Incorporation of the company

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Querist : Anonymous

Querist : Anonymous (Querist)

27 December 2012 Hey Frds
Can any one tell me what are the activity considered for NBFC Company ??

Ajay Mishra

Ajay Mishra (Expert)
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27 December 2012 Hi

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company).

Ajay Mishra

Ajay Mishra (Expert)
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27 December 2012
NBFCs are doing functions akin to that of banks; however there are a few differences:
(i) an NBFC cannot accept demand deposits;

(ii) an NBFC is not a part of the payment and settlement system and as such an NBFC cannot issuecheques drawn on itself; and

(iii) deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors unlike in case of banks.

Ajay Mishra

Ajay Mishra (Expert)
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27 December 2012 In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934.

However, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982 or Housing Finance Companies regulated by National Housing Bank.

Querist : Anonymous

Querist : Anonymous (Querist)

27 December 2012 Ajay Sir
i wanted to incorporate the company but a normal pvt company with a object of FINANCING AND ADVANCING CREDITS FOR SHORT TERM MEDIUM TERM AND LONG TERM TO INDIVIDUALS, COMPANIE, TRUST OR ASSOCIATION OF INDIVIDUALS BY WHATEVER NAME CALLED EITHER ON SECURITIES OR CLEAN WITHOUT SECURITIES AND TO ACT AS FINANCIAL ADVISORS AND ASSIST IN ALL FINANCIAL MATTERS AND TO LEASE, HIRE PURCHASE, INDUSTRIAL AND COMMERCIAL FINANCE INCLUDING CASH, CREDIT FACILITIES, OVERDRAFT FACILITIES, SUBSCRIPTION OF DEBENTURES, TERM LOANS AND INSURANCE. as per the client can i do so ??
pls guide sir

Ajay Mishra

Ajay Mishra (Expert)
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27 December 2012 As you mentioned your object is covered under NBFC and for this you will take approval fromRBI and concerned Authorities as mentioned above.

For example, if you doing Insurance business then you will take approval from IRDA for incorporating of company.

Querist : Anonymous

Querist : Anonymous (Querist)

27 December 2012 Sir
the Client have filed the Form 1 A and the same as u said the querry is raised.
they have used the name of the company followed with FINANCE AND CREDIT SERVICES.
sir can you guide me how to come out of this problem.
As they just want to incorporate the Pvt Co. and if possible with all such activity as listed in earlier.

Ajay Mishra

Ajay Mishra (Expert)
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27 December 2012 Hi

You will comply the capital clause and should have minimum paid up capital of Rs. 2 crore for incorporating such kind of capital.

You will take RBI approval for incorporating such company.

Ajay Mishra

Ajay Mishra (Expert)
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27 December 2012 I am providing you a illustrative list of Main objects of NBFC company:

Main objects of NBFC Company
1. To carry on the business or businesses of a holding and investment company, and to buy, underwrite and to invest in and acquire and hold shares, stocks, debentures, debenture stock, bonds, obligation or securities of companies or partnership firms or body corporates or any other entities whether in India or elsewhere either singly or jointly with any other person(s), body corporate or partnership firm or any other entity carrying out or proposing to carry out any activity whether in India or elsewhere in any manner including but not limited to the following:

a. To acquire any such shares , stocks, debenture, debenture stock, bonds, obligation or securities by original subscription, exchange or otherwise and to subscribe for the same either conditionally or otherwise, to guarantee the subscription thereof issued or guaranteed by any government, state, public body, or authority, firm, body corporate or any other entity or persons in India or elsewhere.

b. To purchase or acquire, hold, trade and further to dispose of any right, stake or controlling interest in the shares, stocks, debentures, debenture stock, bonds, obligation or securities of companies or partnership firms either singly or jointly with any other person(s), body corporate or partnership firm carrying out or proposing to carry out any activity in India or in any other part of the world.

c. To invest and deal with the moneys of the Company not immediately required in such manner as may from time to time be determined and to hold or otherwise deal with any investment made.

d. To facilitate and encourage the creation, issue or conversion of debentures, debenture stock, bonds, obligation, shares, stocks, and securities, and to act as trustees in connection with any such securities, and to take part in the conversion of business concerns and undertakings into companies.

2. To give any guarantee in relation to the payment of any debentures, debenture stock, bonds, obligation or securities.

3. To subscribe for, conditionally or unconditionally, to underwrite issue on commission or otherwise take, hold, deal in, and convert stocks, shares and securities, of all kinds, and to enter into partnership, or into any arrangement for sharing profits, union of interest, reciprocal consession or co-operation with any person, partnership, or organize companies, syndicates, or partnerships of all kinds, for the purpose of acquiring and undertaking any property and liabilities of this company, or of any other company or of advancing, directly or indirectly, the object thereof, or for any other purpose which this company may think expedient.

4. To lend and advance money and assets of all kinds or give credit on any terms or mode and with or without security to any individual, firm, body corporate or any other entity ( including without prejudice to the generality of the foregoing any holding company, subsidiary or fellow subsidiary of , or any other company whether or not associated in any way with, the company ), to enter into guarantees, contracts of indemnity and suretyship of all kinds, to receive money on deposits or loan upon any terms, and to secure or guarantee in any manner and upon any terms the payment of any sum of money or the performance of any obligation by any person, firm or company (including without prejudice to the generality of the foregoing any holding company, subsidiary or fellow subsidiary of , or any other company associated in any way with, the company )

5. To borrow and raise money in any manner for the purpose of any business of the company or of any company in which the company is interested and to secure the repayment of any money borrowed, raised or owing by mortgage, charge, standard security, lien or other security upon the whole or any part of the Company’s property or assets (whether present or future).

6. To transact or carry on all kinds of agency business, and in particular in relation to the investment of money, the sale of property and the collection and receipt of money.

7. To Purchase or otherwise acquire, and to sell, exchange, surrender, lease, mortgage, charge, convert, turn to account, dispose of , and deal with property and rights of all kinds, and in particular, mortgages, debentures, produce, concessions, options, contracts, patents, licenses, stocks, shares, bonds, policies, book debts, business concerns, and undertakings and claims, privileges, and chooses in action of all kinds.

8. To carry on activities of leasing and /or hire-purchase.

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