Section 2(85) of CA, 2013 which reads as under- “small company” means a company, other than a public company-
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; and
(ii) turnover of which as per profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees.
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
The Government Provide certain relief to private Companies under companies Act 2013 .
That the Private Company
Who’s paid Up Capital does not exceed fifty lakhs rupees and annual turnover does not exceed 2 Crores rupees as per previous audited financial statement, shall be treated as small Company for Companies Act 2013
Only One Person Company and Private company can be cover in small company definition.
Benefits For Small Companies
1. Board Meetings:
Small Companies can hold only 2 board meetings in calendar year. However gap between two board meetings shall not be less than 90 days
2. Annual Return:
The Annual Return of small company can be signed by Company Secretary or, by a single Director only.
3. Cash Flow Statements
Cash flow statement is not required to be a part of Financial Statement of Small companies.
4. Director Report
An abridged Director Report shall also be sufficient for Small Companies. That Matters to be included in Board’s Report mention in Rule -8 of Companis ( Accounts) Rules, 2014 may not apply for small company.
5. Fast Track Merger Process
The merger process between small companies is Simple and less expensive.
6.Auditor Retirement By Rotation
A small company, shall never be required to rotate its auditor according to Section 139(2) of Companies Act 2013
7. Internal Financial Control Report
A Small Company does not require to report in its Audit Report regarding Internal Financial controls and the operating effectiveness of the company.
8. Fees
Form filings fees u/s. 403 of the Companies Act, 2013 is also lower for the small companies.
9. Less Penalties
If a small company fails to comply with the provisions of section 92(5), section 117(2) or section 137(3), such company and officer in default of such company shall be liable to a penalty which shall not be more than one half of the penalty specified in Section 446B of the Companies Act, 2013: –
10. Certification by the Professional on E Forms is not required.
A small Company does not required to certify its E form by Professional CS, CA, CMA.