Revised definition of Small company under Companies Act 2013

The Companies Act 2013 has introduced the concept of small companies on the basis of paid up share capital and turnover.

MCA(Ministry of corporate affairs) amend the definition of small company and amend the rule 2(1)( t) of Companies (Specification of Definition Details Rule 2014) wide it’s notification on 15th September ‘2022.

In the companies specification of definition Rule,2014 in rule 2, in sub-rule (1), for clause (t), the following clause shall be substituted, namely:-

“(t) For the purposes of sub-clause (i) and sub-clause (ii) of clause (85) of section 2 of the Act, paid up capital and turnover of the small company shall not exceed rupees four crore and rupees forty crore respectively.

Basically the earlier threshold limit of categorising the small company by turnover and paid up share capital which was amended in 2021 is changed on 15 th September ‘2022 from two crore rupees and twenty crore rupees to four crore rupees and forty crore rupees respectively.

Following companies not to be considered as small companies –

1. It is a Public Company;

2. It is a Holding of another company.

3. The company is a subsidiary of another company.

4. The company is a Section 8 Company.

5. It is a company governed by any Special Act.

Small companies play great role in boosting the economy and help in the growth and development of nation.

Small companies not having separate procedure to register as small companies .Small companies are registered as private limited companies,but the act differentiate small companies on the basis of paid up share capital and turnover.

Through this amendment in the definition of small company the certification of e forms of ROC(Register of Companies) by practicing professionals (Practicing Chartered Accountant/Practicing company secretary/Practicing cost Accountant) is reduced. But there are wide  variety of opportunities available to practicing Holding a COP(Certificate of Practice) not restrict you to ROC compliance only you can make your core area in diversified areas available like Intellectual property rights, Litigations,IBC, Security Market, Portfolio Manager, Investment Banker, Teacher.