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New Amendments to The Companies Rules 2021: Key points

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.