A Small Company is a company, other than a public company;

1. Paid-up share capital of which does not exceed Rs. 50 Lakhs or such higher amount as may be prescribed which shall not be more than Rs. 5 Crores; or
2. Turnover of which as per its last P&L A/c does not exceed Rs. 2 Crores or such higher amount as may be prescribed which shall not be more than Rs. 20 Crores.

Provided that nothing in this clause shall apply to—

1. a holding company or a subsidiary company;
2. a company registered under section 8; or
3. a company or body corporate governed by any special Act;

Features of Small Company

• Only a private company can be classified as a small company.
• Holding company, subsidiary company, charitable company and company governed by any Special Act cannot be classified as a small company.
• For a small company, either the paid-up capital should not exceed Rs. 50 lakhs or the turnover as per latest statement of profit & loss should not exceed Rs. 5 crores.
• The status of a company as “Small Company” may change from year to year. Hence, the benefits available during a particular year may stand withdrawn in the next year and become available again in the subsequent year.

Special Provisions and Exemptions

• Privileges/exemptions available to a small company are same as OPC.
• The annual return of a Small Company can be signed by the company secretary alone. Where there is no company secretary, it can be signed by a single director of the company.
• A small company may hold only two board meetings in a year, i.e. one Board Meeting in each half of the calendar year with a minimum gap of ninety days between the two meetings.
• A small company need not include Cash Flow Statement as a part of its financial statements.
• Provision regarding mandatory rotation of auditor not applicable to a small company.
• Holding and subsidiary companies are specifically excluded from the concept of small company.