Threshold Limit Under Companies Act, 2013

12 Mar, 2020

Reading Time: 6 Minutes

Several provisions are applicable to the registered companies under the Companies Act, 2013^[1]. These provisions are based on the threshold limit related to XBRL, CARO, Cash Flow Statement, Internal Auditor, Duly Certified Annual Return by a Company Secretary in practice, Signing of Annual Return by a Company, Secretarial Audit, Independent Director, Managing Director/Whole Time Director, Key Managerial Personnel, Auditors Committee, Vigil Mechanism, Related Party Transactions, Corporate Social Responsibility Committee and Appointment & reappointment of Auditor.

This article gives a bird’s eye view on mandatory compliances.

Sr. No.	Provision under Companies Act, 2013	Applicability of Provision	Non-Applicability of provision
1	XBRL	a) Companies that fall under the list of Stock Exchange in India. b) Company’s subsidiaries listed with any Stock Exchange in India. c) Companies that have paid up Share Capital of Rs. 5 Crore and above. d)Companies with a turnover of Rupees 100 Crore and above.	a) Banking Companies b) Insurance Companies c) Power Companies d) Non-Banking Financial Companies e) Housing Finance Companies
2	CARO MCA had passed an order on 29^th March 2016	as per which CARO is applied to every company, including a foreign company. It is elaborated in clause (42) of Section 2 of the Companies Act, 2013. List of companies in which it is not applicable:	A Banking Company An Insurance Company A Section 8 Company One Person Company A Small Company A Private Limited Company; which is not a holding of public company or is not being a subsidiary. – Paid-up capital of not exceeding Rs. 1 crore and – which doesn’t have credit extraordinary surpassing Rs 1 crore from any bank or Financial Institution any time of time during the monetary year -and which doesn’t have a complete income as uncovered in Scheduled III to CA 2013 (counting income from stopping – tasks) surpassing Rs 10 crores during the FY according to the fiscal summaries.
3	Cash Flow Statement As per section 2(40) of Companies Act,2013	Definition of Section 2(40) says that all companies except those mentioned in the next column need to prepare the Cash Flow Statement.	a) One Person Company b) Small company c) Dormant company d) private company (if it is a start-up)
4	Internal Auditor As per Provisions of Section 138 of Companies Act, 2013 read with sub-rule 1 of Rule 13 Chapter IX, Companies (Accounts) Rules, 2014.	a) All listed companies b) Every unlisted public company having: Paid Up share capital of 50 Crore or more than 50 Crore during the preceding financial year Turnover of 200 Crore or more in the course of the previous budgetary year Outstanding loans or borrowings from banks or from public financial institutions exceeding 100 Crore or more at any purpose of time during the previous money related year; or Outstanding Deposits of 25 Crore or more at a given point of time during the preceding financial year; and c)Every Private Company having; Turnover of 200 Crore or more in the course of the former money related year Outstanding loans borrowings from banks or open budgetary establishments exceeding 100 Crore or more at any point of time during the former money related year; or	Every Public Company having: Paid-up share capital below Rs. 50 Crore
5	Certification of Yearly Return by a Company Secretary by and by. As per Provisions of Section 92 of Companies Act, 2013 read with sub-rule 2 of Rule 11 Chapter VII, Companies (Management and Administration) Rules, 2014.	a) All Listed Companies b) Company with a paid-Up share capital of 10 Crore or more or with a turnover of 50 Crore rupees or more
6	The signing of Yearly Return by a Company Secretary practically speaking. As per Section 92 of Companies Act, 2013, read with sub-rule 2 of Rule 11 Chapter VII, Companies (Management and Administration) Rules, 2014.	a) All listed companies b) All public companies c) Private Limited Company that has: Paid-up share capital outpacing 50 lac; or Turnover surpassing 2 Crore	a) One Person Company b) Small company c) Private organization (if such privately-owned business is a start-up) (These are the organizations excluded from marking of Annual Return by Company Secretary.)
7	Companies which shall appoint Company Secretary As per Provisions of Section 203 of Companies Act, 2013 read with Rule 8A Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.	a) All listed Companies b) Every other organization is having a settled up share capital Rs. 5 Crore or more
8	Secretarial Audit As prescribed in subsection ‘1’ of Section 204 of Companies Act, 2013: As per Section 204 of Companies Act, 2013 read with Rule 9 Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.	a) All Listed Companies b) Every Public Company having; Paid-Up Share Capital of Rs. 50 Crore or more; orEvery Public Organization is having a turnover of Rs. 250 Crore or more
9	Independent Director Section 204 of Companies Act read with Rule 4 Chapter XI, Companies (Appointment and Qualification of Directors) Rules, 2014:	a) All listed companies b)Public Companies that can afford Paid Up Share capital of Rs. 10 Crore or more (AT LEAST 2 INDEPENDENT DIRECTOR) c)Public Companies has a turnover of Rs. 100 Crore or more (AT LEAST 2 INDEPENDENT DIRECTOR) d) The Public Organizations which have, in total, exceptional advances, debentures and deposits, exceeding Rs. 50 Crore Exemptions: Unlisted public organization which is a Joint Venture, WOS or Dormant will not be required to appoint Independent Director.
10	Managing Director/ Whole Time Director Section 203 of Companies Act read with Rule 8 Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:	a) All Listed Companies b) Every Public Company that has a Paid-Up Share Capital of Rs. 10 Crore or more. c) Companies which do not comply with the above limits has the authority to appoint MD and WTD by following the system given under Section 196 of Companies Act, 2013.
11	Key Managerial Personnel Under Section 203 of Companies Act read with Rule 8 Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:	a) All listed companies b) All those public companies that have paid-up share capital of Rs. 10 Crore or more. c)Every Private Constrained Company having Paid-Up Share Capital of Rs. 5 Crore or more need to appoint Company Secretary as Key Managerial Personnel.
12	Auditors Committee According to Section 177 of Companies Act, 2013 read with Rule 6 Chapter XII, Companies (Meetings of Board and its Powers) Rules:	a) All listedcompanies b) Every Public Company with a paid-up Share Capital of Rs. 10 Crore or more. c) Public Companies having a turnover of Rs. 100 Crore or more (AT LEAST 2 INDEPENDENT DIRECTOR) d) The Public Organizations which have, in total, remarkable advances, debentures and deposits, exceeding Rs. 50 Crore
13	Nomination Committee As per Section 177 of Companies Act, 2013 read with Rule 6 Chapter XII, Companies (Meetings of Board and its Powers) Rules, 2014:	a) All listedcompanies b) Every Public Organization is having Paid-Up Share Capital of Rs. 10 Crore or more. c) Public Companies having Turnover of Rs. 100 Crore or more (AT LEAST 2 INDEPENDENT DIRECTOR) d) The Public Organizations which have, in total, exceptional advances, debentures and deposits, exceeding Rs. 50 Crore
14	Women Director As per Section 149 of Companies Act, 2013, read with Rule 3 Chapter XI, Companies (Appointment and Qualification of Directors) Rules, 2014:	a) All listed companies b) Every Public Organization is having a Paid-Up Share Capital of Rs. 100 Crore or more; or c) Every Public Organization is having a turnover of Rs. 300 Crore or more
15	Vigil Mechanism According to Section 177 of Companies Act read with Rule 7 Chapter XII, Companies (Meetings of Board and its Powers) Rules, 2014:	a) All listed companies b) The company accepting deposits from the general public; c) The companies that already have taken money from banks and public financial institutions in excess of Rs. 50 crore
16	Related Party Transactions As per Section: 188 of Companies Act, 2013 read with Rule -3, of Chapter Xii Companies (Meetings Of Board And Its Power) introduced in Second Amendment Rule, 2014:	Applicable on all with the exception of exchanges on a safe distance and in the ordinary course	a) transactions on arm length and the ordinary course
17	Corporate Social Responsibility Committee As per Section 135 of Companies Act, 2013, read with Rule 3 Chapter XI, Companies (Appointment and Qualification of Directors) Rules, 2014:	a) Every company having a total amount of rupees 500 Crore or more; b) Every company with a turnover of rupees 1000 crore or more; c) Every company with a net profit of rupees 5 crores or more; During immediate preceding financial year.
18	Appointment & reappointment of Auditor : Companies shall not appoint or re-appoint: An individual working as an auditor for more than one term of five consecutive years; and an audit firm is functioning as an auditor for more than two terms of five consecutive years. Section 139 of Companies Act read with Rule 5 Chapter X, Companies (Audit and Auditors) Rules, 2014	a) All listed companies b) Every Public Organization having Paid-Up Share Capital of Rs. 10 Crore or more. c) Every Private Constrained Company having Paid-Up Share Capital of Rs. 20 Crore or more. d) All Companies which have borrowed from Financial Institutions, banks or public deposits of Rs. 50 Crore or more.