Thus, the classification of ‘Small Company’ in the Companies Act, 2013, goes a long way in the promotion of small businesses in India.
Here is a brief on the characteristics of a small company as per the Companies Act, 2013.
As per Section 2(85) of the Companies Act, 2013, a Small Company is defined in the following way:
Small company means a company other than a public company and should fulfil the following criteria:
Since most of the startups usually, have a paid-up capital of less than Rs. 50 lakhs and an annual sales turnover of below 200 lakhs, they are classified under the category of ‘Small Company’.
A Private Limited Company can be classified as a small company as per the fulfilling of the conditions that are discussed above in this write-up. Small companies enjoy numerous benefits under the Companies Act, 2013, and are subject to lesser compliance formalities.
Some of the Significant advantages enjoyed by a Small Company are as discussed below: