Amendment of The Companies Rules:
The ministry of corporate affairs (MCA) has amended the definition of small companies by amending the Companies Rules. The new amendment allows 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 the Union Budget.
- These changes will come into effect from April 1.
- The notification also highlights that the paid-up capital and the turnover of the small company shall not exceed respectively rupees two crores and rupees twenty crores.
- 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.
- In the year 2018, amendments were made to the companies act. It 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 Finance Minister highlights that the change in the threshold will lighten the compliance burden of about 200,000 companies.