Recent Amendment in OPC - One Person Company in Companies Act, 2013
- 05/06/2021
- Posted by: admin
- Category: Company Law
An One Person Company modern concept form of business in India proposed by the Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture should not be made to do it through an association of persons and allowing them to create a single person economic entity in the form of ‘One Person Company’.
It is a step forward to facilitate more business friendly corporate regulations in India. The matter was first recommended by the expert committee of Dr. JJ Irani in 2005. it was also suggested that such an entity may be provided with a simpler regime through exemptions so that the single entrepreneur is not stuck in only complying with various rules and regulation and waste his time, energy and resources on procedural matters.
An OPC is a hybrid structure, wherein it combines most of the benefits of a sole proprietorship and a company form of business. Thus, it does away with the hassles of finding the right kind of co-partner/s for starting a business as registered entity.
The Hon’ble Finance Minister presented the Union Budget 2021 on 1st February. The Budget leads the way for various amendments in One Person Company (OPC) in Companies Act, 2013 which are as follows:
They shall come into force on the 1st day April, 2021.
| S.No | Content | Before Budget | After Budget w.e.f 01/04/2021 |
| 1 | Formation of OPC | Only a natural person who is an Indian citizen and resident
in India shall be eligible to incorporate OPC. |
Non-resident are now enabled to set up One Person Companies (OPC) with no paid up capital and turnover restrictions. |
| 2 | Defination of Resident for OPC | The term “resident in India” means a person who has stayed in India for a period of not less than 182 days immediately preceding one calendar year. | The term “resident in India” has been changed from 182 days to 120 days immediately preceding one calendar year |
| 3 | Restriction of OPC | There is restriction of 2 years to convert OPC into other companies | Omitted – Now there is no such restriction. Allowing their conversion into any type of company any time. |
| 4 | Conversion of OPC | It is mandatory for the OPC to convert it into private or public company, where the paid-up capital exceeds Rs. 50 lakhs and its average annual turnover exceed Rs.2 crores. | Omitted – Now there is no such restriction to convert. |
| 5 | Ease and change of process of conversion of OPC into other company. | ||