A. ONE PERSON COMPANY
1. Who can Incorporate OPC :
Current Provisions
OPC can only be incorporated by a natural person who is an Indian citizen and resident in India
Proposed by Union Budget 2021-22
Now OPC can also be incorporated by Non- Resident Indian (NRI).
2. Who will be considered as resident in India
Current Provisions
A person who has stayed in India for a period of not less then 182 days during the immediately preceding financial year
Proposed by Union Budget 2021-22
A Person who has stayed in India for a period of not less than 120 days during the immediately preceding financial year.
The amendment will be effective from 01st April 2021.
3. Conversion of OPC into any other kind of Company
Current Provisions
An OPC cannot voluntarily convert itself into any other kind of company unless it fulfils any of these conditions:
- A period of 2 years is expired from the date of its incorporation; or
- Its paid up share capital is increased beyond 50 lakh rupees; or
- It average annual turnover during the relevant period exceeds 2 crore
Proposed by Union Budget 2021-22
An OPC can voluntarily convert itself into any kind of company at any time without meeting any of the criteria’s as to paid up share capital and average annual turnover.
The amendment will be effective from 01st April 2021.
4. The requirement of compulsory conversion on exceeding the specified turnover or paid-up capital is done away with and now the One Person Company can grow without any restriction. The amendment will be effective from 01st April 2021.
B. SMALL COMPANY
Current Provisions
A Small company means a private company which fulfills the following conditions:
- Paid up Share Capital does not exceed ₹ 50 lakh; and
- Turnover does not exceed ₹ 2 Crore
Proposed by Union Budget 2021-22
A Small company means a private company which fulfils the following conditions:
- Paid up Share Capital does not exceed ₹ 2 Crore; and
- Turnover does not exceed ₹ 20 Crore
The amendment will be effective from 01st April 2021.
The increase in above mentioned thresholds will benefit companies by easing their compliance requirements.
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