Relaxations for Small Companies have been provided via revision of definition of small companies, like fewer board meetings, exemption from preparing cash flow statement, lesser filing fee and penalties, etc., with effect from 01/04/2021 (FY 2021-22).
From 1st April 2021, small companies won’t have to prepare cash flow statements. Shall provide details of just the aggregate remuneration drawn by directors in their annual return instead of what directors and key managerial personnel drew.
The benefits come from the revised definition of small companies. Finance minister Nirmala Sitharaman proposed to revise the definition of small companies as per Companies Act, 2013 by increasing the threshold for paid-up capital from Rs 50 lakh to Rs 2 Crore and for turnover from Rs 2 Crore to Rs 20 Crore. The revision of definition shall come into force from 01/04/2021 (FY 2021-22).
Other benefits for small companies include mandatory rotation of auditor will not be required, the auditor won’t have to report on the adequacy of internal financial controls and its operating effectiveness in the auditor’s report, businesses will have to hold only two board meetings annually, company secretary (CS) will be allowed to sign the annual return of the company and in the absence of a CS, a single director will be able to sign the same.
The revision of the definition will also lead to lesser penalties and filing fees for small companies.