Small Company

The Companies Act 2013 has provisions on small company. Section 2 (85)
of the Act defines it as a company other than a public company whose
1. Paid up capital does not exceed Rs 50 lakh or such higher amount as
may be prescribed
2. Turnover as per its last profit and loss account does not exceed Rs 2
crore or such higher amount as may be prescribed.

A small company cannot be

• a holding company or a subsidiary company
• a company registered under section 8 of the 2013 Act
• a company or corporate body governed by any special Act
“Turnover” means the aggregate value of the realisation of amount made
from the sale, during a financial year.
 Exemptions of a Small Company
1. Financial statement of a small company may not include the cash flow
statement [section 2(40)]
2. Signing of annual return –
The annual return shall be filed by director and company secretary
3. Frequency of board meeting –
In case of a small company it is sufficient if at least one meeting of the
Board of Directors has been conducted in each half of a calendar year.
The gap between the two meetings should not be less than ninety days.

The central government has been conferred the power to grant exemptions
to small companies from any provisions of the 2013 Act.
 Dormant company
According to the Companies Act 2013, Dormant company can be a company
formed for a future project or to hold an asset or intellectual property
without there being any significant accounting transaction or a company
which is not active.
Such a company or an inactive company has to make an application to the
Registrar for obtaining the status of a dormant company. An inactive company
has been defined as a company which has not made any significant
accounting transaction during the last two financial years.
An company can apply for a “dormant company “ by making an application in
the prescribed form provided under the Companies (Miscellaneous) rules
2014 have been complied with.
The rules provide the following
1. Application can be made only after obtaining special resolution approval
of the shareholders or at least 3/4th of the shareholders in value terms.
2. No inspection, enquiry or investigation has been taken up against the
company or no prosecution has been initiated against the company and
pending under any court.
3. The company does not have any public deposits or interest thereon
outstanding for payment.
4. There is no outstanding loan, secured or unsecured. If there are
unsecured then consent of the lender should be obtained and enclosed
along with the form.
5. There is no outstanding tax dues either to central or state government or
local authorities.
6. The company has not defaulted in payment of its workmen’s dues.
7. It is not a listed company
In case a company has not filed its annual return for the last two years, then
The Registrar can take it to the dormant company status.
A dormant company can apply to revert back to active company status.

As per the Companies (Miscellaneous) rules 2014, a dormant company

cannot remain as a dormant company for more than 5 consecutive financial
years. If it remains so then, the company shall be removed.
 Government Company
As per section 2(45) of the Companies Act, means a company in which not
less than 51 percent of the paid up share capital is held by the government. It
is not an agent of the government as it is a juristic person different from its
members (the government).

Specific provisions regarding Govt Companies

1. The auditor of a government company is appointed or re appointed by the
Controller and Auditor General of India. The controller directs the manner
in which company’s accounts are to be maintained and also other
instructions relating to functions of auditor. The auditor must submit a copy
of his report to the controller, and such report with his comments thereon ,
shall be placed before the annual general meeting of the company.
2. Where the central government is a member, it shall prepare an annual
report on the working and affairs of the company within three months of
the annual general meeting and place it along with the audit report and
comments thereon before both Houses of parliament. When state
government is a member report shall be presented before the houses of
state legislature.
3. The Government may, by notification in the Official Gazette, direct that
any of the provisions of this Act specified in the notification:
• Shall not apply to any Government company; or
• Shall apply to any Government company, only with such exceptions,
modifications and adaptations, as may be specified in the notification.