Ministry of Corporate of Affairs of India has clarified the much awaited provision of Small Company as defined in Clause (i) of section 2 (85) of the Companies Act ,2013 with the Removal of Difficulties Order, 2015 notified on 13th February, 2015. It redefined the meaning of Small Company by substituting the word "or” with the word "and” occurring at the end of the Clause (i) of section 2 (85) of the Companies Act ,2013.and now both conditions are simultaneously required to be complied with.
The previous definition of Small Company categories a Company as Small Company, if it meets either of the conditions provided therein thereby making the second limit meaningless. Therefore situation was not clear as to whether the companies which, though, meet one of the criteria but exceed the monetary limit prescribed in second criteria are also getting classified as 'small companies'.
Now a company shall be treated as Small Company, if it fulfill both the following conditions:
- The paid up share capital of the Company does not exceed Rs.50 Lacs, and
- The Turnover of the Company does not exceed Rs. 2 crores.
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