OVERSEAS COMPANY INCORPORATION - PowerPoint Presentation

1. OVERSEAS COMPANY INCORPORATIONAdv. (CS) Ameya Munagekar, CPA (USA)

2. Do you think that?A Company can issue shares at No Par Value?A Company can trade in its own stock?An LLP can issue shares & get listed on a Stock Bourse?A Company can be formed with a single Director and Shareholder whose identity can be concealed?A 100% Subsidiary can have a single person as its Secretary, Director, Chairperson and authorized representative, and the so appointed person is unrelated to its holding company?A Company can do business transaction and open bank accounts in different names? That All Capital Gains could be non-Taxable?

3.

4. Company Incorporation in IndiaGoverned Centrally by the Ministry of Corporate Affairs, New Delhi under the aegis of the Companies Act, 2013One Single Register of Companies on the MCA21 ie: a company with the exactly same and identical name cannot be incorporated in another state or region of the country.The Memorandum and Articles of Association are two separate documents that govern the working of the Company.Compulsory statutory audit from the first year of operations whether or not the company books any revenue or turnover.Income Tax levied on the company by the Central Government at Flat Rates of Taxation on every rupee earned

5. Company Incorporation in IndiaDividends are taxed from 1st April 2020 onwards at the hands of the ShareholderCapital Gains as and when applicable are taxable Shares can have Par Value as low as Re. 1Types of Companies: Limited by Guarantee, Limited by Shares, Unlimited, Section 8 Companies, Government Companies, OPCs, Producer Companies, Most Popular- Private and Public Limited CompaniesMultiple Annual Compliances required including many filings with MCA

6. Company Incorporation in IndiaFilings include but not limited to:Annual Reports which contain Annual Audited Balance SheetsAuditor Appointment Lettersc. List of Directors including their Date of Appointment and their present residential addressesMOST Filings with MCA are PUBLIC INFORMATION and can be accessed by ANYONE from ANYWHERE in the world by paying the limited fees stipulated by MCA and can access the intricate financial data and reports including the names and residential addresses of directors, names of auditors, current bank loans acquired by the company, current turnover, related parties of the company etc.

7.

8.

9. Legal Business Vehicles in USA:A sole proprietorshipA general PartnershipA limited PartnershipA Limited Liability Company (LLC)A Corporation (Inc.) (i) S-Corp (ii)C-CorpA Professional CorporationA branch of a foreign Company

10. Company Incorporation in USAFederal State, companies (called corporations) are incorporated under the State Laws, with the Secretary of the State.USA consists of 50 States, a Federal District and 5 major territoriesEvery state and territory has its own basic corporate code, while Federal Law creates minimum standards for trade in company shares and governance rights. A corporation as well as an LLC can have just one shareholderCorporations may incorporate in the State of their choice regardless of where their headquarters are situated.Over 50% of the publicly traded corporations in USA and 60% of the Fortune 500 Companies are incorporated in the State of Delaware under the Delaware General Corporation Law (1899)

11. Why Delaware?Special Courts for Corporations- Delaware Court of Chancery (A separate court of equity as opposed to Courts of Law)Cases are heard by Judges (not juries) called Chancellors.Litigants may appeal final decisions of the Court of Chancery to the Delaware Supreme Court.Anonymity While most states require a for-profit corporation to have at least one director and two officers, Delaware laws do not have this restriction. All offices may be held by a single person who also can be the sole shareholder. The person, who does not need to be a U.S. citizen or resident, may also operate anonymously with only the listing agent through whom the company is registered named.

12. Why Delaware?Shares can be issued without any Par Value and no minimum paid up share capital Delaware charges no income tax on corporations not operating within the state, so taking advantage of Delaware's other benefits does not result in taxation.The Delaware (DE) state sales tax rate is currently 0%.Delaware does not impose a state or local sales tax, but does impose a gross receipts tax on the seller of goods (tangible or otherwise) or provider of services in the state.Business and occupational gross receipts tax rates range from 0.0945% to 1.9914%, depending on the business activity.

13. Doing business in another State:In order to establish offices or do business in another state, in addition to the state in which it was incorporated a process known as “Foreign Qualification”, also known as Certificate of Authority or Certificate of Registration with the office of the Secretary of State of the new state is required. It enables the corporations, limited liability companies or limited partnerships (essentially foreign to the new state) to legally pursue growth opportunities across state borders without having to incorporate a new business entity. It's typically the first step in expanding a business to a new state.

14. Doing Business asEvery business has a “legal” or “true name”. In the case of a sole proprietorship or partnership, that legal name is the name of the business owner or owners. In the case of a corporation, LLC or other statutory entity, the legal name is the one on its formation document.If the person or company does business under another name, that is a DBA name. DBAs are also referred to as an “assumed name”, “fictitious business name” or “trade name”. There are no limits to the number of DBAs or assumed names you can use. But the law in most states is that unless the DBA name is registered, which is done by making a filing in the state.

15. Why DBA?Better Privacy Bank Accounts can be opened in the DBA Name (especially required in sole proprietorships)The company is entering a new line of business not reflected by the current nameTo use a more memorable name. The legal name may be long, hard to spell or pronounce, difficult to remember, or not search engine friendly.BrandingWhen company name is not available as domain name

16. Annual Corporate ComplianceAudit: Private companies are not required to have their financial statements audited, public companies must have an annual financial statement audit conducted by an independent Certified Public Accountant (CPA).Annual Reports, Minutes of AGM, Auditor’s reports are not required to be filed in the office of the Secretary of StateA private company must file financial reports with the SEC when it has more than 500 common shareholders and $10 million in assets, as set by the Securities and Exchange Act of 1934. Public companies file quarterly and annual reports etc regularly with the SEC.

17. Accounting in USA:You can select your own financial reporting year for all reporting and business purposes! US typically follows the Calendar year beginning on 1st January and ending on 31st December.As per the US GAAP, LIFO method of Inventory valuation is an acceptable method!Farms in USA can follow the Crop method of accounting for reporting their Farm income to the IRS!

18.

19.

20. Legal Business Vehicles in GermanyEinzelunternehmern- Sole ProprietorshipOffene Handelsgesellschaft (oHG)- General PartnershipKommanditgesellschaft (KG) – Limited Liability Partnership with atleast one partner with unlimited liabilityUnternehmergesellschaft (haftungsbeschränkt) (UG)- Mini Private Limited Company with EUR 1 as paid up capital requirement (since 2008)Gesellschaft mit beschränkter Haftung (GmbH)- Company with limited liability (Private Ltd Company)

21. Legal Business Vehicles in GermanyGesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft (GmbH & Co. KG) - a limited partnership with, typically, the sole general partner being a limited liability company. It can thus combine the advantages of a partnership with those of the limited liability of a corporation.Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft auf Aktien (KGaA): a limited partnership with, typically, the sole general partner being a limited liability company and its shares being publicAktiengesellschaft (AG): Public Limited CompanyForeign Branch- Not a legal entity, its assets and liabilities belong to the foreign company

22. Why Germany?Global Powerhouse of technological advancementWorld’s Fourth Largest Economy and Third Largest Exporter and Second Largest ImporterResponsible for 22% of Europe’s GDPHome to Multinationals- Volkswagen, Allianz, BMW, Siemens, Bayer etcLargest Economy in Europe with 454 Million consumersMember of the European Union enabling free access to European MarketsGenerally, no restrictions on repatriation of Profits

23. Company Incorporation in GermanyGoverned under the provisions of the Commercial Code (Handelsgesetzbuch HGB) passed on 10th May 1897 and effective 1st January, 1900Minimum Capital required: EUR 1 (UG), EUR 25000 (GmbH), EUR 50000 (AG)Registration is at the Federal Level (Nationwide), through the public commercial register (Handelsregister) and the local trade office.Companies are required to file Articles of Association certified by the Notary in the Public commercial Register

24. Company Incorporation in GermanyGoverned under the provisions of the Commercial Code (Handelsgesetzbuch HGB) passed on 10th May 1897 and effective 1st January, 1900. Additionally German Stock Corporation Act, 1965 (Aktiengesetz) applies only to Public Listed companies.Minimum Capital required: EUR 1 (UG), EUR 25000 (GmbH), EUR 50000 (AG)Registration is at the Federal Level (Nationwide), through the public commercial register (Handelsregister) and the local trade office.Companies are required to file Articles of Association certified by the Notary in the Public commercial Register

25. Fantastic Deutschland:Germany defines small companies as a company with a turnover of less than EUR 12,000,000 per annum!Compulsory statutory audit depends upon the size of the company and is only applicable if certain thresholds are met!However, Shareholders have unlimited right of access to company's books and information when company has no auditors!In General, even a public company (AG) is not required to publicly disclose the names of the shareholders and the number and amount of their shares!

26.

27. Legal Business Vehicles:Sole proprietorshipPartnershipLimited PartnershipLimited Liability PartnershipCompany Limited by Shares (LLC) A. Private Limited (Pte Ltd.) B. Public Limited (Ltd.)Branch

28. Why Singapore?Highly developed free market economyThere are no foreign exchange or currency restrictions on the remittance or repatriation of capital or profits in or out of Singapore.  No Capital Gains- In Singapore, the sales of shares, fixed assets, intangible assets, gains on foreign exchange on capital transactions etc. are not taxable.Dividends are not taxable, and need not be even declared in personal income tax filings of the shareholderLow Corporate Taxation rates with Two slabs of 8.5% and 17% at the highestTwo GST Rates of 0% and 7%. No GST on exports and international services.

29. Incorporation in Singapore:Limited Liability Companies (LLC) are incorporated by registering with Accounting and Corporate Regulatory Authority (ACRA)Initial Paid up Capital SGD 1 , shares can be issued without par valueThe number of shareholders in a Private Limited Company must not be more than 50. A Singapore Company shall have at least one director who is a resident of SingaporeAn EPC or Exempt private Limited company is a small company with less than 21 Shareholders none of which are a body corporate and has annual revenue of less than SGD 5 Million. Such EPCs are not subject to statutory audit.

30. Other Requirements:Registration for GST required only in expected annual turnover is more than SGD 1 million. ‘Small’ companies ie those with annual turnover not exceeding SGD 10 Million and with less than 50 full time employees need not appoint auditors and have their accounts auditedAll locally incorporated companies must file annual return with the ACRA within one month of the AGMLike in the US, Companies can choose their financial year and accounting cycle.

31. Fun Facts Singapore:Singapore derives its name from the old Sanskrit Name of the place- Singapura, a name associated with the place since the 14th Century CE.Singapore’s land area consists of the main city and 64 offshore islandsSingapore follows the fiscal year that corresponds with that of India ie 1st April to 31st March of next yearAs per the Singapore Constitution the government is required to maintain a balanced budget over each term. The government does not borrow to fund recurrent spending, nor does it tap on the past reserves for that.

32. Thank you!Email: ameyamunagekar@gmail.comCell: +91 90280 97207