Companies (Incorporation) 2nd Amendment Rules 2021


Quick Summary
The Ministry of Corporate Affairs has issued the Companies (Incorporation) Second Amendment Rules, 2021, effective from 1st April 2021. These amendments modify existing rules concerning company incorporation. Key changes include altering the residency requirement for directors and updating the duration for determining residency. Additionally, the rules provide a new framework for converting a One Person Company into a Private or Public Company, specifying the necessary steps and compliance requirements.

GOVERNMENT OF INDIA 
MINISTRY OF CORPORATE AFFAIRS 
NOTIFICATION 
New Delhi, 0 February, 2021 

G.S.R (E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Incorporation) Rules, 2014, namely: - 

1. (1) These rules may be called the Companies (Incorporation) Second Amendment Rules, 2021. 
(2) They shall come into force on the 1st day of April, 2021.

2. In the Companies (Incorporation) Rules, 2014,-

I. in rule 3,

(a) in sub-rule (1),-

(i) for the words, "and resident in India" the words "whether resident in India or otherwise" shall be substituted; 

(ii) in Explanation I, for the words "one hundred and eighty two days" the words "one hundred and twenty days" shall be substituted; 

(b) sub-rule (7) shall be omitted. 

II. for rule 6, the following rule shall be substituted, namely:-

"6. Conversion of One Person Company into a Public company or a Private company.- 

(1) The One Person company shall alter its memorandum and articles by passing a resolution in accordance with sub-section (3) of section 122 of the Act to give effect to the conversion and to make necessary changes incidental thereto.

(2) A One Person company may be converted into a Private or Public Company, other than a company registered under section 8 of the Act, after increasing the minimum number of members and directors to two or seven members and two or three directors, as the case may be, and maintaining the minimum paid-up capital as per the requirements of the Act for such class of company and by making due compliance of section 18 of the Act for conversion. 

To view / download the complete notification, check the attached file

FAQ :

These rules come into force on the 1st day of April, 2021.

The rules now state that directors can be 'whether resident in India or otherwise', replacing the previous 'and resident in India' wording. Also, the period for determining residency has been changed from 'one hundred and eighty two days' to 'one hundred and twenty days'.

A One Person Company can be converted into a Private or Public Company, but not into a company registered under section 8 of the Act.

To convert, a One Person Company must alter its memorandum and articles by passing a resolution. It also needs to increase its members and directors to the minimum required for a Private or Public Company, maintain the minimum paid-up capital, and comply with section 18 of the Act.

Rule 6 of the Companies (Incorporation) Rules, 2014, has been substituted to provide the framework for the conversion of a One Person Company into a Public or Private Company.

 
Notification No : F. No. 1/13/2013 CL-V, Vol.IV
Source : http://www.mca.gov.in/Ministry/pdf/SecondAmndtRules_02022021.pdf
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