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MCA amends One Person Companies (OPCs) rules; revises paid up capital & Turnover threshold for Small Companies

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MCA amends One Person Companies (OPCs) rulesMinistry of Corporate Affairs (MCA) has amended the ‘Companies (Incorporation) Rules, 2014’ to make changes in the definition of One Person Companies (OPCs) Rules

  • The new changes will be called as ‘Companies (Incorporation) Second Amendment Rules, 2021’ 
  • They will come into force from April 1, 2021
  • The decision to change the definition of OPCs was announced by Union Finance Minister, Nirmala Sitharaman during the presentation of Union Budget 2021-22.

The changes:

One Person company shall alter its memorandum and articles by passing a resolution in accordance with subsection (3) of section 122 of the Act to give effect to the conversion and to make necessary changes incidental thereto.

i.The Changes allow Non-Resident Indians (NRIs) to incorporate one person companies (OPCs) in India.

  • Previously Non Resident Indians (NRIs) were not allowed to start OPCs.

ii.The residency period for being considered as a Resident in India  has been reduced to 120 days from 182 days for NRIs.

iii.The rules regarding Voluntary conversion of OPCs unless they have completed two years from the date of inception has been omitted.

iv.The changes have also permitted OPCs to be converted into a Public company or Private Company at any time under section 8 of the Act.

  • The conversion of OPCs can take place after increasing the Minimum number of members and directors to two or minimum of seven members & 3 directors (depending on the case).

v.The limitation of Paid up Capital & Turnover applicable for OPCs – paid up share capital of 50 Lakh Rupees & annual Turnover of INR 2 Crore rupees has been relaxed.

Change in Threshold of Paid-up capitals & Turnover:

MCA has also revised the limit of  paid-up capital & Turnover  of small companies under Companies Act , 2013

  • The Threshold for paid-up capital has been changed from “not exceeding INR 50 Lakhs” to “Not Exceeding INR 2 Crores”.
  • The Threshold for Turnover has been changed from “not exceeding INR 2 Crores” to “not exceeding INR 20 Crore”.

Fast Track process for Mergers & Amalgamations of Startups:

The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 has been amended to ensure fast track process for mergers & amalgamations between Startups & small companies under Companies Act, 2013.

i.The new rules shall be called the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2021.

ii.It fastens the mergers and amalgamations between

  • Two or more start-up companies
  • One or more start-up companies with one or more small companies.


  • The changes are expected to benefit Startups & Innovators in the country.
  • Startups & Companies which focus on supplying products & services on e-commerce platform are expected to benefit
  • It will also bring unincorporated businesses into the organized corporate sector space.

MCA21 Portal:

The MCA21 Portal which is utilized by companies for submitting various documents as part of compliance requirements under company law will be equipped with data analytics, artificial intelligence & machine learning & other modules for e-adjudication and compliance management.

What are One Person Companies (OPCs):

  • Section 2 (62) of Companies Act, 2013 defines OPC as a company which has only 1 person as to its members.
  • It was introduced by Government to encourage Self-employment opportunities

Recent Related News:

i.On September 17, 2020 MCA extended the tenure of the Company Law Committee by one year.

ii.On August 11, 2020, Secretary, MCA, Rajesh Verma released the “Report of the Committee on Business Responsibility Reporting (BRR)” from New Delhi which recommended a new reporting framework called as ”Business Responsibility and Sustainability Report (BRSR)”  to increase trends of ESG (Environmental, Social and Governance) investing.

About Ministry of Corporate Affairs (MCA):
Union Minister – Nirmala Sitharaman (Rajya Sabha Member – Constituency – Karnataka)
Minister of State – Anurag Singh Thakur (Lok Sabha Member Constituency – Hamirpur(Himachal Pradesh))