At Trademark & Legal Hub, we help businesses stay compliant with every MCA update without stress or confusion. The Ministry of Corporate Affairs has recently expanded the definition of Small Companies and increased the benefits for companies that fall under this category.
This article breaks down the latest amendment, eligibility limits and the full list of exemptions in a way that founders can understand immediately.
✔ Updated Definition of a Small Company
Under the latest MCA notification, a company will be treated as a Small Company if it meets both of the following limits:
➤ Paid-up Share Capital: Not more than ₹10 crores
➤ Turnover: Not more than ₹100 crores (as per latest audited financials)
✘ Companies that cannot be classified as Small Companies:
Even if they meet the limits, the following are excluded:
✘ Public companies
✘ Holding or subsidiary companies
✘ Section 8 (Non-profit) companies
✘ Companies regulated under any special Act
★ Key Compliance Benefits & Exemptions for Small Companies
The MCA gives Small Companies multiple relaxations to reduce compliance cost and effort. Here is the full list:
✔ 1. Reduced Penalties
Under Section 446B, Small Companies enjoy substantially lower penalties for many non-compliances. This protects small businesses from heavy financial burden.
✔ 2. No Cash-Flow Statement Required
Small Companies only need to prepare:
✔ Balance Sheet
✔ Profit & Loss Account
✔ Notes to Accounts
➤ A cash-flow statement is not mandatory, which makes financial reporting faster and cheaper.
✔ 3. Only Two Board Meetings Per Year
A Small Company must hold:
➤ Minimum 2 board meetings, one in each half of the year, with at least 90 days gap.
No need for quarterly meetings like other companies.
✔ 4. CARO Does Not Apply
The Companies Auditor’s Report Order (CARO) does not apply to Small Companies.
This reduces audit work, documentation and professional fees.
✔ 5. File MGT-7A Instead of MGT-7
Small Companies file Form MGT-7A which is shorter, simpler and quick to complete.
✔ 6. Simplified Directors’ Report
Small Companies can use a light, simplified format of the Directors’ Report.
Fewer disclosures mean less drafting and fewer compliance hours.
✔ 7. Exemption From Auditor Rotation
Rules relating to mandatory auditor rotation do not apply to Small Companies.
This offers stability and avoids unnecessary change.
✔ 8. No Requirement to Report Internal Financial Controls (IFC)
Small Companies are exempt from detailed reporting on Internal Financial Controls, which makes audit simpler.
✔ 9. Simplified Secretarial Requirements
Small Companies can maintain simplified minutes and enjoy reduced secretarial compliance compared to larger companies.
★ Why This Amendment Matters for Your Business
With the revised thresholds, more companies now fall into the Small Company category. This means:
✔ Lower compliance burden
✔ Lower audit cost
✔ Reduced penalties
✔ Faster filings
✔ Less documentation
✔ Easier management of statutory obligations
For startups, micro businesses and early-stage companies, these relaxations provide real savings and more breathing room.
✦ How Trademark & Legal Hub Helps You Stay Compliant
At Trademark & Legal Hub, we ensure that every client knows:
✔ Whether they qualify as a Small Company
✔ Which exemptions they can legally claim
✔ How to reduce compliance costs without violating the Act
✔ How to prepare simplified MGT-7A, Directors’ Report and filings
✔ How to stay on track with our annual compliance calendar
We guide you from incorporation → compliance → growth, with clear advice and zero confusion.
✔ Final Word
The MCA’s latest amendment strengthens the goal of “Ease of Doing Business” in India. With higher limits and more relaxations, Small Companies can now focus on growing instead of drowning in paperwork.