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Criteria for classification of non corporate Entities as decided issued by the ICAI


The Accounting Standards Board of ICAI has issued an announced regarding the Classification of Entities and Applicability of Accounting Standards. In connection with this the ASB has divided the Non Corporate Entities into three Levels and these three are explained in details and the conditions are explained to decide the classification of an Entity.

As per the announcement of Criteria for Classification of Entities and Applicability of Accounting Standards issued by the Accounting Standards Board of ICAI the Entities are classified into three categories in order to applicability of the Accounting Standards. And there three are called as Non-Corporate Entities.

Level 1 Non Corporate Entities

All the Non Corporate Entities which fall in any one of the following categories, at the end of the relevant accounting period, are classified as Level 1 Entities.

  1. Whose Equity Securities (Bank Notes, Bonds, Debentures) or Debt Securities (Common Stock, Ordinary Shares) are listed or are in the process of listing on any Stock Exchange, whether in India or outside India.
  2. Banks (including co-operative Banks), Financial Institutions, or Entities carrying on Insurance Business.
  3. All Commercial, Industrial and Business reporting Entities, whose turnover (excluding other income) exceeds rupees Fifty Crore in the immediately preceding Accounting Year.
  4. Holding and Subsidiary Entities of the Entity/Entities falling in any one or more of the above categories.

Level II Non Corporate Entities (SMEs)

The Level II Entities are also called as Small and Medium Sized Entities. All the Non Corporate Entities which are not Level 1 entities but fall in any one or more of the following categories are classified as Level II Entities.

  1. All Commercial Industrial and Business Reporting Entities, whose turnover (excluding other income) exceeds rupees One Crore but does not exceed rupees Fifty Crore; or
  2. Borrowing (including public deposits) in excess of rupees One Crore but not in excess of rupees Ten Crore in the immediately preceding Accounting Year.
  3. Holding and Subsidiary Entities of the Entity/Entities falling in any one or more of the above categories.

The ASB on 07-03-2013 revised the minimum turnover to One Crore for Level II Entities with the announcement ‘Criteria for classifying Level II non-corporate Entities’

Level III Non Corporate Entity (SMEs)

Along with Level II Entities, Level III Entities are also called as Small and Medium Sized Entities. Entities which are not covered under Level I and Level II non corporate entities are considered as Level III Entities.

There are the criteria mentioned by the Accounting Standards Board of ICAI to classify the Non Corporate Entities.

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{ 2 Comments... read them below or add one }

Unknown said...

How can non coporate entity list its securities on stock exchange?

Venkkatesh K said...

I have searched regarding this, there are plenty of the sources available on Net. Just search or contact a Company Secretary in this regard.

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