The Ministry of Corporate Affairs (MCA) has amended definition of the small companies by amending the Companies Rules. The new amendment permits the non-resident Indians (NRIs) to incorporate one person companies (OPCs) in India. The changes were announced by Finance Minister Nirmala Sitharaman during the presentation of Union budget, will come into effect from April 1.
As per the official release, paid up capital and turnover of the small company shall not exceed rupees two crores and rupees twenty crores respectively. Earlier, the definition was based on the thresholds defined by the Companies Act. The companies act had mentioned a maximum paid up capital of Rs. 50 lakh and turnover of Rs. 2 crores for the instantly previous fiscal.
In the year 2018, amendments were made to the companies act that contained provisions of increasing the paid up capital and turnover thresholds for small companies respectively up to Rs. 10 crore and Rs. 100 crore. The move is predicted to lighten the compliance burden of about 200,000 corporations, Finance Minister had stated.
The notification contains several amendments regarding the OPCs. Previously NRIs were not allowed to incorporate OPCs. Now any natural person, who is an Indian citizen, whether resident in India or otherwise would be allowed to form an OPC. For being considered as a resident in India, the residency period has been proposed to be reduced to 120 days from 182 days for NRIs.
Further, the fast track process for mergers under the Companies Act, 2013 has also been now extended to also include mergers of Startups with other Startups and with Small companies, so that the process of mergers & amalgamations is completed faster for such companies.