Legal Question in Business Law in India

Hi,

I am planning to open a school in India. The problem here is that we are a startup. As per government rules in India, a school should run by a non-profit organization only.

As a startup, we created a new business model which is very profitable to us and at the same time less costly to parents.

The issue here is that I want to scale this startup rapidly. For that, I need funding. I am not sure any VC would fund a non-profit organization.

How do I move ahead with it?

I had a second thought of registering two entities, one private limited company and other as a society.

I keep my business model and technology proprietary to the Pvt. Ltd and run my school via the society. In that way, my Pvt Ltd receives the VC funding and the implementation is done in my school.

The question here is,what are the rules for transferring funds from Pvt Ltd to Society? Any legal hassle? Is it even allowed?

I'm sorry if the question isn't well framed. If you ask any doubt, I will make sure I clarify my queries more.

Thanks. Sudhendu.


Asked on 9/13/15, 6:57 am

3 Answers from Attorneys
Fca Prashant Chavan Expert Edge LLP

13.09.2015

Dear Sudhendu,

A school is ideally opened, run and managed by a registered Educational Trust duly approved by the State Education Department. Venture Capital. I recommend you speak to any Team Member at www.infuseventures.in to put your plan in action.

Regards,

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Answered on 9/13/15, 7:27 am
Gaurav Shanker

Hi Sudhendu, educational institutions in India have to be operated as a not for profit organization. However, as we all know this is a lucrative business and is of interest to a number of VCs. It can be operated either as a society or through a company with charitable objects. However, with proper structuring and documentation having complete legal sanctity, profits can be pocketed by the shareholders and investors.

Should you wish to discuss this further or require clarifications, you may do so at [email protected].

Regards

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Answered on 9/14/15, 2:18 am
mohd mahboob

firstly you have to decide to which fields to you have to go. Every fields has profitable.but different way like non-profits organisation provide goods salaries to compare to profit organisation.

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Answered on 9/14/15, 10:21 pm


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