SMALL COMPANY
The definition of Small Company covers under the Section 2(85) of Companies Act 2013 Section 2(85) of Companies Act 2013
- Small Company means a company other than a public company whose:-
1. Paid up share capital is upto 2 crore; and
2. Turnover is upto 20 crore.
Except:-
1. Holding of a company;
2. Subsidiary of a company;
3. Section 8 Company;
4. Companies governed by special act of Parliament.
Note:- Small company means a private company which falls under the aforesaid criteria. A public company cannot be a small company.
The aforesaid definition is effective from 01st April, 2021.
Earlier the limit of paid up share capital was Rs. 50 lakh and the turnover limit was Rs. 2 crore. In order to provide more benefits to the small companies and benefits them in terms of less compliances cost, Finance Minister revised the definition of Small Company in Union budget 2021.
Accordingly, the Central Government has amended the definition of Small Company vide notification in the Official Gazette.
PRIVILEGES TO THE SMALL C OMPANY
1. Annual return to be filed in Form MGT -7A for the financial year 2020-21 onwards;
2. Annual return does not required certification from Practising Company Secretaries or Chartered Accountant in Practise;
3. Company shall hold board meeting once in each half year subject to minimum gap of at least 90 day between two consecutive Board meetings;
5. Do not required to include Cash Flow Statement in Financial Statements. Hence, no need to prepare Cash flow statement;
6. Exemption from mandatory rotation of Statutory Auditor of the Company.
Author Bio
Terms of Easy Exit Scheme should be modified so that many non functional companies could avail of the Scheme.