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CHANGE IN THE DEFINITION OF SMALL COMPANY

Existing Definition Proposed Definition
Small Company - means a Company, other than a Public Company, which fulfills the following criteria:
  • Paid-up capital of not more than Fifty (50) Lakhs; and
  • Turnover as per last profit and loss account does not exceed Two (2) crore rupees.
Small Company - means a Company, other than a Public Company, which fulfills the following criteria:
  • Paid-up capital of not more than Two (2) crore rupees; and
  • Turnover as per last profit and loss account does not exceed Twenty (20) crore rupees.
Budget 2021   Key changes in the Companies Act, 2013

This will benefit more than two lakhs Companies in easing their compliance requirements.

WIDER SCOPE OF ONE PERSON COMPANY (OPC)

As proposed in Union Budget – 2021 and as per the Companies (Incorporation) Second Amendment Rules, 2021 which shall come in force with effect from 1st April 2021, the following amendment has been incorporated in the provision of the One Person Company (OPC):

 
Old Provision Proposed Amendments
Person resident in India shall be eligible to incorporate the One Person Company Person ‘resident in India or Otherwise’ shall be eligible to incorporate the One Person Company i.e., Non-Resident Indians (NRIs) is eligible to incorporate the OPC
"Resident in India" means a person who has stayed in India for a period of not less than one hundred and eighty two days (182) during the immediately preceding financial year. "Resident in India" means a person who has stayed in India for a period of not less than one hundred and Twenty days (120) during the immediately preceding financial year.
Mandatorily conversion of OPC to Private or Public Company Where the paid up share capital of an One Person Company exceeds fifty lakh rupees and its average annual turnover during immediately preceding three consecutive financial years exceeds two crore rupees, Such One Person Company was be required to convert itself into either a private company with minimum of two members and two directors or a public company with at least of seven members and three directors with 6 Months . The Mandatorily requirement for the conversion of OPC in to Private or Public Company based of its Paid-up Share Capital and Turnover is waived-off .
 

3. OTHER MEASURES

  • Decriminalization process for the Limited Liability Partnership (LLP) Act, 2008 will be introduced.
  • NCLT framework will be strengthened, e-Courts system shall be implemented and alternate methods of debt resolution and special framework for MSMEs shall be introduced.
  • MCA 21 Version 3.0. will be launched with additional modules for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management.

The author can a lso be reached at bungpooja@ymail.com

Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a piece of professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information.

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Category Union Budget, Other Articles by - Pooja Bung 



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