Amendments in Companies Act, 2013 applicable w.e.f. 1st April 2021

1. Definition of Small Company

Post amendment private companies having Paid-up Share Capital of upto Rs. 2 crores and turnover of upto Rs. 20 crores as per Profit & Loss Account of preceding F.Y. shall qualify for Small Company instead of erstwhile limit of Rs. 50 lakhs and 2 crores respectively.

However, following shall still not qualify for Small Companies:

a. Holding Co or Subsidiary Co

b. Company registered u/s 8

c. Company or body corporate governed under special Act

Analysis of the amendment

1. Since the paid-up share capital and turnover limits are enhanced, companies which were earlier not small company comes into the bracket of small company resulting in fewer compliances.

2. As against minimum 4 Board Meetings during the year, these companies are now required to hold only 2 Board Meetings in a Calendar Year with 1 each in half Calendar Year.

3. Auditors Reporting of CARO not applicable on them.

4. Need not require to maintain Cash Flow Statement.

5. Annual Returns can be signed by Director instead of employed CS or Company Secretary in practice.

6. A large number of start-ups would be recognised as small companies.

2. Provisions with respect to One Person Company (OPC)

As a measure to directly benefit Start-ups & Innovators in the country, especially those who are supplying products & services on e-commerce platforms, and in order to bring in more unincorporated businesses into the organized corporate sector, provisions relating to the incorporation of OPCs has been incentivized to allow OPCs to grow without any restrictions.

The change in provisions is summarized below in the following table:

3. Annual Returns

From the F.Y. 2020-21; OPC & Small Company shall file Annual Return in Form No. MGT 7A. Other companies shall continue to file Form No. MGT 7.

Post amendment, extract of Annual Return in Form No. MGT 9 shall not be required to be attached with the Board’s Report.

4. Modifications or Additional disclosures in Form No. MGT 7

a. Reporting no. of shares held by shareholders in physical & demat form separately.

b. ISIN of the equity shares of the company.

c. Details of FII holding shares of the company viz. Name, address, country, date of incorporation, No. of shares & % of holding.

d. Furnishing of information with respect to Indebtedness on account of Secured Loans, Unsecured Loans & Deposits at the end of the Financial Year is removed.

5. Modifications in Form No. MGT 7A in comparison to erstwhile Form No. MGT 7

a. Option has been inserted to select if the company is OPC or Small Company.

b. Furnishing of information with respect to Details of stock split / consolidation removed.

c. Furnishing of information with respect to Indebtedness on account of Secured Loans, Unsecured Loans & Deposits at the end of the Financial Year is removed.

d. Information with respect to Directors & KMP viz. bifurcation of Directors amongst. Executive & Non-Executive along with their shareholding, details of Directors at the year end and change in directors during the year no longer required.

e. No need to furnish dates of committee meetings held. However, it appears that this clause may be further amended.

f. Details of furnishing information about remuneration to CEO/CFO/CS no longer required.

6. Amendment in Auditor’s Report

a. The auditor is required to report on the appropriateness of representation received from management to the fact that they have not advanced any money for Ultimate Beneficiaries or received any money for benefit of any Ultimate Beneficiaries.

b. The auditor is required to whether the company has complied with the provisions of the Act regarding declaration and payment of dividend.