Compliance Certificate will enable the SMEs to seek the ‘in-
principle’ approval for listing of shares in SME Exchange.

Company Secretary Guide in development of Business policies and
implementation

A Company Secretary can guide the MSMEs both at policy and operational
level in formulation of various responsible Business policies,
implementation of the principles enshrined, allocation of budgets and
approval of the budgets allocated for these activities and reporting &
disclosures.

Company Secretaries can also help MSMEs to comply with environmental
regulations and assist in funding of compliance programs to meet the
pollution standards and also avail of government sponsored incentives
and training assistance.

***

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