Information on One Person Companies (OPCs) rules amendments by MCA
One Person Company (OPCs) rules are amended by MCA through Company (Incorporation) Second Amendment Rules, 2021.
In certain cases, rule 6 gets amended by MCA when a person Company is to be converted into a public company or a private company, and for the conversion of a private company to a person company-related rule, 7 is amended as per Companies (Incorporations) Second Amendment Rules, 2021.
As an initiative to facilitate startups and innovators in the country, especially the services and products suppliers working on e-commerce platforms, and in order to facilitate more unincorporated businesses and get them entered into the organized corporate sector, the Company’s (Incorporation)rule is amended to incentivize the One Person Companies (OPCs) incorporation. This has allowed OPCs to grow and flourish without any restrictions related to paid-up capital and turnover This amendment has allowed the company to convert into any other kind of company at any time. The residency limit for Indian citizens has been reduced from 182 days to 120 days to set up an OPC and has also allowed the incorporation OPCs by the Non-resident Indians (NRIs).
As a direct consequence of the revised definition few of the benefits of reduction in compliance burden for about 2 lakh estimated companies are given under:
- As a part of the financial statement, there is no specified need to prepare a cash flow statement.
- As far as other companies are concerned, they have to provide the remuneration detail to directors and the key managing personnel of the company whereas, small companies in annual returns are only required to provide details of aggregate remuneration amount details drawn by directors.
- There is no requirement for mandatory rotation of the auditor.
- In the auditors’ report, the auditors of small companies are not required to submit reports on the adequacy of inter-financial controls and their operating effectiveness.
- Two board meetings are to be held within a year.
- The company secretary is allowed to sign the tax returns of the company. In case, there is no company secretary, only the single director of the company is allowed to do that.
- Small companies have to be given lesser penalties.
- The filing fee is very less for small companies.
Ministry of Corporate Affairs Notification
1st February 2021
G.S.R. 91(E).- In exercise of the power given by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the following rules are hereby given by the Central Government for amendment of the Companies (Incorporation) Rules, 2014, are:
- (1) These rules may be named the Companies (Incorporation) Second Amendment Rules, 2021.
(2) They may come forward into force on the 1st day of April 2021
- Within the Companies (Incorporation) Rules, 2014,-
- In rule 3,
- In sub-rule (1).
(i) Substitution for the words, “and resident in India” the words “whether a resident of India or otherwise” can be made.
(ii) As in Explanation I, substitution for the words “one hundred and eighty-two days” the words “One hundred and twenty days can be used.
- Sub-rule 7 shall get omitted
II. for rule 6 the rules are given under can be substituted as:
“6.One Person Company conversion into public or a private company.”
- By passing the resolution in accordance with the subsection (3) of section 122 of the act the One Person Company shall get its memorandum altered along with the articles that will give its effect to company conversion and the necessary changes made will be incidental thereto.
- Other than a company registered under section 8 of the act, a Person Company may get converted into a Private or Public Company as it gets a number of members and directors from two to seven members or having two to three directors. In such case, for conversion of this kind of company to maintain the minimum paid-up capital as per the requirements specified in the act and for conversion the due compliance of section 18 of the Act is mandatory.
- For Conversion, into a Public or Private company, an application shall be filed by the company in e-form No. INC-6, other than the specified point in section 8 of the Act. Along with the fees as mentioned in Companies (Registration Offices and Fees) Rules, 2014 with attached documents, namely:-
(a) Altered MOA and AOA; (b) copy of resolution; (c) the list of proposed members List and its directors along with consent; (d) list of creditors (e) the latest audited balance sheet and profit and loss account.
- The registrar shall approve the form and issue the certificate after satisfaction that the herein stated requirements have complied
III. in Rule 7,
- As in sub-rule (1), the words written as ” having the paid-up share capital of fifty lakhs rupees or less and average annual turnover during the relevant period is two crore rupees or less” shall get omitted.
- In sub-rule (4) clause (i), the lines “the paid-up share capital of the company is fifty lakh rupees or less and the average turnover is less than two crore rupees as in case may be” shall get omitted.
IV. As in Annexure,
- The e-form No. INC-5 will not be included.
- For the e-Form No. INC-6, the following mentioned form shall get substituted, namely:-
e-Form No. INC-6 Download
[F.No. 1/13/2013 CL-V, Vol.IV]
K.V.R . MURTY, Jt. Secy.
Note: In the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 250(E), dated the 31st March 2014 the principal rules were published. The last amendment is vided number G.S.R.44(E), dated the 25th January,2021.