Student at Government Law College, Mumbai
The recent amendments made to the Companies Act 2013 vis-a-vis Union Budget 2021-2022, announced by Hon’ble Finance Minister, Shrimati Nirmala Sitharaman are expected to bring a lot of advancements concerning Foreign Investments and Collaborations. These changes aim towards contributing a step towards India’s Ease of Doing Business Index. Companies especially Small and One Person Companies are expected to benefit under this amendment. Not only this but also entrepreneurs can now think strategically and take complete advantage of the given changes to grow and prosper.
Research Paper
International Journal of Law Management and Humanities, Volume 4, Issue 2, Page 290 - 294
DOI: http://doi.one/10.1732/IJLMH.26053This is an Open Access article, distributed under the terms of the Creative Commons Attribution -NonCommercial 4.0 International (CC BY-NC 4.0) (https://creativecommons.org/licenses/by-nc/4.0/), which permits remixing, adapting, and building upon the work for non-commercial use, provided the original work is properly cited.
Copyright © IJLMH 2021
The Hon’ble Finance Minister, Srimati Nirmala Sitharaman, on 1st February 2021, introduced the Union Budget 2021-22. She addressed the nation through a speech referring to the proposals on company matters that would facilitate the Ease of Doing Business in India. In accordance with this, the Ministry of Corporate Affairs further notified amendments to the relevant provisions of the Companies Act 2013 and Rules made thereunder. Below, are the detailed breakdown of the amendments relating to Small Companies and One Person Companies, and also what new horizons have these changes opened to.
1. The Amendment:
Earlier, as per section 2(85) of the Companies Act 2013, for a company to be called a Small Company, the threshold limits were as follows-
Paid-up Share Capital | < 50 Lakhs |
And;
Turnover | < 2 Crores |
But after the recent amendment that was brought via the Union Budget 2021, the older threshold limits with respect to a Small Company were increased to-
Paid-up Share Capital | < 2 Crores |
And;
Turnover | < 20 Crores |
The said amendment would however be made applicable from 1st April 2021. Provided nothing in the above-mentioned amendment shall apply to the following-
2. Aftermath:
Nirmala Sitharaman, through her speech in the Parliament, addressed that- “this threshold limit increase is going to benefit more than 200,000 companies to reprieve of the COVID impact”.. This decision seems similar to a move made last year with respect to revising the limits for companies to qualify for MSME. That was yet another step made by the government towards ease of Doing Business.
3. How does this Benefit:
This amendment brought with it several transactional benefits, exemptions, and compliance reliefs for companies.
Below listed are some of such benefits, exemptions, and reliefs a company should look for: –
1. The Amendment:
The amendments relating to Residential Status stipulate that;
The amendments relating to the Conversion Procedure stipulate that;
2. Aftermath:
The amendments have brought with it a lot of motivation to grow without a barrier on paid-up share capital or turnover limits. It would also help in boosting and inculcating foreign technology and capital by the elimination of the earlier residential status requirements. A lot of companies will now have to deal with lesser compliances and enjoy more autonomy than before.
3. How does this benefit:
This amendment too brought with it several transactional benefits, exemptions, and compliance reliefs for companies.
Below listed are some of such benefits, exemptions, and reliefs a company should look for: –
This initiative of amending the threshold limits of Small Companies and altering the Residential and Conversion related frameworks of the One Person Company will surely benefit a lot of companies in terms of various exemptions, transactional benefits, and compliance reliefs to recover from the abnormal state that they were into, due to COVID. These amendments also seek to attract a lot of foreign technologies and investments for the growth of the economy. Not only this, but it will also help in boosting the government’s Ease of Doing Business Index to a large extent. Further, the amendments will also help in reducing the effective burden on Startups and encourage them to flourish in the years to come.
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