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kamalrajkumar79
6

Dear seniors, I wonder if there is any law or statute or regulation that mandates that all the firms [even small scale] have to be registered under the Companies Act 1956 or any such law? By small scale, I mean sole proprietorships.

Please kindly help me with a serious case here:

There is a really small-scale proprietary publishing firm that has been running for 10+ plus years. During these 10 years, the firm had earned its license from the Registrar of Newspapers of India, which allows it to publish books, etc. However, the license expired and was not renewed. The firm had operated in a small house. No boards or anything as such.

The firm has lot of reputed public and private sector clients, including banks, FMCG companies, medical practitioners, who give advertisements in the publishing firm's books. It publishes annual religious magazines and travel guides.

The firm has only two main employees and six contract sales boys for three different cities its books are sold in. The firm's turnover is about Rs: 1, 90,000/ - to Rs: 2, 50, 000/-. It is still running but with its office in an apartment and with just one book as its product, which was its mainstay all the time.

As far as I know [considering the period I was associated with firm], the firm did not pay any commercial taxes. I was paid 3k in the beginning. I worked there for four years [October 2002-July 2007]. At the time of leaving, my salary was 7k.

I request you all to please advise me on this case. The reason I asked this question is, it is the first employer I worked for after my MBA (2002 passout) and it is not registered under the companies act. I am in the middle of the Accenture interview process. Even TCS called me for an interview. I heard that TCS does not consider work experience from unregistered companies. Why is this a problem? Everyone in this world doesn’t have a super good beginning like campus interview big companies, etc. I am one of those with a humble or low-scale career beginning.

Depending on what our experts here suggest...I can at least argue with my prospective employers in case there is no law as such. Please help me...

Awaiting your advice.

From India, Hyderabad
BSSV
201

I very well understand your disappointment and view point Mr. Kamal Raj. But there is something called discipline is expected from every system. No one can reply upon anything when there is no legal backup, law is the major concern which moulds all the systems run smoothly in a more protected and responsible way, otherwise there will be a chaos everywhere.

Regarding your first doubt, well Registration of sole proprietorship concerns are mandatory as per law, and that is dealt under Indian Partnership Act and not under Companies Act. The Unregistered partnership or sole proprietorship concerns can not claim any benefits provided under the Act and they will not have any protection under law and they can not claim of the rights under the Act before the courts of law. Secondly, Licensing is different from Registration, and it is compulsory for such businesses. And if the firm is officially not running any business and no more active then license is the concern, otherwise legal actions would be taken against such business activities, that's a different issue here.......

Thirdly, paying commercial taxes depend upon the profit they gain, if the firm is undergoing losses then where will they get the money to pay the taxes!! Certain fees are mandatory but tax is different from those......

Why, the companies do not accept of avoid accepting such references if because, chances are more that such certificates may be fake and when they g for the back ground check they will not be getting any data about the firm's existence, since it is not registered its documents will not be recorded, they collect all the documents during registration hence law gives assurence for registered companies which unregistered lack, so in such case how do you expect the company believe in its truth and since they have got huge number of employees they can not spend more that responsible time on individual employee for his detailed back ground checks, hence they would prefer relying upon legal document available easily.......

Coming to the main issue, regarding your job opportunities, do specify the name it was before and mention that it's a licensed business activity. You can not oppose the company policies, whether it is TCS or what ever, it is there policy, but ask them directly if the issue arises if they call you for the interview, ask them clearly that they respect the skill sets acquired, education and knowledge, experience gained and the abilities required, is important or some partnership firm being not registered under the Act. And convince them that you have the ability to do justice to the job your are offered for....... And clearly mention in your resumae' in brackets after your firms name where you had worked, its license number and permission acknowledgement number. In this way your responsibility of proving that you are genuine is done. Above that as already mentioned, clear this issues during the interview that you are not responsible for the running and closures of the firms you have worked with and go ahead saying with confidence that you have the ability to justify the job ...... Any one shall respect the abilities and skillsets, if they feel you are the right candidate for the position depending upon how you were able to convince them, they either choose your or look for more better ones......

And, there is nothing to feel bad about your career path, ups and downs are common and need not compare with others, you have what you have and no less than anyone....... be confident and do not get disappointed, at least you have one, many are even unemployed ...... So, being an MBA you must have to be optimistic in approach so be cool and confident.....

Wish you all the very best.........

From India, Bangalore
kamalrajkumar79
6

Dear BSSV sir, Thank you very much for your reply. Very well explained. It’s an eye opener to me. I will definitely do what you said. Best Regards, Kamal raj
From India, Hyderabad
kamalrajkumar79
6

Dear BSSV sir,
I have one more doubt. Please clarify. While I will still mention the license number [name is already mentioned on my CV] Isn't immaterial for me if the firm is registered or not? As an employee I am paid and genuinely worked for the business. So, as you rightly said, my skills and learnings from that experience should come into play. Am I right?
Awaiting your reply,
Kamal Raj

From India, Hyderabad
BSSV
201

Yes. I asked you to mention the details is because it gives more accuracy and dependability on the facts you have stated on your resumae', if in case the firm was registered, there can't be two companies under single name, that is not allowed under law, hence the name indicated one company only, when not registered, what is the guarantee that you are not using others name or fake name, so make it legally reliable i asked you to mention the number, which can not be manipulated since it will have its record in the licensing office........ and yeah, to make your stand more firm i asked you to not in absolute support of them, you are the beneficiary and yes it is immaterial to you, but beneficial........
From India, Bangalore
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