Q) Is there any minimum number of directors that a company has to appoint?
A) Yes. Every Public company has to have at least three directors and every private company has to have atleast two directors.

Q) What are the different types of companies?
A) There can be six types of companies in India based on their features of incorporation. These can be distinguished on the basis of liability and shareholding: Liability (Limited by Shares, Limited by Guarantee and Unlimited) Shareholding (Private and Public) In addition to the above it is also possible to incorporate joint stock companies in India. These companies are similar to partnerships but are not commonly used.

Q) Who are members of a company?
A) The subscribers of the memorandum of a company are deemed to have become members of a company, and on its registration, shall be entered as members in its register of members. Every other person who agrees in writing a become member of a company and whose name is entered in its register of members, is a member of the company. Every person holding equity share capital of a company and whose name is entered as beneficial owner in the records of the depository shall be a member of the concerned company.

Q) Who are members of a company?
A) The subscribers of the memorandum of a company are deemed to have become members of a company, and on its registration, shall be entered as members in its register of members. Every other person who agrees in writing a become member of a company and whose name is entered in its register of members, is a member of the company. Every person holding equity share capital of a company and whose name is entered as beneficial owner in the records of the depository shall be a member of the concerned company.

Q) What kind of company has share capital?
A) A company limited by shares has share capital. Share capital is a fund representing the nominal value of shares.

2) Foreign Direct Investment

Q) What is the Foreign Investment Promotion Board (FIPB)?
A) The Foreign Investment Promotion Board or the FIPB as it is called comprises inter alia, the Industry Secretary, the Finance Secretary, Commerce Secretary and the Secretary (Economic relations), Ministry of External Affairs of the Government of India. The FIPB is chaired by the Secretary, Department of Industrial Policy & Promotion (Ministry of Industry), Government of India. The FIPB has been set up by the Government of India to undertake investment promotion activities and to facilitate and invite foreign investments. The Board considers all investment proposals other than those eligible for automatic approval. The Board meets every week and considers all applications within 15 days of its receipt with the endeavor to communicate decisions to the applicants within four weeks. The FIPB has been given the flexibility of purposeful negotiation with investors and considers project proposals in totality, free from parameters, with a view to maximizing foreign direct investment into the country. According to the policy statement issued by the Industry Minister in February 2000 approval for investment in most sectors will be covered by the automatic route and only in a few cases which have been placed in the negative list will the investor need to approach the FIPB.

Q) What is the Secretariat for Industrial Assistance (SIA)?
A) The Secretariat for Industrial Assistance or SIA as it is called has been set up by the Government of India in the Department of Industrial Policy and Promotion in the Ministry of Industry to provide a single window for entrepreneurial assistance, investor facilitation, receiving and processing all applications which require Government Approval and monitoring the projects so approved. The SIA would also liaison with other organizations and State Governments for the purpose of monitoring the implementation of Approvals.

Q) What is meant by the term "foreign company" ?
A) 'Foreign companies', means companies (other than banking companies) which are not incorporated in India. For the purposes of FERA 1973, the term 'foreign company' connotes firms and other institutions, which are registered or incorporated outside India. These companies are subjected to special regulations relating to their business etc. activities in India through the provisions of Sections 28, 29 and 30 of FERA 1973.

Q) What do FERA companies mean?
A) Indian companies (other than banking companies) in which non-resident interest exceeds forty per cent are termed as FERA companies. Since January 1993 FERA companies are treated on par with other Indian companies except in regard to carrying on 'agricultural or plantation' activities in India. The term 'Non-resident interest' has been defined in the Explanation (ii) to Section 29 of the FERA Act, 1973 to mean participation in the share capital by, or entitlement to the distributable profits of, any individual or company resident outside India, or any company not incorporated under any law in force in India or any branch of such company whether resident outside India or not.

Q) What are the permissions required by Foreign Banks for Opening Branches / Offices in India?
A) Opening of branches / offices in India by banks incorporated abroad (foreign banks) requires permission of Reserve Bank of India. Applications for the purpose should be made to the Chief General Manager, Department of Banking Operations and Development, Reserve Bank of India, Central Office, Mumbai 400 001. Remittance of net profits/surplus by Indian branches of foreign banks to their Head Offices abroad, however, requires prior approval of the Exchange Control Department of Reserve Bank.

Q) In what manner can foreign banks operating in India remit profits abroad?
A) Applications from branches of foreign banks operating in India for remittance of net profit/surplus arising out of their Indian business to their Head Offices outside India has to be submitted to Reserve Bank for prior approval after finalisation of the accounts for the respective year in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949. The said application should be supported by following documents: (a) Certified true copy of audited Balance Sheet and Profit and Loss Account statement for the year to which the profit/surplus relates. (b) Certificate from the auditors covering the following: (1) manner of arriving at the remittable amount giving details of the income of the bank for the year in question, expenditure in India (without making any provision for Head Office expenses) and the rates at which the tax and surcharge, if any, are payable for the year in question; (2) confirmation that the entire income of the bank included in the accounts for the year had accrued from sources in India (In case any part of the income had accrued from sources outside India the auditor's certificate should clearly indicate that this amount was repatriated to India immediately on realisation); (3) confirmation that the amount set aside as provision for meeting tax liabilities (which should not in any case be less than the tax calculated at full rate on the entire amount of profit / surplus) is adequate to cover the tax liabilities of the branch(es) India of the bank for the year in question; (4) confirmation that no part of the income included in the amount sought to be remitted by the applicant bank as profit / surplus for the year in question has arisen out of appointment of the bank as technical / management adviser to a banking company in India, accepted without prior approval of Reserve Bank (DBOD). (c) Undertaking from the bank to the effect that Income-tax assessment order evidencing acceptance of profit / surplus by Income-tax Authorities and showing the tax actually payable will be submitted as soon as Income-tax assessment is completed. (d) Declaration from the bank that the profit/surplus sought to be remitted is purely the profit/surplus earned in the normal course of business and does not include any profit on account of revaluation of immovable assets or profit arising out of sale of non-banking assets.

Q) What are Free Trade Zones (FTZ) and Export-Oriented Units (EOU)?
A) The Government has declared certain areas as Free Trade Zones and internationally competitive infrastructural facilities and a duty free low cost environment have been provided in these zones for production facilities. Export-Oriented Units are production facilities, which are set up outside the Free Trade Zone area as, described above but they are entitled to the incentives that are provided to production facilities set up in the Free Trade Zone Areas. For setting up EOU s the prior permission of the Government is required.

3) Intellectual Property Law

Q) What is copyright?
A) Copyright is a form of intellectual property protection granted under the Indian Copyright Act 1957 to the creators of original works of authorship such as literary works (including computer programmes tables and compilations), dramatic, musical and artistic works, cinematographic films and sound recordings.

Q) What are the rights available through copyright protection?
A) Copyright protection provides the following rights to the right holder:-

1. In the case of literary, dramatic or musical work, not being a computer programme -
to reproduce the work in any material;
to issue new copies of the work to the public;
to perform the work in public, or communicate it to the public;
to make any cinematography film or sound recording in respect of the work;
to make any translation of the work;
to make any adaptation of the work.

2. in the case of computer program -
to do any acts as specified under literary, dramatic or musical work;
to sell or rent or offer for sale or for rent any copy of the computer programme.

3. in the case of an artistic work
to reproduce the work in any material form including depiction of two dimensional work in three dimensions or three dimensional work in two dimensions;
to communicate the work to the public;
to issue new copies of the work to the public;
to include the work in any cinematography film;
to make any adaptation of the work.

4. in the case of a cinematography film -
to make a copy of the film including a photograph of any;
to sell or rent or offer for sale or rent, any copy of the film;
to communicate the film to the public.

5. in the case of sound recording -
to make any other sound recording embodying it;
to sell or rent or offer for sale or rent, any copy of the sound recording;
to communicate the sound recording to the public.

Q) What is a design?
A) 'Design' means only the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to an are judged solely by the eye.

Q) What is the object of registration of Designs?
A) The object of the Designs Act, 2000 is to protect new or original design which is created and applied or made applicable to particular article which is manufactured by industrial process or means. Sometimes purchase of articles for use is influenced not only by their practical efficiency but also by their appearance. The important purpose of design registration is to see that the artisan, creator, originator of a design having aesthetic look is not deprived of his bonafide reward by others by applying it to their goods.

Q) What is a patent?
A) A patent is an exclusive right granted to a person who has invented a new and useful article, or made an improvement of an existing article, or invented a new process of making an article. This right entails the person to exclusively manufacture the new article invented, or exclusively manufacture an article according to the invented process. The right subsists only for a limited period and at the expiry of the period, any person can make use of the invention. A patent is not granted for a mere idea or principle, but for some article or the process of making an article applying the idea.

Q) What inventions are patentable?
A) An invention in order to be patentable, should relate to a machine, article, or substance produced by manufacture. The process of manufacture of an article or the improvement of an article or the improvement of the process of manufacture is also patentable. The invention should be new and useful. A process or method constitutes manufacture, if it results in the production of some vendible product, improves or restores a vendible product to its former condition, has the effect of preserving from deterioration some vendible product. To summarise, the three essential requirements of a patentable invention are novelty, inventiveness and commercial utility.

Q) What inventions are not patentable?
A) The following inventions are not patentable under the Act. -
an invention which is frivolous or which claims anything obvious contrary to well established natural laws;
an invention the primary or intended use of which would be contrary to law or morality or injurious to human/plant/animal life or health or to environment;
the mere discovery of a scientific principle or the formulation of an abstract theory or discovery of living or non-living thing occurring in nature;
the mere discovery of any new property of mere new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant;
a substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance;
the mere arrangement or re-arrangement or duplication of known devices each functioning independently of one another in a known way;
a method of agriculture or horticulture;
any process for the medicinal, surgical, curative, prophylactic, diagnostic, therapeutic or other treatment of human beings or any process for a similar treatment of animals to render them free of disease or to increase their economic value or that of their products;
plants and animals in whole or any part thereof other than micro-organisms but including seeds, varieties and species and essentially biological processes for production or propagation of plants and animals;
a computer programme per se other than its technical application to industry or a combination with hardware;
a mathematical method or a business method or algorithms;
a literary, dramatic, musical or artistic work or any other aesthetic creation whatsoever including cinematographic works and television productions;
a mere scheme or rule or method of performing mental act or method of playing game;
a presentation of information;
topography of integrated circuits;
an invention which, in effect, is traditional knowledge or which is an aggregation or duplication of known properties of traditionally known component or components; and
invention relating to atomic energy.

Q) What are the rights of a patentee?
A) A patent confers upon a patentee an exclusive right to prevent any third party from making, using, offering for sale, selling or importing without his consent his patented products or products obtained from his patented process. Also, a patent further gives monopoly to the patentee of assigning or licensing his rights over the patent to others. Further, a holder of the patent can seek legal remedy for infringements where the secret of the patented product/process has been disclosed or where it has come into the hands of others through independent discovery.

Q) What are trademarks?
A) A trade mark is a visual symbol in the form of a word a device or a label applied to articles of commerce with a view to indicate to the purchasing pubic that they are the goods manufactured or services offered or otherwise dealt in by a particular person as distinguished from similar goods manufactured or dealt in by other persons. By virtue of this application the person who sells his goods under a particular trademark acquires a sort of limited exclusive right to the use of the mark in relation to those goods. Such a right acquired by use is recognized as a form of property in the trademark, and protected under common law. A person can also acquire a similar right over a trade mark, not so far used but only proposed to be used, by registering it under the Trade Marks Act 1999.

Q) What are the conditions for registrability of a trade mark?
A) A trade mark is registrable if it satisfies the following conditions:(i) the mark, which may include a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination, is capable of being represented graphically;(ii) the mark is capable of distinguishing the goods or services of one person from those of others;(iii) the mark used in relation to goods or services for the purpose of indicating or so as to indicate a connection in the course of trade between the goods or services and some person having the right as proprietor or by way of permitted user.

Q) What are the rights of a registered trademark user?
A) A registered trademark confers a bundle of exclusive rights upon the registered owner, including the right to exclusive use the mark in relation to the products or services for which it is registered. It provides a permanent record of the registered marks so that any trader might consult the Register before adopting a new mark and thus avoid adopting, unwittingly, a mark that would be an infringement of an already registered trademark, belonging to another owner. The law in most jurisdictions also allows the owner of a registered trademark to prevent unauthorised use of the mark in relation to products or services which are similar to the "registered" products or services. Registration of the mark is prima facie evidence of the owner s title to the mark. A registered trademark can also be assigned by way of licensing or permitting use of the trademark by others, transmission of rights etc, thereby earning revenue for the registered user of the trademark. Whereas if the trademark is not registered, the owner can only give it away along with the goodwill of the business.

4) Trade Laws

Q) What is Dumping?
A) Article VI of the General Agreement on Tariffs and Trade -lays down the principles to be followed by the member countries for imposition of anti-dumping duties, countervailing duties and safeguard measures. Indian laws were amended with effect from 1.1.1995 to bring them in line with the provisions of the respective GATT agreements. Dumping. where it causes "material injury" to a domestic industry. is condemned under Article VI of the General Agreement on Tariffs and Trade (GATT) and anti- dumping. measures may be imposed. This is justified on the grounds that dumping constitutes an unfair trade practice. The new Agreement on Implementation of Article VI of the GATT' 1994 - referred to as "the 1994 Anti-Dumping Agreement" considerably strengthens the discipline in this area compared with the 1979 Anti-Dumping Code negotiated in the Tokyo Round. It requires greater transparency for anti-dumping actions and establishes, new methodology, procedures and rules to govern dumping investigations by national governments, whilst maintaining a balance between the legitimate interests of domestic producers on the one hand and those of importers and exporters on the other. The US. the EU, Canada and Australia. with their liberal trading. regimes, have been the primary users of anti-dumping measures. However, since the mid 1980's, with the expansion of world trade, anti-dumping action has become widespread as other countries have felt the need to take anti-dumping action to counteract trade distortions. The EU, while being a "user" of anti-dumping, is also the subject of anti-dumping actions by third countries including "new user" countries (such as Brazil and Mexico). All Members of WTO are required to follow the rules and procedures set out in the 1994 Auti-Dumping Agreement. Indeed the E-U will expect all users to conduct their anti-dumping proceedings with the same rigour as it applies to investigations in the Community. Sections 9A, 9B and 9C of the Customs Tariff Act, 1975 as amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 framed thereunder form the legal basis for anti-dumping investigations and for the levy of anti-dumping duties. These laws are based on the Agreement on Anti-Dumping which is in pursuance of Article VI of GATT 1994.

Q) Why is a Causal Link important in anti- dumping matters?
A) A 'causal link' must exist between the material injury being suffered by the Indian industry and the dumped imports. In addition, other injury causes have to be investigated so that they are not attributed to dumping. Some of these are volume and prices of imports not sold at dumped prices, contraction in demand or changes, in the pattern of consumption, export performance, productivity of the domestic industry etc. Injury could be caused due to other reasons which are referred to as the 'the volume effect' and 'the price effect'. To determine if the injury has been caused due to 'the Volume Effect', the Authority examines the volume of the dumped imports, including. the extent to which there has been or is likely to be a significant increase in the volume of dumped imports, either in absolute terms or in relation to production or consumption in India, and its effect on the domestic industry. To determine if there is a Price Effect, the authority determines the effect of the dumped imports on prices in the Indian market for like articles, including the existence of price undercutting, or the extent to which the dumped imports are causing price depression or preventing price increases for the goods which otherwise would have occurred. The consequent economic and financial impact of the dumped imports on the concerned Indian industry can be demonstrated, inter alia, by the following factors, viz., decline in output, loss of sales, reduced profits, decline in productivity, decline in capacity utilization, reduced return on investments, price effects and the adverse effects on cash flow, inventories, employment, Wages, growth, investments, ability to raise capital, etc.

Q) Why Dumping is regarded Unfair?
A) It is recognised that all countries have assets which they can employ to produce goods for their domestic markets or to complete overseas. It is also a fact that countries may have a comparative advantage with regard to their human, industrial, natural or financial resources. However, dumping does not have a relationship with an exporter s competitive advantage. As outlined above the conditions for dumping arise from a trading environment which confers unfair advantages on certain parties independently of their competitiveness. Indeed dumping is practised by both competitive and non competitive exporter' alike. Dumping has the effect of putting downward pressure of prices in the importing market. In the short term, the producer in the importing country may be able to bear such losses. However, over a period of time the dumping will result in loss of profits and market share which in turn lead to lost capacities, lost investment unemployment, reduction s in research and development and the shrinkage or total loss of the industry. It can thus, push out of business, domestic producers with a clear competitive advantage over the dumping exporter. While in the short term, users and consumers may benefit from low prices, this situation will not necessarily continue. As experience shows, the injurious effects of dumping in the domestic market will eventually lead to a reduction in, or elimination of, competition, which in turn will lead again to higher prices.

Q) What is meant by the Lesser Duty Rule?
A) Under the GATT provisions, the national authorities cannot impose duties higher than the margin of dumping. It is, however, suggested that it would be desirable if the appropriate Government authorities impose a lesser duty which is adequate to remove the injury to the domestic industry. Under the Indian laws, the Government is obliged to restrict the anti - dumping duty to the lower of the two i.e. dumping margin and the injury margin.

Q) What is the injury margin?
A) The injury margin is the difference between the fair selling price and the landed cost of the product under consideration. Besides the calculation of the margin of dumping, the Designated Authority also calculates the injury margin which is the difference between the fair selling price and the landed cost of the product under consideration. Landed cost for this purpose is taken as assessable value under the Customs Act and the basic customs duties.

Q) What are non tariff barriers?
A) Non Tariff Barriers may be broadly defined as government laws, regulations, policies, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products. The barriers which are normally included in NTBs include quotas, licenses or other types of surveillance, price administration, restraints on purchases of foreign goods, and administration of any non-trade controls in a way intended to deter imports. The most important are quotas which exist on a formal basis; import controls, fully quantified (the best known example is in textiles and clothing) or in some cases (e.g. in some agricultural trade) subject to variation with production or prices.

Q) What are the factors leading to the growth of Non Tariff Barriers?
A) The traditional barrier to trade has been tariffs. A tariff is a tax levied upon goods when it crosses a nation's border. Since tariffs generally reduce imports of foreign products, the higher the tariff, the greater the protection afforded to the country's import-competing industries. At one time, tariffs were perhaps the most commonly applied trade policy. Many countries used tariffs as a primary source of funds for their government budgets. However, as trade liberalization advanced in the second half of the twentieth century, many other types of non-tariff barriers became more prominent. Because a tariff increases the domestic price of a good, the consumers are worse off and domestic producers are better off. Often, tariff redirects resources from industries that have a comparative advantage to those that have a comparative disadvantage. The success of the GATT rounds in liberalising world trade after 1947 led to considerable reduction in the average level of industrial tariffs and which in turn spurred the growth of other forms of protectionism. Two of the most important forms of protectionism or non tariff barriers manifested itself in the form of import quotas and voluntary export restraints. Very often these non tariff barriers have the effect of often worsening the terms of trade against the developing countries.

Q) What is the World Trade Organisation?
A) The World Trade Organisation ("WTO") is the principle international body concerned with solving trade problems between countries and with negotiating trade-liberalising agreements. The WTO takes the place of the former General Agreement on Tariffs & Trade (GATT) and is the embodiment of the results of the 1986-1994 Uruguay Round of trade negotiations concluded under GATT. The WTO was established on 1st January 1995 and it encompasses previous GATT legal instruments, as they existed when the Uruguay Round was completed. However, the WTO extends new disciplines to economic and trade sectors not covered in the past. While the GATT was limited to trade in goods, the WTO covers trade in services, including such sectors as banking, insurance, transport, tourism and telecommunications sectors as well as the provision of labour. In addition, the WTO covers all aspects of trade related intellectual property rights. The WTO joins the International Monetary Fund (IMF) and the World Bank as the third pillar of the global economic management system. In terms of governance, the WTO's principle one-member, one-vote makes it unique among multilateral institutions. (Both IMF and World Bank operate a weighted voting system with voting power depending on the amount of money contributed to the budget.) Despite this, in the WTO, there is still a noticeable imbalance when it comes to the attentiveness with which a country's voice is heard. The WTO and the Agreements under it are treaties concluded by member states and therefore forms part of international economic law as opposed to international trade law.

Q) What is the Appellate Body?
A) This is a standing tribunal established by the DSB pursuant to Article 17 of the DSU and is composed of seven persons who are persons of recognised Authority with demonstrated expertise in law and international trade. They are unaffiliated with any government and shall broadly be representative of the membership in the WTO. Appeals from the decision of the panels are heard by the Appellate Body.

Q) How does the appellate body function?
A) The Appellate Body generally sits in divisions of 3 members to hear cases. An appeal to the Appellate Body is limited to issues of law covered in the Panel Report and legal interpretations developed by the Panel. It has the Authority to uphold, modify or reverse the legal findings and conclusions of the panel. It is only the parties to the dispute and not third parties who may appeal a Panel Report. An appeal is not limited to the overall result of a Panel Report. It is therefore not necessary for a party to be aggrieved by a Panel ruling in order to appeal. A WTO member whose position prevailed before a Panel may opt nevertheless to appeal the legal reasoning and legal interpretations developed by the panel. The Appellant review was initially intended as an additional safeguard to ensure that panel reports were not faulty in legal reasoning or result. However, in WTO practice thus far, every Panel Report has been appealed.

Q) How does the appellate body function?
A) The Appellate Body generally sits in divisions of 3 members to hear cases. An appeal to the Appellate Body is limited to issues of law covered in the Panel Report and legal interpretations developed by the Panel. It has the Authority to uphold, modify or reverse the legal findings and conclusions of the panel. It is only the parties to the dispute and not third parties who may appeal a Panel Report. An appeal is not limited to the overall result of a Panel Report. It is therefore not necessary for a party to be aggrieved by a Panel ruling in order to appeal. A WTO member whose position prevailed before a Panel may opt nevertheless to appeal the legal reasoning and legal interpretations developed by the panel. The Appellant review was initially intended as an additional safeguard to ensure that panel reports were not faulty in legal reasoning or result. However, in WTO practice thus far, every Panel Report has been appealed.

Q) What is the constitution of the panel?
A) The Panel consists of three members unless the parties to the dispute agree within 10 days from the establishment of the Panel that the Panel should be composed of five members. The members are qualified governmental and non-governmental individuals and the Contracting Parties shall permit their representatives to serve as Panel members. If there is no agreement within 20 days on the members of the Panel, then the Director-General of WTO appoints the Panel. All Contracting Parties have to be informed about the constitution of a panel and the progress of its proceedings. Any third contracting party having a substantial interest in the matter before the panel shall have an opportunity of being heard by the panel and of making written submissions to it.