No, there hasn’t been any change.
1 Like
I think you can take alpha membership today by depositing 25 lakhs without any charges . Can you confirm it? Also yes compliance costs would increase but do you think it will make sense if someone wants to scale up. You can handle 50 clients too along with propreitory trading.
Secondly I want to ask will banks provide bank guarantee to exchanges against FD if someone takes alpha membership.
Btw SEBI is talking about increasing networth requirement for membership on exchange. We will get to know in 2 to 3 months.
Getting membership isn’t enough, you need a trading platform and backoffice platform for all the reporting. These can cost you, doesn’t make sense to do this unless the AUM is alteast Rs 5crores.
There are restrictions now on Bank Guarantees. Btw the deposit with the exchange for membership can’t be used for BG.
4 Likes
I think traders like optionables, vp financial, shreyas bandi etc have formed their companies without mentioning trading/investment as an objective. They’re nonetheless using it mainly for trading purpose. Shreyas Bandi hasn’t had a paid course till date. So they’re just using the loophole in the law. Form a company with a broad objective, use it for trading. Report it as business income and file taxes normally. Nobody came asking them why they haven’t taken NBFC license and they never had to reply. Don’t ask don’t tell.
2 Likes
Optionables formed an LLP, not a private company.
IT Dept and RBI may recognize that their income is from trading with the help of AIS statements.
This is a video from Shreyas Bandi who is trading with 4-5 crores in his company account. He goes into a lot of details about this. Worth watching. Watch from 3 minutes onwards
3 Likes
Nothing of what he does is legally right. Just because somebody posts something on YouTube don’t believe it to be true.
He himself is saying incorporate company with different objective. So you are going against your object clause. Lol. This is just one thing. Most of the other things that he has mentioned are also not correct.
2 Likes
Indian laws heavily depend on precedents, however different judicial persons see things in quite contrary light.
Here one is tip toeing on a grey area where as long as you are not caught out you will do just fine.
Even scams flourish in the meadows of ambiguity but are brought to light only when the flock increase and cover the green of the mead.
2 Likes
I actually found him very stupid. First of all he is doing illegal stuff. Over that he has made a YouTube video out of it.
People watch what they like to watch. Am sure there are 100s of videos which say a company cannot trade in stock exchange without necessary approvals. No… Nobody even talks about them.
2 Likes
The problem is the comfort wrought in knowing that PR S, IT J, Optionables, Alpha Leo etc are also registered likewise.
3 Likes
Haven’t seen the video, but trust it’s crap…
Anyway, per Zerodha’s article…
“ Firstly, an LLP with the objective of investing or trading is not allowed, so people use an alternate objective to create the LLP. This is a clear violation of MCA (Ministry of Corporate Affairs) rules. In the case of a Private Limited or Public Limited company, if more than 50% of revenue comes from financial income (trading), then the company is required to get registered as an NBFC (Non-Banking Financial Corporation) with RBI.”.
One does not expect them to make more than 50% of their revenues from trading, do they?.. other than carry-forward losses 
2 Likes
It’s revenue. Not profit. Since you guys are saying they do not have any other activity in the company, their revenue is 100 percent from trading.
I personally do not follow any of these.
1 Like
For trading, revenue is profit, atleast per this post….
1 Like
Yes you are right. It actually talks about ‘Income’ and not ‘revenue’.
1 Like
Even if we trade using a sole proprietor or OPC - the tax on the company may be only 25%. But how do we take the money out ?
If we payout to our individual bank account - that amount is also taxable right?
Why do you want to take the money out? Spend the money as expense to the company.
2 Likes
@Nitin @Prakhar_Agrawal - I am a little confused with multiple replies on this thread, So here is my question most probably a repeated one but if you can help me understand this, it would be really helpful.
- If I trade in FnO and 100% of LLP company income is from this activity do I need NBFC license?
- I do not intend to take any stock in delivery all the income will be from Intraday Trading.
- Company will not accumulate any Financial assets like stocks or MF etc
- Wil this 50 50 rule apply for FnO Trading only.
- We may buy some real estate or electronics using the company’s trading income, which would be the company’s asset.
Thanks in advance!
We can trade(fno and share trading) if 100% fund is from unsecured loan from Director in Private Limited co ??
Then we don’t need NBFC Registration?
You will still need it. The income from trading F&O is still in the private limited company’s name doesn’t matter if the capital is equity or debt.
But no public money is involved. Own Money is used in pvt ltd.
Then also NBFC Registration required?