Insurance company document
prakash
(Querist) 27 March 2008
This query is : Resolved
hi,
what are the legal document & permissions required for the insurance company branch in tamil nadu
Prakash
Rajendran Nallusamy
(Expert) 17 April 2008
A company expands its business by opening up its branch offices in various parts of the domestic country as well as in other countries. A branch office refers to an establishment which carries on substantially the same business and activity as is carried out by its Head Office. Such offices help the company in:-
1. Spreading its business to diverse locations and thus increasing the customer base
2. Bringing its product closer to the customers by increasing their accessibility to it
3. Making the distribution and marketing of its goods and services easier and more effective.
In other words, branch offices help in expanding the size of the market for a company's product by attracting more customers; widening the scope of its trading and manufacturing activities as well as bringing more opportunities and opening unexplored avenues for it. Thus, these offices help to fuel the growth of the company and enhance its profitability on a sustained basis.
Procedure for opening branch offices by a domestic company
It is provided under the Companies Act,1956, according to which:-
In order to open new branch offices in India, a domestic company must pass a resolution in its Board meeting specifying:-
* The business to be carried out at that particular branch office
* The appointment of somebody to look after the day-to-day business of the branch and operate the bank account of that branch
* The provision for authorising somebody to make arrangement for accommodation,establishment and other requirements which are necessary to run that branch office
The person so authorised in the Board meeting may also be delegated certain powers,on behalf of the company,which are as follows:-
* The power to make calls on shareholders in respect of money unpaid on their shares;
* The power to issue debentures;
* The power to borrow money otherwise than on debentures;
* The power to invest the funds of the company;
* The power to make loans.
However, the business to be transacted at the new proposed branch is covered by the Memorandum of Association of the company. The Memorandum of Association is the charter of the company which defines the objective of its formation, the scope of its operations as well as inform its stake holders about the permitted range of the enterprise. It is ultra vires for a company to act beyond the scope of its memorandum and any departure cannot be validated even if assented to by all the members of the company. It is the principal document of a company without which it cannot be registered. It regulates the procedures relating to the expansion of business of the company through opening new branches.
But if a company wants to commence new business at the proposed branch office, which is not incidental to its existing business, then it has to pass a special resolution. Thereafter, it has to file a declaration in e-Form No.20A with the concerned Registrar of Companies (ROC) within thirty days of passing the resolution and also the special resolution in e-Form No.23, after paying requisite fee as prescribed under the Act.
prakash
(Querist) 02 August 2008
A lot of thanks for you sir....
