Companies bill 2012

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Rakhee

Company Secretary

37 Points Posted on 25 February 2013

The definition of 'Small company' in Companies Bill 2012 seems confusing which reads as follows:-

(85) ‘‘small company’’ means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such
higher amount as may be prescribed which shall not be more than five crore
rupees; or
(ii) turnover of which as per its last profit and loss account does not
exceed two crore rupees or such higher amount as may be prescribed which shall
not be more than twenty crore rupees:

If a limit of Fifty Lakh rupees of paid-up capital and Two Crore rupees of turnover is mentioned then why a higher amount is needed to be prescribed?

Replies (2)

CS Advocate Abhishek Goyal

M Com FCS LLB M-AIMA

11027 Points Posted on 25 February 2013

The first limit of paid up share capital of Rs. 50 lakhs and turnover of Rs. 2 crores for identification of small companies shall be applicable as long as no notificiation/rules prescribing higher amount is issued.

Probably the intent of the legislature is to keep some flexibility in norms relating to small companies both in terms of paid up share capial and turnover. But yes the definition of small companies should have been made simple rather than leaving a scope for prescribing the upper limit of paid up share capital and turnover.