Benefits for small companies under companies Act, 2013 for Compliances

When a Private company satisfies following conditions then company will be called as  the category of small company:

  • Paid up share capital of private company shall not exceed 50 lakh rupees and
  • the turnover of the company shall not exceed 2 crore rupees

Because of any reason if company cross the above prescribed limit either for paid-up capital or turnover, company will not cover under the category of small company.

Benefits / exemptions for small company

  • Board Meetings: – Small companies doesn’t have a wide range of business so it’s not required for small companies to hold 4 board meetings in year, small companies may hold only 2 board meetings in a calendar year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings.

 

  • Rotation of company auditors: –It is not necessary for small companies to follow the condition laid in Section 139(2) of the Company Act 2013, which mandates the rotation of auditors every 5 years (individual auditors) and every 10 years (firm of auditors).

 

  • Exemptions for Board’s Report: – Matters to be included in Board’s Report mention in Rule -8 of companies (Accounts) Rules, 2014 not apply for small company.

 

  • Annual Return: – Annual Return of a Small Company can be signed by the company secretary alone, or where there is no company secretary, by a single director of the company.

 

  • Remuneration details in Annual Return : – As per section 92 of companies Act, 2013 private companies are require to give a details of remuneration of directors and key managerial personnel , but in small companies only “aggregate amount of remuneration drawn by directors”  is required in annual return.

 

  • Cash Flow Statement: – A small company needs not to include Cash Flow Statement as part of its financial statement.

 

  • Exemptions for Audit Report: – small companies are not required to give report on internal financial controls with reference to financial statements and the operating effectiveness of such controls in audit report.

 

  • Lesser penalties for Small Companies under Section 446B of the Companies Act, 2013– If a small company fails to comply with the provisions of section 92(5), section 117(2) or section 137(3), such company and officer in default of such company shall be liable to a penalty which shall not be more than one half of the penalty specified in such sections.

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