Tag: small business debt

Categories
Startup

New Rules for OPCs To Directly Benefit Startups, Small Companies and Innovators in India; Check List of Amended Rules for One Person Companies

startup ipo india

New Delhi, February 6: In a bid to directly benefit Startups in India, especially those who are supplying products & services on e-commerce platforms, the incorporation of  is being incentivized by amending the Companies (Incorporation) Rules. This would benefit the startups and innovators in the country to bring in more unincorporated businesses into the organized corporate sector.

This is being done to allow OPCs to grow without any restrictions on paid up capital and turnover, allowing their conversion into any other type of company at any time, reducing the residency limit for an Indian citizen to set up an OPC from 182 days to 120 days and also allow Non-Resident Indians (NRIs) to incorporate OPCs in India.

In addition, the fast track process for mergers under the Companies Act, 2013 has also been now extended to also include mergers of Startups with other Startups and with Small companies, so that the process of mergers & amalgamations is completed faster for such companies.

The amendment notification was issued on February 1, 2021. The amendments to the Rules governing OPCs will cover the following, from April 1, 2021:

  1. Previously NRIs were not allowed to incorporate OPCs. Now any natural person, who is an Indian citizen, whether resident in India or otherwise would be allowed to form an OPC.
  2. For being considered as a resident in India, the residency period has been proposed to be reduced to 120 days from 182 days for NRIs.
  3. Rule relating to voluntary conversion unless OPC has completed two years from the date of incorporated is proposed to be omitted and with effect from 01.04.2021, Conversion of One Person Company into a Public company or a Private company shall be permitted anytime. A One Person company may be converted into a Private or Public Company other than a company registered under section 8 of the Act, after increasing the minimum number of members and directors to two or minimum of seven members and three directors as the case may be,
  4. Similarly the limitation of Paid up capital & turnover presently applicable for OPCs (paid up share capital of fifty lakhs rupees and average annual turnover during the relevant period of two crore rupees) is being done away with so that there are no restrictions on the growth of OPCs in terms of their paid up capital & turnover.
  5. Rationalization of e-forms applicable for OPCs by omitting e-Form No. INC-5 and modification of e-form INC-6 (application for conversion from OPC to a Private company or a Public company and also Private company to OPC.
Categories
Finance

5 Smart Solutions to get your Small Business out-of-debt

debt free business

The experience of being in debt can be scary as well as overwhelming. However, most entrepreneurs begin their start-up by arranging funds through debt funding, equity funding, loans, or through other less formal sources like friends & family.

If managed smartly, borrowing funds can help you accomplish your goals. On the other hand, mismanaged small business debt can not only affect your financial wellbeing but can also cause mental stress, especially to small business owners that are worse affected due to the Covid-19 pandemic.


In a bid to rescue the small business owners, the Indian government had offered relief to MSMEs in the form of subordinated debts, collateral-free loans, and equity infusion through its Fund of Funds (FoF) scheme in 2020. This scheme proposes to purchase up to 15% growth capital in high-credit MSMEs.

If you have a well-thought financial plan, you can solve the cumbersome process of taking your business out of debt, just like others. Here is how you can chart your way out of debt:

  1. Take Stock of your Debts

The first step that will take you closer to managing your debt is to organize all the details of exactly what you owe. Make a list of your debts with EMIs, interest rates, and tenures. This will help you recognize the costliest debts.

  1. Settle Urgent & Costliest Debts First!

After sorting out your debts, pick the costliest one! Costly debts, if not paid on time, will extract the highest interest. This can drain your finances. Hence, settle your costliest debts on a priority basis.

  1. Plan Monthly Budget

One of the most vital debt management techniques is to have a monthly budget, planned! Make a list of your income & expenses while deciding your monthly budget. This will give you a window to think about ways to reduce your daily expenditure. Having details of monthly cash-flow can help you save money that you can use to clear your debt.

  1. Consolidate Loans

Sometimes keeping a track of all the loans can be difficult. If you have too many loans, consolidating them into one can be a good idea. This will leave you with just one EMI. Business loans, personal loans, and credit cards provide you with this option. It will remove various debts and leave you with just one loan to track.

  1. Protect yourself Against Economic Shocks

The future is uncertain and it is wise to protect yourself from uncertainties that you might be exposed to. E.g. a loss of a job could lead to delayed EMIs. So, to avoid such situations, create an emergency fund to help you sustain during a bad phase. Ideally, this fund should be 3-6 times more than your current monthly income.

Repaying loans is a moral, legal, and also a financial obligation. With smart and effective debt management strategies, you too can get your business out of debt. Learn how to manage your debt with the top-industry leaders from our Problem Solving Courses. To know more, click here: https://www.badabusiness.com/psc?ref_code=ArticlesLeads