Turnover And Borrowing Thresholds For Small And Medium Sized Companies (SMC):
The Corporate Affairs Ministry has expanded the turnover and borrowing thresholds for Small and Medium sized Companies (SMC).
- The Corporate Affairs Ministry has increased the turnover threshold for SMCs to Rs 250 crore from Rs 50 crore, and the borrowing threshold to Rs 50 crore from Rs 10 crore.
- SMCs are permitted to avail a number of exemptions under the Company (Accounting Standards) Rules 2021 to reduce the complexity of regulatory filings for smaller firms.
The move would promote ease of doing business for the firms that would now be included under the definition of SMC.
- SMC are completely exempted from having to file cash flow statements and provide a segmental break up of their financial performance in mandatory filings.
- They can also avail partial reporting exemptions in areas including reporting on employee benefits obligations such as pensions.
- They are exempted from having to provide a detailed analysis of benefit obligations to employees, but are still required to provide actuarial assumptions used in valuing the company’s obligations to employees.
- SMCs are also allowed to provide an estimated value in use of assets carried on their balance sheets, and are not required to use present value techniques to arrive at the value in use of assets.
- They are also exempted from having to report diluted earnings per share in their filings.
Exceptions:
- Banks, monetary establishments, insurance coverage firms and listed firms can’t be labelled as SMCs.
Any firm which is both the holding firm and subsidiary of an organization that’s not an SMC can’t be labelled as an SMC.
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