A Small Company is a private limited company that qualifies for simplified compliance under the Companies Act, 2013, by meeting specific limits on paid-up share capital and annual turnover. This page explains the definition under Section 2(85) and Rule 2(1)(t), outlines the revised thresholds effective from 1 December 2025, and lists excluded company categories.
What is a “Small Company”
In India, a Small Company is a size-based classification for private companies, determined each year by paid-up share capital and turnover from the previous financial year’s profit and loss account. No separate registration is required, and there are no restrictions on business activities. This status provides simplified requirements for board meetings, audits, and annual returns, and reduces penalties for procedural defaults under Section 446B.
Exceptions
Not all private companies qualify as a Small Company. Section 2(85) excludes public companies, holding or subsidiary companies, Section 8 Companies, and companies governed by a special Act, regardless of capital or turnover. While similar to a Small LLP in concept, the criteria and compliance requirements differ. This classification is also separate from the MSME classification, which is based on investment and turnover.
Criteria for a Small Company, Effective 1 December 2025
| No | Criterion | Statutory threshold |
|---|---|---|
| 1 | Paid-up share capital | does not exceed ₹10 crore |
| 2 | Turnover (Preceding FY) | does not exceed ₹100 crore |
| 3 | Both criteria | must be satisfied simultaneously |
| 4 | Excluded categories | Public Limited Companies,Holding Company Subsidiary Company Section 8CompanySpecial-Act companies |
Legal Provisions
To find the exact legal wording, please consult Section 2(85) of the Companies Act, 2013, along with Rule 2(1)(t) of the Companies (Specification of Definition Details) Rules, 2014. The official Act and Rules are accessible on the Ministry of Corporate Affairs website (mca.gov.in).
Frequently Asked Questions
What is the difference between a Small Company and an ordinary private company?
Under which law is a Small Company defined?
What are the paid-up capital and turnover limits for a Small Company?
In This Article
Author Bio
Meet Sanjeev Kumar, a distinguished advocate before the Supreme Court of India, High Courts, and National Tribunals. Founding Partner of Juriskps Law Offices, a premier law firm, he specializes in commercial, corporate, tax, arbitration, and IPR matters. His incisive legal insights enrich Setindiabiz’s blog with expert commentary.
