What is the difference between Authorized Capital, Issued Capital, Subscribed Capital, Called-up Capital, Paid-up Capital

1. Nominal Authorized or Registered Capital

Nominal authorized or registered capital means the sum mentioned in the capital clause of Memorandum of Association (say Rs. 10,00,000/- i.e. Ten Lakhs). It is the maximum amount, which the company raises by issuing the shares and on which the registration fee is paid. This limit cannot be exceeded unless the Memorandum of Association is altered.

2. Issued capital

Issued capital means that part of the authorized capital, which has been offered for subscription to members (say Rs. 5,00,000/- i.e. Five Lakhs) and includes shares allotted to members for consideration in kind also.

3. Subscribed capital

Subscribed capital means that part of the issued capital at nominal or face value which has been subscribed or taken up by purchaser of shares in the company and which has been allotted (say Rs. 4,00,000/- i.e. Four Lakhs).

4. Called-up capital

Called-up capital means the total amount of called up capital on the shares issued and subscribed by the shareholders on capital account. i.e. if the face value of a share is Rs.10/- but the company requires only Rs.2/- at present, it may call only Rs.2/- now and the balance Rs.8/- at a later date. Rs.2/- is the called up share capital and Rs.8/- is the uncalled share capital.

5. Paid-up capital

Paid-up capital means the total amount of called up share capital, which is actually paid to the company by the members (say Rs. 3,00,000/- i.e. Three Lakhs).

KINDUZ Business Consulting

'KINDUZ Business Consulting' is the name of the organization. We got the confirmation mail a couple of hours back.

The organization will be branded as 'KINDUZ' and the website is http://www.kinduz.com/.

Before you visit the website, just wanted to let you know that it is currently under development and will be released on October 9th 2008.

Thanks for your patronage.

Importance of Self Discipline and Self Motivation

When you start an organization, your on your own.

There is no one to check what you are doing, if you are wiling away time, if you are watching the TV endlessly, etc.

You need to be self-disciplined and self-motivated. This is one of the most basic needs of becoming an entrepreneur (I can't stress this point enough).

The more deeper you get into setting up the company, the more you realize that a lot depends on 'YOU'.

The moment you start recruiting people, they will be as good as YOU are. To a large extent YOU and other founders define the culture of the organization.

If you don't have the self-discipline and self-motivation, would recommend that you don't get into entrepreneurship or stop. If you get lucky, my best wishes are with you as well!

What will be the Company name?

This is again a very important question to answer. I will provide some tips, the choice should always be yours:

1) Use a name that can be easily pronounced by people of different nationalities (if you are planning to build a global enterprise). For example: Google, Infosys and Apple are all very simple. Company names like Technoelectroics are tough to pronounce and remember.
2) Keep it as short as possible, this helps easy brand recall
3) Make sure you can obtain a domain name. You might name a company 'XYZ Business Consulting Pvt. Ltd'; ideally you should be able to find a domain name which is http://www.xyz.com and not http://www.xyzbusinessconsulting.com/. It is too long to type and
remember. If you can't find a good domain name, I would recommend you find a name with a domain name.
4) I would strongly recommend that the name of the company have a basis for its selection. When a prospective client or a prospective employee asks you about why such a name was selected, you should have a story to say. A story that is ideally better than "It is based on my name."
5) Try and stay away from naming your company on your last name or first name. In today's world, it can scare away employees, investors and clients.
6) Make sure that another company does not have the same name, or sounds the same phonetically.
7) At the end always ask yourself, "If I have to introduce my company, will I feel proud introducing my company with its name?"

It took us about 3 weeks to finalize the name of the company. Part of the delay was due to us finalizing the name, and part of the delay was due to some issues raised by Registrar of Companies.

Some learnings while dealing with the Registrar of Companies (RoC), India:

1) Do not use a name that sound phonetically similar to another company, especially Trademarked companies. For example: 'INDDUS' sound very similar to 'INDUS'
2) If you want to use words like 'Industries' or 'Business', the RoC will ask you to increase the Authorized Capital to at least Rs. 10 Lakhs

Ok, so what's the name of the company? I am not going to answer this completely as I am waiting for a final confirmation from the RoC; I will sure do once I have the formal confirmation in my hand. But here are some clues:

1) The name of the company is going to be 6 letters long
2) The complete name will be "<CompanyName> Business Consulting Pvt. Ltd."
3) The name of the company is based on the company 'Values' defined previously
4) The company will be branded using the 6 letter word '<CompanyName>'
5) The website of the company will be the 6 letter word and '.com'. The website is already registered and we have also registered domain names with similar names to avoid confusion for our visitors.

Look forward to communicating the company name soon.

What will be the Company logo?

I am a firm believer that an organization's logo if well made, makes a huge difference in branding the organization well.

I was at Indian School of Business (ISB), Hyderabad two weeks back (My brother-in-law is completing his MBA from ISB). For some reason I woke up at 4.00 A.M. and starting reading a book. At about 5.00 A.M., I wanted a coffee and started walking to the 24/7 Cafe Coffee Day at ISB. Had an excellent coffee and started walking back.

It was still dark but you could see the twilight coming. You could hear the birds chirping and the pleasant sway of trees because of the breeze. A perfect time I thought.

The stars were still visible, but they were slowly fading as the Sun was rising. As the Sun rose higher, the lesser you could see the other stars. Someone told me when I was a kid, that the stars are all there in the sky even during the day. It is just that we don't see them because of the Sun is so bright.

For some reason, I started thinking about what a good Business Consulting organization does. If they are in a position to transform a client from one of the many starts to a Sun; a Sun that starts to dwarf other stars (competitors), the Consulting Organization would have done their job.

I am looking at creating a logo that can represent the above idea, and also represent the DNA and Values of the company at the same time.

DNA, Values and Mission

Have been reading the 'The High Performance Entrepreneur' - by Subroto Bagchi for the last few days. Chapter 5's title is "DNA, Mission, Vision and Values". These are very powerful tools that define an organization.

Here are the DNA, Values and Mission Statements of the company we plan to setup.

DNA:
1) Innovate
2) Strategize
3) Execute
4) Satisfy

Values:

1) Innovation, Research and Learning
2) Dreaming, Creating a Vision, Acting Practically
3) Delivering Sustained Strategic Value; Professionally and Ethically
4) Stakeholder Satisfaction through 'Karma'

To understand 'Karma', please click here and refer Wikipedia

I will detail out each of the DNA's and Values in the due course of time

Mission:

"We will deliver Sustained Strategic Value; Professionally and Ethically, ultimately ensuring Stakeholder Satisfaction. We will achieve this by Dreaming, creating a Vision but at the same time Acting Practically. We will enhance value delivered by continuously Innovating, conducting Research and by being Life-long Learners."

Forming a Company in India: Step 3 - Check the Availability of Company Name

If you have a name in mind, and want to check if the company name is available, you can go to the Ministry of Corporate Affairs website and check its availability. Navigate as follows:

http://mca.gov.in/ -> 'Other Services' -> 'Check Company Name'

Once you find it available, you have to formally apply for availability of a company name using the Form 1A. This can be downloaded at http://mca.gov.in/MinistryWebsite/dca/downloadeforms/Download_eForm_choose.html

Forming a Company in India: Step 2 - Obtain Director Identification Number

You need to have a minimum of two directors in case of a Private Limited company

The concept of a Director Identification Number (DIN) has been introduced for the first time with the insertion of Sections 266A to 266G of Companies (Amendment) Act, 2006.

Further details can be obtained at http://mca.gov.in/MinistryWebsite/dca/din/DIN.htm

Make sure of the following:

1. Pay the application fees on the MCA portal after you obtain the provision DIN
2. Dispatch DIN application with required documents and information
3. Once you obtain a DIN, intimate you DIN to all companies in which you are a director, in form DIN-2
4. Make sure your companies intimate the DINs of its directors to the ROC, in form DIN-3
5. Any changes that become effective based on information filed in DIN-1 should be intimated, in form DIN-4

A detailed DIN Process document is available at http://mca.gov.in/MinistryWebsite/dca/din/processdoc.pdf

Forming a Company in India: Step 1 - Obtain a Digital Certificate

The first step in the formation of a company is to obtain the digital certificate from one of the Ministry of Corporate Affair's (MCA) Certifying Authorities.

The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is the only secure and authentic way that a document can be submitted electronically. As such, all filings done by the companies under MCA21 e-Governance programme are required to be filed with the use of Digital Signatures by the person authorized to sign the documents. More information about Digital Signatures can be found at http://www.mca.gov.in/MinistryWebsite/dca/dsc/certifying-new.html.

The list of Certifying Authorities can be found at:
http://www.mca.gov.in/MinistryWebsite/dca/dsc/certifying-new_1.html.

Some Frequently Asked Questions can be found at
http://www.mca.gov.in/MinistryWebsite/dca/dsc/faq_dsc.html.

Make sure of the following when you get the digital certificate:
1) Obtain only a Class - 2 or a Class - 3 certificate.
2) Obtain a USB Cryptotoken (This is safer than keeping the digital signature on a desktop / laptop). It should cost a bit extra.

What form of a Business will this be?

This is a decision every entrepreneur needs to make early in the process. Obviously you need to understand the options in hand and their pro's and con's. I must say, both you and me are lucky. There is an excellent website for reference (created by Government of India) at http://business.gov.in/starting_business/location_industry.php.

The forms a business can take are:

• Proprietorship
• Private Limited Company
• Partnership Firm
• Co-operatives
• Public Limited Company
• Join Hindu Limited Business

Details of each of these forms of Business, are available at the website given above.

I chose a 'Private Limited Company' mainly because most of the clients are willing to work only with a 'Private Limited Company' or a 'Public Limited Company', not to forget the excellent governance framework the government puts in place in the form of the Company Law.

Why this blog?

In early August 2008, I found 'few' good online resources, with consolidated information about starting and managing a company. What I did find were a lot of eager entrepreneurs posting questions everywhere.

Through this blog, I hope to achieve the following:
1) Share my journey, hoping you will learn something out of it (NOTE: I will share not only the business outcomes, but also what went behind getting those business outcomes)
2) Look forward to your recommendations and feedback

I hope we both find this useful. Feel free to send me a mail by using the online form at PAVANKOTA.com or by clicking here.

When did I know it was time to quit?

When I started my career in June 2000, I wanted to be exposed to all functions of an organization i.e. HR, Sales, Marketing, Quality, Production, etc. By January 2008 I had met that goal and had done well in my career.

Earning a good six-figure salary in the US, and a good seven-figure salary in India I had no reason to quit. But, I firmly believe that money is secondary, and it is the 'LEARNING' that is critical. If you have the right skills and competencies, money will follow.

I had never thought about what I wanted to do after meeting my first goal, and that was a big questions in my mind from January 2008. I used to talk about the options in hand, with my wife, over and over again; ranging from doing a PhD., to joining a new company, writing a book about my experiences and learnings, and to starting a company. 'I WAS CONFUSED'.

One of my habits, that I have found very useful is to talk about my career plans, career confusions with my close friends. It helps in three ways:
1) You sometimes get very good suggestions
2) As you speak, you are forced to think and ideate which results in increased clarity of thought and confidence
3) You create pressure on yourself to succeed, now that you have spoken about your plans with your close friends

As I spoke more and more about my confusions (than my plans), the plans started to form. I started to realize that I had some unique skill sets and learnings, which I wanted to share with everyone and at the same time build an organization around them.

Some equally important factors helped in making this decision right now:
1) Support from my wife and extended family (without this nothing works)
2) My wife was earning a decent salary and we were in a position to support our extended family (at least to some extent) and take the risk at the same time
3) I did not want to continue in a job and keep thinking about my dream

Hence the decision made. Our family moved to India on the August 15th 2008. The Leadership and Management team at Capgemini were very supportive of my decision and relieved me by August 22nd 2008. And here I am chasing my dream and passion!