New Delhi: The MCA, the ministry of corporate Affairs had earlier under the Companies Act 2013 revised the definition of small companies by increasing their thresholds for paid-up capital from not exceeding Rs 50 to 2 crores and turnover from not exceeding Rs 2 crore to 20 crores. Noe the definition has been further revised by increasing such thresholds for paid-up capital from not exceeding Rs 2 crores to 4 crores and turnover from not exceeding 20 crores to 40 crores.

Centre revises the definitions of the threshold for paid-up capital of small companies
Centre revises the definitions of the threshold for paid-up capital of small companies

The small companies represent the entrepreneurial aspirations and innovation capabilities of lakhs of citizens and contribute to the growth and development in a significant manner. The ministry of corporate affairs said in a press conference, that the government has always taken measures that make a more conducive business environment for law enduring companies, like including a reduction of keeping burden on such companies.

THE BENEFITS OF THE REVISED DEFINITIONS

• There is no need to prepare a cash flow statement as part of the financial statement.
• The advantage of preparing and filing an Abridged Annual Return.
• The mandatory rotation of auditors is 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 only two board meetings in a year.
• Annual Returns of the company can be signed by the company secretary or by a director of the company.
• Also, there are lesser penalties for small companies.

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