NEW DELHI: The ministry of corporate affairs (MCA) on Wednesday amended the Companies Rules to revise the definition of a small company and to allow non-resident Indians (NRIs) to incorporate one person companies (OPCs) in India.
“Paid up capital and turnover of the small company shall not exceed rupees two crores and rupees twenty crores respectively,” the notification said.
The previous definition was based on thresholds defined by the Companies Act which mentioned a maximum paid up capital of Rs 50 lakh and turnover of Rs 2 crore for the immediately preceding fiscal.
The move is expected to lighten the compliance burden of about 200,000 companies, Finance Minister Nirmala Sitharaman had said in her speech.
The changes, announced by finance minister Nirmala Sitharaman during her budget speech on Monday, will come into effect from April 1, according to the notifications.
Earlier, NRIs were not allowed to incorporate OPCs.
Now any natural person, who is an Indian citizen, whether resident 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.
In addition, the fast track process for mergers under the Companies Act, 2013 has also been now extended to also include mergers of startups with Startups and with Small firms, so that mergers and amalgamations is completed faster.