New Delhi [India], February 3 (ANI): The Corporate Affairs Ministry has revised the definition of small companies under the Companies Act by increasing their thresholds for paid-up capital from "not exceeding Rs 50 lakh" to "not exceeding Rs two crore" and turnover from "not exceeding Rs two crore" to "not exceeding Rs 20 crore"
The gazette notification was issued on Tuesday.
A Ministry release said the step, in line with the government's vision, is expected to benefit more than two lakh companies in terms of lesser compliances, lesser filing fees and lesser penalties in the event of any defaults.
"Small companies are the backbone of our corporate world. They represent the entrepreneurial aspirations and innovation capabilities of lakhs of citizens. They contribute to employment and GDP in a very substantial manner," the release said, adding that the government has always been committed to taking measures which create a more conducive business environment for such law-abiding companies.
The release said benefits of reduction in compliance burden for over two lakh companies as a direct consequence of the revised definition include no need to prepare cash flow statement as part of financial statement. Mandatory rotation of auditor will not be required.
While other companies require providing details of remuneration to directors and key managerial personnel, small companies are required to provide details of the only aggregate amount of remuneration drawn by directors in its annual return.
An auditor of small companies is not required to report on the adequacy of the internal financial controls and its operating effectiveness in the auditor's report, the release said.
The annual return of the company can be signed by the Company Secretary or where there is no company secretary by a single director of the company, the release said. (ANI)