Ease of Doing Business for MSMEs: Lesser penalties are applicable for small companies, one-person companies, for certain contravention.
Ease of Doing Business for MSMEs: In an effort to enhance the ease of doing business for small companies, the government has taken multiple steps on an ongoing basis. The aim is to reduce the cost of compliance and increase the feasibility to carry on businesses. “The registration fee for incorporation of companies with an authorized capital of up to Rs 15 lakh has been reduced to zero by the Companies (Incorporation) Second Amendment Rules, 2019,” Anurag Singh Thakur, MoS, Ministry of Finance and Corporate Affairs, said in a reply to a question in Rajya Sabha. However, MCA has increased the requirement of paid-up capital from Rs 5 crore to Rs 10 crore for the appointment of Whole Time Company Secretary vide Companies Amendment Rules, 2020.
The Ministry of Corporate Affairs has also reduced the cost of compliance for small companies and startups from complying with various provisions of the Companies Act. Since smaller companies are more vulnerable to market risks and changing policies, a relief on compliance costs helps to provide cushion to the companies’ financials.
Here are the seven ways by which the Narendra Modi-led government has made the life of small companies easier in terms of compliance.
- Annual return shall be signed by the company secretary or the director: In a private company which is a startup/small company, the annual return shall be signed by the company secretary or by the director of the company if there is no company secretary,
- One board meeting in each half of a calendar year: In a private company which is a startup/small company, one board meeting in each half of a calendar year with gap between two meetings of not less than 90 days is sufficient, as against the earlier requirement of meeting at least once in 120 days and hold a minimum of 04 board meetings in a year.
- No need to produce certification: Small companies are exempted from producing certification form practicing professionals, under various provisions of the Act, 2013.
- Can approach Regional Director for mergers: Small companies can approach Regional Director for corporate mergers, arrangements, etc. instead of National Company Law Tribunal (NCLT).
- Low penalty: Lesser penalties are applicable for small companies, one-person companies, for certain contravention under section 446 B of the Companies Act, 2013.
- Concessions/rebates on fee: Small companies are given certain concessions/rebates on the fee payable on applications (including appeal) made to the Central Government.