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Union Budget 2021: Brings relief to OPC and Small Companies

Online Legal India LogoBy Online Legal India Published On 08 Feb 2021 Updated On 14 Jun 2021 Category One Person Company 3 comments

Exhibiting India's first-ever paperless Union Budget 2021, the minister of finance Nirmala Sitharaman propounded on the incorporation of One Person Companies (OPCs), with no restriction in paid-up capital and turnover, also adds an update to the definition of Small Companies under Companies Act, 2013. 


Though in her speech, the FM Nirmala Sitharaman sharply mentions, "As an extra measure which directly benefits startups and innovators, I propose to incentivise the incorporation of One Person Companies (OPCs) by allowing OPCs to grow with none restrictions on paid-up capital and turnover, allowing their conversion into the other sort of company at any time, reducing the residency limit for an Indian citizen to line up an OPC from 182 days to 120 days, and also allow Non-Resident Indians (NRIs) to include OPCs in India,"


The Companies Act, 2013 had introduced the concept of One Person Company (OPC), which led to the prominence of a new way of starting businesses, providing several flexibilities to make a corporation alongside protection of indebtedness that Sole Proprietorship or partnerships lacked. 

  • Minimum Paid Up Capital

In Section 2(62) of the Companies Act defines a One Person Company as a corporation that has just one person as a member. In addition to it, members of a corporation are nothing but subscribers either to its Memorandum of Association (MoA), or its shareholders. So, an OPC is effectively a corporation that has just one shareholder as its member. Such companies are generally created at early-stage by the entrepreneurs. Currently, to make such a corporation, a minimum paid-up capital of Rs 1 lakh was required, but with the introduction of new Union Budget 2021-22 has put forward to not have any minimum paid-up capital. 


  • Conversion of OPCs 

Rules regulating the formation of OPCs expressly restrict the conversion of OPCs into Section 8 Companies, i.e. companies that have charitable objectives. Also, OPCs cannot voluntarily convert into other forms of companies until the expiry of two years from the date of their incorporation. 

  • Eligibility of OPC 

As defined by the MCA is that to become an eligible member of an OPC, only an Indian citizen, and resident in India is eligible to become a member and nominee of an OPC. A resident in India has currently mentioned an individual who has lived in India for not but 182 days during the immediately preceding one fiscal year. While the newest announcement reduces the amount to 120 days from the previously decided 182 days.

Adding to the list the Ministry of Corporate Affairs (MCA) also exclaimed, if the paid-up share capital of an OPC currently surpasses Rs 50 lakh, or its average annual turnover of immediately preceding three consecutive financial years exceeds Rs 2 crore, then the corporate is excused to convert itself into a personal or public company — which can not be the case after the newest proposal by the FM.

How can Online Legal IndiaTM help you?

Amidst Budget 2021, a start-up’s best option is to go for OPC registration. The government certainly gives a head start to all the budding SMEs. We all know how important that is for a new business. Go for the One Person Company Registration at a very affordable charge with us as we would take care of your business without any hassle. This is the best option for a new businessman who lacks manpower and shareholders. We have the best minds in the business who would give you service round the clock until your contentment.

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Ravichandra tr

31 Mar, 2022

Hi sir. I have sent parcel on 29 march with DTDC to mandya from tumkur but it's not delivered. We need urjent at lest today before evening. DTDC NO B10260404 Why take this much time for just 80 km distance


Anjali Malhotra


Anjali Malhotra


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