Quick Summary
Through an engaging conversation between Krishna and Arjuna, this article explains the Ministry of Corporate Affairs' amendment to the definition of a "small company," effective 1 December 2025. By increasing the paid-up share capital limit to Rs 10 crore and the turnover threshold to Rs 100 crore,
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FAQ :
The new criteria for classifying a company as 'small' come into effect from 1st December 2025.
The paid-up share capital limit has been increased from Rs 4 crores to Rs 10 crores, and the turnover limit has been raised from Rs 40 crores to Rs 100 crores.
Benefits include a lower compliance burden, no requirement for cash flow statements, relaxed board meeting requirements, lower penalties for non-compliance, simplified annual returns, exemption from auditor rotation, and eligibility for a fast-track merger process.
Small companies are subject to lesser penalties, specifically 50% of the specified penalty or Rs 2 Lakh, whichever is lower.
For small companies, only one director or the company secretary needs to sign the annual return, simplifying the filing process.
Yes, small companies can utilise a fast-track merger process under Section 233 of the Companies Act, which bypasses the lengthy National Company Law Tribunal process.
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