The 2021 Budget session brought out various changes that will impact the business process. It has made amendments in the provision that aims at helping the business recover post lockdown and also promote the rise of smaller businesses. It has also made amendments to the Companies Act which will benefit most of the businesses heavily. It has helped in the increase of the private limited company incorporations because of ease in the policies.

What is the Companies Act 2013?

The Companies Act 2013 is a reformed act that has replaced the Companies Act of 1956. It makes provisions where the listed and unlisted companies are governed under certain rules and regulations. It implemented new sections and reformed relevant sections. The changes that it brought to the laws had far-reaching consequences on the ways companies functioned. Some of the key elements of the Companies Act 2013 are:

• The maximum number of members (Shareholders) was increased from 50 to 200.

• One-Person company was introduced to promote the growth of new companies.

• Section 135 of the Act which deals with Corporate Social Responsibility was also implemented.

• And lastly, the Company Law Tribunal and Company Law Appellate Tribunal were formed.

What were the new Changes to the Companies Act 2013 in the 2021 budget?

The 2021 Budget had brought out newer amendments to the Companies Act 2013. These new amendments made things easy for the existing businesses and upcoming ones. Some of the amendments that were made are:

• Changes in the definition of Small Companies where the definition was reformed. The new change in the definition stated that a small business is one where paid-up capital did not exceed INR 2 crores. It also defines that the turnover should not exceed 20 crores. This was earlier set to 50 lakhs and 2 crores respectively.

• There were changes made to the One Person Company (OPC) framework. The new amendment states that an NR can set up an OPC which was not allowed before. This will allow the registrations of private limited companies in India. The other point was the removal of the monetary limit in conversion to other forms of corporate. Where the companies with a paid capital of fewer than 50 lakhs and turnover of 5 crores were allowed before. And lastly, the terms of residence got reduced to 120 days from that of 182 days.

• And lastly, the Merger or amalgamation of start-up companies was also amended. According to this a scheme or a merge can only be made under section 233 of CA 2013. It states that a merger can happen only if two or more start-up companies or one or more start-up companies with one or more small companies come together.

How has it affected the business?

With the new amendments, the companies have the freedom to explore the rules and regulations and function accordingly. With the incorporation of newer amendments, newer companies can come up as there will be scope for NRI investments. With more investments, there is bound to be an increase in tax payments which will lead to an increase in GDP and also the influx of foreign funding into the slow-paced businesses. It has led to the growth of small companies with a much larger finance base to improve without having to worry about taxes up to a certain period. Various benefits have come from the amendment of the Companies Act. The new policies will provide relaxation from a lot of provisions of CA 2013 and ease the compliance burden on them.

With the rise in new companies, the new policy will lead to the benefit of thousands of companies. The new changes in the OP sector will promote the rise in investments from NRIs in Indian startups. The ultimate goal was to help ease the fast pace of business growth. The advancement of the technologies has helped online private company registration which will not only save time but energy too.

This same is the case for the GST collections online for the companies in India. It has allowed for a faster process of tax collection and easier calculation of revenue.

Conclusion

The latest amendments to the Company Act, 2013 have had a huge impact on the Company Registration process. It has allowed for a free flow of new companies registrations and the emergence of new companies. It has allowed for better growth with the inclusion of NRIs in the business sector. It will not only benefit the economic growth but also provide more employment opportunities.