COMPLIANCES FOR SMALL COMPANIES

A Small Company is a type of private company defined under the Companies Act, 2013 that meets certain financial limits and gets reduced compliance requirements and simplified regulations to promote ease of doing business.

A small-sized private business entity with limited capital and turnover, which gets relaxations in legal compliances.

A Small Company is a government-recognized category designed to support small businesses by reducing compliance burden, making it easier for them to grow and operate efficiently.

Meaning of small company- Section 2(85)

“Small company” means a company, other than a Public company, –

1 Paid up share capital of 10 crore rupees

AND

2 Turnover of which as per profit and loss account for the immediately preceding financial year which shall not be more than 100 crore rupees:

OLD AND NEW LIMITS;

Particular	Earlier Limit	New Limit (2025-26)
Paid-up Share Capital	₹4 Crore	₹10 Crore
Turnover	₹40 Crore	₹100 Crore

The above amendment came on 1^st December,2025

Provided that nothing in this clause shall apply to-

A holding company or subsidiary company;
A company registered under section 8; or
A company or body corporate governed by any special Act;

Category – only private companies can qualify.

EXCLUSIONS (that cannot be small company)

. Holding companies or subsidiary companies.

. Companies registered under section 8(non-profit)

. Companies or bodies corporate governed by a special Act.

Characterstics of Small Companies

Low Profitability and Revenue

A small company’s revenue is not high as compared to medium and large size companies. The revenue depends on the type of business and the its capability . However, lower revenue cannot be considered as lower profitability of the company.

Fewer Employees

Since small companies have less paid-up capital and turnover, they onboard a small team of employees than large companies. Sometimes, this may even be handled by a single person or one team.

Smaller covering of areas

It covers the smaller sections of society. Thus they have small market range for doing their business activities.

Fewer locations

Generally, small companies does not have several branches but have a limited area of operations. They are usually not established in other countries and several states. The sales of small companies are confined restricted to a single area.

Mandatory Compliances For Small Companies

1.BOARD MEETINGS

Must have a maximum of 2 meetings in a financial year.

The minimum gap between the two Board Meetings must be at least 90 days. Only two meetings are sufficient in a year.

Whereas a private limited company that is not considered a small company must conduct 4 board meetings in financial year.

2.ANNUAL GENERAL MEETINGS

Every company must conduct AGM once in every financial year. The maximum gap between two AGMs cannot exceed 15 months.

If a company is incorporated on 1 June 2025 and its financial year ends 31 March 2026, the first AGM can be held up to 31 December 2026.

The AGM Should be done within 6 months from end of financial year.

3.ANNUAL RETURN

Small companies can file simplified annual return.

Annual return signed by a Company Secretary, or a director if the company does not have Company Secretary.

Annual return filing in the Form MGT-7A (specifically introduced for small companies and OPCs.)

Filing of annual return must be within 60 days of AGM.

4.BOARD’ S REPORT

Lesser reporting requirement for small companies which may include-

Director’s responsibility statement
Number of board meeting held
Web address of annual return
Fraud reporting by auditors (if any)

5.FINANCIAL STATEMENT

Company must file the Financial statements with the MCA in the form AOC-4.

Due date of financial statement is within 30 days of AGM.

Small companies also get relaxations from cash flow statement as it is not mandatory as per section 2(40).

6.APPOINTMENT OF AUDITOR

Every company must appoint a statutory auditor as per the provisions of the companies Act.

The board of directors appoint 1^st auditor within the 30 days from the date of incorporation.

If board fails to appoint then members, must appoint the auditor in the Extra Ordinary Meeting (EGM) WITHIN 90 days.

The first auditor holds office until the conclusion of the first Annual General Meeting (AGM).

The auditor appointment is filed through Form ADT-1.

7.INCOME TAX RETURN

Companies must fill income tax return with department in Income Tax IN THE FORM ITR-6.

Generally the due date is 31^st October if company’s business require auditing.

IMPORTANT COMPLIANCE AND THEIR DATES

Compliance	Form	Due Date
Board Meetings	—	Minimum 2 per year
AGM	—	Within 6 months of FY end
Financial Statements	AOC-4	Within 30 days of AGM
Annual Return	MGT-7A	Within 60 days of AGM
Income Tax Return	ITR-6	31 October

Consequences Of Non- Filing

Failure to comply with the regulatory requirement leads to following:

i. Monetary policy

ii Disqualification from directors

iii.Other legal proceedings lead under companies Act,2013

Benefits of Small Companies

i Reduced number of board meetings

ii Simplified annual return filing

iii Exemption from cash flow statement

iv Reduced penalties for non-compliance

v Simplified Director’s Report

These relaxations help companies focus more on business growth rather than heavy compliance.

CONCLUSION

Small companies play a vital role in driving innovation, employment, and economic growth in India. The regulatory framework under the Companies Act, 2013 provides necessary flexibility and reduced compliance requirements to encourage entrepreneurship.

However, despite these relaxations, companies must ensure timely filing of statutory returns and proper maintenance of records with the Ministry of Corporate Affairs to avoid penalties.