In this blogpost, Vikram Chaudhuri, Student of Department of Law, Calcutta University and the Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about, what is hybrid structure and the advantages and disadvantages of having a hybrid organization  . 

Introduction

The most important thing to do before launching an enterprise is to choose its legal structure. On the basis of the structuring, it will depend how the enterprise gets its funding, and how the enterprise will govern, and how the profits will be divided. The amount of tax an enterprise has to pay will depend on how the enterprise has been structured.

Countries like US and UK have different options for structuring a social enterprise. They can structure their company in a L3C (Low-Profit Limited Liability Company) and Benefit Corporations ( B Corps )

India, only has a few options for social enterprises.  Entrepreneurs can structure their enterprises in the following formats:-

Non – Profit Organization

 NonProfit Organizations can be structured as Societies, Trusts (Public or Private) or as a Sec 8 Company under the Companies Act. Any organization working for the relief of the poor, education, medical relief, Preservation of Environment including Wildlife and Forests, any other organization for Public Utility will enjoy tax benefits under the Income Tax Act, 1961. Another advantage is that they can accept Donations under the Foreign Contribution (Regulation)  Act.

The ways in which a Non- Profit Organization can earn revenues are by generating revenues from their work, by interest or dividend from its investments. The most important method for earning revenues for them is donation and grants from the Government. Their main objective is to help the society and not earn profits from their ventures.  Teach for India and Digital Green are two examples of Non – Profit Organization.

For Profit Organization

A social enterprise can also be set up as a For- Profit Organization. For Profit- Organizations can be structured as the following four: sole proprietorship, partnership, limited liability partnerships, company.

Most enterprises in India are established as For Profit Organizations. The major advantage of a For Profit Organization is that it is suited for social enterprises looking for fast growth and profit. It’s easier for a For Profit organization to scale up their operations.  These organizations can issue shares and go public. They can attract funding from Venture Capitals (VC’s), and as they are working for profit, they can easily invest in their own infrastructure and hire talented people.

One of the disadvantages is that the main aim of the social organization may drift apart if it is for profit. Making profit may become the ultimate motive of the organization and they may not work for the benefit of the society anymore.

Hybrid Organizations

Hybrid organizations are those which combine the social logic of a non-profit with the commercial logic of a for-profit business. These organizations start off as a non-profit or profit organization, and then they launch another entity.

 As funds start to dry up, non- profits need to rethink as to how to generate revenue to keep the organization in working condition. Generally, they take the option of setting up another for-profit entity. Let us take one example.  Consider two organizations with the same purpose: of solving the problem of poor eyesight in developing countries. The first, the Centre for Vision in the Developing World follows a traditional non-profit model, which runs on donations that fund the creation and distribution of specially designed eyeglasses that can be calibrated by the user to circumvent the need for an optometrist. The second, Vision Spring follows a different approach , working to build a network of entrepreneurs who sell eyeglasses in their communities.  But they sustain themselves by selling glasses. VisionSpring is what organization scholars call a “hybrid” social venture, since it combines the social welfare logic of a non-profit and the commercial logic of a for-profit business.

Advantages of Using a Hybrid Model

When hybrids work, they can be a fantastically creative means of solving real-world problems in totally self-sustaining ways, harnessing the strengths of both for-profit and non-profit models. Hybrid structuring brings together the best of both worlds. It can attract both grants and donations and is still eligible for VC’s. To put it simply, hybrid structures are a combination of a For-Profit and non- profit entity, where both the entities function together as a joint unit. The For-Profit entity can be a subsidiary of the non-profit entity and vice versa. They can also be two separate legal entities but working for the same cause. A hybrid model helps in scaling up easily. Hybrid models are coming up in all spheres including healthcare, technology, agriculture. NGO’s and businesses are collaborating with each other in new inventive ways.

Let us take one more example. The non- profit Mozilla Foundation which promotes an open internet, in 2005, opened its for profit-subsidiary , Mozilla Corp to manage operations related to Firefox, the Web Browser created by Mozilla Foundation, and it’s other open – source software.

Disadvantages of Using a Hybrid Model

The most important thing to remember is that there is no fixed guideline on how a hybrid organization should operate. The hybrid organizations are immensely complicated organizations and each hybrid organization is set up for a particular objective. The success of a hybrid organization often depends on how well the non-profit entity and the For-Profit entity are working together. Several complexities can arise as for how these hybrid organization will be governed, to whom the Intellectual Property will belong , and sometimes there might be a conflict of interest between the for- profit entity and the non-profit entity.

The funding for the two entities also remains a problematic issue. For instance under the IT Act, a charitable trust cannot invest money in the shares of a company. There is no fixed chain of command, and nor is there any guideline on how these conflicts will be solved. So it will depend on the hybrid organization to solve its problem internally. While establishing the hybrid organization, it must be seen that the objectives and purposes of each entity are identified, in a well-drafted document, including any structural and governance problem. This will help in solving the conflicts between the two entities in a relatively easier way.

Another problem is that the entrepreneurs  do not want to invest in a hybrid structure because hybrid social ventures fall into a gray area between business and charity. They are not easily funded by venture capitalists on the one hand or philanthropic foundations on the other.

Conclusion

However, it must be noted that, to maintain a hybrid organization it takes a huge amount of workforce and a huge amount of money. Different legal entities have different rules and regulations. They need to follow certain guidelines of the Government. To maintain a non-profit entity (for example a Trust) and a For Profit Entity (a Company) at the same time, all the necessary compliances has to be followed for both the entities. Hence, hybrid organizations are not always ideal, and must be used only in cases where it is needed.

Hybrid organizations enjoy the bests of both- the non-profit entity and a for-profit entity. A hybrid organization has some distinct advantages as well as disadvantages over the traditional for-profit and non- profit organization. It is up to the entrepreneur as to how he wishes to structure his enterprise according to the needs of his enterprise.

In this blogpost, Abhiraj Thakur, Student, NALSAR University of Law, Hyderabad, writes about environmental migration: exploring the plight of climate change refugees

Climate change in the modern era has been accelerated manifold by industrialisation primarily in the North. Greenhouse gas emissions, dumping of industrial waste in water bodies, and other human activity has led to an increase in global temperatures, leading to disastrous consequences in the international sphere. Some effects of global warming include a rise in sea levels, glacier retreat, and change in timing of seasonal events, changes in agricultural productivity, precipitation patterns, extreme weather changes, acidification in seas, etc. this effects directly impact livelihood of people in affected areas, decrease in crop yield and subsequently leading to a food security crisis, negatively impacts health, leads to a shortage of water resources in some areas and an abundance in others, the geo-bio diversity in the regions, an increased risk of extreme weather conditions like floods, storms, droughts, etc.[1] The regions most affected by climate change will be Africa, Asian mega-deltas and small island states in the Pacific.

Cross-border movements induced by climate change have given rise to a pertinent issue in international law on whether to treat such persons as migrants or as refugees, given that there are widespread legal implications attached to each concept.

The idea of an “ecological refugee” was first proposed in 1948, concretising subsequently in a UNEP report in 1985 by El-Hinnawi.[2] The 1980s and 1990s saw the conception of climate change as a scientific and environmental issue. The 1990 Intergovernmental Panel on Climate Change (IPCC) succeeded in identifying the abeyant consequences of climate change on human migration. There numerous challenges faced by the affected populace, compelling them to look for other opportunities to support themselves and their families, this ultimately results in migration to a different country in the hope of procuring better resources and exploring new avenues for growth. Though there is a dispute over the magnitude of the phenomenon, it is widely agreed that climate change has an impact on the movement of persons among countries and regions within a country.

Major problems

Climate change is defined in the UNFCCC as “a change of climate which is attributed directly or indirectly to human activity that alters the composition of the global atmosphere and which is in addition to other natural climate variability that has been observed over comparable time periods.”[3] Though past experiences such as huge influx of Africans trying to get into Europe and many other examples show there exists a relationship between climate change, environmental events and the displacement/movement of people, it is difficult to ascertain exclusive causality among the factors using current scientific procedures. Migration is a multi-causal event.

Claims under different laws

• International refugee law

Climate change displacement occurs over a period of time, as opposed to sudden displacement like that faced by traditional refugees. The displaced people, as discussed above, do not fit into the definition of “refugee”.  Definitional obstacles come in way of claiming protection under refugee law, as

Environmental changes cannot readily be characterised as persecution. It is pertinent to explore the concept of non-refoulement, i.e. the principle that no one should be sent back to the persecution or other forms of serious harm,[4] rather than attempting at characterising climate change refugees within the definition of a refugee under the 1951 refugee convention which might lead to a narrow interpretation and consequently refuses wider protection and the evolution of categories of principles. This gives only a temporary refuge, meaning that the host country cannot readily persecute refugees and expel them. However in cases where indigenous people are given a lesser priority than other residents of the state in cases of climate change induced displacement, which can constitute persecution on the grounds of race. Another problem is of IDPs, A large part of those displaced might be Internally Displaced People (IDPs), which is governed by soft law principles, not binding treaties. This concept cannot be governed by international law. UNHCR deals only with those IDPs who are forced to move due to conflict. There, however, is a tangible danger of conflict arising because of the scarcity of food, which can be traced back to climate change.

• International environment law

The global climate is a part of a “common pool resource”[5] which is of great importance to humanity. Customary international law mandates state to control pollution and conserve biodiversity in their respective states. Refrainment against causing transboundary environmental harm is an established principle. The Kyoto Protocol has succeeded to some extent, in helping to identify causation of emissions. It accepted that the right to environment is essential to fulfil the right to life of any individual.

The limitations faced by application of environmental law include the prioritisation of states over individuals as claimants, as it lies primarily between states and individuals enjoy lesser legal capacity. The problem of quantifying the amount of carbon emissions and identifying causation remains a pertinent issue here as well. Compounding to this, the responsibilities of corporations which have a major role to play in contributing to toxic wastes in the environment, cannot be adjudged affectively. The states remain the primary unit of a legal system.

• International human rights law

Human rights law sets out a minimum standard of treatment to be meted out by states towards individuals within its territory. It provides a way of assessing which rights are being compromised by climate change and provides a mechanism of devolving primary responsibility on national authorities. In extreme cases where there is a loss of the physical state, resulting in a situation of statelessness, the right to self-determination of people is threatened. However, international law doesn’t anticipate these eventualities and those displaced are not protected by the international statelessness regime. The legal definition states that statelessness occurs when there is a denial of nationality through an operation of the law of a particular state, not by the disappearance of the state altogether.[6] This narrow interpretation negates protection by the persons of Tuvalu and Kiribati islands, which have a legitimate concern of their territory being submerged in foreseeable future.

In the case of relocation, human rights law also mandates a certain standard of treatment to be meted out to those displaced. The right to life as envisaged by the International Convention on Economic, Social and Cultural Rights provides for the right to an adequate standard of living, adequate food, clothing, housing, and the continuous improvement of living conditions, and the right not to be deprived of livelihood.[7] The right to enjoyment of physical and mental health may be affected due to change in climatic conditions.[8] The rights of ethnic, religious, linguistic and indigenous minorities will also be threatened due to climate change. However, when the question of whether states producing carbon emissions can be held liable for those they affect in other states, international human rights law falls short. The responsibility a state owes extends only to those who are present in their territory.

If human rights are at a risk, complementary protection may be provided on a legal basis by another state.[9] It entails protection granted by states outside the purview of the 1951 Refugee Convention and is based on humanitarian principles. However, only the principle of nonrefoulement is applicable to climate change refugees. This too, cannot be the legal basis for a protection claim according to current jurisprudence, as it doesn’t meet the international definition of torture.

• International humanitarian law

The International humanitarian law comes in situations of conflict, and in the context of climate change, it can be applied in cases where climatic conditions lead to a situation of conflict. This is not a far-fetched situation, as direct consequences of climate change attack the very basic needs of human life, creating scarcity. When faced with a scarcity of agricultural produce, water resources, livelihood, etc. it creates a situation of conflict over possession of the same.[10] The causes of conflict may be manifold, and cannot be attributed to climate change alone. It provides for a temporary relocation of displaced people, providing for their return after the conflict subsides. It prohibits unlawful displacement of civilians but does not provide for remedies like restitution or compensation for losses suffered due to displacement, though the jurisprudence in these areas is still developing. The principle of nonrefoulement prevents states from expelling refugees displaced in situations of conflict, which may be caused by climate change. But we see Humanitarian law gives minimal regard to the causes of displacement. It emphasises on the principle of neutrality and applies equally to all citizens affected by conflict. It provides only for basic protections for displaced individuals, failing to provide for a long-term relocation or solution.

Possible solutions

When protection claims are sought individually under the various provisions discussed above, the result seems to fall short of a concrete solution. The lack of a dedicated institution to address the threat of climate change and its consequences does little to contribute to the institutional stagnancy faced by the affected people. A human security approach has been proposed by Professor Jane McAdam. Human security approaches this concept in terms of human needs. As articulated by the UN Development Programme, human security is defined in terms of ‘freedom from want’, ‘freedom from want’, ‘safety from chronic threats like hunger, disease and repression’ and ‘protection from sudden and hurtful disruptions in the patterns of daily life’.[11]

Some suggestions made in the Oslo Nansen Conference[12] include:

• Migration needs to be looked at as an adaptive and survival strategy.
• Interdisciplinary partnerships between scientists and disaster risk managers to address the problems of causation and to further research in this area.
• Climate information must be paramount in decision-making forums so as to ensure acknowledgement of the same and to act as a guiding and channelizing factor in decision making.

Early warning and preparedness systems need to be institutionalised and harnessed to prevent migration.

[1] Climate Change (IPCC) (2007)

[2] El-Hinnawi E., Environmental Refugees (United Nations Environment Programme) (1985)

[3] Article 1(2) UNFCCC

[4] Jean Allain, The jus cogens Nature of non‐refoulement, 13 International Journal of Refugee Law 533–558 (2001)

[5] xi The drama of the commons (National Academy Press) (2002)

[6] Article 1(1), Convention Relating to the Status of Stateless Persons

[7] Article 12, ICESCR

[8] CLIMATE CHANGE (IPCC) (2007) at 7

[9] Jane McAdam, Complementary Protection in International Refugee Law (Oxford Monographs in International Law) (2007)

[10] D. Zhang and others, Global Climate Change, War, and Population Decline in Recent Human History, Proceedings of the National Academy of Sciences of the United States of America, vol. 104, no. 49 (4 December 2007), International Alert, A Climate of Conflict: The Links between Climate Change, Peace and War, (London, November 2007)

[11] UNDP, Human Development Report, 1994, 23

[12] Nansen Conference on Climate Change and Displacement in the 21st century (Oslo, 6-7 June 2011): Conference Report UNHCR, http://www.unhcr.org/4ea969729.html (last visited Apr 10, 2015)

In this blogpost, Pramit Bhattacharya, Student, Damodaram Sanjivayya National Law University, Visakhapatnam, writes about the pros and cons of making betting legal in India.

 

Betting can be a very scandalous topic, especially when considered in the context of betting in sports. For some, it can be viewed as the growth of an economy, and thriving industry, for others it can be viewed as marring the spirit of the game and corruption among the sportsperson.

Talking about betting in the Indian context, especially with regards to betting in cricket, the debate has been a long drawn one. There are contrasting views about it, but the recent trends indicate that there is a careful inclination towards legalizing betting in sports.

Before going into the intricacies of it, let us see what the effects of making gambling illegal are (it is in common knowledge that betting is illegal in India).

Whenever we are talking about any law, we need to see the pith and substance of the law, i.e., the object behind. And based on that object a law can be good or bad. As a civilized society, we understand what good laws are. Any law or statute, protecting the rights of an individual, and protecting him from harm, which may be caused by other are deemed to be good laws. In this sense, a law protecting a person from himself can also be considered a bad law. Arguments against legalizing betting are mainly focused towards protecting a person from himself. When a person is unable to make any sound decision overwhelmed by his greed for money, the government intervenes and tell them how to conduct yourself responsible way. But such restriction on the part of the government incriminates everyone, even those who can act responsibly. One more argument against betting is that it appeals to the criminals factions. However, plethoric restriction attracts more crime. Sometimes excessive restriction creates more problems than they were intended to untangle.

Here are some negative impacts of illegalizing betting-

• Black Market

A complete restriction on betting has not eradicated it but has sent the activity ‘underground’ covered in the murky undertakings of the crime syndicates. Such restrictions rather broaden the operation of criminal activities instead of restricting them. Where an individual could have placed his bet with a controlled and licensed establishment, he gets entangled in a black market, where no protection of the law is granted. Such black markets also fill the coffers of the crime syndicates and allow them to make a profit out of activity, which they shouldn’t have been able to do had it been legal. Such increase in profits also draws out many more people to these criminal syndicates to fill their pockets more easily.

• Match fixing

With betting activities going underground, it becomes harder to dragoon and oppress the problem of match fixing. Criminals are not very interested in following the law from the outset only. Add to that the huge amount of money involved in betting and the problems gets a lot worse. Matches are fixed to make more and more amount of money. This problem does not rear its ugly head in a regulated market, where the reputation of the bookmaker or the establishment is the prime concern of the bettors. If a licensed bookmaker or establishment is caught in the scandal of rigging games, their business would be ruined both legally and in terms of customer base. Also, when betting is done in the open markets, they are easily traceable, thereby reducing the chances of rigging.

• A Setback to the economy

A boost in the economy always helps and legalizing betting does provide that boost. The economy loses a lot of money to betting, and it also increases the amount of black money being circulated in the market. Moreover, profits of betting can’t be taxed, as these profits are not under the purview of taxable income. This way also the economy loses a lot of money.

Coming back to the point of legalizing of betting, no other problem has marred Indian sports especially cricket than betting and match fixing. Betting is illegal in India, but still the betting markets exist, which are being controlled by the dark underworld. The fact apart, people from different walks of life has spoken about legalizing betting in cricket. When people like ex-CBI chief, Ranjit Sinha and former captain of the Indian cricket team, Rahul Darvid talks about legalizing of betting in cricket, you got to take notice of the fact.

In the year 2000, the Delhi Police busted a match-fixing scandal involving players like Hansie Cronje, Mohd. Azharuddin and Ajay Jadeja. Very recently, these players were banned from the IPL for their involvement in match-fixing scandals (in the 6^th edition of the IPL, S Sreesant, Ankit Chavan and Ajit Chandila were banned for fixing a match)[1]

The Lodha Committee headed by former Chief Justice R M Lodha, which was set up set up to investigate the spot-fixing incidents that took place in the IPL,  also suggested that betting should be legalized to curb the menace of match-fixing. Chairman of the ICC’s Anti-corruption Unit, Sir Ronnie Flanagan has also been very vocal about the idea of legalizing betting in India. According to him, it would be much easier to track incidents of spot-fixing and game-fixing if the betting Industry is legalized in India.

“If we talk about countries (like England) where betting is legal and heavily regulated, we have a Memorandum of Understanding with the legitimate betting industry and we find that is helpful because they report to us on any unusual spike in betting about a particular event or a particular time and we investigate it and they stop taking bets when that happens. Obviously, in the black market, the betting industry is harder to track.”[2]

According to him, it’ll also help the ICC, if India legalizes betting. He states that where betting is legalized it is heavily regulated, and they work in close conjunction with us, so it does assist the ICC. But he also emphasizes on the fact that it is not for him to suggest what India should do in terms of legislations and laws regarding the issue of legalization of betting. But if at all betting is legalized in India, he believes that ICC will be seeking close collaboration who would govern the activity of betting.

Various arguments can be given in favor of legalizing betting in sports (specifically with respect to cricket). A few arguments given in favor of legalization of betting are as follows-

• It is very evident that numerous influential personalities are involved in the business of betting in sports, and it is a big business issue, albeit unofficially. It would be right for the government to legalize betting and make it a taxable income.
• Legalization of betting and gambling in sports can also help in the terms of employment generation and total output. Consider the fact- as of year 2015-13,207 million pounds gross value added transaction occurred in the gambling and betting industries.[3]
• In terms of employment also legalizing of betting and gambling has created numerous jobs. At the end of the financial year 2015, the betting and gambling industry employed 104, 869 people.[4]
• Betting is not bad per se. It is just another game linked with economic benefits and losses. Technically the Indian share market can also be termed as a field for gambling and betting. There is no certainty when the share prices will go up or down. If speculations of shares are legalized, why not speculation is sports. A few other forms of betting and gambling in India like betting on Horse Races and Casinos are legalized in India.
• One of the fact to be considered is that criminalization of betting does not stop it from happening. According to reports betting money involved in IPL-7 and IPL-8 were around Rs. 7,000 crores and Rs. 12, 000 crores respectively.[5]
• In these times of struggling global economy taxing the profits earned by betting can be a very appealing option. The best option would be that the government comes out with clear laws and legitimize betting and protect the consumers. This will be much preferred rather than outright prohibitions which create further problems. It is a win-win situation for both the government and the bettors. By creating a safe environment for betting, the government can earn financial benefits from the tax revenues. It’ll also help the consumers to place their bets in the open market where the money is traceable, instead of getting entangled in the world of criminal organizations.

Betting as a vice cannot be eliminated. Such activities are taking place even when it is illegal. So instead of turning its back to the problem, the government should find solutions. Once the market is open, people will prefer to bet through fair channels, online or offline. It will suck out the liquidity from the unregulated market, and chances of fixing will reduce drastically. The greatest advantage of regulating sports betting is that there will be accountability for the large amounts of money transferred through illegal channels leading to a reduction in cases of match fixing, money laundering, and crimes. Also, with the changing times, the society has come to accept betting activities and not see betting as nefarious. According to a survey done by FICCI, 68% people believed that betting activities can be controlled by a proper framework and almost 83% of the participants of the survey stated that regulating betting in sports with proper laws is much better than completely prohibiting it.[6]

Therefore, the need of the hour is to come up with an active regulatory framework- whether the principle philosophy is to permit or restrict betting, but not completely banning it.

[1] http://sports.ndtv.com/cricket/news/214024-sreesanth-chavan-banned-for-life-bccis-official-media-release

[2] http://www.rediff.com/cricket/report/how-legalising-betting-in-india-could-prevent-fixing-in-cricket-flanagan-world-t20-wt20-lodha-pix/20160306.htm

[3] http://www.gamblingcommission.gov.uk/Gambling-data-analysis/statistics/Industry-statistics.aspx – http://www.gamblingcommission.gov.uk/docs/Industry-statistics-April-2010-to-March-2015.docx

[4] http://www.gamblingcommission.gov.uk/Gambling-data-analysis/statistics/Industry-statistics.aspx – http://www.gamblingcommission.gov.uk/docs/Industry-statistics-April-2010-to-March-2015.docx

[5] http://www.oneindia.com/feature/oneindia-exclusive-ipl-betting-dossier-bookies-put-in-rs-7000-crore-in-2014-1630631.html

[6] http://ficci.in/spdocument/20254/report-betting-conference.pdf

In this blogpost, KomalRastogi, Student, Nirma University, Ahmedabad, writes about the offshore investments and tax evasions, reasons for the offshore investment, and also about the increasing risks to tax evasion through offshore investments.

Offshore investments have become a great source of investment and have spread all across the world. India is no exception to this. Offshore investment is an investment housed in a country other than one’s own country of residence. Offshore investment is a means of reducing taxes levied on the investors either large or small scale investors. This leads to moral and legal questions regarding tax evasion or tax avoidance. These investments are popular among those investors who try to hide their money from being taxed heavily.

Payment of less tax is the most important reason for the increase in offshore activity. Due to these offshore investments, investors are able to have a more profitable business. Generally, taxes levied in the country create less profit to the business. But by using offshore mechanisms an investor can reduce the amount of tax that he or she has to pay.

The other reason as to why offshore investments are more preferred than to onshore investments is because the former is less regulated and the behavior of any of the offshore investors is unrestricted than that of an  onshore investor.

Reasons for the offshore investment

1. Confidentiality: Along with the investments, the offshore authority provides a complimentary benefit of trade confidentiality to the company. The countries which allow offshore investments have separate laws for the banking and corporate confidentiality. This helps them to manage their taxes on incomes, capital gains, etc. If the confidentiality is breached, then there will be severe consequences for the other party. The secrecy or confidentiality doesn’t mean that they are hiding something or they are criminals. But if there is any issue of drug trafficking or money laundering then the offshore laws would allow disclosing the identity in that case. In the case of the high-profile investors, the secrets they want to keep is for their business profits so that they are not forced to share their market share and ultimately give up their share in profit.
2. Tax reduction: The countries who want to attract foreign investors offers them tax incentives. The favourable tax conditions are provided by the offshore countries to promote healthy investment environment. Offshore investment arises when any investor forms a corporation in other than one’s country of residence. The corporation tax trend gets lower from 51% to 32% only to attract foreign investors. US markets provide tax-free status to many foreign investors. But in recent years, due to their tax exemption policy, US market has suffered huge revenue loss towards its offshore investors. US has a policy according to which it levies taxes on the investors residing in the territory of USA on the basis of their worldwide income. This will prosecute the investors who evade the country’s capital gain through tax evasion.
3. Variation in investment: Investing in foreign markets will help in diversifying the assets. This will help offshore investors to have truly diversified investment portfolio. Risks can be controlled by investments among a wide range of options that are accessible for onshore investments.
4. Diversification in assets: Investment in foreign countries can help in expanding the business and would lead to diversification of their assets. This diversification can help at the time of downturn of the economy.

Due to these offshore investments, investors found a new way to escape from the taxes which can be levied on them. The investors either rich or middle class, invest their money in other countries as to avoid their taxes.

Tax evasion

Tax evasion is a process where a corporation or persons illegally attempt to minimize their tax payments or avoid tax through fraudulent techniques. Tax invasion activities include: underreporting income, hiding money, hiding interest in offshore accounts, or inflating deductions or expenses.[1] Tax evasion can lead to corruption, increase in the price of houses, etc. The direct impact of tax evasion is an increase in inflation and the loss of revenue.

 Increasing menace of tax evasion by offshore investments

In India, tax evasion is a civil offence as of now, and tax evaders are punished under Income Tax Act. The act only provides penalties for the crime of tax evasion and one year jail in some cases. Nowadays Tax Evasion related to the holding of illegal foreign assets is categorized under anti-money laundering laws which make the crime of hiding money through offshore investments as a criminal offence. With the offence of concealing the money and tax evasion with respect to offshore investment makes it a crime punishable under Prevention of Money laundering Act. Few countries in the world have made this tax evasion a criminal offence. According to the circumstances prevailing in India, slowly and gradually it will also join the group of those few countries.

The offences which are covered under Income Tax Act will be the 15th Scheduled Offence and would be dealing with predicate offences. Scheduled offences are the offence which are listed in the schedule to Prevention of Money Laundering Act, 2002. The laws which are listed in the Scheduled Offence includes Indian Penal Code, 1860; NDPS Act, 1985; Unlawful Activities (Prevention) Act, 1967; Prevention of Corruption Act, 1988; Customs Act, 1962; SEBI Act, 1992; Copyright Act, 1957; Trade Marks Act, 1999; Information Technology Act, 2000; Explosive Substances Act, 1908; Wild Life (Protection) Act, 1972; Passport Act, 1967; Environment Protection Act, 1986, and the Arms Act, 1959. The IT Act will be the 15^th Scheduled Offence which makes tax evasion through offshore investment a criminal offence. As IT act will be covered under Scheduled Offences, it can be investigated by CBI, SEBI, Police or Narcotics Control Bureau which can further register any crime as a criminal offence. The violation of tax laws with offshore investment is categorized under the predicate offence and will be treated under civil IT laws.

“Major international economies readily cooperate with a foreign country on tax information exchange matters if the case in question is registered under criminal laws like PMLA or Narcotic Drugs and Psychotropic Substances Act.”[2] Now, the organizations can prosecute huge tax evasion crimes under Indian Penal Code and Anti-Money Laundering Act. For Example the list of account holders in HSBC bank couldn’t be prosecuted under Prevention of Money Laundering Act despite indications of money laundering by the accused but was sued under civil foreign exchange laws.

Recently, India has decided to have an amendment in the tax pact with Mauritius. This step is taken to prevent tax evasion by the taxpayers. India might levy the capital tax in Mauritius. The reasons why India is looking for the amendments is because of round tripping and other treaty criticisms. After a long conversation, “Mauritius has agreed to include a clause which shares the benefit with India and is similar to the treaty that India has with Singapore.”[3]

[1] Retrieved on http://legaldictionary.net/tax-evasion/

[2] Retrieved on http://articles.economictimes.indiatimes.com/2015-03-02/news/59684142_1_criminal-offence-tax-evasion-predicate-offence

[3] Retrieved on https://www.bankbazaar.com/tax/tax-evasion.html

In this blogpost, Inayat Dhanda, Advocate and a graduate from ILS Pune, writes about How Woman are bound in the social obscenity cycle  

As Kangana Ranaut very rightly said;”period blood isn’t gross”.

I’m proud to bleed. I’m proud that I have the privilege to reproduce and ensure continuity of the human race.

I’ve actually wanted to write on this, but thought, people would judge me.

Since a little girl when I hadn’t hit puberty all the girls in their 8th grade , were taken for a short seminar conducted by a gynaecologist in our school.

It was a very funny affair because we got circulars addressed only to the girls in every class.

The boys were obviously curious to know as to what was happening.

The cherry on the cake was how all girls came up with different answers on being asked as to what that circular contained.

One girl said,” sewing classes”, the other said ” dance workshop “, and then there was the lot like me who said;” We aren’t supposed to tell

Making it all the more obvious.

We, women, are blessed enough to have that responsibility to bear children and procreate.

Why then do I have to hide my period pains from my guy friends, father or my brother?

Why do I have to pack my sanitary napkins twice, in a paper when I have to dispose it off?

Why do I get a packet of whisper from the medicine shop carefully wrapped in brown paper, as if I’m ashamed of it?

Why do I always have to lie, that I have a fever or a headache, when I actually am bearing a painful period pain?

Why am I considered impure and asked to sleep on the floor while I’m menstruating?

Why can’t I enter my very own kitchen?

Why can’t I worship or attend a jagrata of a God who herself is a woman ?

Why is it said that God listens to a girl’s prayers more, when she hasn’t hit puberty ?

I will tell you why.

Because we love being stupid.

And that’s where it ends.

Let’s not be so stupid that we loose all our reasoning and stick to crazy practices.

I refuse to be idiotic anymore.

I make this choice. This very moment.

How about you ?

I’m a happy girl.

I’m happy to bleed.

In this blog post, Harsha Asnani, student, NIRMA University, Ahmedabad writes about the relationship between competition law and policy and consumer protection in India. The article also covers various legal provisions and reasons that prove the two legal disciplines are mutually re-enforcing.

In the recent times, there has been major changes and emergence of various competitive practices in economies across the world. Due to the increasing competition, adverse consequences are produced. These repercussions do not remain limited to the market stakeholders but are extended to the consumers as well. The major problem arises when the effects of such competition become non-quantifiable and non-obvious. Until the late 1970s, there was no systematic movement in lieu of taking steps for the protection of interests of the consumers. In the recent consumer friendly environment, it is acknowledged that the true indicator of a country’s development and its progressiveness is a level of consumer awareness and protection in the territory. The factors that have led to an increase in need of consumer protection are multifold. These include increasing the complexity of production and distribution system, greater levels of sophistication in selling and marketing, advertising and promotional practices, increased mobility of consumers and lack of or reduction in the interaction between the consumers and sellers.

In order to tackle this problem, enactment of Competition laws is the best suitable recourse. Taking into consideration the consumer needs and imbalances faced by them in economic terms, education levels and bargaining power, there are various guidelines that have been made in furtherance of consumer protection. Such guidelines have been formulated or expanded to include ‘sustainable consumption’ as an important subject matter. These guidelines have been helpful in setting up international accepted set of objectives particularly for the developing countries in order to help them identify priorities and hence structure their consumer protection policies and legislations.

Enforcement of Consumer protection through Competition laws

It is an acknowledged fact there exist an unequal relationship between the producers and consumers. Competition Law, therefore, restricts the producers from abusing the dominant position of theirs in the market. The Supreme Court of India has observed that the main objective of Competition law is to use competition as a tool to promote economic efficiencies and assist in creating the market as responsive to consumer preferences.

Using Competition as a tool bears following benefits for the consumers:

• It is a means of lowering prices and improving quality. Consumer prices get lowered because with a better degree of competition, productivity of the industries increases. Not only consumer prices get lowered but also employment increases.
• It leads to consumer empowerment because of promotion of factors like higher degree of consumer protection, freedom of individual choice and abhorrence of concentration of power and decentralised economic efficiency
• It also aims for open market so that situations of shortages can be avoided, and therefore allocative efficiency may be increased;
• By achieving all these objectives growth and development get accelerated, and political and economic democracy gets preserved.
• It also produces better and wider choices.

It has been observed that there is a strong commonality between consumer protection policy on one hand and competition law and policy on the other hand. An effective and efficient competition policy if implemented in a proper manner can reduce the amount of trade barriers on entry and exit. Such reduction in barriers can help in making the market environment more conducive for not only promoting entrepreneurship but also for small and medium scale enterprises and their respective growth and provide scope for consequent expansion. Competition law and Policy aims at maintaining the ambit and process of competition between various enterprises and also provide for remedies to behavioural and structural problems so that competition can be re-established in the market. If all the above mentioned objectives are met then benefits like greater economic efficiency, higher innovation, and enhancement of consumer welfare can be achieved.

Consumer welfare would be achieved because now the consumers shall have greater choices and more availability of goods at reasonable and affordable prices. On the other hand, consumer policy deals with the nature of consumer transactions, steps, and strategies that can help in improving market conditions so that the consumers can effectively make an informed choice. Irrespective of the fact that the two policies focus on varying market failures and their respective remedies, but it is noteworthy that their aims coincide in a way that they both aim at maintenance of well-functioning and competitive markets that promote consumer welfare. It is because of this common feature that they are termed as mutually re-enforcing.

The ultimate objective of competition policy is to formulate such legal framework which shall empower other policies to facilitate competitive outcomes in the country. A good competition policy is not only an essential element of economic policy framework but also maximises consumer and social framework. It benefits the consumers in the way that it creates a business environment where efficient resource allocation is ultimately curbing or preventing abuse of market power.

In the Indian matrix, along with the Competition Act, it was suggested in the Tenth Five-year plan that a National Competition policy should also be articulated. This National Competition Policy would reflect nation’s need for an accelerated economic growth and improvement in the quality of life of the people, nation’s image and self-esteem etc. It was further put forth that the National Competition Policy would help in bringing about a competitive culture among various organisations, therefore maximising economic efficiency, protecting consumer interests and improving international competitiveness.

Provisions in the Competition Act that enforce consumer protection

Expressly, the Competition Act, 2002 gives protection to the consumers by way of Section 4, where it is recognised that an enterprise or group shall be termed as abusing its dominant position if it limits or restricts technical or scientific development relating to goods or   services to the prejudice of consumers.[1] Definition of the dominant position of a firm or enterprise is gauged by various factors. Among all other factors, it is defined as a position of strength enjoyed by an enterprise, in the relevant market, in India, which enables it to affect its consumers or the relevant market in its favour.

According to Section 18 of the Act, the Competition Commission of India has the power to take suo moto action in order to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India.

According to Section 19(4), among other factors, dominant position is also determined by the dependence of consumers on the enterprise and entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical barriers, economies of scale, high cost of substitutable goods or service for consumers. Section 19(6) and 19(7), the relevant geographical market and product market are determined by the many factors. One of the major factors among all others is consumer preferences.

Protection from the Unfair Trade Practices and Restrictive Trade Practices to consumers

The Competition Act, 2002 does not recognise unfair trade practices. Such practices have been recognised in the Consumer Protection Act, 1986, and any person found in contravention of such provisions is penalised. However, the Competition Act, 2002 recognises the Restrictive Trade Practices. A Restrictive Trade Practices is defined as the one which has the potential of bearing effects such as preventing, distorting or restricting competition. In particular, any trade practice that obstructs the flow of capital or resources into the stream of production can be termed as Restrictive Trade Practice. Examples of such practice include price manipulation, the imposition of such conditions on the delivery or supply of goods that have an effect of imposing unjustified costs and restrictions etc.

[1] Section 4(b)(ii)

In this blogpost, Sreeraj.K.V, Student of Government Law College, Kerala, writes an article on the topic Concept of ADR in the present legal system of India. The topic covers the importance of ADR, major provisions under the Arbitration and conciliation Act, advantages of arbitration as well as major cases which made the system much more important.

One of the main drawbacks of India’s legal system and law enforcement agencies are a lack of effective delivery of legal remedies to the people in need. Pending cases are comparatively much more than the cases settled. The main reason behind such a phenomenon is that increase in the number of offences as well as time taking to solve the cases from the part of the judiciary. In such a situation, Alternative Disputes Resolution mechanism plays an important role in resolving disputes among people which is less important when compared to serious offences so that court can save its valuable time as well as parties affected will be delivered with an effective solution for their disputes.

Looking to its legal aspects, we have Arbitration and conciliation Act, 1996 to deal with various provisions relating to the alternative disputes resolution mechanism in India. Along with that, section 89(1) of the Code of Civil Procedure, 1908 deals with an option of the parties to make a settlement of their dispute outside the court. This states the importance of such machinery wherein parties can arrive at a solution for their problems by themselves.

Arbitration and conciliation Act, 1996

This Act provides certain powers to the judiciary as well as concerned authorities to make a settlement of the case at the option of the parties involved. Section 30 of the Act deals with provisions wherein the arbitrator, with the consent of the parties, undergo mediation, conciliation or other such proceedings at any time of arbitration to encourage settlement of the dispute. [1] But the Act also states that for enforcement of any such provisions of the Act, there must be an ‘arbitration agreement’ between both the parties in writing. In fact, the process of arbitration is being done mainly for civil cases which involve monetary settlement among the parties.  While referring the term conciliation, it will be clear that this system of resolving disputes is much informal than arbitration. There is no need for agreements between the parties of a dispute. During any time of judicial proceedings, a party can request for conciliation to the other party and then a conciliator may be appointed. After going through the facts of the case, the conciliator calls up for a meeting between two parties jointly or individually. Then if the dispute is resolved, a settlement document is prepared by enclosing the details regarding the settlement.

Apart from these two machineries, there are certain other prominent systems under the head of ADR, which involves Lok adalath as well as Mediation. Lok adalath is generally known as ‘people’s court’. This is a non-adversarial system wherein mock courts are held by State authority, District Legal Services authority, Taluk legal service committee as well as Supreme Court and High Court legal services committees. It has no jurisdiction over any non-compoundable offences. One of the merits of this system is that the parties can directly contact with the judges which is not possible in regular courts.  The focus of adalath is on compromise and if not, the case will be returned to the courts and if compromised, it will be a decree equal to the civil court and no appeal is applicable even under Article 226 as the decree made is upon the consent of both the parties.

On the other hand, mediation plays yet another role in the field of ADR wherein a negotiation is done between the parties with the help of a mediator who is a third party to them. The main object of undergoing mediation proceeding is to protect the best interest of the parties. It does not cover any legal provisions so that the parties will be not held inside certain limitations of such legal matters. It provides a friendly talk between the parties and a means of counselling so that the real issue faced by them will be found out and the dispute among them will be resolved easily. There are certain types of mediation which are termed as court referred mediation and private mediation. Same theory which is applicable to Lok adalath is applied here also, i.e., if the parties arrives at a settlement, no person can file an appeal to a higher court in any manner. [2]

Advantages of Alternative Disputes Resolution

• Cost effective and less time-consuming procedures
• People’s chance of revealing the true fact
• Preserving the best interest of the parties
• Informal way of resolving disputes
• Provides confidentiality in its nature
• Prevents further conflicts and preserves good relation among the parties

As mentioned before, there are certain provisions in connection with ADR even in the Code of Civil Procedure, 1908. Section 89(1) of the code deals with the power of the court to refer the dispute for settlement for a purpose of an amicable, peaceful and mutual settlement between the parties without the intervention of the court. This section states that if there are favourable elements in the case which a court can prefer it for settlement, court may formulate various terms of settlement to the parties and if it’s agreed by them, then the court can proceed for an out of court settlement which includes:

• Arbitration
• Conciliation
• Judicial settlements through Lok Adalath
• Mediation

There are various important judgements for the cases which involve section 89 of CPC. In the case of Afcons infrastructure and Anr v. Cherian Varkey construction co[3], Supreme Court held that “all suits of civil nature, in particular, the following categories of cases are normally suitable for ADR process”:

1. Cases relating to trade, commerce and contract
2. Cases arising from strained or sourced relationships
3. In cases wherein there is a need for continuation of pre –existing relationship in spite of disputes
4. Cases relating to tortious liability
5. All consumer disputes

Supreme Court also held that enumeration of the above said cases are only indicative and not intended to be exhaustive or rigid. In many other cases as in Jagdish Chander v. Ramesh Chander,[4] Supreme Court held that “there cannot be a reference to arbitration under section 89 of CPC unless there is consent of the parties for such a reference”.

Conclusion

Facts and circumstances mentioned above make a clear picture that the system of alternative disputes resolution plays a vital role in dealing with disputes among two parties as well as its effective resolution. In fact, dispute among married couples as well as a dispute regarding property is the major area which is now being focused by the Courts and judicial agencies where effective dispute resolution is possible. The impact of such mechanisms is, people get a speedy redressal opportunity and also a friendly atmosphere apart from the rigid rules and regulations of the courts. The current status gives us an idea that there is a drastic increase even in this field of law as the people started understanding the pure concept of this as well as its effectiveness in the enforceability of law through a different perspective so that the term ‘democracy’ gains much more importance in the life of the people as well as in the society.

[1] Retrieved on : http://www.gktoday.in/alternative-dispute-resolution/

[2] Retrieved on: http://mediationbhc.gov.in/PDF/concept_and_process.pdf

[3] Retrieved on: http://www.mondaq.com/india/x/137680/Arbitration+Dispute+Resolution/Parties+Must+Agree+To+Have+Their+Disputes+Resolved+Through+Arbitration+Even+Under+Section+89+Of+CPC

Afcons  infrastructure Ltd and Anr v. Cheriyan Varkey construction co: Civil Appeal no: 6000 of 2010

[4] Jagdish chander v. Ramesh Chander 2007 (5) SCC 719

In this blogpost, Madhuri V Kashyap, Student of the Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about, criteria one needs to know before deciding the structure of business, what is meant by franchising, advantages of franchising a business and what is a master franchising agreement. 

Introduction

Globalization in the business sphere has increased more than ever, and with the advances in science and technology, it has never been easier to conduct cross-border transactions. India is a young, developing country and is hot for new businesses to come in and “set up shop”, as the saying goes. By 2025, India is touted to be the fifth largest consumer market in the world. The Indian middle class alone, at 300 million is comparable in size to the European Union markets. The current Government has a friendly and accommodating stance towards start-up businesses and those seeking to invest in India. India also has the added advantage of an enormous pool of skilled and unskilled labour available at very cost-effective rates to global businesses, as compared to what they might have to shell out in developed countries.

The first set of criteria to be looked at before providing structuring advice to a business that wants to expand in India would be the following

1. The proposed type of business operations to be carried out in India
2. The scale of the business, whether it would be a small scale, medium-sized or large-scale operation
3. Estimation of the amount of time required
4. Estimating the costs of expanding, and conducting business operations on a day-to-day basis
5. Profit margins and profit, the dividend-sharing ratio of the business for the foreseeable future.
6. Is the business grounded enough in its home country to survive going global
7. Does the company have dedicated manpower and resources to cover overseas Sales and Marketing, as well as senior staffers for handling other operations
8. How much control over management and decision making of the company’s operations do the clients wish to cede or retain, as the case may be
9. Determining the size of the market for the product and adaptability of the business/product to suit the local needs of consumers.

In the present scenario, we have an entrepreneur from the Middle East seeking to expand business operations in India. Keeping in mind the aforementioned factors, there would be two ways that would be optimal for the Middle Eastern entrepreneur to expand his business.

Solution – Franchising the business

1. What is meant by Franchising?

Franchising is a licensing arrangement that enables a business entity to expand its operations, by providing other entrepreneurs the right to use the existent business’s products and/or services, its business model and any intellectual property in another location, for an initial and on-going licensing fee for a definitive period of time. There are usually two parties involved, known as the Franchisor and Franchisee.

“Globalisation and market liberalisation have fuelled brand awareness among the Indian masses making the importation of foreign brands to Indian shores an attractive business opportunity for local businessmen.” [1]Many international brands like Britannia, Pizza Hut, Coca-Cola have entered the Indian business spheres by means of a franchising arrangement. Other international brands that have received a tremendous response in India include Papa John’s, Domino’s Pizza, Barista, TGI Friday’s, Taco Bell, L’Oreal, Maybelline and such other brands generally in the realm of the FMCG sector. This arrangement is particularly useful because Franchising offers plenty of advantages to international players in terms of ease of regulatory and tax compliances. As such, franchising is in its developing stages, so there are no legal sanctions per se those deal with franchising specifically. However, clauses in the Franchising License agreement are governed by the statutory stipulations contained in the Indian Contract Act, Competition Act, Foreign Exchange Management Act, Trademarks Act, Income Tax Act, The Consumer Protection Act and, the Arbitration and Conciliation Act.

2. Advantages of Franchising a business

• A business can be franchised at relatively lower costs of expansion and operation as opposed to setting up a private limited company. “The inherent risks usually associated with expansion are thereby reduced. The franchisor is able to exploit and market its business more effectively by increasing the number of its outlets far more rapidly than could otherwise be the case.”[2]

• When an independent franchisee is in charge of the operations of the franchise, the degree of motivation and perseverance is higher, because he is the manager and owner of his franchise, thereby creating a personal stake in the profit margin.

• Franchises create a wider base for brand recognition, locally as well as globally.

• The Franchisor’s personal involvement is reduced to the extent that the day to day responsibilities are taken care of, by the Franchisee while the Franchisor is free to concentrate on other aspects of his business.

• The Franchisor’s expansion costs are reduced because the Franchisee brings his own working capital, resources as well as initial and on-going franchising fees to the transaction.

• The Franchisor has a regular source of income as the Franchisee is expected to pay him a previously agreed upon share of the profits, royalties, licensing fees (both initial and on-going) for the time period, as agreed upon in the Licensing Agreement between the two parties.

• Developing networks with franchisees can be mutually beneficial to the franchisor too because this can act as a great tool for collective bargaining and enable product-based franchisors to negotiate extremely favourable prices.

3. What type of franchising agreement would be best in the instant case?

If the entrepreneur from the Middle East has a goods-based or distribution-based business, then it would be best to go in for the Product or Distribution Franchise agreement. Some popular examples of conglomerates that opted for this model include Exxon, Ford and other automotive enterprises.

If the business model is one where the franchisor is required to sell/lease the usage rights of specific know-how, which along with an essential ingredient or a secret formula and quality control processes is instrumental in the manufacturing of the final product then the entrepreneur would be advised to go in for the Manufacturing, Producing or Processing Franchise. Examples of companies that operate under this kind of licensing include Pepsi, Coca-Cola that provide the knowledge of their secret recipe/ingredient to their franchisees exclusively, subject to stringent sanctions in case of any breach by the franchisee, regarding disclosure of the same. This kind of franchise agreement usually has a water tight Non-Disclosure clause as leaks could potentially cause massive damages to the franchisor.

If the business model is one where the franchisor grants full rights to the franchisee to use the business model as well as intellectual property rights, then the entrepreneur may go for the Business Format Franchising Agreement. Exclusive luxury hotels like the Holiday Inn, the Hilton chain of hotels have gone in for this kind of franchising agreement.

What is a master franchising agreement

Based on the degree of control desired by the Middle Eastern entrepreneur over his franchise, he may be advised to go for a Master Franchising Agreement. That means, drawing up a Franchising Agreement in a manner to sub-franchise the powers and responsibilities of the franchisor, to the franchisee in a particular area for a certain amount of time, previously agreed upon. The only disadvantage here would be the loss of flexibility and direct control over the sub-franchisee as the franchisor and franchisee would have virtually no interaction on a regular basis. The Middle Eastern franchisor would be required to form a subsidiary in India that can act in the capacity of the franchisor locally. The subsidiary of the franchisor in India and the local franchisee form a joint venture for the purpose of expanding the Middle Eastern business into India as well. While expanding the business internationally, the entrepreneur must keep in mind that the protections afforded to the intellectual property rights are territorial, and every attempt must be made to secure their intellectual property as per lex loci.

Conclusion

All that the entrepreneur needs to do is register with the Ministry of Corporate Affairs, India and fill out the requisite forms given on the website for the creation of a subsidiary to act as the sub-franchisor between the franchisee and the global franchisor. “Any Foreign LLP can establish its place of business in India by filling Form 27 (Registration of particulars by Foreign Limited Liability Partnership (FLLP)). The eForm has to be digitally signed by authorized representative of the FLLP. There is no mandatory requirement to apply and obtain DPIN or DIN for Designated Partners of FLLP, but the DSC of the authorized representative is mandatory. Form 25 is required to be filed with Registrar to reserve the name of foreign LLP or foreign company for a period of three years.”[3] Additionally, the franchisor has to provide the details of ownership documents, the audited financial statements, a list of franchise owners in other countries (if any), and any other relevant material to be filed with the Ministry of Corporate Affairs. India does not have a specific statutory requirement for the disclosure of material information to the franchisee, unlike in many other countries. However, the Middle Eastern entrepreneur would be advised to register his company’s existing intellectual property documents with the Registrar of Trade Marks using the filing form, TM-28. This would ensure that the intellectual property of the Middle Eastern franchisor would be protected under the laws of his country, as well as the Indian intellectual property laws. Thus, this would be the most cost-effective way of expansion of the Middle Eastern business into India. It is this model that has made it possible for over 115 businesses from the Middle East to actively expand their business operations to India.

[1] http://whoswholegal.com/news/features/article/18463/franchising-india/

[2] http://sellingafranchise.co.uk/what-are-the-advantages-and-disadvantages-of-a-franchise-business-opportunity/

[3] http://www.mca.gov.in/MinistryV2/RegisterNewComp_LLP.html