New "capital" and "turnover" thresholds for small businesses The Companies (Specification

of Definition Details) Amendment Rules, 2022, which change the definition of "small
company" under the Companies Act, 2013 (the "Companies Act"), were announced by the
Ministry of Corporate Affairs on September 15, 2022. By this modification, the bar for a
small company's maximum paid-up capital is raised from INR 2,00,00,000 (Indian Rupees
two crores) to INR 4,00,00,000 (Indian Rupees four crores), while the threshold for turnover
is raised from INR 20,00,00,000 to INR 40,00,00,000 (Indian Rupees forty crores) (Indian
Rupees twenty crores).

With the expansion of the "paid-up capital" and "turnover" threshold restrictions, more
businesses will now fall within the definition of small businesses. As a result, more
businesses will be able to benefit from the exemptions provided to small businesses under the
Companies Act that are not provided to other types of businesses..

These benefits and exemptions are in terms of compliance requirements as under:

1. 1. There are just two (2) mandatory board meetings each fiscal year (as opposed to
four (4) obligatory meetings for other corporations);
2. The annual report may be signed by either the company secretary or a director;
3. the financial statement need not include a cash flow statement; and
4. No mandated auditor rotation is required, an abbreviated yearly report must be
completed, and less severe penalties may apply..

Our Overview.

In order to offer certain benefits and exemptions to small enterprises functioning as private
limited companies, the Companies Act developed the idea of small companies. More
businesses will be included in its scope thanks to these expanded limitations on paid-up
capital and turnover. These businesses can benefit from exemptions from several regulatory
obligations. It makes conducting business in India easier, especially for new firms and other
small businesses.