The information extracted from the audited Financial Statement of Paper Private Limited as on 31st March, 2025 is as below: (1) Paid-up equity share…

(a) According to section 2 (85) of the Companies Act, 2013, small company means a company, other than a public company, having- (A) paid-up share capital not exceeding four crore rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; and (B) turnover as per profit and loss account for the immediately preceding financial year not exceeding forty crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees: Provided that nothing in this clause shall apply to a holding company or a subsidiary company. Also, according to section 2 (87) , subsidiary company, in relation to any other company (that is to say the holding company), means a company in which the holding company exercises or controls more than one-half of the total voting power either at its own or together with one or more of its subsidiary companies. In the given question, Clip Limited (a public company) holds 2,00,000 equity shares of Paper Private Limited (having paid up share capital of 5,00,000 equity shares @10 totalling 50lakh). Hence, Paper Private Limited is not a subsidiary of Clip Limited and hence it is a private company and not a deemed public company. Further, the paid up share capital (50lakh) and turnover (2crore) is within the limit as prescribed under section 2 (85) , hence, Paper Private Limited can be categorised as a small company.