Cash flow applicablity

To be classified as a ‘small company’, the company needs to fulfill both the conditions laid down in sec. 2(85) of the Companies Act, 2013.

i.e. paid-up share capital should not exceed Rs. 50 lakh AND turnover (as per its last P&L account) should not exceed Rs. 2 crore. Before the amendment, the requirement was to fulfill either one of the two conditions.

In the given instance, the company is fulfilling only the turnover condition. Hence, it cannot be classified as a ‘small company’. Consequently, its financial statement should include cash flow statement as per sec. 2(40).