Small company after 1 December 2025
G.S.R. 880(E) amended the Companies (Specification of Definition Details) Rules from 1 December 2025: a private company is a small company if its paid-up capital is not more than ₹10 crore and its turnover for the last financial year is not more than ₹100 crore (earlier ₹4 crore and ₹40 crore). Holding and subsidiary companies, section 8 companies and companies governed by a special Act cannot be small companies, whatever their size. Small company status drives several other exemptions: cash flow statement, auditor rotation, CARO 2020, IFC reporting, demat under Rule 9B and the half-penalty rule in s.446B. The Corporate Laws (Amendment) Bill, 2026 proposes to raise the limits to ₹20 crore and ₹200 crore proposed.
Which figure each threshold uses
Rules 4 (independent directors) and 6 (committees) of the board rules use paid-up capital, turnover and aggregate outstanding loans, debentures and deposits as on the last audited financial statements. Rule 13 (internal audit) looks at the preceding financial year and borrowings at any point in it. Rule 9 (secretarial audit) uses the latest audited balance sheet. CSR looks only at the immediately preceding financial year. Enter the highest figure that fits the rule if in doubt, and check close calls against the rule text.
Company secretary at ₹10 crore
Rule 8A requires a whole-time company secretary in any company with paid-up capital of ₹10 crore or more, private companies included. A private company at exactly ₹10 crore is therefore a small company and still needs a whole-time CS. Listed companies and public companies at ₹10 crore paid-up need the full set of KMP under Rule 8.
Common questions
Is a subsidiary of a private company a small company?
No. Section 2(85) excludes any holding company and any subsidiary company, so both the parent and the subsidiary lose small company status even if each is within ₹10 crore paid-up and ₹100 crore turnover.
Does CARO 2020 apply to a private company with turnover of ₹50 crore?
Yes, unless it is a small company. The private-company exemption needs paid-up capital plus reserves of ₹1 crore or less, bank or FI borrowings of ₹1 crore or less at all times in the year, and total revenue including other income of ₹10 crore or less, and it must not be a holding or subsidiary of a public company.
When does secretarial audit apply to a private company?
Only when its outstanding loans or borrowings from banks or public financial institutions are ₹100 crore or more, or when it is a material unlisted subsidiary of a listed company under SEBI LODR Regulation 24A.
Do the new small company limits change the auditor rotation rule?
Indirectly. Rule 5 of the Audit Rules excludes small companies and OPCs, so a private company that now qualifies as small falls outside rotation even if it has bank borrowings of ₹50 crore or more.