BBN Bureau
NEW DELHI/September 15-2022: The Ministry of Corporate Affairs (MCA) has revised the thresholds for paid-up capital and turnover for Small Companies from ‘not exceeding Rs2 crore’ to ‘not exceeding Rs4 crore’ and “not exceeding Rs20 crore” to “not exceeding Rs40 crore, respectively.
MCA has taken several measures in the recent past towards ease of doing business and ease of living for the corporates. These included decriminalisation of various provisions of the Companies Act, 2013 & the LLP Act, 2008, extending fast track mergers to start ups, incentivising incorporation of One Person Companies (OPCs), etc.
Earlier, definition of “small companies” under the Companies Act, 2013 was revised by increasing their thresholds for paid-up capital from “not exceeding Rs50 lakh” to “not exceeding Rs2 crore” and turnover from “not exceeding Rs2 crore” to “not exceeding Rs20 crore”.
This definition has, now, been further revised by increasing such thresholds further.
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,” an official statement noted.
Some of the benefits of reduction in compliance burden as a result of the revised definition for small companies include – No need to prepare cash flow statement as part of financial statement; advantage of preparing and filing an Abridged Annual Return; Mandatory rotation of auditor not required; an auditor of a small company is not required to report on the adequacy of the internal financial controls and its operating effectiveness in the auditor’s report; holding of only two board meetings in a year, and annual return of the company can be signed by the company secretary, or where there is no company secretary, by a director of the company.
