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What are the legal requirements to be fulfilled by a start up?
26-Dec-2023 (In Startup Law)
Hello sir. I want to start a new company dealing in various daily use appliances Eg: TV, Fridge, AC etc. For promotional purposes, I want to start a lucky draw contest where I will collect 2000 from customers for 12months. I will conduct draw every month and give some give aways. One important thing that I'm promising my customers is that no one will be left empty handed.... Atlast if you don't get anything from draw, I will give them a bike. What are the legal issues that I must comply with? Can I register my company and register it with government? Thanks in advance.
A very interesting question indeed. You can start a company for selling daily use appliances, that's entirely legal. When you mention that you will collect Rs. 2,000/- every month for 12 months from customers, with a promise that they will get something in return for the amount they are paying you monthly, you are not saying that every customer will get something worth Rs. 2,000/-. Instead, you are only stating that each customer will get something, which could possibly be worth less that Rs. 2,000/- within those 12 months.
Certain questions will have to be answered by you before you decide to take the plunge:
1. What will happen to the Rs. 24,000/- that each customer has paid you over the 12 months period?
2. Will the customers who have received gifts through lucky draw not be made a part of the future lucky draws?
3. How will you determine who gets be part of the lucky draw the following month if one customer receives a gift, which is of less value than the gift another customer receives?
These are merely indicative questions that you might have to consider before you make such an offer. Your scheme might be considered as a chit fund, and you might be required to register under the Chit Fund Act, 1982, and be compliant under Chit Fund (Karnataka) Rules, 1983.
Certain questions will have to be answered by you before you decide to take the plunge:
1. What will happen to the Rs. 24,000/- that each customer has paid you over the 12 months period?
2. Will the customers who have received gifts through lucky draw not be made a part of the future lucky draws?
3. How will you determine who gets be part of the lucky draw the following month if one customer receives a gift, which is of less value than the gift another customer receives?
These are merely indicative questions that you might have to consider before you make such an offer. Your scheme might be considered as a chit fund, and you might be required to register under the Chit Fund Act, 1982, and be compliant under Chit Fund (Karnataka) Rules, 1983.
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Adv. Vijay Belavadi
Bangalore | 100+ Answers
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