Small Company means a company, other than a public company

• paid-up share capital is < four crore rupees and
• turnover of which as per profit and loss account for the immediately preceding financial year is < forty crore rupees

In line with the government's policy of increasing the ease of doing business, the small companies enjoy benefits like:

1. Board meetings – a normal company must conduct 4 board meetings in a year. A small company needs to hold only 2.
2. Preparation of financials – a small company is exempted from preparing cash flow statement (BS and P&L only)
3. Annual returns filing – Annual returns of a small company can be signed by a CS or Director. For normal companies both must sign
4. Rotation of directors – A private company must have rotation of directors every 5 years while a small company need not have rotation
5. Exemption to CARO 2020 Reporting - For a small company, the auditor need not report on the various aspects as required in the CARO Order
6. Lesser penalties for small companies - the penalty for any contravention is restricted to half the normal penalties and also an upper cap in monetary terms is also specified.