In an effort to promote startups, business innovation, and entrepreneurship, the parliament approved the Companies (Amendment) Bill 2021.
Tell me more: Parliament also approved the Secure Transactions Act (Amendment) Bill and the Corporate Restructuring Companies (Amendment) Bill, in addition to the Companies (Amendment) Bill 2021.
What it says: It redefines startups as:
- is less than ten years old
- with a financial turnover of less than Rs. 500 million.
According to the bill, a startup company cannot be created by dividing or reorganizing an existing company.
Also, startups now have access to employee stock option plans. These were previously only available to public companies.
Last but not least, startups that have raised less than Rs. 1 million in capital don’t have to file unaudited financial statements.
Section 458A was added providing greater ease in doing business through appropriate measures such as:
- Enabling startups to enter the market more easily by specifying processes and modes.
- Business practices that promote the use of fintech
- Building environments where innovations, new processes, or technologies, like crowdfunding, digital assets, and APIs, can be tested and examined.
- Setting incentives that foster innovation, promote startups and the entrepreneurship ecosystem in line with international best practices
Also, the requirement to mention the husband’s name by a married woman or widow for registration of a company has been abolished.