The concept of small company was introduced under Section 2(85) of the Companies Act was amended to make the compliance easier for around 2 Lakh companies who are at its infancy and/or startups or limited to lower turnover.
The new definition of Small Company was amended post budget BY 2021, that states, a company can be categorized as a small company if it’s
- Paid up capital of the company not exceeding Rs. 2 Crores
- Turnover of the company has not exceed Rs. 20 Crores for the immediately preceding fiscal
The new definition of the Small Company made effective from Apr 01st 2021
The old definition of a Small Company states that a company can be called as a Small Company if company has a maximum paid up capital of Rs. 50 Lakh and turnover of Rs. 2 Crore for the immediately preceding fiscal.
While there are many proposals in the past to define the Small Company in India, the new proposal seems to be more appropriate for the day and economy.
To simplify the Company Compliance, MCA has announced on Mar 05th that a new Form MGT-7A for OPC and Small Company Compliance where some of the data and requirement for Company Secretary (CS) signature made optional to reduce the compliance burden. The applicability of MGT-7A is from FY 2020-21
All other companies (other than OPC and small Companies) are required to file annual returns in form MGT 7 from FY 2020-21
In addition, one may note that the Budget 2021 announcement made a way for a voluntary conversion of OPC to a Private Limited Company or a Public Limited Company, subjected to the minimum requirements for such a conversion.
Announcement can be found @ MCA Portal
In case of any specific requirement consultation and / or a service related to your Company, you may consult EZTax.in