Definition of Small Company:-
Sec 2(85) of Companies Act 2013 (“the Act”) read with the Companies (Specification of Definitions Details) Rules 2014:
“small company” means a company, other than a public company.
(i) paid-up share capital of which does not exceed [before amendment: Rs. 4 crores] [after amendment: Rs. 10 crores] AND
(ii) turnover of which as per profit and loss account for the immediately preceding financial year does not exceed [before amendment: Rs. 40 crores] [after amendment: Rs. 100 crores]
Provided that nothing in this clause shall apply to –
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
Frequently Asked Questions on this amendment:-
- What will be impact of this amendment on such companies which were not “small company” as per old definition but have become “small company” as per amended definition and have not yet done annual filing for FY 24-25? Whether their e-form AOC-4 will require certification from practicing professional and whether they need to file e-form MGT-7 or MGT-7A?
Answer:
In such cases, only once MCA filing system is updated as per revised thresholds, then e-form AOC-4 shall not require certification from a practicing professional. As per MCA’s earlier advisory, once e-form AOC-4 is filed and MCA records are updated, the Company’s classification will be revised automatically and Company can file its annual return for FY 24-25 in e-form MGT-7A (a smaller form prescribed for small companies) instead of MGT-7.
Till the MCA filing system is not updated, the Company will need to file e-form AOC-4 and e-form MGT-7 as per earlier definition, i.e., as it is not a small company.
- In the above case, what if Company had paid up capital of Rs. 5 crores or above but less than Rs. 10 crores and hence e-form AOC-4 XBRL is applicable to it? Whether Company needs to file e-form AOC-4 XBRL or AOC-4 in non xbrl format?
Answer:
There is no consequent amendment in the Companies (Filing of Documents and Forms in Extensible Business Reporting Language) Rules, 2015. Hence in case of a private company (not being a section 8 company/ holding company/ subsidiary company/ governed by any special Act and turnover less than Rs. 100 crores) having paid up capital of more than Rs. 5 crores but less than Rs. 10 crores OR if the Company had filed e-form AOC-4 XBRL in any previous year, it will need to file e-Form AOC-4 XBRL, even if it is a small company as per the amended definition. In such case, e-form AOC-4 XBRL will mandatorily require certification of practicing professional.
Hence it is a matter of representation that the thresholds of XBRL should also be amended in line with the change in definition of small company and MCA needs to clarify on the applicability of XBRL for such companies who had filed e-form AOC-4 XBRL in any previous year but now they are small companies as per thresholds in amended definition.