The Ministry of Corporate Affairs (MCA) on Friday said it has revised upwards the threshold limit for paid-up capital of small-scale companies. Under the Companies Act, 2013, the definition of “small companies” will include those with the paid-up capital of “not exceeding Rs 4 crore” as compared with “not exceeding Rs 2 crore” earlier.
“Earlier, the definition of “small companies” under the Companies Act, 2013, was revised by increasing their thresholds for paid up capital from ‘not exceeding Rs 50 lakh’ to ‘not exceeding Rs 2 crore’ and turnover from ‘not exceeding Rs 2 crore’ to ‘not exceeding Rs 20 crore’. This definition has, now, been further revised by increasing such thresholds for paid-up capital from ‘not exceeding Rs 2 crore’ to ‘not exceeding Rs 4 crore’ and turnover from ‘not exceeding Rs 20 crore’ to ‘not exceeding Rs 40 crore’,” the ministry said.
It added that the corporate affairs ministry has taken several measures in the recent past towards ease of doing business and ease of living for the corporates. These included the decriminalisation of various provisions of the Companies Act, 2013, and the LLP Act, 2008, extending fast-track mergers to start-ups and incentivising incorporation of one-person companies (OPCs), etc.
“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,” the MCA said.
Some of the benefits of reduction in compliance burden as a result of the revised definition for small companies are — 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; and 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.
The benefits also include holding of only two board meetings in a year; 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; and lesser penalties for small companies.
“In exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the…rules further to amend the Companies (Specification of Definition Details) Rules, 2014,” according to a gazette notification.
Read all the Latest Business News and Breaking News here
For all the latest business News Click Here
