22 September 2022
MCA Modifies Definition of Small Companies under Companies (Specification of Definition details) Amendment Rules, 2022
 
The Ministry of Corporate Affairs (MCA) has amended Companies (Specification of Definition details) Amendment Rules, 2014 by introducing 'Companies (Specification of Definition details) Amendment Rules, 2022' effective from 15 September 2022.

The following changes are made under Rule 2 of Companies (Specification of Definition details) Amendment Rules, 2014.
 
The Companies (Specification of Definition details) Amendment Rules, 2014 The Companies (Specification of Definition details) Amendment Rules, 2022
As per Section 2(85), small company means a company, other than a public company;
  1. paid-up share capital of which does not exceed INR 20 million or such higher amount as may be prescribed which shall not be more than INR 100 million
  2. turnover of which as per profit and loss account for the immediately preceding financial year does not exceed INR 200 million or such higher amount as may be prescribed which shall not be more than INR 1 billion
Provided that nothing in this clause shall apply to
  1. a holding company or a subsidiary company;
  2. a company registered under section 8; or
  3. a company or body corporate governed by any special Act;
As per Section 2(85), small company means a company, other than a public company;
  1. paid-up share capital of which does not exceed INR 40 million or such higher amount as may be prescribed which shall not be more than INR 100 million
  2. turnover of which as per profit and loss account for the immediately preceding financial year does not exceed INR 400 million or such higher amount as may be prescribed which shall not be more than INR 1 billion
Provided that nothing in this clause shall apply to
  1. a holding company or a subsidiary company;
  2. a company registered under section 8; or
  3. a company or body corporate governed by any special Act;
Our Comments
These threshold limits have now been amended and increased to INR 40 million and INR 400 million, respectively. Following this amendment in the definition of Small Companies, more companies will fall under the ambit of Small Companies and can avail benefits such as fast track IPR application, no certification for Filing of Forms, Recognition on the Start-up India portal, and overall reduction compliance cost. .

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