Small Company, budget

Change in Definition of Small Companies under Companies Act'2013

Definition of small companies to be raised by increasing the capital limit from Rs 50 lakh to Rs 2 crore and turnover from Rs 2 crore to Rs. 20 crores: FM

Benefits / exemptions for small company
  • Board Meetings: – Small companies may hold only 2 board meetings in a calendar year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings (instead of minimum 4 board meeting)
  • Rotation of company auditors: –It is not necessary for small companies to follow the condition of rotation of auditors every 5 years (individual auditors) and every 10 years (firm of auditors) (Sec 139(2))
  • Exemptions for Board’s Report: – Matters to be included in Board’s Report mention in Rule -8 of companies (Accounts) Rules, 2014 not apply for small company.
  • Annual Return: – Annual Return of a Small Company can be signed by the company secretary alone, or where there is no company secretary, by a single director of the company with lesser details in Annual Return.
  • Cash Flow Statement: – No need to prepare Cash Flow Statement as part of its financial statement.
  • Exemptions for Audit Report: – Exemption from Audit of internal financial controls with reference to financial statements and the operating effectiveness of such controls.
  • Lesser penalties for Small Companies under Section 446B of the Companies Act, 2013: – 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 such sections.

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