Get All Access for $5/mo

Corp Affairs Min Revises Definition of "Small Companies" The ministry has revised small companies' paid up capital and turnover thresholds to INR 4 crore and INR 40 crore respectively.

By Soumya Duggal

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

freepik

In order to qualify as "small companies", business entities must have a paid up capital of less than or equal to INR 4 crore and a turnover of less than or equal to INR 40 crore, according to a new notification by the Ministry of Corporate Affairs (MCA).

The ministry has revised the rules regarding small companies' paid up capital and turnover, which were less than or equal to INR 2 crore and INR 20 crore respectively prior to the latest notification.

Earlier, the definition of "small companies" under the Companies Act, 2013, had been revised by increasing their thresholds for paid-up capital from "not exceeding INR 50 lakh" to "not exceeding INR 2 crore" and turnover from "not exceeding INR 2 crore" to "not exceeding INR 20 crore".

MCA has taken several measures in the recent past towards enabling the ease of living and doing business for corporates, said the ministry, citing the decriminalisation of various provisions of the Companies Act, 2013, and the LLP Act, 2008. These were aimed at extending fast track mergers to startups and incentivising incorporation of One Person Companies (OPCs), among other things.

"Small companies represent the entrepreneurial aspirations and innovation capabilities of lakhs of citizens and contribute to growth and employment in a significant manner. The Government has always been committed to taking measures which create a more conducive business environment for law-abiding companies, including reduction of compliance burden on such companies," said MCA.

According to the ministry, reducing the compliance burden on companies through the latest revision in laws has a number of benefits, such as eliminating the need to prepare cash flow statements as part of financial statements and to have a mandatory rotation of auditors. Also, an auditor of a small company is not required to report on the adequacy of the internal financial controls and the company's operating effectiveness.

Further, on account of the new rules, companies categorised as "small" would be able to prepare and file abridged annual returns, with the company secretary or a director of the company being permitted to sign the annual return. What's more, small companies are required to hold only two board meetings in a year and face fewer penalties.

Soumya Duggal

Former Feature Writer

News and Trends

Dee Piping Goes Public: Announces Initial Public Offering

Dee Development Engineers Limited, commonly known as 'Dee Piping,' has announced its transition into a public limited company.

Business Solutions

Increase Productivity with This Microsoft 365 Subscription, Now $25 Off

It can make the entrepreneur life a lot easier.

News and Trends

Unifi Capital Launches Two New Funds at GIFT City

Rangoli India Fund and G20 Portfolio are the two new funds launched by Unifi Capital, via its subsidiary UIML in GIFT City, to expand international investment opportunities.

Business News

Apple Pay Later Is Ending. Here's What's Taking Its Place.

The program was available for less than a year.

Culture

I've Grown a High-Performing Team in Just 2 Years — Here's are 5 Growth Strategies I Learned

A team's strength lies in its people's individual skills and how they synergistically come together.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.