Skip to content

CA Intermediate · Corporate and Other Laws · Preliminary

Meera Textiles Private Limited has a paid-up share capital of Rs 4 crore, and its turnover in the last financial year was Rs 30 crore. It is not a holding or subsidiary company and is not a Section 8 company. Under the Companies Act, 2013, how is this company classified in terms of the definition of a 'small company'?

Meera Textiles is a small company. A small company is a private company, not a holding, subsidiary or Section 8 company, with paid-up capital within Rs 10 crore and turnover within Rs 100 crore. Its Rs 4 crore capital and Rs 30 crore turnover both fall within these limits.

  1. AIt is a small company because paid-up capital does not exceed the prescribed limit and turnover does not exceed the prescribed limitCorrect
  2. BIt is not a small company because turnover exceeds Rs 20 crore
  3. CIt is not a small company because a private company can never be a small company
  4. DIt is a small company only if it also has a net worth below Rs 1 crore

Explanation

A small company is a company other than a public company whose paid-up capital does not exceed Rs 10 crore and turnover does not exceed Rs 100 crore (as prescribed), and it must not be a holding or subsidiary company, a Section 8 company, or governed by a special Act. Meera Textiles has Rs 4 crore capital and Rs 30 crore turnover, so it qualifies. Option B uses an incorrect turnover limit.

Did you get it right without looking?

One question tells you little. A timed set on Preliminary shows your real accuracy, how long you take and where you lose marks.

Practise PreliminaryFree diagnostic mock

More Preliminary questions