A small company enjoys several compliance benefits under the Companies Act in India. These advantages reduce the legal workload and allow founders to stay focused on growth. Small companies also save costs as many filings and reporting requirements are simplified. This blog explains the updated limits and the key benefits available to small companies today.
A small company is defined under Section 2(85) of the Companies Act. The Government revised the limits through the amendment published on 1 December 2025. This update expanded the number of businesses that can qualify.
To be treated as a small company, the business must meet the following:
Paid up capital is 10 crore or less
Turnover is 100 crore or less as per audited financials
It is a private limited company
It is not a holding company or subsidiary
It is not registered under Section 8
It is not a company notified under special categories by MCA
These conditions are available on www.mca.gov.in and apply for every assessment year.
Even though a small company enjoys several exemptions, it still must follow the basic annual compliance requirements. These help maintain transparency and keep the business active on the MCA portal.
1. Director’s Interest Disclosure
Directors must disclose their interest in other entities through Form MBP 1 in the first board meeting of each year or whenever any change occurs.
2. Appointment of Directors
At least one director must be a resident of India. A person staying in India for 180 days or more in a calendar year meets this requirement.
3. Appointment of Auditors
The Board must appoint the first auditor within 30 days of incorporation. In the first AGM, the company must appoint the statutory auditor for a period of five years and file Form ADT 1 with the Registrar.
4. Annual General Meeting
A small company must hold its AGM every year at its registered office or another approved venue. The notice should be sent at least 21 clear days before the meeting unless held on shorter notice.
5. Board Meetings
A small company must hold at least two board meetings in a financial year. There must be a minimum gap of 90 days between the two meetings. Directors may attend the meeting in person or through video conferencing.
6. Filing of Financial Statements
The financial statements must be filed using Form AOC 4.Copies of approved financial statements must be shared with members at least 21 clear days before the AGM.
7. Filing of Annual Return
A small company must file its annual return within 60 days of the AGM using Form MGT 7A. Where no AGM is held, the return must be filed within 60 days from the date the AGM should have been held.
8. Statutory Registers
A small company must maintain statutory registers, including:
Register of members
Register of debenture holders
Register of other security holders
A small company enjoys several relaxations that help founders save time, reduce paperwork, and limit penalties.
1. Relaxed Board Meeting Requirements
Only two board meetings are required each year. This is a major advantage because other companies must hold at least four.
2. Financial Statement Benefits
A small company does not need to prepare a cash flow statement. This reduces accounting work and review time.
3. Simplified Annual Return
Small companies can file Form MGT 7A, which is a short and simple annual return. If there is no company secretary, a single director can sign the return.
4. Auditor Rotation Not Required
Section 139(2) on auditor rotation does not apply. This allows the company to continue with the same auditor without mandatory change.
5. Internal Control and Audit Exemptions
Auditors of a small company do not need to report on internal financial controls. Internal audit is also not required unless the company falls under a special notified class.
6. Lower Penalties
Section 446B provides that a small company pays half of the normal penalty for defaults under Sections 92, 117, and 137. This reduces the risk for startups and small businesses.
These benefits make compliance easier, faster, and more cost effective. Many founders share that shifting to small company status allows them to focus more on operations and less on paperwork.
We check your paid up capital and turnover to confirm small company status
We guide you on the exact forms required under MCA rules
We prepare MGT 7A, AOC 4, minutes, registers, and AGM documents
We complete all filings with the Registrar within deadlines
We provide reminders and compliance support throughout the year
A small company enjoys multiple benefits that reduce compliance pressure and cost. With simple reporting and lower penalties, founders can manage their business activities with ease. If you want support to identify your status and complete filings on time, Ebizfiling can guide you at every step.
Documents Needed to Start a New Company
Important ROC Registration for Small Businesses
From 1 December 2025, a company qualifies as a small company if its paid-up capital is up to ₹10 crore and its turnover is up to ₹100 crore as per the latest audited financial statements. These limits were updated to reduce compliance burden for more businesses.
No. Even if capital and turnover limits are met, a company cannot be treated as a small company if it is a holding company, subsidiary company, Section 8 company, or a company classified under any special category by the Government.
A small company must file its annual return in Form MGT-7A, which is a simplified version of the regular MGT-7 and reduces the paperwork for smaller companies.
No. A small company is exempt from preparing a cash flow statement, making annual financial reporting easier and less time-consuming.
A small company must hold at least two board meetings each financial year with a minimum gap of 90 days between them—much fewer than other companies.
Yes. Statutory audit is mandatory for all companies, including small companies. However, the reporting requirements are simpler due to fewer disclosure obligations.
No. Auditor rotation rules do not apply to small companies, allowing the same auditor to continue if the company prefers.
Under Section 446B, small companies pay reduced penalties—usually half of what applies to other companies—making compliance less burdensome.
If the company has a company secretary, they must sign the annual return. If not, a single director can sign it, making compliance cost-effective and simple.
Yes. A company will lose its small company status in the next financial year if its paid-up capital or turnover exceeds the prescribed limits, after which full compliance requirements apply.
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