Relaxation for Small Companies and One Person Company as per Union Budget 2021
The Union Budget 2021 has proposed 2 major changes in companies Act First one is relaxes threshold for Small Companies and 2nd one is allows NRIs to form One Person Company.
As per the new definition
Small companies means a company, other than a public company which have :-
As per the Old definition
‘‘small company’’ means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or
(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:
KEY POINTS OF CHANGES
1. Threshold increased to Paid up capital from 50 lakh to 2 crore rupees and
2. Annual turnover also been raised from 2 crore to 20 crore rupees.
Its is beneficiary to more than 2 lakh companies in compliance required.
Privileges for small companies
Companies Act 2013 provides certain benefits to the Small companies which includes:-
The Annual Budget 2021 proposes to allow the NRIs to form One Person Company (OPC). Earlier the NRIs were exempted from forming One Person Company. However, they were allowed to become directors of an Indian company. Only resident Individual persons could start the One Person Company (OPC) in India. This new proposal would undoubtedly benefit many NRIs.
As Per union budget proposed changes one person company :-
1. “Non-resident individuals with entrepreneurial potential are now enabled to set up One Person Companies (OPC) with no paid up capital and turnover restrictions, reducing registration timeline from 182 days to120 days. Earlier only Indian resident citizens were permitted to set up OPCs
2. Removed the restriction of paid up capital and average annual turnover
As per old provision of one person company
As per Section 2(62) of the Companies Act defines a one-person company as a company that has only one person as to its member.
1. By the rules only Indian Resident can avail of “One Person Company” benefit and the word “ One person company “ shall be a part of the name of company as per section 12(3) of the Act.
2. The paid up capital of the OPC cannot exceed 50 lakhs and its average annual turnover cannot exceed 2 crores.
3. A person can incorporate a maximum of 5 OPCs. (Rule 2.1(2))
Companies Act provides certain benefits to the one person companies like –
1. No need to hold annual meetings,
2. No independent directors required
3. More remunerations to directors compared to other companies etc.