THRESHOLD LIMIT COMPLIANCES UNDER COMPANIES ACT, 2013

There are various compliances under Companies Act, 2013 which are applicable on various types of Companies. The below mentioned table shows you the compliances on the basis of threshold limits under the Companies Act, 2013.

Sr. No. Compliances Section Applicability
1. Appointment of Internal Auditor Section 138 of Companies Act, 2013 and Rule 13 of The Companies (Accounts of Companies) Rules, 2014 i. Every Listed Company;

ii. Every Unlisted Public Company having-

Ø Paid up share capital of 50 Crore rupees or more during the preceding financial year;

Ø Turnover of 200 Crore rupees or more during the preceding financial year;

Ø Outstanding loans or borrowing from Banks or PFIs exceeding 100 Crore rupees or more at any point of time during preceding financial year;

Ø Outstanding deposits of 25 Crore rupees or more at any point of time during preceding financial year.

iii. Every Private Company having:

Ø Turnover of 200 Crore rupees or more during the preceding financial year;

Ø Outstanding loans or borrowings from Banks/PFIs exceeding 100 Crore rupees or more at any point of time during the preceding financial year

2. Appointment of Secretarial Auditor Section 204 of Companies Act, 2013 and Rule 9 of The Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 i. Every Listed Company;

ii. Every Public Company having:

Ø Paid-up Share Capital of 50 Crores rupees or more;

Ø Turnover of 250 Crores rupees or more;

iii. Every Company having Outstanding loans or borrowings from Banks/PFIs of 100 Crores rupees or more

“Format of Secretarial Audit Report: MR-3”

3. Applicability of XBRL filings Section 137 of Companies Act, 2013 and Rule 12 of The Companies (Accounts) Rules, 2014 i. All Public Companies Listed in a Stock Exchange in India and its Subsidiaries;

ii. All Companies with a Turnover of 100 Crores or more;

iii. All Companies with a Paid-up Share Capital of Rs.5 Crores or more;

4. Appointment of Key Managerial Personnel (KMP) Section 203 of Companies Act, 2013 and Rule 8 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 i. Every Listed Company;

ii. Every Public Company having Paid-up Share Capital of Rs.10 Crores or more

5. Appointment of Company Secretary Section 203 of Companies Act, 2013 and Rule 8A of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 Every Company having Paid-up Share Capital of Rs.10 Crores or more
6. Corporate Social Responsibility (CSR) Section 135 of Companies Act, 2013 Every Company having during the immediately preceding financial year:

i. Net worth of Rs.500 Crores or more; or

ii. Turnover of Rs.1,000 Crores or more; or

iii. Net Profits of Rs.5 Crores or more;

7. Appointment of Independent Director Section 149(6) of Companies Act, 2013 and Rule 4 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 Following Companies shall have atleast 2 Directors as Independent Directors:

i. Public Companies having Paid-up Share Capital of Rs.10 Crores or more;

ii. Public Companies having Turnover of Rs.100 Crores or more;

iii. Public Companies which have, in aggregate, outstanding loans, debentures and deposits exceeding Rs.50 Crores;

8. Appointment of Woman Director Section 149(1) of Companies Act, 2013 and Rule 3 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 i. Every Listed Companies;

ii. Every other Public Company having:

Ø Paid-up Share Capital of Rs.100 Crores or more;

Ø Turnover of Rs.300 Crores or more.

9. Audit Committee Section 177 of Companies Act, 2013 and Rule 4 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 i. Every Listed Public Company;

ii. Every other Public Companies having Paid-up Share Capital of Rs.10 Crores or more;

iii. Every other Public Companies having Turnover of Rs.100 Crores or more;

iv. Every other Public Companies which have, in aggregate, outstanding loans, debentures and deposits exceeding Rs.50 Crores.

10. Nomination and Remuneration Committee Section 178 of Companies Act, 2013 and Rule 4 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 i. Every Listed Public Company;

ii. Every other Public Companies having Paid-up Share Capital of Rs.10 Crores or more;

iii. Every other Public Companies having Turnover of Rs.100 Crores or more;

iv. Every other Public Companies which have, in aggregate, outstanding loans, debentures and deposits exceeding Rs.50 Crores.

11. Establishment of Vigil Mechanism Rule 7 of the Companies (Meetings of Board and its powers) Rules, 2014 i. Every Listed Company;

ii. Every Company which accepts deposits from public;

iii. Every Companies which have borrowed money from Banks and Public Financial Institutions in excess of Rs.50 Crores or more.

Further this mechanism is required by the Companies for their Directors and Employees to report their genuine concerns or grievances.

12. Applicability of attaching MGT-8 in the Annual Return (MGT-7) Section 92(2) of Companies Act, 2013 and Rule 11(2) of Companies (Management and Administration) Rules, 2014 i. Every Listed Company;

ii. Every other Company having:

Ø Paid-up Share Capital of Rs.10 Crores or more;

Ø Turnover of Rs.50 Crores or more.

Form MGT-8 shall be certified by Company Secretary in Practice.

13. Applicability of Companies (Auditor’s Report) Order, 2020 (CARO) Rule 1 of Companies (Auditor’s Report) Order, 2020 CARO is applicable on every Company including Foreign Company and:

i. A Private Limited Company not being a Subsidiary or Holding Company of a Public Company having:

Ø Paid-up Capital and reserves and surplus exceeds of Rs.1 Crores or more;

Ø Total Revenue exceeds Rs.10 Crores or more;

Ø Total Borrowings exceeding of Rs.1 Crores or more from any Bank or Public Financial Institution at any point of time during the Financial Year.

However, this clause is not applicable on the below mentioned Companies:

Ø Banking Company;

Ø Insurance Company;

Ø Section 8 Company;

Ø One Person Company;

Ø Private Limited Company which does not exceeds the above mentioned limit.

14. Applicability of Cost Audit Section 148 of Companies Act, 2013 and Rule 3 of Companies (Cost Records and Audit) Rules, 2014 i. Every Company specified in item A of Rule 3 shall keep cost records and conducting Cost Audit having:

Ø Overall Annual Turnover of all its products or services of Rs.50 Crores or more; and

Ø Aggregate Turnover of individual products or products or services of Rs.25 Crores or more.

ii. Every Company specified in item B of Rule 3 shall keep cost records and conducting Cost Audit having:

Ø Overall Annual Turnover of all its products or services of Rs.100 Crores or more; and

Ø Aggregate Turnover of individual products or products or services of Rs.35 Crores or more.

However, the above mentioned Companies shall be exempted for keeping cost records and conducting Cost Audit, if:

• Having Revenue from Exports, in forex exceeds 75% of its total revenue;

• Operating from Special Economic Zone (SEZ);

• Engaged in generation of Electricity for captive consumption through captive generating plant.

15. Rotation of Statutory Auditor Section 139(2) of Companies Act, 2013 and Rule 5 of Companies (Audit and Auditors) Rules, 2014 Term of Individual Auditor – One Term of 5 consecutive years;

Term of Audit Firm – Two Terms of 5 consecutive years

Rotation of Statutory Auditor is applicable on:

i. Every Listed Company;

ii. All Unlisted Public Companies having Paid up Share Capital of Rs. 10 Crores or more;

iii. All Private Companies having Paid up share Capital of Rs. 50 Crores or more;

iv. All Companies having paid Share Capital of above mentioned limit in point (ii) & (iii) and having public borrowings from Financial institutions, Banks or Public Deposit of Rs.50 Crores or more.

Cooling Period of the Auditors/Audit Firm: 5 Years from the completion of the term

Author Bio

Qualification: CS
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Location: Gurugram, Haryana, India
Member Since: 22 Apr 2020 | Total Posts: 6
I Alka Gupta, an Associate Company Secretary and would like to learn and grow at every given opportunity. View Full Profile

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