Sahjeevan

13.12.2010

Objectives Nature of Activity Operational Structure Act & its legal requirements Ownership Management Profit Distribution Taxability or Tax incentives Legal Compliances

For Development
Public Charitable Trust Charitable Societies Section 25 Companies

For Business
Cooperatives Producer Companies Regular Companies Societies (Not having Charitable Objects)

Value Added Tax (VAT) in Gujarat

Inst. Having charitable purpose are exempted from the definition of Dealers in VAT Act, 2005

Service Tax
Applicable to services listed in schedule of Act and all service providers are liable to get registration

Income Tax
Charitable Purpose (till F.Y. 2007-08) : (1) Education, (2) Medical, (3) Relief to poor, (4) Any other general public utility business activity incidental to the main objects were allowed for charitable organization

As per the Finance Act 2009, F.Y. 2009-10 onwards, business activities of Charitable organisations are allowed if it is incidental to main objects of
Education Medical Relief to Poor Preservation of Environment Preservation of monuments and historic places

Organisations other than above objects, fall under objects of general public utility, can do business up to gross receipt of 10 lakhs in any F.Y.

Act Companies Act, 1956 Membership (Any one who has interest in business and want to invest)
In case of Pvt. Ltd. Min. 2 members, max. 50 In case of Public co. Minimum 7 members

Voting Rights One vote per share Management Board of Directors amongst members and can also appoint professionals from outside Profit Distribution through Dividend / Bonus Share

Capital Increase - through bonus shares/ members shares (Public Limited co. can also invite public to invest in companies share) Legal Compliances
In case of Pvt. Ltd. - Very Minimum, In case of Public Ltd. little Higher

Audit General Body can appoint an auditor Bank Finances Easy to get bank Finance / or through Private Financers based on Financial Statements / collateral / Credibility

Act State Cooperative Act , Multi State Cooperative Act, or Mutually Aided Cooperative Society (MACS) Membership - Any 10 individual or 2 or more cooperatives having involved in similar business can form (single comodity no multi products) Voting Right One Member - One vote Management Board of Directors appointed amongst members (No Professionals can be appointed as Director)

Profit Distribution through Dividend in prescribed limit (not on proportion to Business generated) State govt. can invest in Share Capital State Fund/ Subsidy specially for cooperatives Bank Finance Easy to get State Interference in Management Audit - can be done through approved Auditors from State Govt. Legal Compliances with Registrar Complex procedure

Act Companies Act, 1956 (New Chapter IX-A under section 581 inserted in 2002) Membership Any 10 primary producers or 2 or more producer institutions can form Voting Rights One vote per member irrespective of share holding Management Board of Directors amongst members and can also appoint professionals from outside Profit Distribution through dividend in prescribed limit however, additional bonus on business patronage can be declared on pro rata basis to business generated

Capital Increase - through bonus shares/ members shares (restriction to invite public to invest in companies share) Legal Compliances Very Minimum Audit General Body can appoint an auditor State Fund / Subsidy At present no such subsidy or Programmes developed to promote producer companies Bank Finances Some times difficult to get bank Finance / or through Private Financers

Parameters Act Registration Membership

Normal Company Companies Act, 1956 Registrar of Companies Any person / insitutions who has willingness to invest in busness One Vote / Share

Cooperatives

Producer Company

State Cooperative Act Companies Act, 1956 Registrar of Cooprative Society Registrar of Companies Primry Producers, or group of co Primary producers, Producers' operatives institutions, any person involved in busines of primar produce One Vote / Member

Voting Rights Management

One vote / Member Professionals can be appointed as Professionals can be appointed Board of Directors from amongst board of Direcotr as board of Director the members only Legal Compliances In case of Pvt. Ltd. Minimum, Higher Minimum (Producer Co. is treated In case of Public Ld. Higher as pvt. Ltd.)

Parameters

Normal Company

Cooperatives restricted upto specified limit No special provision in Act

Producer Company restricted upto specified limit members can get priviledge pro rate basis on business generated by each members through share capital / Bonus share

Profit Distribution Board in General Meeting Patronage Bonus No special provision in Act

through share capital / bonus through share capital / bonus share Increase in Capital share State Govt. can invest in Share Incase of Public ltd., company can invite plublic to invest in pvt. Ltd. Restriction to invie publicPublic ltd., company can invite plublic to invest State interference Minimum High State Interference

Minimum