Modi government changed the definition of 'small company'.

 


The Central Government has changed the rules related to the paid-up capital and turnover of small companies. In fact, these changes will reduce compliance pressure on companies. The Ministry of Corporate Affairs (MCA) issued a notification in this regard on Friday. The Ministry of Corporate Affairs, which enforces the Companies Act in the country, has redefined the definition of small companies in its latest decision. Due to which the very definition of small companies changed. It is believed that the government wants to promote ease of doing business by doing so.

Under this change, the maximum limit of paid-up capital of small companies has been increased from Rs 2 crore to Rs 4 crore. Also, the turnover limit of these companies has been increased from Rs 20 crore to Rs 40 crore. After this change, small companies will be able to file abridged annual return. According to the notification, with this change, more and more companies will now be able to join the category of small companies. According to the ministry, small companies have also been exempted from the requirement of preparing cash flow statement as part of the financial statement. They can also file a summary annual return. They will also not need to change auditors frequently.

After the amendment, small companies will get this benefit

Companies no longer need to prepare a statement of cash flows in the form of financial statements.

  • Ease of preparation and filing of summary annual returns.
  • Mandatory rotation of auditors is not required.
  • Only two board meetings in a year.
  • - Provision of lesser penalty.

The annual return may be signed by the company secretary, where there is no company secretary, the director of the company may be signed.

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