The Ministry of Corporate Affairs (MCA) has officially notified the Companies (Specification of definition details) Amendment Rules, 2025 on 1 December 2025, revising the financial thresholds for classification as a “small company.”
As per the notification, for the purposes of Section 2(85)(i) and (ii) of the Companies Act, 2013, a company will now be considered a small company if its:
- Paid-up share capital does not exceed INR 10 crore (earlier INR 4 crore), and
- Turnover does not exceed INR 100 crore (earlier INR 40 crore).
This expansion significantly broadens the eligibility landscape and brings a much larger pool of companies within the small-company framework.
Key Benefits
1. Ease of Doing Business & Compliance Relief
With more companies now falling within the definition, the revised thresholds unlock several operational and compliance advantages that meaningfully support ease of doing business. These reforms reduce procedural complexity, lower regulatory burdens, and enable small companies to function with greater agility and cost efficiency.
2. Relaxation from Mandatory Dematerialisation of Shares
Small companies remain exempt from the mandatory requirement to dematerialise their securities under Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014. This allows them to continue issuing and holding shares in physical form without engaging depositories, registrars or transfer agents, resulting in significant cost and process savings.
3. Simplified Merger Process
Small companies benefit from a considerably simplified and fast-track merger mechanism under Section 233 of the Companies Act, allowing them to merge with other small companies or start-up companies through a streamlined approval process that avoids lengthy tribunal procedures.
The revised framework is poised to empower emerging businesses with greater flexibility, operational simplicity, and a more conducive environment for expansion and consolidation.
Leave A Comment