Seeking to further improve the ease of doing business, Finance Minister Nirmala Sitharaman on Monday said NRIs will be allowed to set up one person companies, definition of small companies will be revised and various provisions of the Limited Liability Partnership (LLP) Act will be decriminalised. The proposed relaxations to rules governing One Person Companies (OPCs) are expected to benefit startups and innovators.
Dedicating a separate portion of her 2021-22 Budget speech to company matters, Sitharaman said in the next fiscal year, MCA 21 portal will be driven by data analytics, artificial intelligence and machine learning features as well as have additional modules such as for e-adjudication and compliance management. MCA 21 portal is used for submitting various documents as part of compliance requirements under the companies law.
Sitharaman, who is also in charge of the corporate affairs ministry, said the decriminalising of the procedural and technical compoundable offences under the Companies Act, 2013, is now complete, and that the next step is to take up decriminalisation of the LLP Act, 2008. Further, she proposed revising the definition of small companies under the Companies Act, 2013 by increasing their thresholds for paid-up capital from 'not exceeding Rs 50 lakh' to 'not exceeding Rs 2 crore' and turnover from 'not exceeding 'Rs 2 crore' to 'not exceeding Rs 20 crore'.
"This will benefit more than two lakh companies in easing their compliance requirements," she said. Regarding OPCs, the minister said she is proposing to "incentivise" the incorporation of such companies.
OPCs will be allowed to "grow without any restrictions on paid up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non Resident Indians (NRIs) to incorporate OPCs in India". OPCs, which have lesser compliance requirements, can be set up with one member.
Further, the minister said the National Company Law Tribunal (NCLT) framework will be strengthened, e-courts system shall be implemented and alternate methods of debt resolution and special framework for MSMEs shall be introduced. These are to ensure faster resolution of cases.
"During the coming fiscal 2021-22, we will be launching data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0. This Version 3.0 will have additional modules for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management," she said.