One Person Company – Latest Provisions:
As proposed in Budget Speech in respect of amendment in the provision of One Person Company. MCA has introduced “Companies (Incorporation), Second Amendment Rules, 2021 on 1st February 2021.
Most Important: Amendment in Process of Conversion of One Person Company to Private/ Public Company
Date of Effectiveness of these rules:
These rules came into effect on 1 April 2021.
- A person other then resident in India can incorporate OPC in India
- A person stays in India for 120 days in preceding financial year shall be considered as resident in India for purpose of OPC.
- No need to convert OPC in other type of company, even reaching on turnover of 2 crore or more.
- OPC can be convert in to other type of company any time after incorporation on discretion of Promoters.
INCORPORATION OF OPC- AMENDMENT IN RULE 3:
First amendment: for the words, “and resident in India” the words “whether resident in India or otherwise” shall be substituted;
Only a natural person who is an Indian citizen and “Whether resident in India or otherwise” shall be eligible to incorporate a One Person Company.
Impact: Earlier only Indian resident was allowed to incorporate OPC in India, now person other than resident in India can incorporate OPC in India.
Second amendment: in Explanation 1, for the words “one hundred and eighty two days” the words “one hundred and twenty days” shall be substituted;
Explanation – For the purposes of this rule, the term “resident in India” means a person who has stayed in India for a period of not less than “one hundred and twenty days “ during the immediately preceding financial year.
Impact: After this amendment, if a person stay in india for 120 days instead of 182 shall be consider as resident in india for the purpose of One Person Company.
Third amendment: As per Rule 3(7) OPC cant convert into other type of company before expiry of 2 years from its incorporation.
This rule has been OMITTED.
Fourth amendment: Rule 6 in relation to Process of Conversion of OPC to Private/ public has been completely substituted and new process is introduced by the MCA.
Full fledge New process of conversion of OPC into Private/ public company shall be published in next article i.e. editorial no 656.
Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at email@example.com).
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