Summary:
Delivering the Union Budget 2021-22, Finance Minister Nirmala Sitharaman, on Monday, proposed changes in definition of small companies under the Companies Act.
Definitions:
Old Definition: As
per the Old definition
‘‘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 five crore rupees;
and
(ii)
turnover of which as per its last profit and loss account
does not exceed two crore rupees or such higher amount as may be prescribed
which shall not be more than twenty crore rupees:
New Definition: As per the new definition
Small companies
means a company, other than a public company which have :-
·
Paid up share capital
of not more than 2 crore rupees and
·
Turnover of which as per its last profit and loss account
does not exceed 20 crore
rupees.
IMPACT ON DEFINITION:
‘‘Small Company’’
means a company,
other than a public company,—
Que: Whether small company needs to file any from to convert
into non-small Company?
There is no need to file any form or company
any process to convert small company into non small
Company. Once a company fall in limits given under definition of small
Company it shall be consider as Small
Company, if company cross the limits given in definition shall be consider as non-small
company itself.
IMPORTANT NOTE:
i.
Only a Private Company
can be classified as a Small Company.
ii.
If
a Company doesn’t cross the above-mentioned
limits, however, such a
Company is a holding Company
or a Subsidiary Company of any other
Company then such a Company
cannot be considered as a Small
Company.
iii.
A Public
Company cannot be a Small Company.
iv.
A Section
8 Company cannot be a Small Company
v.
For a Small Company, both the conditions are needed to be fulfilled i.e the paid-up
capital should not exceed Rs. 2 Crore or the turnover as per last statement of profit &
loss should not exceed Rs. 20 Crore. If any of the
given limits crossed at any point of time then such a Company shall be out of the preview of a Small
Company.
The status of a company as “Small Company” may change from year to year. Thus the benefits
which are available during a particular year may stand withdrawn in the
next year and become available again in the subsequent year.
BENEFIT TO BECOME
SMALL COMPANY:
1.
Lessor No. of Mandatory Board Meetings:
Every Small Company
shall hold a minimum number of Two
meetings of its Board of Directors every year in such a manner that Minimum gap between the two meetings
should not be Less than 90 (Ninety)
days. {Section 173}.
In Case of Non-Small Company, it is required to
hold four Board Meeting in a year.
2.
No Requirement of Cash Flow Statement:
As
per provisions of Companies Act, 2013, Small Companies are not required
to prepare Cash Flow Statement.
3.
Certification of e-forms:
As per provisions of Act, any e-form of Small Company
are not required to get certify from Professional (CA/CS/ADV).
e-forms of non-small Company can be file with ROC only with Digital Signature of Directors.
4.
Abridge Directors report:
There are a lot of difference b/w Directors Report of Small Company or
Non- Small Company. By amendment in the Companies Act, 2013, MCA has introduced the abridged format of the Directors’ Report for a Small Company.
Abridge report
means, director report of Small Company shall required to give less disclosures then a non-small
Company.
5.
No IFC Reporting:
A Small
Company does not require to report in its
Audit
Report
regarding Internal Financial controls and the operating effectiveness
of the company.
6.
Lessor Penalties {446B):
Notwithstanding anything
contained in this Act, if penalty is payable for non- compliance of any of the provisions of this Act by a small company
or by any of its officer in default, or any other
person in respect of such company, then such
company, its officer in default or any other person, as the case may be,
shall be liable to a penalty
which shall not be more than
one-half of the penalty
specified in such provisions
subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer
who is in default or any other person, as the case may be.
7.
Rotation of Auditor {139(2)):
Provisions of Section 139(2) relating to rotation of auditor are not applicable on Small Company.
Means, in Small company
it is not required to mandatory change the auditor by rotation. An auditor firm
or individual auditor can get appointment as auditor in small Company
ever after 10 year or 5 years of appointment also.
|
ANNUAL COMPLIANCE CALENDAR SMALL COMPANY: |
|||
|
Month |
April |
May |
June |
|
Compli ance |
·
Obtaining of MBP-1 ·
Obtaining of DIR-8 ·
Filing of MSME-1
(30.04) |
·
Holding of the
First Meeting of the Board of
Directors for the quarter |
·
Filing of DPT-3 with
the ROC (30.06) |
|
Month |
July |
August |
September |
|
Compli ance |
Filing of FLA with
RBI. If having
foreign liability or assets |
·
Holding of the Second
Meeting of the
Board of Directors. ·
Preparation/ Adoption
of the Financial statement ·
Adoption Auditors’ Report ·
Preparation/ Adoption of the Directors’ Report ·
Obtaining
of MBP-1, in case of any change. ·
Circulation of the Financial Statement and notice of AGM
to the Shareholders, Directors, Auditor etc. |
·
Holding of the Annual
General Meeting ·
Filing of DIR-3 KYC (30.09) |
|
Month |
October |
November |
December |
|
Compli ance |
·
Filing of AOC-4
(29.10) ·
Filing of MSME-1
(30.10) |
·
Filing of MGT-7 with ROC (29.11) |
·
Holding of Third Meeting of Board of Directors. ·
Obtaining of MBP-1, in case of any change. |
|
|
|
|
|
|
Month |
January |
February |
March |
|
Compli ance |
|
|
·
Holding of the Fourth
Meeting of the Board of Directors. ·
Obtaining of MBP-1, in case of any change. |
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