Dear seniors, I wonder if there is any law or statute or regulation that mandates that all firms, even small-scale ones, 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:
Case of a Small Proprietary Publishing Firm
There is a really small-scale proprietary publishing firm that has been running for over 10 years. During these 10 years, the firm 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 operated in a small house with no boards or anything of the sort.
The firm has a lot of reputed public and private sector clients, including banks, FMCG companies, and 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 where its books are sold. 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 the firm, it 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.
Seeking Advice on Work Experience Recognition
I request you all to please advise me on this case. The reason I asked this question is that 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 interviews with 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
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6Case of a Small Proprietary Publishing Firm
There is a really small-scale proprietary publishing firm that has been running for over 10 years. During these 10 years, the firm 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 operated in a small house with no boards or anything of the sort.
The firm has a lot of reputed public and private sector clients, including banks, FMCG companies, and 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 where its books are sold. 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 the firm, it 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.
Seeking Advice on Work Experience Recognition
I request you all to please advise me on this case. The reason I asked this question is that 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 interviews with 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
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I very well understand your disappointment and viewpoint, Mr. Kamal Raj. However, there is something called discipline that is expected from every system. No one can rely on anything when there is no legal backup; law is the major concern that molds all systems to run smoothly in a more protected and responsible way. Otherwise, there will be chaos everywhere.
Registration and Legal Requirements
Regarding your first doubt, the registration of sole proprietorship concerns is mandatory as per law, and that is dealt with under the Indian Partnership Act and not under the Companies Act. Unregistered partnerships or sole proprietorship concerns cannot claim any benefits provided under the Act, and they will not have any protection under the law; they cannot claim rights under the Act before the courts of law. Secondly, licensing is different from registration, and it is compulsory for such businesses. If the firm is officially not running any business and is no longer active, then the license is the concern; otherwise, legal actions would be taken against such business activities. That's a different issue here.
Commercial Taxes and Financial Concerns
Thirdly, paying commercial taxes depends on 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.
Background Checks and Company Policies
Why do companies not accept or avoid accepting such references? Because chances are higher that such certificates may be fake. When they go for the background check, they will not find 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, the law gives assurance for registered companies which unregistered companies lack. In such cases, how do you expect the company to believe in its truth? Since they have a huge number of employees, they cannot spend more than a responsible amount of time on individual employee background checks; hence, they would prefer relying on legally available documents.
Job Opportunities and Presentation
Coming to the main issue regarding your job opportunities, do specify the name it was before and mention that it is a licensed business activity. You cannot oppose the company policies, whether it is TCS or whatever; it is their policy. But ask them directly if the issue arises if they call you for the interview. Ask them clearly if they respect the skill sets acquired, education, knowledge, experience gained, and the abilities required, which are important, or some partnership firm not registered under the Act. Convince them that you have the ability to do justice to the job you are offered. Clearly mention in your resume, in brackets after your firm's name where you had worked, its license number, and permission acknowledgment number. In this way, your responsibility of proving that you are genuine is done. As already mentioned, clarify these issues during the interview that you are not responsible for the running and closures of the firms you have worked with. Go ahead saying confidently that you have the ability to justify the job. Anyone shall respect the abilities and skill sets; if they feel you are the right candidate for the position depending upon how you were able to convince them, they either choose you or look for better candidates.
Career Path and Confidence
There is nothing to feel bad about in your career path; ups and downs are common and need not be compared with others. You have what you have and are no less than anyone. Be confident and do not get disappointed; at least you have a job; many are even unemployed. So, being an MBA, you must be optimistic in your approach, so be cool and confident.
Wish you all the very best.
From India, Bangalore
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Registration and Legal Requirements
Regarding your first doubt, the registration of sole proprietorship concerns is mandatory as per law, and that is dealt with under the Indian Partnership Act and not under the Companies Act. Unregistered partnerships or sole proprietorship concerns cannot claim any benefits provided under the Act, and they will not have any protection under the law; they cannot claim rights under the Act before the courts of law. Secondly, licensing is different from registration, and it is compulsory for such businesses. If the firm is officially not running any business and is no longer active, then the license is the concern; otherwise, legal actions would be taken against such business activities. That's a different issue here.
Commercial Taxes and Financial Concerns
Thirdly, paying commercial taxes depends on 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.
Background Checks and Company Policies
Why do companies not accept or avoid accepting such references? Because chances are higher that such certificates may be fake. When they go for the background check, they will not find 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, the law gives assurance for registered companies which unregistered companies lack. In such cases, how do you expect the company to believe in its truth? Since they have a huge number of employees, they cannot spend more than a responsible amount of time on individual employee background checks; hence, they would prefer relying on legally available documents.
Job Opportunities and Presentation
Coming to the main issue regarding your job opportunities, do specify the name it was before and mention that it is a licensed business activity. You cannot oppose the company policies, whether it is TCS or whatever; it is their policy. But ask them directly if the issue arises if they call you for the interview. Ask them clearly if they respect the skill sets acquired, education, knowledge, experience gained, and the abilities required, which are important, or some partnership firm not registered under the Act. Convince them that you have the ability to do justice to the job you are offered. Clearly mention in your resume, in brackets after your firm's name where you had worked, its license number, and permission acknowledgment number. In this way, your responsibility of proving that you are genuine is done. As already mentioned, clarify these issues during the interview that you are not responsible for the running and closures of the firms you have worked with. Go ahead saying confidently that you have the ability to justify the job. Anyone shall respect the abilities and skill sets; if they feel you are the right candidate for the position depending upon how you were able to convince them, they either choose you or look for better candidates.
Career Path and Confidence
There is nothing to feel bad about in your career path; ups and downs are common and need not be compared with others. You have what you have and are no less than anyone. Be confident and do not get disappointed; at least you have a job; many are even unemployed. So, being an MBA, you must be optimistic in your approach, so be cool and confident.
Wish you all the very best.
From India, Bangalore
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I have one more doubt. Please clarify. While I will still mention the license number [name is already mentioned on my CV], isn't it 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
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Awaiting your reply,
Kamal Raj
From India, Hyderabad
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Yes, I asked you to mention the details because it provides more accuracy and dependability on the facts you have stated on your resume. If the firm was registered, there can't be two companies under a single name, as that is not allowed under the law. Hence, the name indicated one company only. When not registered, what is the guarantee that you are not using another person's name or a fake name? To make it legally reliable, I asked you to mention the number, which cannot be manipulated since it will have its record in the licensing office.
To make your stand firmer, I asked you not to be in absolute support of them. You are the beneficiary, and it is immaterial to you, but beneficial.
From India, Bangalore
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To make your stand firmer, I asked you not to be in absolute support of them. You are the beneficiary, and it is immaterial to you, but beneficial.
From India, Bangalore
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