A Small Company is a privately owned Partnership, a Sole Proprietorship or a Corporation. These type of companies have fewer employees and small annual revenue than other structure of a business. The businesses which are defined as “small” are in terms of being able to apply for government support and qualify for the preferential tax policies which vary depending on the country and the industry. There are multiple compliances of a Small Company mentioned below which are required to be followed by thoroughly.
A company will be accredited as a Small company if it fulfills both, the criteria of having paid up share 50 lakh or less than it and a turnover of 2 crores or less than it.
Therefore, as per the definition of a small company, a concept of a small company does not apply to hold any subsidiary companies. Even though both the holding company and subsidiary company may fulfill the capital and turnover requirement of a small company, they will still fall outside the purview of a small company. Accordingly, the benefits and exemptions which are available to a small company cannot be applied to a company which is a holding a subsidiary company.
Every Company must hold a minimum of two meetings of its Board of Directors each year in such a manner that the minimum gap between both the meetings is not less than 90 days.
The Annual Compliances of a Small Company
Receipt of MBP -1
- The first Compliances of Small Company suggest that In each financial year, every director of the company in the First Meeting of the Board of Director shall disclose his interest in other entities.
- Every Director will be required to submit with the Company a fresh MBP-1, whenever there is a change in Director’s interest from the earlier given MBP-1. Therefore, it should be mandatory for each n every director.
Receipt of DIR- 8
- Each and every Director of the Company in each Financial Year will have to file with the Company disclosure of non-disqualification. However, the filing of the disclosure is mandatory for every company.
- The receipt of DIR- 8 comes under the Form DIR – 8.
E- Forms Filing Requirements
- Annual Return: Every Small Company has to file its Annual Return within 60 days of holding the Annual General Meeting. Annual Income Tax Return will be for the period 1st April to 31st March. The respective form is E-form: MGT-7.
- Financial Statement: The company will be required to file its Balance Sheet along with the Statement of its Profit-Loss Account and as well as Directors’ Report in this form. The respective form is E-form: AOC-4.
Mentioned below are some attachment required to submit with the above-mentioned forms:
- Balance Sheet
- Statement of Profit-Loss Account
- Director’s Report – In Compliances of Small Company, Directors’ Report shall be prepared by mentioning all the information that is required for Small Company and must be signed by the Chairperson authorized by the Board/at least two Directors of the company
- Auditors’ Report – An auditor will be appointed for 5 years and form ADT-1 will be filed for this 5-year appointment. After that every year in AGM, shareholders will ratify the auditor but there is no need to file ADT-1. In the appointment of the auditor, the respective form is E-form: ADT-1.
- Notice of AGM – In the Compliances of Small Company, Every Notice of Annual General Meeting will be prepared as per Section 101 of Companies Act 2013 and Secretarial Standard – II.
- Circulation of Financial Statement and other relevant Documents – The company will be sending to the members of the Company approved Financial Statement, Directors’ Report, and Auditors’ Report for at least 21 clear days before the Annual General Meeting. However, but except in case of AGM is called on Shorter Notice.
Above mentioned Compliances of Small Company that are mandatory yearly compliances for every Small Company. Except above Compliances of Small Company, there can be event-based compliances too.