What compliance relaxations are available to a 'small company' under the Companies Act?

Question

My company has low turnover and paid-up capital and I want to know if it qualifies as a small company with reduced compliance. Specifically, I want to know how Companies Act 2013, Section 2(85) applies to a situation like mine and what the corporate law position in India actually is. If there is a deadline I should be aware of, I need to know that now.

MyVakeel Legal Desk · Accepted Answer

What compliance relaxations are available to a 'small company' under the Companies Act? is governed in India primarily by Companies Act 2013, Section 2(85), Companies Act 2013, Section 92 and Companies Act 2013, Section 134. Outcomes in small company definition section 2(85) disputes depend heavily on documentation, so check what you can actually evidence as you read.

Section 2(85) defines a small company as a private company with paid-up capital not exceeding the prescribed limit and turnover not exceeding the prescribed limit as per the latest audited financial statement, excluding holding, subsidiary, Section 8 and certain other companies.

Small companies can file an abridged annual return in Form MGT-7A instead of the full MGT-7 required under Section 92, reducing disclosure burden.

Section 134 permits small companies to have the board's report signed by only two directors, or one director in the case of an OPC, and allows a simplified board's report format covering fewer matters.

Small companies are exempt from the requirement of holding a minimum of four board meetings a year, needing only two meetings with a gap of not more than 90 days.

Auditor rotation requirements under Section 139(2) and certain internal financial control reporting requirements do not apply to small companies, easing audit compliance.

Practical steps: 1) Check the latest paid-up capital and turnover against the small company thresholds; 2) File the abridged MGT-7A annual return if eligible; 3) Reduce board meetings to the minimum two permitted for small companies; 4) Confirm exemption eligibility annually since thresholds can change with turnover growth.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — remedies under Companies Act 2013, Section 2(85) carry limitation periods, and unexplained delay weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in corporate law.