If you want to trade only in F&O then you can go for Pvt Ltd. and even you can do advisory or other services under that after getting registered by SEBI.
Cost of compliance will be high. Many people are doing this.
But I think you can’t buy and hold another listed company shares. For that you may need more permissions.
hey @Priyank_Nevatia,
Any update on this thread? I wanted to know what did you finally decide? forming a LLP? any learnings/issues regarding the same till now?
awaiting response!
thanks
Wouldn’t it be easier to register a LLP and then accept money from the investors or people as a loan and enter into an agreement with the investor to get a fixed interest in addition to a predecided share of profits over and above the fixed interest for his loan.
eg. The Company XYZ LLP Ltd borrows 10 lacs from Mr. A for a fixed interest of 8% and profit sharing of 20% of the overall business profits (after deducting the fixed ROI) provided at the end of a 12 month period.
The managing partner/proprietor will keep 80% of the profits after deducting for the 8% interest.
There will be no advertisement for the same and the publicity will be only by word of mouth.
Like I have mentioned above, this would come under Collective investment scheme, this is not allowed. Check out the SEBI order on HBJ capital, among the various other issues, SEBI banned them for also raising money and managing it this way that you have mentioned.
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i read all your replies in this thread.
my question if we ( me and my 6 friends ) start LLP from our own funds
not allowing any outsider person to enter in this.
will it be illegal ?
we are breaking SEBI laws ?
If you are not going around scouting for money and promising returns, but this is setup just like any other business between partners, it should be okay. But still best to consult a CA.
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I dont see that any issue existing here. If there are 100 good buddies who are trusting to each other, then they can easily form investment fund and manage their funds in a manner in which they all think is the best way. I can only say good luck with your idea
If you have thorough knowledge of trading and investment, i guess you won’t need any parters to do business in trading. With one lakh capital and 10 times leverage, one can achieve 10% capital a day if you are experienced. I know one guy making even one lakh a day -but NRML trades. So I would suggest to get experienced first, then think about business.
They only give for intraday trading, not for FnO.
all investment companies are to be classified as NBFC. need rbi approval, which they are not going to give. truly unfair is what it is. small guys cant start investment companies!
need rbi approval for starting an investing company… which they dont give i presume since alternative investment fund model is there. also, LTCG for such an LLP(even if rbi allows) will be 20%, far higher than mutual funds…which is 10%. makes no economic sense to me. companies can invest provided 50% of their profit do not come from investment activities. or/and 50% of their assets arent financial products.
Sir what if a few of my friends decide to pool our money together for the purposes to trade and make a partnership will that be illegal?
Thank you so much for the reply Sir
Sir I had another doubt that whether discussing about stocks(technical analysis along with price targets etc.) amongst family and friends amount to as a violation of SEBI’s Investment Advisor and Research Analyst regulations?
With friends and family should be okay I guess, only thing is do not advertise them or put it on social media out for all, also by chance if they complain against you that they lost money based on your recommendation then you will be in trouble.
As long as you don’t collect fees, it should be okay.
Actually Sir the discussions are always mutual we decide amongst ourselves and take trades from our own personal trading accounts … So is it by any chance a violation that we are recommending stocks to each other?
@nithin @
Thank you Sir
Sir, Partnership firm attracts 30% Income tax but Private Limited attracts 25% Income tax. So for people with capital say 1 cr & above. Is Private limited the best option to save income tax?
If you are setting the pvt ltd company and its main purpose is trading, then yeah it is an issue. If more than 50% of income comes from this activity, you might have to get an NBFC license. Also selling shares might seem like you are circumventing the collective investment scheme regulation. Think about it, everyone would do it this way instead of having to take AIF or PMS license, if it was this easy.
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