Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman proposed reforms for small companies and MSMEs to strengthen Start up ecosystem, while presenting Union Budget 2021-22 in Parliament.
The following are the major Proposals in the same regards of the Budget 2021:
- Easing Compliance requirements of Small Companies : Proposed to revise the definition under the Companies Act, 2013 for Small Companies 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”.
- Decriminalisation of the Limited Liability Partnership (LLP) Act, 2008 : The Finance Minister has proposed to take up decriminalization of the Limited Liability Partnership (LLP) Act, 2008 after decriminalizing of the procedural and technical compoundable offences under the Companies Act, 2013.
- Incentivizing Start-ups and Innovators : As a further measure which directly benefits Start-ups and Innovators, the Finance Minister has proposed to incentivize the incorporation of One Person Companies (OPCs) by allowing OPCs 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.
- Strengthening of NCLT framework : To ensure faster resolution of cases, 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.
- Launching of MCA21 Version 3.0 : The Finance Minister stated that 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.
