Small Company: Companies Act, 2013

Admin
March 03, 2023

Small Companies under the Companies Act, 2013:

  1. Definition: Small Company is defined under Section 2(85) of the Companies Act, 2013 as a company, other than a public company, whose paid-up share capital does not exceed Rs. 2 crore and turnover does not exceed Rs. 20 crore in the immediately preceding financial year.

  2. Exemptions: Small Companies are exempted from various provisions of the Companies Act, 2013, such as holding of Annual General Meetings (AGMs) at a particular place, the requirement to prepare a Cash Flow Statement, the requirement to constitute various committees, and others.

  3. Board of Directors: Small Companies are required to have at least two directors, one of whom should be a resident in India. However, the maximum number of directors in a Small Company cannot exceed fifteen.

  4. Annual Return: Small Companies are required to file an Annual Return with the Registrar of Companies in the prescribed format within 60 days from the date of Annual General Meeting.

  5. Financial Statements: Small Companies are required to prepare and file financial statements in the prescribed format with the Registrar of Companies. The financial statements include Balance Sheet, Profit and Loss Account, and Cash Flow Statement.

  6. Auditing: Small Companies are required to get their accounts audited by a Chartered Accountant or a Cost Accountant. However, Small Companies that have a turnover of up to Rs. 1 crore are exempted from the requirement of compulsory audit.

  7. Related Party Transactions: Small Companies are required to disclose any related party transactions in their financial statements and obtain prior approval of the Board of Directors for any such transactions.

  8. Corporate Social Responsibility: Small Companies are exempted from the requirement of spending on Corporate Social Responsibility (CSR) activities.

These are some of the key provisions related to Small Companies under the Companies Act, 2013. The Act also provides for various other provisions related to the management and governance of Small Companies, their dissolution and winding up, and the rights and duties of their members and directors.