Official Source
Ministry of Corporate Affairs
The Ministry of Corporate Affairs has amended the Companies Act, 2013 to expand the definition of "Small Company," providing significant compliance relief to a larger number of companies. The revised thresholds come into effect from the notification date.
Revised Definition of Small Company
A company is now classified as a "Small Company" if:
Both conditions must be satisfied simultaneously. Listed companies and their subsidiaries are excluded regardless of size.
- ▸Paid-up share capital does not exceed ₹4 crore (previously ₹2 crore), AND
- ▸Turnover does not exceed ₹40 crore (previously ₹20 crore)
Benefits Available to Small Companies
Small company classification provides significant compliance relief:
Reduced Annual Return: Can file simplified MGT-7A (abridged) instead of detailed MGT-7
Half-Yearly Board Meetings: Only 2 board meetings per year required (instead of 4)
Consolidated Financial Statements: Not required to prepare consolidated accounts
No Internal Auditor Requirement: Section 138 internal audit not mandatory
Cash Flow Statement: Not required to include in financial statements
Faster Merger: Can use fast-track merger provisions under Section 233
Revised OPC (One Person Company) Thresholds
In addition to small company, OPC thresholds also revised:
- ▸Paid-up capital limit increased from ₹50 lakh to ₹2 crore
- ▸Annual turnover limit increased from ₹2 crore to ₹20 crore
- ▸OPC exceeding these limits must compulsorily convert to Private Limited or LLP
Companies Newly Eligible for Small Company Benefits
Companies with paid-up capital between ₹2–4 crore OR turnover between ₹20–40 crore that were previously "other than small company" can now benefit. These companies should:
- ▸Check if both conditions (capital AND turnover) are met
- ▸Update board resolution acknowledging small company status
- ▸Use simplified MGT-7A form for annual return
- ▸Reduce board meeting frequency if desired (minimum 2 per year)
- ▸Inform their statutory auditor about the revised status
LLP (Limited Liability Partnership) Updates
Similar relief for LLPs:
- ▸LLP Annual Return Form-11 due date: May 30 each year
- ▸Statement of Account and Solvency Form-8: October 30 each year
- ▸Small LLP (contribution < ₹25 lakh OR turnover < ₹40 lakh): Lower additional fees for delayed filing
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