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.
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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