In this blogpost, Rohan Chawla, Student of Delhi University and Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about the pros and cons of a sole proprietorship and explains what a one person company is. Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about the pros and cons of a sole proprietorship and explains what a one person company is.

Perhaps, one of the principal questions an entrepreneur has to face is regarding the structure of the business. While there are multiple options available (sole proprietorship, partnership, company etc.), there are factors that trump one over the other.

In a sole proprietorship, there is a single businessman and he runs the business by himself. He is the founder, manager, shareholder and the boss. He is the recipient of all profits and is also liable for all losses. Your local grocer, chemist, florist, baker, salon etc. are best examples of sole proprietors.

Given the nature of sole proprietorship, the foremost question to be answered is the number of founders. If there is a plurality of founders or shareholders, then a sole proprietorship may not be the optimal arrangement and structures such as partnership and LLP maybe preferred.

The second factor is the requirement of funds. The proprietor is the sole shareholder and manager and as a result, the business is constrained by the personal wealth and creditworthiness of the proprietor. If the business is simple and does not require extensive funding, then a sole proprietorship may be preferred. It could also be the case that the business starts as a sole proprietorship, and as and when the business needs additional funding, it can be converted into a partnership/company.

Ganesh Ram (who later founded VETA) established his first teaching institute (in 1981) by borrowing a sum of Rs 500 from his mother. For his further ventures, he relied on the profits generated from the business. It was only in 2004 that VETA took a loan from the bank for the purposes of expansion. When he was served a notice from the income tax department, he decided to form a private limited company. Until then, his business did not have any official legal structure and was in the nature of a sole proprietorship^[2].

The riskiness of the business is also crucial. In cases of a sole proprietorship, the business is not a separate legal entity from the proprietor. In the eyes of the law, they are one and the same. Accordingly, a liability of the business is a personal liability of the proprietor. Moreover, such liability is not limited to the capital contribution of the proprietor. It is unlimited in nature and the personal assets of the proprietor may be utilised to satisfy the debts of the business. Hence, riskier businesses or businesses where the degree of the downside is significant should avoid the sole proprietorship route.

Thus, if a sole proprietor provides tutoring services or is a freelance writer, then the risk of unlimited liability is minimal. However, if he owns a cafe or a bookstore, the risk is relatively higher.

An advantage of a sole proprietorship is quick decision making and full control. The proprietor is the sole controller and decision-making body, and thus, decisions are turned around quickly. In fields such as stock market trading, where spontaneous decision making is of the essence, an entrepreneur may prefer going solo.

However, a sole proprietor suffers from the lack of expert advice and the perils of a confirmation bias. The entrepreneur cannot be an expert at everything and may not have the skill to effectively handle all aspects of business. He may hire the services on another on an ad hoc basis, but nothing can replace the counsel of a partner. Good employees may not stay for long as they do not taste the fruits of profit in the same way as the proprietor does.

When R. Sriram (who later set up the Crossword chain of bookstores) was setting up Walden (another bookstore) in Hyderabad, he realised that he had a bit of knowledge, but not enough. While he knew some parts of the business, he needed partners who would know other aspects he had no clue of. People who would complement his skills & strengths and most importantly had similar values^[3]. He did not approach them as his employees, but instead as his partners.

The sole proprietor maintains personal relations with all the stakeholders of the business. Since he is the only person, he is able to maintain a close relationship with the suppliers, clientele, employees etc. Thus, if the business is small and has limited clientele (market size is small), then a sole proprietorship will be ideal. For instance, a salon owner usually has personal relationships with his clientele. He usually has 5-6 employees with whom he has a great degree of interaction.

A sole proprietor also enjoys confidentiality of trade secrets. The crucial information of the business is stored in the proprietor’s mind. He would, at best, share it with his closest aid and employee, but no one else. Hence, the commercial secrets remain within a tight circle. For instance, let’s say there is a sole proprietor who is in the home cleaning business. Not everyone is comfortable allowing strangers into their house, and so the proprietor advertises heavily and as a result is able to generate a decent clientele. Now imagine, if this clientele list came into the hands of a third person, then such third person has to only approach these customers and offer his services at a competitive price. The third person doesn’t have to go through the entire process of advertising and finding out the persons who are predisposed to allowing cleaners^[4]. A risk such as this is eliminated in case of sole proprietorship as the proprietor is in complete control of his business information. However, this risk may exist in cases of partnership, where a retiring partner may start a competing business and solicit the clients of the erstwhile business. Clients leaving with partners is not uncommon in the legal field.

Setting up a sole proprietorship is cost effective as there isn’t an elaborate procedure. Only basic things like PAN Card, business licenses, bank account, VAT registration etc. are needed. There is no requirement to register a sole proprietorship, and a “Proprietor Declaration” document is purely optional.

However, a sole proprietorship lacks perpetual succession. The business comes to an end with the insolvency or death of the proprietor. The business may be continued by the legal heirs/family members of the proprietor. However, the same would not be easy. The sole proprietorship is individualistic and in the absence of the individual (proprietor), the other stakeholders (such as employees, customers, suppliers, creditors etc.) may not continue their engagement. Their trust was in the original proprietor, and the same may not continue in his absence.

What is a One Person Company

Thus, there are many preconditions to a successful partnership, and it is only in a limited number of situations that a proprietorship is workable. However, an alternative to a partnership is the concept of a “one person company (OPC).” The OPC was introduced in the amended Companies Act of 2013 and was notified on 26 March 2014. It plugs the disadvantages of a sole proprietorship while still retaining its major advantages.

An OPC does not suffer from unlimited liability and as a private limited company, the liability of a shareholder is limited to the unpaid subscription money in his name. It also provides for the facility of “nomination” wherein the nominee assumes the control of the business on the death of the sole member. In a limited fashion, OPC provides for perpetual succession. While the compliances are greater compared to a sole proprietorship, there are certain provisions that are exempt for an OPC compared to a private company. Thus, an OPC is a mixture of a sole proprietorship and a private company. OPCs will provide an opportunity to bring in a formal corporate structure to the otherwise unorganised sector^[5].

Thus, when contemplating on a sole proprietorship as a form of business, the  following checklist make come handy:

• Are there multiple founders? If yes, go for a Memorandum of Understanding or a Partnership.
• At its inception, does the business require a large amount of funds? If yes, a company might be a better structure for the business.
• Is the business risk? If yes, go for a limited liability form of business such as an OPC or an LLP or a company.
• Does the business require specialised personnel or elaborate functions such as marketing, planning, auditing, production? If yes, then a business setup that has a multiplicity of people such as partnership or company may be preferred.
• Does the business require personal relations with the clientele? In case the clientele is small, then a sole proprietorship is preferable. However, where the clientele is large or where each client requires special attention (as in law firms), then a partnership may ben preferred.

Conclusion

Thus, there are many ifs and buts when it comes to choosing a sole proprietorship as the form of business. The business structure seems ideal when the business is in its initial stages, and the idea is being tested. It is also ideal for businessmen who have a small establishment and do not have any extensive growth plans. Your local grocer, chemist, salon owner etc. maybe running the establishment for several years and earning handsome profits without any need for expansion. In those cases, a sole proprietorship is ideal.

However in cases where the businessmen want to grow and will need large funds, a sole proprietorship should give away to a partnership or a company, as the case maybe.

^[1] Image source: http://www.mymoneyblog.com/images/0901/ch.jpg

^[2] Connect the Dots, Rashmi Bansal, p. 37, 44, 51

^[3] Connect the Dots, Rashmi Bansal, p. 160

^[4] Example inspired from Trade Secrets: A Valuable and Often Overlooked Asset, Gene Quinn, IP Watchdog : http://www.ipwatchdog.com/2011/01/14/trade-secrets-valuable-overlooked-asset/id=14411/

^[5] One Person Company- A Concept For New Age Business Ownership, Vatsala Singh, Mondaq : http://www.mondaq.com/india/x/278154/Corporate+Commercial+Law/One+Person+Company+A+Concept+For+New+Age+Business+Ownership

In this blogpost,  Mansumyer Singh, Advocate, Student of the Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about the various business structures a single founder could opt for.

Introduction

There are a number of business structuring options available for a person wanting to start a new business. A new founder can choose to either start his business as a sole proprietorship, wherein his business will not have a separate legal entity and will be included in his personal assets/income for the purposes of taxation.

A new founder can also choose to start his business using the One Person Company business structure newly introduced under the Companies Act, 2013. A One Person Company is the same as a Company in the sense that it has a separate legal entity, but leeway has been provided to OPCs under the Companies Act, 2013 such as being allowed to have only one director and other rebates in the holding of Meetings. The incorporation process and filings are the same as those in the case of a Company. Some relaxations for compliances have been provided under the Companies Act, 2013.

If there are multiple founders wanting to start a business, they may choose to adopt the Partnership business structure, or they may choose to structure their business as a Limited Liability Partnership if the partners wish to have limited liability.

Entrepreneurs may even choose to start their business as a Company, which has advantages like limited liability and easy access to investment and loans, both foreign and domestic. But since the incorporation process, compliance and filings are pretty exhaustive, the cost for incorporating and running a Company may be a little too much for new entrepreneurs.

Being a single founder

While conventional wisdom postulates that a start-up should preferably have multiple founders, but when it comes to businesses with multiple founders, more often than not there is that one dominant founder without whom the start-up will not be able to achieve the same heights of success it would if he is there playing his part.

Conventional wisdom also says that if you are a single founder of a start-up business, the odds are stacked heavily against you and that co-founder businesses have higher chances of success. However, this is not necessarily the case. On the contrary, we can safely say that now is the best time to be a solo founder in India. The government has been promoting start-up businesses with flagship policies like “make in India” and “start up India”, along with the recently unveiled Start-up India Policy 2016, which has provided a number of advantages to single founder startups, which are not subject of the present article.

The above-mentioned policies adopted by the government to promote start-ups have resulted in creating an entrepreneurial atmosphere in the country and will lead to a substantial drop in the cost of building businesses in the long run. This drop in the cost of building businesses is a massive advantage to single founders, who lack the large resource pool which might be available to multiple founders, which leads us to a very pertinent issue we shall now discuss.

Angel Investors, Venture Capitalists and other investors generally tend to be wary of single founder businesses. They prefer to invest in businesses with multiple founders over those with single founders. Thus, single founders have a harder time raising money in the form of outside investments when compared to multiple founder businesses and resultantly, it would be tougher to build your business and make it grow at a rapid pace. However, that may not be a bad thing.

The earlier a business raises money in the form of investments, the more risk it is asking the investors to endure. Thus, funding in the form of investments at the beginning stages of business when the founder is unsure of how it will run and whether it will succeed may not be that good an idea.

Business structures which can be adopted by single founders

There are a number of business structures which Indian entrepreneurs can choose for their businesses like, Private limited Company, Partnership, Limited Liability Partnership (LLP), the newly introduced One Person Company (OPC) and Sole Proprietorship.

Each business structure has its distinct features, and it cannot be assumed that any one structure is inherently better than the other. Which business structure is more suitable depends on the individual circumstances of each business. Thus, the decision of choosing a legal structure for your business is not one that should be taken lightly. The needs of the business must be the determining factors when it comes to choosing a business structure, and they must be matched with the advantages offered by the different business vehicles in order to decide on the one most suitable for that particular business.

When it comes to single founder businesses, the choice of structures available is considerably less as compared to businesses with multiple founders. A single founder can choose to establish a sole-proprietorship or he can choose to form a One Person Company (OPC) which has been newly introduced under the Companies Act, 2013.

Both structures have their distinct advantages and preference of one over the other depends entirely on the needs of the particular business.

Sole proprietorship as a business structure for single founders

Sole Proprietorship is the simplest of all the business structures. It is ideal for a single founder who is looking to experiment with his start-up and wishes to test the waters before delving too deep into the business. A single founder may choose to start his business as a Proprietorship when the nature of his business is simple, the risk involved is low, the product market is small, and there is not a substantial capital requirement or the need for a large amount of outside funding/investments.

In a Sole Proprietorship, the single founder possesses all the authority in respect of his business. A sole proprietorship is not a separate legal entity, and all its assets and liabilities are deemed to be assets and liabilities of the proprietor. For the purposes of taxation, the income of the proprietorship is deemed to be the income of the proprietor and is taxed accordingly. A sole proprietorship need not be registered, which makes the process of starting a proprietorship a lot less cumbersome as compared to the other business structures. The key features of a Sole proprietorship are as follows:

• It is the simplest of all business structures
• Registration not mandatory.
• Almost no Compliance requirements.
• The proprietor has complete control of the finances of the company.
• The Proprietor has unlimited liability in the Proprietorship.
• Succession in case of death of proprietor through execution of will.[1]

One person company (OPC) as a business structure

One Person Company (OPC) is a business structure newly introduced under the Companies Act, 2013. It essentially consists of all the characteristics of a Private Limited Company, but with considerably lesser compliance requirements. An OPC can be incorporated by a single person and can fully function with only one director and member. However, an OPC need not have just one member; it can have up to 15 members. This feature gives the founder flexibility in case he wishes to include more persons in his business venture.

One Person Company is best for a single founder who has a well-defined business plan but wishes to start small and subsequently grow as the business grows. It is not meant for a founder who wants to experiment with his venture. An OPC caters to the single founders who wish to start their business in an organized manner and enjoy the benefits of limited liability offered by the OPC business vehicle.

Once incorporated, an OPC has a separate legal identity and has to ensure its compliance with the Companies Act, 2013. However, OPCs have been given some relaxations under the Companies Act, 2013 and have lesser compliances as compared to Private Limited Companies. Some of the key features of an OPC are:

• Separate Legal Identity.
• Limited Liability.
• Requires a minimum of Rs. 1 Lac Paid-up Capital.
• The member can name a nominee who will succeed him in the event of his death.
• OPC must meet the minimum compliances under Companies Act, 2013.[2]

Conclusion

A single founder should choose carefully and wisely while deciding on a business structure for his start-up and should seek professional advice before deciding the same. A single founder who has a definitive plan for his business venture and wishes to start his business and make it grow in an organized and structured manner should prefer the One Person Company business vehicle. However, the cost of incorporation and compliances in the case of OPCs can be substantial. In terms of taxation, an OPC is the same as a Private Limited Company, and its income is taxable at the flat rate of 30%, which doesn’t make it as cost effective as a Proprietorship.

On the other hand, a single founder who wishes to experiment with his business and wants to gather a better understanding of his business and its working before getting further involved in it will be better off choosing a Sole Proprietorship business vehicle, provided that the business is relatively low risk, and the capital and funding requirements are relatively small since the proprietor will have unlimited liability in a proprietorship.

[1] Lawsikho.com-NUJS diploma in entrepreneurship administration

[2] ibid

In this blogpost, Komal Rastogi, Student, Nirma University, Ahmedabad, writes about the history of Indian refugee, protection granted to the asylum people in India,  Law for refugees and displaced people and the role of judiciary for the protection of refugee

India has one of the largest refugee population in the world. Regardless of the fact that India serves to the diverse group of refugees, example: – Syrians, Afghans, Palestinians, Persians, Ethiopians and Christians, etc., the country do not have specific domestic laws and policies for the refugees. “The United Nations 1951 Convention relating to the Status of Refugees (Refugee Convention) defines a refugee as a person who, “owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country.”[1]  Although India is not the party to the 1951 Refugee Convention or its 1967 protocol, even do not have a national refugee protection framework, but still it continues to give asylums to refugees of the neighboring countries. Asylum seekers can get the refugee status from UNHCR if the status is not protected by the Indian Government. “Under Indian law, the term “foreigner” is the only reference to aliens of any kind; this places refugees, immigrants, and tourists in the same broad category.”[2]

History of the Indian refugees

As earlier discussed, India is one of the few countries to experience the refugee situation in the last half century.[3] Indian history is evident by large-scale migration of people from different countries. These migrations had taken place in 2 ways: “Hindukush Mountains in the West and the Patkoi range in the East”.[4]

After Independence, the first twenty-five years of India was spent on accepting the responsibility of 20 million refugees. This was due to the partition of India and Pakistan. As a result, India had to confront a task by providing relief to the displaced persons from West Pakistan. “At the initial stage, 160 relief camps were organized and the total expenditure incurred was Rs. 60 crore approximately.”[5] There were many steps taken by the government of India to overcome with the refugee problem. The most important step that had been passed by the government was the Rehabilitation Financial Administration Act, 1948. The utmost question arises in this Act when the definition of displaced person was provided that what will be the legal status of these displaced persons?  The term refugee was defined in 1951 convention relating to the status of refugees. After observing the situations of displaced persons from India to Pakistan and vice versa, it was clear that the situation of displaced person was not different from that of refugees.

India had to face another refugee influx in 1959 when Dalai Lama along with his followers fled and reached India. The government of India provided Dalai Lama and his followers a political asylum. Another refugee influx which our country had to face was in 1971 when 10 million refugees fled from East Pakistan to India. For this asylum, India was forced by the humanitarian obligation to give shelter to the refugees.

After some gap, India was again affected by the influx of refugees from Sri Lanka and Bangladesh in 1983 and 1986. As per the World Refugee Report, India hosted approximately 400,000 refugees along with at least 2,000,000 refugees and some 237,000 internally displaced persons.[6]

Protection granted to the asylum people in India

Treatment given to the asylum people were divided into three heads:

(a) National treatment

(b) Treatment that is accorded to foreigners

(c) Special treatment.

• National Treatment: The national treatment to the asylum people is same as the citizens of India. There are certain Articles in the Constitution of India, which takes care of the Fundamental Rights of all people in India. The rights such as equal protection to law under article 14, religious freedom under article 25, the right to life and personal liberty under article 21, right to social security and educational rights are guaranteed in Part III of the Indian Constitution.
• Treatment that is accorded to foreigners: – Under this head, there are rights which are related to the housing problems, movements, etc. the rights which are provided under this treatment are: right to employment or profession under article 17, freedom of residence and movement under article 26, right to housing under article 21, right to form association under article 15 and right to property under article 13 of the 1951 Refugee Convention.
• Special treatment: – This treatment includes the identity and travel document under article 28, exemption from penalties under article 3(1) of the 1951 Refugee Convention.

Law for refugees and displaced people

As discussed earlier India has been the home for several refugees. For these refugees, numerous legislative measures were passed and issued under Seventh Schedule of the Indian Constitution. But some of the measures have lost their importance in the current context. “There were certain legislation that was enacted following the partition of India and before the Indian Constitution came into effect which are given below:”[7]

• East Punjab Evacuees (Administration of Property) Act, 1947
• UP Land Acquisition (Rehabilitation of Refugees) Act, 1948
• East Punjab Refugees (Registration of Land Claims) Act, 1948
• Mysore Administration of Evacuee Property (Emergency) Act, 1949
• Mysore Administration of Evacuee Property (Second Emergency) Act, 1949

Once the Constitution of India came into operation, the following acts were passed relating to refugees, evacuees and displaced persons:

• Immigrants (Expulsion from Assam) Act, 1950
• Administration of Evacuee Property Act, 1950
• Evacuee Interest (Separation) Act, 1951
• Displaced Persons (Debts Adjustment) Act, 1951
• Influx from Pakistan (Control) Repelling Act, 1952
• Displaced Persons (Claims) Supplementary Act, 1954
• Displaced Persons (Compensation & Rehabilitation) Act, 1954
• Transfer of Evacuee Deposits Act, 1954
• Foreigners Law (Application & Amendment) Act, 1962
• Goa, Daman & Diu Administration of Evacuee Property Act, 1969
• Refugee Relief Taxes (Abolition) Act, 1973[8]

“Article 51 states that the state shall endeavor to foster respect for international law and treaty obligations in the dealings of organized people with one another.”[9] “Article 51 of the Constitution is the Directive Principles of State Policy demonstrating the spirit in which India approaches her international relations and obligations.”[10]

Article 253 of the Indian Constitution states that “Parliament has the power to make any law for the whole or any part of the territory of India for implementing any treaty, agreement, or convention with any country or countries or any decision made at any international conference, association or other body.”[11] Further Entry 14 of the Union List of the seventh schedule states that “Entering into treaties and agreements with foreign countries and implementing of treaties, agreements and conventions with foreign countries.[12] Article 253 read with Entry 14 makes it clear that the power conferred by Parliament to enter into treaties carries the right to encroach on the state list to enable the union to implement a treaty with it.[13] Therefore, any law made in accordance with this Article that gives effect to an international convention shall not be invalidated on the ground that it contains provisions relating to the state subjects.[14]

Role of judiciary for the protection of refugee

When any of the refugees are detained or arrested by the Indian authorities, there would always be a danger of refoulment, repatriate or deportation. Those refugees who are arrested for the illegal stay can be detained illegally under administrative order without charges.[15] The Foreigners Act vests an absolute and unfettered discretion in the Central Government to expel foreigners from India. The Supreme Court of India in “Hans Muller of Nurenburg vs Superintendent, Presidency”[16] gave “absolute and unfettered” power to the Government to throw out foreigners. The said judgment was again upheld by the Supreme Court in “Mr. Louis De Raedt & Ors vs Union of India.”[17] In the same judgment, Supreme Court also held that foreigners have the right to be heard.

In the judgment of “Ktaer Abbas Habib Al Qutaifi vs Union of India”[18]  the High Court of Gujarat held that the principle  of non-refoulment avoids ejection of a displaced person where his life or freedom would be undermined by virtue of his race, religion, nationality, enrollment of a specific social gathering or political conclusion. Its application ensures life and freedom of a person irrespectively of his nationality.[19]

Problems faced by refugees in India

Various countries protect their refugees by enacting refugee legislation based on international recognized principle. The countries that have signed the convention have a procedure for identifying the refugees and addressing them protection issue.

Although India has not signed the convention but are providing protection to the refugees. “However, consistency in the procedure for determining refugees is still lacking.”[20] Since India has no uniform code for determining refugee status, there is no central body that deals with the refugees. After so many years also, there are various gaps that exist in the mechanism for dealing with refugees policy. This is because the government has not enacted a law for refugees.

Due to the several problems faced by the refugees and no proper legislation has not been passed the legal status of the refugees is miserable.

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[1] Retrieved on https://www.wcl.american.edu/hrbrief/v7i1/india.htm

[2] Retrieved on http://www.alnap.org/pool/files/protection-of-refugess-a-humanitarian-crisis-in-india.pdf.

[3] Retrieved on http://shodhganga.inflibnet.ac.in:8080/jspui/bitstream/10603/68492/10/10_chapter%204.pdf

[4] Ibid

[5] Ibid

[6] Ibid

[7] Retrieved on http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2129225

[8] Ibid

[9] Ibid

[10] Ibid

[11] Ibid

[12] Retrieved on http://lawmin.nic.in/olwing/coi/coi-english/Const.Pock%202Pg.Rom8Fsss(35).pdf

[13] Supra 7

[14] Supra 7

[15] Retrieved on https://sites.google.com/site/tibetanpoliticalreview/articles/refugeerightsissueofdeportationunderindianlegalsystem

[16] 1955 SCR (1)1284

[17] 1991 SCR (3) 149

[18] 1999 CriLJ 919

[19] Supra 15

[20] Supra 7

In this blogpost, Aashish Ahuja, Student, University Institute Of Legal Studies, HP, writes about what is digital India, aims of digital India, vision of digital India, initiative taken by the government and the impact on the economy. 

What is Digital India?

Digital India is an initiative taken by the government of India to ensure that government services are available to the citizens electronically by improving online infrastructures and increasing the internet connectivity. This initiative was taken by the Prime Minister Narendra Modi on 1^st July 2015.

Aim of Digital India

• The main aim of Digital India is to transform the country into a digitally empowered knowledge economy.
• The various schemes included are a digital locker, e-education, e-health, e-sign and national scholarship portal.
• Bharat Net in 11 states and next generation network are also the parts of Digital India.
• It includes projects that aim to ensure that government services are available to the citizens electronically and take the benefit of latest information and communication technology.

Vision of Digital India

The vision of Digital India is growth in areas of electronic services, products manufacturing and job opportunities etc. The vision of Digital India is centered on three key areas:

• Digital infrastructure throughout the country which means utility to the Indian people as it will make available a high-speed internet delivering all the government services with ease. It will provide lifelong, unique, authenticable identity to the citizens. It will be easy to access any online services like handling a bank account, financial management, safe and secure cyberspace, education, distance learning,
• High demand for good governance and online services will make available all the services in real time through digitization. Digitally transformed services would also promote online business by making financial transactions easy and electronic.
• Digital Empowerment of Indian people will lead to the possibility of digital literacy through universally acceptable digital resources. It will enable the people to submit the documents or certificates online and not physically in schools, colleges, offices or any other organization.

The Digital India Programme aims to provide

• broadband highways
• universal access to mobile connectivity
• public internet access programme
• e- governance
• reforming government through technology
• information for all
• IT for jobs
• early harvest programmes
• E-Kranti- electronic delivery of services

Initiatives by the Government

The government has launched some of the initiatives.

• Digital locker helps the citizens to digitally store their important documents like pan card, passport, mark sheets and degree certificates. Digital locker provides secure access to government-issued It uses authenticity services provided Adhaar.
• in has been implemented as a platform for citizen engagement in governance through a “Discuss”, “Do” and “Disseminate” approach. The MyGov app will bring these features to the users on a mobile phone.
• Swach Bharat Mission mobile app would be used by people and government organizations for achieving the goals of Swach Bharat Mission.
• Through e- sign framework citizens may digitally sign their documents online.
• It may ease the important health care services through e-hospital system such as online registration, taking doctor appointments, fee payment, online diagnostic tests, blood checkup, etc
• For best management of online services on mobile such as voice, data, multimedia BSNL’s next generation network will replace 30-year-old telephone exchange.
• There is a Broadband Highways in order to handle all the connectivity related issues.
• Open access to Broadband Highways in all the cities, towns and villages will make possibility the availability of world services on the click of a mouse.
• National scholarships portal: This is one stop solution for implementing the entire scholarship process. Here in a single website, one can apply and register for different scholarships provided by different central and state ministries, governments and other agencies. One can receive application forms and process online. This helps in effective and faster processing of scholarships and delivery of funds to the beneficiaries account.

Impact on economy

Digital India has the potential to be one of the most transformative programmes in recent times. Digital India initiatives provide the much-needed impetus to the economic growth. It has given its focus on key social and industry sectors. Not only IT, telecom, electronics, manufacturing sectors will be benefited from Digital India, but we’ll see a positive impact on other industry sectors as well as power sector, banking and financial services.

Sources

http://www.oneindia.com/feature/what-is-digital-india-programme-explained-1792279.html

http://www.business-standard.com/article/current-affairs/what-is-digital-india-all-you-need-to-know-115070101076_1.html

In this blogpost, Sreeraj.K.V, Student,  Government law college,  Kerala writes about the rights of senior citizens in India.

Introduction

It is a natural law that if we are born once, we will have to leave this Earth one day. We have to face many difficult situations to run the vehicle of our life. When a person is aging  his physical, mental as well as economic perceptions change drastically which changes him from an independent to a dependent person. Here comes the importance of providing certain rights to such elders of the society.  There is a question that arises at this point of time, that whether this is a right to be enforced in favour of the seniors of the society or it is a mandatory moral duty of each and every person of this country to look after their parents. It is irrelevant to see to the age of his/her parents and whether they have crossed the age of 60 or not. It can be stated undoubtedly that the so-called rights of the senior citizens are more than rights they are the duty of each and every other person.

While looking through a common man’s perspective, people who crossed the age of 60 will be considered as one who need proper care and medication as best as possible which shall be provided by his/her children and relatives. In many families, elders are treated as burden. Law gives certain remedies for senior citizens who are not treated well.

Content

A senior citizen is the one who has crossed the age of 60. The Indian government provides concession, financial assistance for senior citizens. There are various public/private sectors of the society providing aids for them.  We can proudly say that our country has many laws and enactments which play a vital role in protecting  the rights of senior citizens.

Article 41 of the Constitution of India provides for right to work, to education and to public assistance in certain cases.  Article 46 provides for promotion of educational and economic interests of scheduled caste, tribes and other weaker section of the society.  The significance of these Articles is that in one point or the other, Article 41 can be made applicable for the senior citizen and Article 46 provides certain educational and economic interests for the people who are of weaker sections of the society.

Rights of senior citizen

There are certain rights which are provided by various Laws of our country in favour of senior citizen. Some of them include:

• Right for maintenance by children and relatives
• Right for proper medical aids and other related problems
• Right for social security and integrity
• Right for old age pensions and other related benefits.
• Right against exploitation and ill treatment by others

Legal analysis

Our society has various customary practices and moral principles in itself. Maintenance of our parents and guardians plays a crucial role among these principles. In India we mainly have Indian Adoption and Maintenance Act along with Maintenance and welfare of parents and senior citizens Act to protect elders especially for the people who crossed the age of 60.

 Section 20(3) of the Hindu Adoption and Maintenance Act provides for the obligation of a person to maintain his or her parent whenever they are unable to look after themselves. This provision does not make it mandatory that each and every person, whether male or female, they has to look after their parents, but the law turns to be mandatory when there is a violation in maintaining our parents. While going through the Muslim Law of maintenance, same principle has been applied, i.e. every person is bound to look after their parents according to their financial capability.  On the other hand there is no separate provision regarding maintenance in Christian Law but persons in need of maintenance can claim under section 125 of the Code of Criminal Procedure[1].

There is yet another provision regarding the rights for older people which is well enumerated in various provisions under Maintenance and Welfare of Parents and Senior Citizens Act, 2007.  Under this Act, there is a clear picture regarding the definitions of parents as well as senior citizens which is provided in chapter 1 and their maintenance and related provisions in chapter 2. The Act makes it mandatory that senior citizens as well as parents who are unable to look after themselves, are to be maintained so as to earn a good living. Even though there are such strong enactments in our country, rights of senior citizens and other elderly people are still locked inside the four walls of such statutes. In this context, there comes the importance of various government/non-government organisations working in favour of such elderly people of the society. Many organisations in our country plays a pivotal role in looking after senior citizens and many other legal and Para- legal organisations stands for their rights. The most appreciable part is that such organisations are running free of cost for the ones who are in need of care and protection

Conclusion

As a conclusion, it can be thus stated that there are various problems faced by senior citizen of our country like lack of proper care, good medication and negligence from the part of family members as well as the society and various acts which may affect even their life and property as well. Government has implemented various schemes and projects like pension scheme in favour of the senior citizens of the society. Above all such benefits, they are in need of love, care and affection from their relatives and the society.We have to just keep this in our mind that  our attitude towards them should be positively changed so that they also will have a better tomorrow.Democracy is for all, and should be for all.

[1] Section 125 crPC – Maintenance for wives, children and parents

In this blogpost, Kanchan Yadav, Student of  South Calcutta Law College and Diploma in Entrepreneurship Administration and Business Laws by NUJS writes about the structuring of business in India and what foreign entrepreneurs should do to ensure their success in India

Introduction

 For structuring a business in India, there are four basic structures available: sole proprietorship, partnership, limited liability partnership, and company. There are some unique advantages and disadvantages to every business structure, and each one can be beneficial under the right circumstances.
A sole proprietorship is basically a one person venture, which many entrepreneurs opt for. It is completely owned and controlled by one person, and he has the complete power to make decisions along with all of the liability. This business structure is ideally suited for smaller businesses, without any need of huge debts and small capital requirements. Start-ups in their initial stages are often structured as a sole proprietorship, only to change it according to need if and when the business grows.

Partnership, on the other hand, involves multiple people who jointly carry on the management of the business and share the profits. Partnership relations are governed by the Partnership Act, 1932.

The limited liability partnership is basically a new concept, which originated in India with the Limited Liability Partnership Act, 2008. Limited liability partnership (LLP) is a partnership in its essence, as evident from the name; however it is less risky for the partners involved. In an ordinary partnership, there is a vicarious liability for all the partners. If one person takes a loan in the name of the company, if its valuation is more than the net valuation of the company, the partners’ personal assets are auctioned to clear the debt. However, in the case of a limited liability partnership, only the partner taking out the loan will be personally accountable, but not any of the other partners. Companies, more or less the same like LLPs, ensure limited liability, however, it comes with a huge bump in tax and long and cumbersome business procedures.

What foreign entrepreneurs should do to ensure their success in India

The business situations of India are hugely different from that of US. For a US entrepreneur to decide to expand his business in India is a bold move indeed, but it is one which can guarantee huge returns upon success as India has a consumer population greater than any other nation. Some would argue, in fact, that this is the best time to be an entrepreneur in India as it is the golden age of start-ups. According to a 2014 NASSCOM start-up report, the nation is armed with 3100 start-ups and adding 800 start-ups yearly. The current government has also taken many new initiatives, policies and campaigns to support fledgling businesses in our country. In fact, more and more foreign entrepreneurs are getting attracted by the surge in opportunity in the Indian market. However, what works abroad doesn’t necessarily work in India. There are lots of opportunities to be tapped and scope for humongous growth if only one knows to press the right buttons.

One of the more successful ventures started by foreign nationals would be the ZoomCar India Pvt. Ltd founded by David Back and Greg Moran in 2013. ZoomCar, launched first in Bangalore, provides self-drive cars to consumers, which was an alien concept before. Numerous cars are stationed throughout the city at all times, and one can easily pick it up after ordering online. The cars include Mahindra Scorpio, BMW, Ford Figo, etc. Another such successful business would be Burrito Restaurants Pvt. Ltd founded by Bert Mueller, Dharam Khalsa and Gaelan Connell, and they founded a burrito chain called California Burrito. They say that their key to success was the decision to keep the prices low and a customizable menu options. And while talking about successful start-ups, we must talk about Exit10 Marketing Pvt. Ltd. It is an online platform to sell electronic gadgets and video games founded by Alexander Souter and Saptarshi Nath. Their online platform Bootstrap helps customers buy and sell cameras, mobiles, laptops, games and accessories. They perform quality checks and provide warranties for all their products, thus keeping their customers very happy.

Now, we can see from all these successful start-ups, that they have one thing in common. All of them have the words ‘Pvt. Ltd’ in their names, denoting that they are private limited companies. Companies can be of two types, private and public. A private company cannot raise funds from the public, or accept public deposits. The eventual goal of the businesses would be to achieve a certain scale and validation and ‘go public’. However, for a new business, that too coming from a foreign entrepreneur, a private limited company would be the most beneficial and secure business model. Even if there is just one founder and he wants to go into business single-handedly, it would be wise to opt for a one person company instead of a sole proprietorship. Even though a one person company is taxed at a much higher rate, and the extra duties of a company makes day to day operations more expensive and time-consuming, there is one huge benefit of a company; the separate legal status. In a sole proprietorship, the business and the owner is sort of clubbed together. The owner is personally responsible for his business. But in a one person company keeps the personal assets of the owner free from liability, which is a necessity if one wants to expand his business abroad, thus taking a huge leap of faith. Nobody would want to expand abroad if there was a risk of going bankrupt in the process.

Comparing between a partnership and company too, in this particular case forming a company would be hugely beneficial. It is true that forming a company means a hike in taxes, but in turn, it keeps the personal assets of the owners safe. Also, in the case of a company founded in India, it is easy to gather foreign investment and foreign loan. Partnership on the other hand, cannot be invested by foreigners, which is a huge disadvantage. While talking about an entrepreneur from the US, his family or friend might want to invest in the business, or he might want to get a loan from his local bank. But if he forms a partnership, he will have to look for investment inside the country, which might be incredibly hard for a relatively new and lesser known product. A company also allows employees to acquire shares without them having effective control over the company.

If we talk about an LLP, it is practically much more similar to a private company than the other structures. Essentially an entrepreneur can choose either one and be happy with the results. However, as the company starts to grow, it might be wise to form a company beforehand rather than juggle from LLP to the company. Firstly, foreign investments in LLPs are strictly regulated and is only on approval basis; while the foreign loan is prohibited. This might be a problem for an entrepreneur who is of non-Indian origin. Secondly, in LLP, there is no concept of separation of ownership and management duties. If one wishes to invest in an LLP, that essentially makes him a partner of the same. Moreover, as LLPs are relatively new, investors are still weary to invest in them because there is a lot of vagueness surrounding the whole process. Companies on the other hand have clear cut rules, and the shareholders and directors are totally distinct; which creates an atmosphere for easy investment and distribution of shares.

Conclusive thoughts

So all things considered, for a US entrepreneur wishing to expand his business to India, it would be best to form a private limited company. There have been many foreign nationals successfully bringing new and innovative ideas to the Indian market, and we hope there will be more still.

In this blogpost, Harsha Asnani, student, NIRMA University, Ahmedabad, writes about the rights available to prostitute in India and how they are violated. The author also writes about the scenario in other countries and then analyzes the present situation in our country.

Introduction

Prostitution in India is not a new age profession but as some people call it, is one of the oldest professions in the world. In the Indian scenario, prostitution has its roots in deep history. It started off in the 6^th century with the emergence of a practice called Devdasi system which later on ritualized prostitution. According to it, young girls were married to deities and then sent to serve as prostitutes to the upper-caste community members. With the rise and fall of empires there have parallel changes to this practice but what has not changed in this profession is the gigantic outlook that it has acquired throughout ancient, medieval and modern India and the corresponding threats posed to the workers operating in this field.

Protection of prostitutes under the present law

In the present state of affairs the laws that regulate prostitution in India is Immoral Trafficking (Prevention) Act, 1956 (this was before amendment known as Suppression of Immoral Traffic in Women and Girl Act, 1956). It is the main statute dealing with prostitutes in India. One of the major protection that it gives to prostitute workers is firstly; it does not criminalise prostitution per se, and secondly, it punishes the acts of third parties such as middle men, brothel keepers, pimps, etc. who either facilitate this entire act or procure and live on the earnings of the prostitute workers. Since involvement in this sex trade makes the sex workers highly vulnerable to exploitation, hence the latter category of protection is held in a very high regard by the lawmakers. In furtherance to same-sex workers cannot solicit in public spheres but can practice their trade privately. In private spaces neither the workers nor the clients are held criminally liable or prosecuted.

Violation of rights of prostitututes

In spite of enactment of the above-mentioned legislations, there are not enough steps taken by the authorities in order to regulate the said profession. Firstly, although third party involvement is prohibited but a major problem arises when even organised prostitution is not allowed. Secondly, since these sex workers do not come under the ambit of labour laws, therefore they are not provided with adequate protection under the said laws. Thirdly, most of the girls brought under this profession are by force or through trafficking. There is no straightjacket mechanism through which if it is found that the element of free consent lacks then such persons who have caused this coercion can be sent to jail. All these factors lead to denial of basic human right as enshrined in the Constitution and various other Central Government Acts. One of the major reasons behind the emergence of these problems is that prostitution in India is not legal.

Sex workers are more of abused and less respected. Since the law does not recognise prostitution as a profession, therefore it is not possible to take such unfavourable clients to court. In the current system, prostitutes are not considered as bearers of rights. They are highly pimped and often raped. Most of the girls involved in this profession are forced into it. Such innocent and unsuspected women generally are forced into this sex trade before attaining the age of eighteen years. It is estimated that every hour, with four women and girls entering into prostitution in India, three of them do so against their will. After being sold, they get trapped into shady brothels, raped and forced to sleep or have unprotected sex with psychopaths who burn and bruise them. Anyone who tries to escape these prisons is brought back by use of force and tortured even more so as to set a deterrent example for other workers. Till the time they continue to serve in the brothels they are denied of all basic rights, for example, they neither do they have ration cards nor do they have a right to vote. They are forced to live in poverty and miserable living conditions. Lack of regulation and periodical medical tests causes the rampant spread of sexually transmitted diseases like HIV-AIDS. These brothel turned dungeons not only infects them with STDs but also other diseases such as cervical cancer or traumatic brain injury or psychological disorders etc. which do not find their cure for a very long period of time. After they grow old, they are thrown on the streets accompanied with no means to earn a shelter and bread and butter for rest of their lives. Being suppressed by societal norms and notions of morality, their voices remain unheard. This problem gets aggravated to a completely different level when these prostitutes are not even aware of the rights that are available to them.

In the recent times there has been an emerging trend of trafficking of child prostitutes in this profession. Such girls are not kept at one place for a long period of time. Instead they are shifted occasionally so as to avoid familiarity with customers and also to avoid police detention. At various instances, the money earned by the child workers is taken away by the middlemen leaving the labour of such child workers as unpaid.

The Indian laws have miserably failed to protect the prostitute workers and safeguard their rights. The Immoral Trafficking (Prevention) Act (ITPA) 1986 although aims at removing the middlemen from this profession but its practical implementation has resulted in depriving the sex workers of their means of earning a livelihood. ITPA often goes against its stated purpose and instead of protecting sex workers it goes against them. In the name of “public interest,” prostitutes are evicted from their place of work or residence. The term public solicitation has been interpreted vaguely and as a result police officials have been known to accuse workers of solicitation and then demand bribes or free sex.

Societal exclusion and insecurity

Since prostitution is not recognised as a morally acceptable profession in India, therefore, a lot of stigmatization is experienced by those involved in the sex trade. These stigmas lead to marginalization and ultimately prevent the prostitutes from proper healthcare, education and, most importantly, the right to practice the business of making money from sex. Since police is also one among the perpetrators of this increasing crime against sex workers, so there is a minimal degree of safety and security available to them. Society considers prostitutes as involved in the morally corrupt profession and hence assumes that since they are guilty, so they deserve the violence committed on them.

These stigmas are not limited to the prostitutes but get carried down to their children as well, irrespective of the latter’s profession and lifestyles. There are several reports made by the children of prostitutes on account of persistent discrimination, ostracization, and isolation faced by them on account of their mother’s profession. They are embarrassed because of their mother’s lifestyles. All these factors have a direct and significant impact on their lives. Reports show their drop-out ratio has been considerably high. Further serious healthcare issues are shared by the sex workers with their blood line. Sexually transmitted diseases are often transmitted to the young ones of such prostitutes. Fear of ill-treatment by medical officers and establishments, illiteracy and ignorance, is a restraining force that prevents or makes it difficult for women from availing proper healthcare facilities, thus making it unlikely for them and their children to seek for preventive or curative care, resulting in lowering levels of health.

Additional steps

Since the Immoral Trafficking (Prevention) Act (ITPA) of 1986 has somewhere failed to achieve its objectives or aims that it had envisaged and due to increasing pressure over legalising prostitution several programs have been undertaken by the central government to tackle this issue. Among all initiatives, one of the major contributions made is by the Association for Moral and Social Hygiene. It works for rehabilitation and liberating prostitutes from the sex trade, controlling the STDs, creating a favourable public opinion, opening rescue homes and hospitals for the furtherance of its objectives.

In furtherance of the convention signed at Geneva for the suppression of immoral traffic in women and girls, an advisory committee was set up which recommended for enactment of a comprehensive legislation which would keep a check on prostitution, establishment of a special police force, special courts to look into human right violation of sex workers and their families etc. There have been multiple suggestions for legalising prostitution. But the question whether such legalisation would really result into overcoming the faults of the existing system or whether it would come up with its own unique problems affecting rights of sex workers remains unanswered. The success of legalisation of the commodification of women depends on upon the efficiency of prostitution licensing board or the Prostitution Control Board. In the experience of foreign countries, mixed observations have been reported. For some countries, it has been favourable whereas for the others such as Germany, New Zealand etc. it has hardly brought any positive or remarkable changes.

It is essential that the present status be changed and necessary steps be taken to ensure that Sex workers should enjoy the same protections and benefits as other citizens and workers. Sex workers must be understood as persons endowed with rights in a meaningful fashion, not merely as a rhetorical claim.

In this blogpost, Mansi Arora, Student of Delhi University and of the Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about the business plan and the legal requirements for starting a play school in India.

In the recent years, India has achieved milestones of success in the economic sector by becoming the tenth-largest in the world by nominal GDP and the third-largest by purchasing power parity; and has witnessed significant social development with rising levels of literacy and social awareness. Where a fast growing economy has generated numerous opportunities and created a favorable environment for businesses to flourish, the rising social awareness has led to a demand for quality education for all age groups including the formative years of a child. The Right to Education Act enacted by the Government of India in 2009 provides for free and compulsory education for children between 6 and 14 in India under Article 21A of the Indian Constitution. Though children below the age of 6 are beyond the scope of the fundamental Right to Education; the act does address early childhood care in Section 11 of the Act by stating that “the appropriate government may make necessary arrangement for providing free pre-school education.” In pursuance to this, the Government of India has signed a convention for implementing Early Childhood care and Education Scheme for free playschool education. As per the Law commission Report No.259 Early Childhood Development and Legal Entitlements “The National Early Childhood Care and Education (ECCE) Policy, 2013 envisions a holistic and integrated development of the child with a focus on care and early learning at each sub-stage of the development continuum, in order to promote all-round development.” However, The ECCE scheme is yet to be implemented.

As per the 2011 Census, Children in the age group of 0-6 years constitute 158.7 million that is about 16% of the total Indian population. Henceforth the increasing demand and rising importance of preschool education for shaping a child’s personality and laying the foundation of his/her character has made setting up a Playschool a lucrative business opportunity. This article shall dwell upon the Business structure for starting a play school in India and elaborate upon the various foundations it lies on.

Business plan/ outline

For setting up a playschool, first and foremost a Business plan must be prepared to take into consideration all important issues and challenges. This shall serve as a blueprint for guiding further course of action and include details like the

• Number of children to be catered to
• Location & Infrastructure: The selected area should be well maintained, safe for children and adequate to set up the infrastructure. A playschool can also be started from a residential area which fulfills safety requirements.
• Business Mode of the playschool: whether it is Full time or part time or Daycare, playschool with afterschool activities, etc
• Financial considerations/Budget in relation to Investments for infrastructure, supplies, equipment, advertising, etc of the playschool and whether a loan needs to be arranged. For instance, the Government has come up with schemes providing a loan to women entrepreneurs for establishing a preschool or child day-care centre by Bharatiya Mahila Bank and Punjab National Bank called the BMB Parvarish loan scheme which requires loan repayment in 5 years and a 12% rate of interest.
• Recruiting of Teaching and administration staff: As per National council for Teacher Education (NCTE) guidelines, a preschool teacher must have a Secondary School certificate or its equivalent and preferably a Diploma/Certificate in Pre-school teacher education programme of not less than one year, or B.Ed.
• Deciding Curriculum be taught and followed in the school, for instance, the Montessori Method of education that focuses both on social interaction and academics.
• Advertising and marketing

Formations of entity

Profit/ Non- profit enterprise

Preschools can be set up as profit or nonprofit enterprises.
In the case of the playschool being a Profit making enterprise, it is advisable to incorporate it into a private limited company or a Limited Liability Partnership.

In the case of the playschool being a nonprofit enterprise, a Company or a Trust can be registered under Section 8 of the Companies Act 2013, which pertains to a established company  ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objects of the company, and no dividend is paid to its members.

Franchise/ setting up one’s institution

For starting a Playschool; one can either choose a franchise or set up one’s own institution

Franchise

In the case of the Franchise, one needs to enter into an agreement with the parent organization and abide by the terms and conditions of the same. In India, there is no specific law on the regulation of franchised businesses. Chapter 5 of the Finance Act defines ‘franchise’ as “an agreement by which the franchisee is granted representational rights to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trademark, service mark, trade name or logo or any such symbol, as the case may be, is involved.” Franchise arrangement is therefore largely contractual in nature and governed by The Indian Contract act 1872. Moreover,  Laws relating to intellectual property, (includes Copyright, Trademark Act, Patent, etc) Taxation, Sale of Goods, Property Laws, Insurance Law and Labour Laws also apply to franchise transactions.
In the last decade, Franchising in the pre-school sector has grown. Different organizations of Playschools have different criteria mostly in relation to investment, location, training, etc; these along with curriculum and support are usually listed on their websites and can also be availed with the help of various play school consultancies. As compared to setting up one’s own institution, a Franchise involves less risk as they have an already established brand name and offer support in selecting a location for playschool, hiring trained staff, developing good curriculum, marketing, purchasing school equipment, promotions, support in organizing events, etc. However, the franchise agreement needs to be carefully drafted keeping in mind interest of both parties.

Setting Up One’s Own Institution

A new institution can be set up either as a proprietary concern or Partnership or as a company. Where a company needs to be registered with the Ministry of Corporate affairs and is governed by The Companies Act 2013, A Partnership deed is governed by The Partnership Act 1932. It is usually easier to form a partnership, as it is cheaper and quick to register.
The advantage of Setting up one’s own institution is that the investment for setting up preschool is lesser as no amount has to be paid as franchise fees or royalty later. Also, there is greater control and opportunities for innovation which would be difficult to exercise in case of a franchise.

Residential Playschool

A playschool can also be started from a place of residence. For this, the permission of cooperative housing society or apartment association would be needed. Furthermore, in case the residential area is acquired on rent/lease, the purpose of using the residential area for running a play school should be clearly mentioned in the lease agreement.

Legal requirements

There is no specific legislation or certification for setting up a play school in India. However, laws like the Private School Education Acts enacted by the State Government needs to be thoroughly considered as they may require registration and licensing of playschool. Moreover to set up a playschool in an independent premise, the formalities related the Municipal Corporation and education department of the city where the play school is being set up need to be completed and the respective application and registration fee is to be paid. For instance in Maharashtra, The Maharashtra Preschool Centres (Regulation of Admission) Act. 1996 provides for compulsory registration of preschools.
Similarly, In Tamil Nadu The District Elementary Educational Officer is the Competent Authority for the approval as per Draft Code Regulations for Play schools 2015
It is proposed that The ‘Early Childhood Care and Education (ECCE) Policy’ along with regularizing the curriculum and learning tools for children, shall also make registration and accreditation of playschools mandatory

Other Regulations

The Shops and Establishments Act, in general, is silent in case of a playschool, that is a play school need not be registered under the said act, however as the regulations are different for every state, the act of the state where the preschool is proposed to be set up needs to be carefully studied and verified in order to reach to any conclusion.

Similarly in the case of Labor Laws, the respective state act needs to be followed:

For instance, the minimum wages for primary schools is Rs. 80 per day but these tend to vary from state to state and are to be accordingly paid. Also In case of the number of employees being more than 20, Employees Provident Fund schemes and Payment of Bonus Act, 1965 are to be considered

Service Tax Applicability for Schools

As per clause (l) of Section 66D of the Finance Act, 1994 service tax is not applicable for a playschool as it is included in the negative list

Conclusion

In today’s era of increasing competition and demand for quality, starting a Playschool in India is not only a lucrative business opportunity but also a Social and ethical responsibility which along with economic gains provides a sense of moral satisfaction and fulfillment. Thus by carefully formulating a business plan; choosing the suitable form of entity and considering applicable legal requirements, A playschool can be successfully started in India.

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In this blogpost, Janaki Sincro, Company Secretary in Practice and a student of the Diploma in Entrepreneurship Administration and Business Laws by NUJS, writes about who is a founder, who is a co-founder and steps to be taken for inducting new co-founder. 

A startup is a commonly used term in today’s times. It’s never too late to start-up. Also it’s never too late to induct a new co-founder in the Company, if it is thought over at an initial stage, and if there is a proper strategy in place to manage different and complex situations. Of course, it is not possible to foresee every contingency, but one must draw a few conclusions through experience- one’s own or that of others.

A lot depends on the business plan and how deeply the founders have thought over what they want to build, how they want to build it and with whom and what kind of people they want to build it. In order to understand anything, it is pertinent to start with the definitions.

Who is a founder

A founder is the one who has an idea, which he wants to implement in order to start something new. It can be for profit, or for non-profit. He might come up with some idea which is filling in some gap or improving something which was already created or finding an alternate solution to the same problems. But an idea itself does not make a person a founder, in order to be a founder- a person must execute the ideas into a reality.

Who is a co-founder?

A founder may like to progress alone, or find another person who is on the same page as him, who believes  in his idea and wants to put in equal or slightly more/less efforts in transforming the idea into a reality. That person is a co-founder. Dictionary defines a co-founder as  A person who is involved, along with one or more others, with helping in the creation of business, organization, union, or entity.

Before Incorporation

1. The idea might be born through discussions between two or more people, and both of them become co-founders.
2. One person has an idea, which he proposes to the other who has some different skill sets that can help in business growth and they both feel excited about the possibilities and start building the product, they become Co-founders.

 After Incorporation

1. An idea has two co-founders, and they incorporate a private company, and while exploring possibilities they meet another person who seems to have the skills to take the company 5 steps ahead, in comparison to the two co-founders whose strategy could only get them from step 1 to step 3, so they induct a new co-founder who has equal rights, or rights in some other percentage which can be decided through an agreement, which is called the Co-founder’s agreement.
2. A new co-founder might also be inducted because an older co-founder wants to quit or leave or retire prematurely or other members want him to leave, and that responsibility remains vacant and needs to be filled.

Issues about co-founders are extremely sensitive. Most start-up’s and businesses fail because of co-founder disputes. That is why this issue needs to be handled very strategically.

Solutions to induct a new co-founder

1. Co-founder induction clause in Original Co-founder agreement: The original co-founder’s agreement may be a detailed document specifying all rights and duties and covering all situations as far as possible, and one of the situations is how the founders want to handle inducting a new co-founder. The new Co-founder might be a friend of one of the founding members; he might not know everyone in the business if there are many founding members and this can lead to animosity and dispute since the new co-founder will have equity in the business.
2. A Panel may be pre-decided consisting of the senior co-founders or on some other criteria and their names be mentioned in the co-founder’s agreement or a third party opinion can be taken , somebody who serves as a mentor and can give an independent opinion on the matter. In this way, the co-founders may decide whether to induct a new person or not. If all are agreeing on the new co-founder, there may not be any need for an external opinion.
3. There may also be a procedure and criteria in place as to what kind of a person is expected or allowed to be a co-founder. That could be mentioned in the Agreement.

 Conclusion

Although I feel that the stricter the co-founder’s agreement and the clauses under it and the more detailed the whole document, less chances for disputes but also lesser growth options. So it is extremely important to give space and have faith and trust in the members and their abilities in order to grow in a positive direction. Insecure co-founders may have a great idea but might not reach the intended goal. In today’s world, the focus is on domain knowledge and the idea, and very less importance is given to interpersonal skills and the relationship and personal side of business. It should never be forgotten that finally, business is made up of people, by the people and for the people and therefore, people management should be given a priority and at least one member/co-founder should be such who can handle people extremely well in order to avoid unnecessary issues into the future. Maturity and experience come to play at this stage.