FreeComplianceSmall company under the Companies Act: definition and benefits
Most early-stage private companies in India are small companies under Section 2(85) of the Companies Act. The status matters: it cuts down board meetings, filings and penalties.
Definition
A small company is a company, other than a public company, with:
- Paid-up share capital of not more than ₹10 crore, and
- Turnover as per the profit and loss account for the preceding financial year of not more than ₹100 crore.
Holding and subsidiary companies, Section 8 companies, and companies governed by special Acts are excluded.
These limits were raised from ₹4 crore and ₹40 crore by an amendment to the Companies (Specification of Definition Details) Rules notified on 1 December 2025.
Benefits
- No cash flow statement required in financial statements.
- Only two board meetings a year, one in each half.
- Abridged annual return in MGT-7A.
- Auditor rotation does not apply.
- Lower government filing fees.
- Penalties under many sections are capped at half (Section 446B).
- Exempt from the mandatory demat requirement for private companies.
- Fast-track mergers with other small companies.
Frequently asked questions
This guide is general information, not legal advice. Government fees and procedures change; confirm current figures before you file.
- MGT-7 vs MGT-7A: which annual return should your company file?
The difference between MGT-7 and MGT-7A annual returns, who files which, due dates, certification and late fees.
- Board meeting rules for private companies
How many board meetings a private company must hold, the 120-day gap, notice, quorum, video conferencing and circular resolutions.
- Annual compliance checklist for a private limited company
The yearly filings a private limited company in India must make: AOC-4, MGT-7, ADT-1, DPT-3, MSME-1, ITR, plus DIR-3 KYC every three years.