MCA Notifies New Forms for OPCs and Small Companies
The Ministry of Corporate Affairs (MCA), by way of the powers provided under section 469 (1) and (2) of the Companies Act 2013, has passed a notification on 05.03.2021 to amend the provisions contained under the Companies (Management and Administration) Rules 2014. The reason behind the amendment is that the MCA has notified new forms for OPCs and Small Companies.
Further, the newly amended regulations will be known as the Companies (Management and Administration) Amendment Rules 2021.
In this learning blog, we will talk about the concept of Small Companies and One Person Company, together with the prescribed new forms for OPCs and Small Companies.
Concept of One Person Company
Any embryonic entrepreneur who has a forward looking approach and wish to start his/ her own micro business, but lacks in having the adequate resources, means, time, and sources to attract minded people in executing the business plan can go for the option of One Person Company. It is a hybrid business format of the regular Sole Proprietorship and Private Limited Company and is best to enjoy the best of both worlds.
Further, the term One Person Company is defined under the provisions of section 2 (62) of the Companies Act 2013, and to obtain One Person Company Registration, one needs to have at least one director and one nominee. Also, Rs 1 lakh is required as the minimum capital requirement for the same.
Concept of Small Companies
The term Small Company is defined under the provisions of section 2 (85) of the Companies Act 2013. Based on the new definition provided by MCA, a small company means a company other than a Public Limited Company, which satisfies the criteria as follows:
- Paid up Share Capital of such a company must not exceed Rs 2 crores;
- Based on the previous financial year’s Profit and Loss Account, the annual turnover must not exceed Rs 20 crores;
Key Provisions Concerning New Forms for OPCs and Small Companies
The key provisions concerning New Forms for OPCs and Small Companies can be summarised as:
Substitution of Rule 11 (1) of Companies (Management and Administration) Rules 2014
From now onwards, it is compulsory for every company (except an OPC and Small Company) to furnish its annual return in MCA Form MGT 7. Further, a Small Company and One Person Company needs to file their annual return in MCA Form MGT 7A (Abridged Annual Return for OPCs and Small Companies for the Financial Year 2020 – 2021), for the financial year 2020 – 2021.
Substitution of Rule 12 of Companies (Management and Administration) Rules 2014
Based on the new provisions, it shall be noted that the companies mentioned above need to furnish a copy of the said annual return to the Registrar of Companies, together with the fees prescribed.
Insertion of Explanation to Rule 20 (2)
The two explanations inserted under the provision of Rule 20 (2) of the Companies (Management and Administration) Rules 2014 can be summarised as:
Based on the new sub rule, the term “Nidhi” means a company or a business entity that has been registered as a Nidhi with the purpose to cultivate the habit of saving and thrift among the members. Also, it deals in receiving deposits and lending money to its members for their mutual benefit and needs to comply with the provisions prescribed by the Central Government.
This part of Rule 20 (2) of the Companies (Management and Administration) Rules 2014 deals with the definitions as follows:
- Cut-off Date;
- Cyber Security;
- Electronic Voting System;
- Remote E-voting;
- Secured System;
- Voting by Electronic Means;
In a nutshell, the Ministry of Corporate Affairs, in consultation with the Central Government, has notified new forms for OPCs and Small Companies, i.e., MCA Form MGT 7A (Abridged Annual Return for OPCs and Small Companies for the Financial Year 2020 – 2021). That means from the Financial Year 2020 – 2021, all the OPCs and Small Companies need to file their annual return in the respective form.