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CA Intermediate · Corporate and Other Laws · Preliminary

Rohit Sharma Pvt Ltd, an unlisted company, has a paid-up share capital of Rs 3.5 crore and turnover of Rs 30 crore in the preceding financial year. It has never been a holding or subsidiary company, and is not a section 8 company. Which statement is correct about its classification as a small company under the Companies Act, 2013, bearing in mind the current thresholds of paid-up capital not exceeding Rs 10 crore and turnover not exceeding Rs 100 crore?

Rohit Sharma Pvt Ltd qualifies as a small company. A small company must be a private company, not a holding, subsidiary or section 8 company, with paid-up capital up to Rs 10 crore and turnover up to Rs 100 crore. Its Rs 3.5 crore capital and Rs 30 crore turnover are within these limits.

  1. AIt qualifies as a small company because both limits are satisfied and it is not excluded by being a holding or subsidiary company or a section 8 companyCorrect
  2. BIt does not qualify because a small company must be a public company
  3. CIt does not qualify because turnover must not exceed Rs 10 crore
  4. DIt does not qualify because only a listed company can be a small company

Explanation

A small company is a company other than a public company whose paid-up capital does not exceed the prescribed limit (Rs 10 crore) and turnover does not exceed the prescribed limit (Rs 100 crore). It must not be a holding or subsidiary company, a section 8 company, or one governed by a special Act. Rohit Sharma Pvt Ltd satisfies these.

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