The Ministry of Corporate Affairs (MCA), vide a notification dated 1st February 2021 has made amendment to The Companies (Specification of Definitions Details) Rules, 2014, whereby it has amended the definition of Small Company.
Following are the amendments made to the definition of Small company as per Section 2(85) of the Companies Act, 2013–
(i) the threshold limit for paid-up share capital has been increased to rupees two crores from earlier limit of rupees fifty lakhs and
(ii) the threshold limit for turnover as per profit and loss account for the immediately preceding financials has been increased to rupees twenty crores from the earlier limit of rupees two crores
The above amendment shall come into force w.e.f. 1st April 2021.
This is a welcome initiative and shall ease the compliance requirements for a large number of companies, further giving a boost to “Ease of Doing Business Initiative”.
Source: MCA Notifications
Audit Associate, ShineWing India