In simple words

The Companies Act, 2013 is the main law for companies in India. It is run by the Ministry of Corporate Affairs (MCA), and most filings are made on the MCA portal with the Registrar of Companies (ROC).

The Act sets the rules, and rules made under it (such as the Companies (Accounts) Rules, 2014) fill in the details and thresholds. Many duties depend on a company's paid-up capital, turnover, net worth or borrowings, so a growing company should recheck its position every year.

This page sums up the provisions finance teams meet most often. It is not a full list of the Act.

Small company: new limits from 1 December 2025

A small company (section 2(85)) is a private company with:

  • paid-up capital of not more than ₹10 crore (was ₹4 crore), and
  • turnover in the previous financial year of not more than ₹100 crore (was ₹40 crore).

The new limits came in through the Companies (Specification of Definition Details) Amendment Rules, 2025 (G.S.R. 880(E)), from 1 December 2025. A holding or subsidiary company, a section 8 company and a company governed by a special Act cannot be a small company.

Small companies get lighter compliance, for example:

  • only two board meetings a year (one in each half of the calendar year, at least 90 days apart)
  • no cash flow statement needed in the financial statements
  • no mandatory auditor rotation
  • an abridged annual return (Form MGT-7A)
  • lower penalties under section 446B

Meetings and ROC filing calendar

Item Section Rule
Board meetings 173 First within 30 days of incorporation. Then at least four a year, with no more than 120 days between two meetings. OPCs, small and dormant companies: one in each half of the calendar year, at least 90 days apart
Annual general meeting (AGM) 96 First AGM within 9 months of the end of the first financial year. Later AGMs within 6 months of the year end, and no more than 15 months apart. OPCs do not hold an AGM
Financial statements (Form AOC-4) 137 Within 30 days of the AGM
Annual return (Form MGT-7 or MGT-7A) 92 Within 60 days of the AGM
Auditor appointment (Form ADT-1) 139 Within 15 days of the meeting that appoints the auditor
Return of deposits (Form DPT-3) 73 and Deposit Rules Every year by 30 June, for outstanding loans and deposits as at 31 March
MSME dues (Form MSME-1) 405 Half-yearly (by 30 April and 31 October), if dues to micro or small suppliers are outstanding for more than 45 days
Director KYC (DIR-3 KYC) 152 and Director Rules From 31 March 2026, once every three years instead of every year. Directors who have already filed are next due by 30 June 2028

Late ROC filings usually attract an additional fee of ₹100 per day of delay, so diarise the AGM-linked deadlines.

Directors and key managerial personnel

Requirement Section and rule Who it applies to
At least one director resident in India (in India for 182 days or more in the financial year) 149(3) Every company
At least one woman director 149(1), Rule 3 Listed companies, and public companies with paid-up capital of ₹100 crore or more, or turnover of ₹300 crore or more
Independent directors 149(4), Rule 4 One-third of the board for listed companies. At least two for public companies with paid-up capital of ₹10 crore or more, turnover of ₹100 crore or more, or loans, debentures and deposits above ₹50 crore
Maximum directorships 165 20 companies in total, of which no more than 10 public companies
Whole-time KMP (MD, CEO or manager, company secretary and CFO) 203, Rule 8 Listed companies and public companies with paid-up capital of ₹10 crore or more
Whole-time company secretary 203, Rule 8A Any other company with paid-up capital of ₹10 crore or more
Audit committee and nomination and remuneration committee 177, 178, Rule 6 Listed companies, and public companies above the same ₹10 crore / ₹100 crore / ₹50 crore limits as for independent directors

Loans to directors (section 185). A company generally cannot lend to, guarantee or secure loans of its directors or their relatives. Loans to entities in which a director is interested are allowed only with a special resolution and if the money is used for the borrower's main business.

Loans and investments (section 186). Without a special resolution, a company's total loans, guarantees, securities and investments in other bodies corporate cannot exceed the higher of:

  • 60% of paid-up capital, free reserves and securities premium, or
  • 100% of free reserves and securities premium.

The loan must also carry interest of at least the yield on government securities of a similar tenor.

Example. Paid-up capital ₹20 crore, free reserves ₹50 crore and securities premium ₹10 crore. 60% of ₹80 crore is ₹48 crore. 100% of ₹60 crore is ₹60 crore. The limit is the higher figure, ₹60 crore. Anything beyond needs a special resolution of shareholders.

Related party transactions (section 188). Contracts with related parties (sale or purchase of goods, services, leases, appointments to an office of profit and so on) need board approval. Transactions above the limits in Rule 15(3) also need shareholders' approval, and related parties cannot vote on it. Transactions in the ordinary course of business and at arm's length are outside section 188, but should be documented. Listed companies also follow SEBI's LODR rules.

Corporate social responsibility (CSR)

Section 135 applies if, in the preceding financial year, a company had any of:

  • net worth of ₹500 crore or more,
  • turnover of ₹1,000 crore or more, or
  • net profit of ₹5 crore or more.

Such a company must spend at least 2% of its average net profits of the last three financial years on CSR activities listed in Schedule VII.

  • If the CSR obligation is ₹50 lakh or less, a CSR committee is not needed; the board does its work.
  • Unspent money for an ongoing project goes to an Unspent CSR Account within 30 days of the year end and must be spent within three years.
  • Other unspent money goes to a Schedule VII fund (such as the PM CARES Fund) within six months of the year end.

Example. Net profits (computed under section 198) for the last three years were ₹12 crore, ₹15 crore and ₹18 crore. The average is ₹15 crore, so the CSR spend is ₹30 lakh. As this is below ₹50 lakh, the board can perform the CSR committee's functions.

Accounts and audit

Topic Section and rule Rule
Financial year 2(41) 1 April to 31 March, unless the Tribunal allows otherwise
Books of account 128 Kept at the registered office (or another place the board decides) for 8 years. Electronic books must be backed up daily on a server in India
Audit trail 128, Accounts Rule 3(1) Accounting software must record an edit log of every change, which cannot be disabled (from 1 April 2023)
Ind AS 133, Ind AS Rules 2015 Listed companies and companies with net worth of ₹250 crore or more, and their holding, subsidiary, associate and joint venture companies
Auditor term and rotation 139 Auditors are appointed for five years. Listed and specified companies must rotate an individual auditor after one term and a firm after two terms, with a five-year cooling-off
CARO 2020 report 143(11) Most companies, except OPCs, small companies and some small private companies
Internal audit 138, Rule 13 Listed companies and larger unlisted public and private companies (for example private companies with turnover of ₹200 crore or more)
Secretarial audit 204, Rule 9 Listed companies and public companies with paid-up capital of ₹50 crore or more or turnover of ₹250 crore or more, or loans of ₹100 crore or more

Proposed changes not yet in force

Corporate Laws (Amendment) Bill, 2026. Introduced in the Lok Sabha on 23 March 2026 and examined by a Joint Parliamentary Committee, which reported on 3 August 2026. As of 26 October 2026 it has not been passed, so none of these changes are law yet. The proposals include raising the small company limits to ₹20 crore capital and ₹200 crore turnover, raising the net profit trigger for a CSR committee from ₹5 crore to ₹10 crore and the no-committee limit from ₹50 lakh to ₹1 crore, giving 90 days instead of 30 to move unspent CSR money, and allowing two buy-backs a year.

Sources

Checked as of 26 October 2026. Thresholds are set by rules that MCA can change by notification; confirm the current text on the MCA website before you rely on it.

Educational information only. This page is not tax, legal, accounting or investment advice and does not create any professional relationship. Laws, rates and thresholds change: read the official text or consult a qualified professional (CA, CS or lawyer) before you act.

Last reviewed 26 October 2026. Spotted an error? Tell us and we will correct it.