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    Concept of a small company

    Posted By : damini / Published on : 08-Apr-2020 02:51 PM / View : 663 / Comment : 1

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    Can someone please explain the concept of a small company WITH ILLUSTRATIONS relating to turnover and capital.
    Read more on : company small concept

    • As per section 2(85), small company means a company other than a public company,

      Old provision-

      (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 2 crore rupees or such higher amount as may be prescribed which shall not be more than twenty 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 above section 2(85) after issuance of Companies (Removal of Difficulties) Order 2015 dated 13.02.2015 has used the word “AND” between sub clauses (i) and (ii), and not the word “OR”.

       

      Accordingly, a private company fulfilling both the criteria of the abovementioned two conditions, i.e., either turnover less than Rs. 2 crore or paid up capital less than Rs. 50 lacs will be considered as small company. Hence, the company in question shall not be a treated as a ‘small company’

      But recently, MCA vide its notification dated September 15, 2022, has amended the Companies (Specification of Definition Details) Rules, 2014, thereby amending the definition of a Small Company. The limit of paid-up capital and turnover of the small company has been now increased to Rs. four crores (Earlier two crores) and Rs. forty crores (Earlier twenty crores) respectively.

      New limit to fall into the definition of a small company effective today:

      Paid-up Capital – not exceeding Rs. 4 crores and
      Turnover – not exceeding Rs. 40 crores

      Means, If Company having Paid-up Capital 4 Cr and Turnover 40 cr then it will come under the era of small Company but as they cross 4 cr and 40 cr with any amount will not be anymore Small company.

      https://blogs.compliancecalendar.in/new-definition-of-small-company-wef-15092022-through-companies-specification-of-definition-details-amendment-rules-2022-12717

       

      16-09-2022 / 08:55:34 AM
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