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Law & policy changes useful for StartUps

Law & policy changes useful for StartUps

Law and Policy Changes Useful for Startups.

Startups are the future of Indian economy. Whether the startup is a sole proprietorship or a partnership business, it’s better to give the business a legal existence. The reason being, a registered company, can be closed only by legal authorities in case of any unforeseen issues. Each type of entity is governed by separate laws, though there are certain common laws which are to be complied with, lother than laws relating to the incorporation, tax laws, labour legislations, environmental laws, securities laws, contract law, intellectual property laws and various other kind of laws are required to be adhered to. According to Forbes Startups should also be aware of dispute settlement mechanism which includes litigation, arbitration, mediation, conciliation and negotiation. The Partnership Act:

Government of India is encouraging startups in India through various policies and regulations. Under the Limited Liability Partnership Act, 2008 in India can be considered as a ‘Startup’ till seven years from the date of its incorporation/ registration for getting the benefits under the Government of India schemes.

Eligible business:

Inter-Ministerial Board of Certification of Department of Industrial Policy will provide a certificate of an eligible business. Eligible business under the Income Tax Act has been now expanded to mean a business carried out by an eligible startup engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation. Startups Intellectual Property Protection Under the Startups Intellectual Property Protection, reduced patent fees {rebate up to 80 percent of the regular tees} for the patent applicants will certainly boost Innovation. New amended Trademark Rules provide SO percent rebate in trademarks filing fee to startups. Foreign Venture Capital Investors A FYCI may contribute up to 100 percent of the capital of an Indian company engaged in any activity mentioned in Schedule 6 of Notification No. FEMA 20/2000, including startups irrespective of the sector in which it is engaged, under the automatic route,

RBI

RBI has also allowed the Indian Startups to raise funds through “Convertible Note’ which means an instrument issued by a startup company evidencing receipt of money initially as debt, which is repayable at the option of the helder, or which ts convertible inta equity shares of the startup company, within a period nat exceeding five years from the date of issue on the occurrence of certain specified events as per the other terms and conditions agreed to. Adhering to legal requirements is very important for any crganisation: knowledge and compliance to applicable laws is the first step to ensure smooth business operations. A sound knowledge of all the legal intricacies in starting and managing the startups can help a long way to scale up the startups which wall in turn result in the overall growth of the Indian economy.

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