Sole proprietorship

First of all the freind of yours will be required to take a NOC from the Landlord to carry on the business of stock broking from his premises  as your freind is staying in an rented premises whihc is not his won house.  You will be required to preserve this document.

Secondly he will be requried to apply to SEBI for undertaking the franchise of stock broking after whihc SEBI will issue him a membership card for undertaking the stock broking business.  He will require to abide by all the rules & regulations of SEBI as there are strict penalties under the SEBI Act if SEBI receives any complaints from the investors on behalf of the stock brokre.

After you receive the membership card from SEBI, he will be required to apply for PAN whihc he will require it to quote in his I-T Return while filing the same.