Relaxations Applicable to Small Companies as per Companies Act, 2013

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Relaxations Applicable to Small Companies

Definition of small Company as per Section 2(85) of The Companies Act, 2013 “small company” means a company, other than a public company.

  • 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 ten crore rupees; and
  • turnover of which as per profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than One Hundred 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;

Relaxations

Preparation of Cash Flow Statement

Section 2(40) financial statements in relation to a company,

includes—

  • a balance sheet as at the end of the financial year;
  • a profit and loss account, or
  • in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;
  • cash flow statement for the financial year;
  • a statement of changes in equity, if applicable; and
  • any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv):

As per the proviso of Section 2(40), The financial statement of Small Company, One Person Company, dormant Company and private company (if such private company is a startup) may not include the Cash flow statement.

Signing of Annual return by Company Secretary

Section 92, Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice.

As per the proviso of section 92, in case of One-person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.

Holding of minimum number of Board Meeting in a year

section 173, Every company shall hold a minimum number of four meetings of its Board of Directors every year in such a manner that not more than one hundred and twenty days shall intervene between two consecutive meetings of the Board

section 173(5), A One Person Company, small company, dormant company and private company (if such private company is a startup) shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days:

Eligibility of Appointment of Auditor

Section 141(3)(g) a person who is in full time employment elsewhere or a person or a partner of a firm holding appointment as its auditor, if such persons or partner is at the date of such appointment or reappointment holding appointment as auditor of more than twenty companies other than One Person Companies, Dormant Companies, Small Companies, Private Companies having paid up capital less than one hundred Crore rupees  shall not be eligible for appointment as an auditor of a company

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