Up-Start for Indian Start-Ups: To Get 10-Year Waivers with regulations


Up-Start for Indian Start-ups: To Get 10-Year Waiver
from Regulatory Filings

Indian government has proposed recently to let start-ups issue sweat equity and grant additional exemptions, as the government is determined to ease norms for them under the Companies Act with a view to boost entrepreneurship in the country. According to the news, the ministry of corporate affairs plans to allow start-ups to issue 50% of their paid-up capital as sweat equity and extend the period of exemptions from other regulatory filings for up to 10 years instead of five now.

They will be exempted for 10 years from a rule that bars private companies from raising deposits exceeding 100% of their paid-up share capital.  Exemptions already given to start-ups for 5 years will be available for 10 years, in line with the revised definition by the Department for Promotion of Industry and Internal Trade.

The DPIIT expanded the definition of start-ups earlier this year to state that entities would be considered start-ups for up to 10 years from the date of their incorporation. News suggest that a notification would be issued soon to put into effect the proposed changes, although relaxation of norms on financial filings for start-ups would require an amendment to the Companies Act of India.

Provisions to exempt start-ups from filing cash flow statements in their annual filings and allowing them to hold only one board meeting every six months instead of four every year may need parliamentary approval. These exemptions help start-ups that are under 10 years old in raising funds for expansion plans and provide flexibility to compensate employees or directors using sweat equity.

The government has taken several measures off late to boost the start-up ecosystem, including giving them relief from what was popularly dubbed angel tax, which is levied when companies get investments at higher than their fair market value. It is looking to enhance the start-up fund of funds, which invests in venture capital and alternative investment funds that in turn invest in start-ups.

For any queries, feel free to write to us at info@gjmco.in or call: +91 7600.482.982

Thanks & Regards,
Knowledge Base team
GJM & Co.
Chartered Accountants
www.gjmco.in

Out SOURCE to Out PERFORM

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