Now, companies having a paid-up capital not exceeding Rs. 4 crores and turnover not exceeding Rs 40 crores are considered as small company ; MCA revises definition of small company

Now, companies having a paid-up capital not exceeding Rs. 4 crores and turnover not exceeding Rs 40 crores are considered as small company. Earlier, the paid-up capital and turnover of a small company could not exceed Rs 2 crores and Rs 20 crores, respectively.

This is by way of a recent amendment under the Companies (Specification of definition details) Amendment Rules, 2022 ; expected to facilitate ease of doing business and reduce compliance burden on a “small company”

Some of the benefits of reduction in compliance burden as a result of the revised definition for small companies are as under:

• No need to prepare cash flow statement as part of financial statement.

• Advantage of preparing and filing an Abridged Annual Return.

• Mandatory rotation of auditor not required.

• An Auditor of a small company is not required to report on the adequacy of the internal financial controls and its operating effectiveness in the auditor’s report.

• Holding of only two board meetings in a year.

• Annual Return of the company can be signed by the company secretary, or where there is no company secretary, by a director of the company.

• Lesser penalties for small companies.

Source : Ministry of Corporate Affairs