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MCA Revises the Definition of Small Companies to Facilitate Ease of Doing Business

September 30, 2022

Ministry of Corporate Affairs (“MCA”) vide Notification No. G.S.R. 700(E) dated 15th September 2022 had amended Rule 2(1)(t) of Companies (Specification of definition details) Rules, 2014 and had further revised the definition of Small Companies.

Initially, the limit for small companies was paid up capital not exceeding rupees 50 lakh and turnover not exceeding rupees 2 crores. The definition was revised by increasing the threshold limit for paid Up Capital from Rupees 50 lakh to Rupees 2 crore and turnover from Rupees 2 crore to Rupees 20 crore vide Notification No. G.S.R. 92(E). dated 1st February 2021 effective from 1st April 2021. Now, the definition has been further revised by increasing such thresholds for paid-up Capital from Rupees 2 crore to Rupees 4 crore and turnover from Rupees 20 crore to Rupees 40 crore.

The changes effected by MCA in the definition of a Small Company can be summarized as follows:

  Earlier Revised w.e.f. 1st April 2021 Revised w.e.f. 15th September 2022
Paid Up Capital not exceeding Rupees 50 Lakhs; and not exceeding Rupees 2  crore; and not exceeding Rupees 4 crore; and
Turnover not exceeding Rupees 2 crore; not exceeding Rupees 20 crore   not exceeding Rupees 40 crore  

The complete text of the Rules may be viewed at the below link:

https://bit.ly/3E3l7w7

Last updated: 30/09/2022

Article contributed by:

Syed Arsalan Ahmed

Associate - Legal

MBG Corporate Services


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