Who this affects: private companies and owner-managed businesses that sit just above the earlier small company limits.
The change
The Ministry of Corporate Affairs notified the Companies (Specification of Definition Details) Amendment Rules, 2025 by G.S.R. 880(E) dated 1 December 2025, effective the same day. For the purpose of Section 2(85) of the Companies Act, 2013:
- Paid-up share capital: from Rs 4 crore to Rs 10 crore.
- Turnover of the previous financial year: from Rs 40 crore to Rs 100 crore.
Why it matters
Small companies enjoy lighter compliance under the Act, including simplified governance and reduced penalties. More companies now fall inside that category.
What to check before you rely on it
- The existing exclusions in the definition (holding or subsidiary companies, Section 8 companies and others) continue to apply. Read the definition in full for your entity.
- Test both limits as per the last audited balance sheet. Both conditions must be met.
- Work out which filings and provisions actually change for your entity (annual return form, board meeting frequency, cash flow statement) rather than assuming a blanket relief.
Our view
For a business crossing Rs 40 crore, this removes a compliance step-up that was about to happen. It does not remove the need for sound books. Lenders and investors will still ask for audited, reconciled numbers.
Sources and verification
Verified on 9 Nov 2026 against the sources below. Laws and notifications change, so confirm the current position before acting.
Need this applied to your business? Talk to CA Nimesh Hariya about your virtual CFO and compliance needs.