The Threshold for Paid Up Capital and Turnover For Small Companies

 The Ministry of Corporate Affairs (MCA) revised the threshold for paid-in capital and turnover for Small Companies.

Highlights:

♦ Change the threshold of paid-in capital from "not more than Rs 50 lakh" to "not more than Rs 2 crore", and change the turnover from "not more than Rs 2 crore" to "not more than 20 crores" to define "small company".

♦ No need to prepare a cash flow statement as part of the financial statement.

♦ If other companies require detailed information on remuneration for directors and key management personnel, small companies are required to provide details of only the total remuneration drawn by directors in their Annual Returns.

♦ No mandatory rotation of auditors is required.

♦ Auditors of small companies are not required to report on the adequacy of internal financial controls and their operational effectiveness in the auditor’s report.

♦ Only two board meetings a year.

♦ The Company's Annual Return can be signed by the Company Secretary or, if there is no company secretary, it can be signed by a director of the company.

♦ There are fewer fines for small companies.

♦ Reduce filing fees for small companies.

Significance:

♦ Small companies are the backbone of our corporate world.

♦ They represent the Entrepreneurial aspirations and Innovation Capabilities of lakhs of people.

♦ They greatly promote employment and GDP.

♦ The idea is to create a more favorable business environment for such companies that comply with the law, including reducing the compliance burden of such companies.