In the budget speech on 01 February 2021 Finance Minister has proposed to revise the threshold for determining a company as a “small company”.
The capital threshold will be
Rs.2 Crores ( at present 50 lakhs ) and the turnover threshold will be Rs.20
Crores (at present 2 crores). If a company has more turnover and less capital
or if a company has more capital and less turnover, still it will not enjoy the status of a
small company.
Let's take the case of a private limited
company which is within the
thresholds and falls within the category of a small company and discuss
up to what extent a small company is required to comply with provisions of the
Companies Act, 2013 and connected rules, as follows ;
|
Subject
Matter |
Provisions |
|
Maximum
Number of Directors limited to 15 |
Yes |
|
DIN |
Required |
|
Disqualification
of Directors |
Applicable |
|
Duties
of Directors |
Applicable |
|
Retirement
of Directors by Rotation |
Not
Required; unless Articles |
|
Accepting
Loans and Deposits from Directors |
Permitted |
|
Accepting
Loans and Deposits from relatives of Directors |
Permitted |
|
Accepting
Loans and Deposits from Shareholders |
Permitted |
|
Internal
Committee under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal ) Act,2013 |
Required |
|
Compliance
of provisions on Related Party Transactions |
Applicable |
|
Disclosure
of Interests by Directors |
Required |
|
Participation
by Interested Directors |
Permitted |
|
Prohibition
to granting loans to directors and relatives |
Not
Applicable unless the |
|
CSR
Provisions, CSR Policy, Disclosures of CSR Policy and CSR Committee |
Will
apply only if net profits are Rs.5 Crores or more in the immediately
preceding financial year; in any case, if the amount to be spent should be
Rs.50 Lakhs, the average net profits during the three immediately preceding
financial years must be of the size of 25 Crores. Therefore, the question of
constituting CSR Committee may not arise. If CSR provisions apply due to
phenomenal net profits, CSR Policy must be there and the same must also be
disclosed in the Board’ Report |
|
Annual
Return |
Required |
|
Board’s Report |
Required;
however only abridged version as per rule 8A of the Companies (Accounts)
Rules, 2014. |
|
Audited
Financial Statements (AFS) |
Required |
|
Cash
Flow Statements |
Not
Required |
|
Consolidated
Financial Statements |
Not
Required |
|
AOC -1,
statement containing salient features of subsidiary etc., |
Not
Required; unless the company has any joint venture or associate company. |
|
Particulars
of Contracts and Arrangements with Related Parties to be included in the
Board’s Report in form AOC-2 |
Required |
|
Appointment
of Auditors |
Required |
|
Accounting
Standards |
As would
apply to small and medium |
|
Register
of Members |
Required |
|
Register
of Directors |
Required |
|
Register
of Loans, Guarantees etc., |
Required |
|
Register
of Investments |
Required |
|
Register
of Contracts and Arrangements with Related Parties |
Required |
|
Registration
of Charges |
Required |
|
Holding
not less than 4 Board Meetings |
Required |
|
Annual
General Meeting |
Required |
|
Secretarial
Standards |
Applicable |
|
Requirement
to Maintain Minutes of Board and General Meeting |
Required |
|
Passing
of Board Resolutions by Circulation of Resolutions to Directors |
Permitted |
|
Exercising
of Powers only at Board Meetings |
Required |
|
Filing
of Special and other Resolutions with Registrar of Companies in MGT-14 other
than those falling under Section 179(3) of the Act |
Required |
