The Ministry of Corporate Affairs (MCA) on September 16, 2022, has taken several measures in the recent past towards ease of doing business and relief of living for the corporates. These included extending fast-track mergers to start-ups, encouraging the incorporation of One Person Companies (OPCs), decriminalizing various aspects of the Companies Act, 2013, and the LLP Act, 2008, etc. Prior to this change, the Firms Act of 2013's definition of "small companies" had its paid-up capital and turnover criteria raised from "not surpassing Rs 50 lakh" to "not exceeding Rs 2 crore" and "not exceeding Rs 2 crore, respectively." The thresholds for paid-up capital have now been raised from "not exceeding Rs. 2 crores" to "not exceeding Rs. 4 crores," and the threshold for turnover has been changed from "not exceeding Rs. 20 crores" to "not exceeding Rs. 40 crores."
Some of the benefits of reduction in compliance burden as a result of the revised definition for small companies are as under:
•No need to prepare a cash flow statement as part of the financial statement.
•Advantage of preparing and filing an Abridged Annual Return.
•Mandatory rotation of auditor not required.
•An Auditor of a small company is not required to report on the adequacy of the internal financial controls and its operating effectiveness in the auditor’s report.
•Holding only two board meetings in a year.
•Annual Returns of the company can be signed by the company secretary, or where there is no company secretary, by a company director.
•Lesser penalties for small companies.
[Notification No. 1859699]
