Applicability of various provisions based on the type, size, and operations of companies
Introduction: The Companies Act, 2013 delineates diverse provisions whose application hinges on factors like company type, size, and operational scope. These distinctions render compliance tailored to each entity’s unique profile, fostering regulatory alignment and operational efficiency. Here are some key points of applicability to consider:
Applicability of Companies (Auditor’s Report)
CARO shall apply to EVERY Company including a Foreign Company, except:
a) A Banking Company;
b) An Insurance Company;
c) Section 8 Company;
d) One Person Company;
e) Small Company;
(Small companies, which are defined as companies with a paid-up capital of less than or equal to Rs. 4 Cr. and with a last reported turnover of less than or equal to Rs. 40 Cr.)
f) A Private Limited Company, not being a subsidiary or holding Company of a Public Company, having a Paid-up Capital and Reserves and Surplus not more than Rs. 1 Cr. as on Balance sheet date and which does not have total Borrowings exceeding Rs. 1 Cr. from any bank or Financial Institution at any point of time during the Financial Year and does not have a Total Revenue as disclosed in Schedule III to the Companies Act (including revenue from discontinuing operations) exceeding Rs. 10 Cr. during the Financial Year as per the Financial Statements.
It may also be noted that in case a company is covered under the definition of Small Company, it will remain exempted from the applicability of the Order even if it falls under any of the criteria specified for Private Company.
Applicability of Internal Financial Control (IFC)
Auditors for the companies have to report whether the Company has adequate IFC if the Company is not:
a) Small Company or;
b) One Person Company or;
c) Private Company having turnover less than Rs. 50 crores and borrowings is less than Rs. 25 Cr.
Applicability of IND AS
a) Every Listed Company or in the process of being Listed;
b) Every Company whose Net Worth is Rs. 250 Cr. or more;
c) Every Banking Co., Insurance Co. having Net Worth of Rs. 500 Cr. or more or;
d) Every NBFC having Net Worth of Rs. 250 Cr. or more or;
e) Companies can voluntarily choose to Incorporate IND AS.
Applicability of Internal Audit
a) All types of Listed Companies;
b) Every Unlisted Public Company that has an annual Turnover of Rs. 200 Cr. or more or;
c) Every Unlisted Public Company that has Paid up Capital of Rs. 50 Cr. or more or;
d) Every Unlisted Public Company that has an Outstanding Deposit of Rs. 25 Cr. rupees or more or;
e) Every Unlisted Public Company that has received alone of Rs. 100 Cr. rupees or more from many Banks or Public Financial Institutions at any point in time or;
f) Every Private Company that has an Annual Turnover of Rs. 200 Cr. or more or;
g) Every Private Company that has received alone of Rs. 100 Cr. rupees or more from many Banks or Public Financial Institutions at any point in time.
Applicability of Corporate Social Responsibility
The CSR provisions are applicable to the following companies:
Every company, its holding company, its subsidiary company, and foreign company having in the preceding financial year:
a) Net Worth more than Rs. 500 Cr. rupees or;
a) Turnover more than Rs. 1000 Cr. rupees or;
b) Net Profit more than Rs. 5 Cr.
Applicability of XBRL Filing:
The class of companies shall file their Financial Statements in e-Form AOC-4 XBRL:
a) All Listed Companies or;
b) All Companies having Paid Up Share Capital of Rs. 5 Cr. or;
c) All Companies having Turnover of Rs. 100 Cr. or above or;
d) All Companies which are required to prepare their Financial Statements in accordance with Companies (Indian Accounting Standards) Rules, 2015.
Conclusion: Navigating the landscape of regulatory compliance under the Companies Act, 2013 necessitates a nuanced understanding of provisions contingent upon company classification. From auditor’s reports to internal controls, corporate social responsibility, and XBRL filings, adherence varies based on factors such as company size, structure, and financial metrics. Acknowledging these intricacies empowers companies to fulfill their statutory obligations effectively while optimizing operational frameworks.
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