Lenders Law

Q1:  What is the new definition of a “Small Company”? Response:  A company is treated as a  small company  if: It is a  private company; Paid-up capital does not exceed  ₹10 crore; Turnover does not exceed  ₹100 crore. It is  not : a holding company; a subsidiary company; a Section 8 company; governed by any Special Act. Q2: From when do the revised limits apply? Response:  Eligibility shall be checked as on 31st March, 2026 and the benefits/ exemptions shall apply for the following financial year i.e. FY 2026-27 onwards  based on the MCA notification. Q3: If my company crosses ₹10 crore capital or ₹100 crore turnover in the middle of the year, does it immediately lose “small company” status? Response:  No. Eligibility is tested  only on 31st March . Your status for the current year remains unchanged. Q4: If my company falls below the thresholds during the year, does it im...

Ministry of Corporate Affairs, vide Gazette Notification no. G.S.R. 880(E) dated 1st December, 2025, expanded the “small company” bracket (₹10 Cr paid-up capital / ₹100 Cr turnover. With higher financial ceilings, a much larger segment of:  closely-held groups, family-run companies, promoter-driven private companies, now qualify for regulatory relaxations— provided they are not : holding companies, subsidiary companies, section 8 companies, governed by special Acts, public companies. Timing Matters: When Does “Small Company” Status Apply? Small company status is determined: As on the last date of the financial year (31 March); Applies to the immediately following financial year  — without any separate filing or approval requirement. . Mid-year restructuring or financial changes do not alter status immediately . One Subsidiary Can Kill Small Company Status — But Divestment Restores It If a company has even one subsidiary,  it is in...

The Hon'ble Supreme Court’s ruling in  EPC Constructions India Ltd. v. Matix Fertilizers and Chemicals Ltd.   (2025) clarifies that preference shares—however structured—remains part of a company's share capital, and cannot be regarded as "debt". Even if classified as “financial liability” under Ind AS 32, legal character under the Companies Act still governs enforceability. A cautionary tale for investors and creditors relying on redeemable or “put option” structures to secure repayment.  The Case in Brief In EPC Constructions (supra), the appellant had over ₹400 crores in receivables for project work. The appellant/ former operational creditor agreed to convert its dues into 8% Cumulative Redeemable Preference Shares (CRPS)—redeemable in three years. When the respondent/ debtor failed to redeem, the appellant (then in liquidation), through its liquidator, filed a Section 7 petition under the Insolvency and Bankruptcy Code (IBC), claiming default on redemption. Both ...

The Companies Act, 2013 lays down strict provisions for acceptance of deposits by companies. Sections 73–76 and the Companies (Acceptance of Deposits) Rules, 2014 regulate this area. However, the framework also provides specific exemptions for private companies. These exclusions often create confusion, particularly around shareholder and director loans. 1. Loan from director or director's relative: Rule 2(1)(c)(viii) : Any amount received from a person who, at the time of receipt, was a director or a director's relative , is not considered a deposit . Conditions: Only applicable to private companies. Disclosure in Board’s Report. Obtain a declaration that the loan has been given out of own funds, and not being given out of funds acquired by him/ her by borrowing or accepting loans or deposits from others.  .  2. Loan from shareholders MCA Notification No. GSR- 583(E) dated 13th June, 2017 granted further relief to private companies by exempting them from S...