SMALL COMPANY EXEMPTION UNDER CARO 2020
This query is : Resolved
12 October 2022
Small Company Definition
Old - Paid up Capital should not exceed 50 Lakhs & Turnover should not exceed 2 Crores
New Amendment - Paid up Capital should not exceed 2 Crores & Turnover should not exceed 20 Crores
A Private Limited Company being Small Company as per new amendment as stated above but complies with one of the criteria (Loan exceeds the limit) mentioned in CARO 2020 applicability.
Shall CARO will be applicable to the Company as Small Companies are exempt from the CARO applicability as per Section 143(11) of Companies Act ?
Old - Paid up Capital should not exceed 50 Lakhs & Turnover should not exceed 2 Crores
New Amendment - Paid up Capital should not exceed 2 Crores & Turnover should not exceed 20 Crores
A Private Limited Company being Small Company as per new amendment as stated above but complies with one of the criteria (Loan exceeds the limit) mentioned in CARO 2020 applicability.
Shall CARO will be applicable to the Company as Small Companies are exempt from the CARO applicability as per Section 143(11) of Companies Act ?
CA R SEETHARAMAN
(Expert)
13 October 2022
Para 12 of the Guidance Note on CARO, 2020 (Revised 2022) clarifies that a small company shall be exempt from the applicability of the Order even if it falls under any of the criteria specified for private company. In view of the above, a private company which is a ‘small company’ shall be exempt from CARO, 2020, even if its total borrowings from banks or financial institutions exceed ` 1 crore at any point of time during financial year 2021-22.
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