FM Announces Modifications to Small Companies Definition

During her speech in the Parliament, the Union Finance Minister - Nirmala Sitharaman has proposed changes in the definition of small companies under the Companies Act.

Going forward, the companies with a paid-up capital of up to Rs 2 crore and a turnover of up to Rs 20 crores will fall under the small company's section.

FM Announces Modifications to Small Companies Definition

Earlier, this threshold limit was held at Rs 50 lakh of paid-up capital and a turnover of up to Rs 2 crore. The move by the government is aimed at benefitting over 2 lakh companies in general.

The FM during her speech said that "I propose to incentivise the incorporation of OPC by allowing OPCs to grow without any restrictions on paid-up capital and turnover. Allowing their conversion into any type of company any time. Reducing the residency limit for Indian citizens to 120 days from 180 days. This will be a big boost to startups," she said.

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