Applicability of section 81.
This query is : Resolved
08 September 2010
Hi all,
A private company which is converted into a public company want to issue shares.
so, please let me know how to calculate the
period of 2years or 1year which is mentioned
in Sec.81(1) of the Companies Act 1956.
As we know that the provisions of Section 81 is not applicable to it while it is a private limited company.
A private company which is converted into a public company want to issue shares.
so, please let me know how to calculate the
period of 2years or 1year which is mentioned
in Sec.81(1) of the Companies Act 1956.
As we know that the provisions of Section 81 is not applicable to it while it is a private limited company.
08 September 2010
If the company is converted into public then Sec 81 would be applicable and the calculation shuld be done as if the company was a publci ltd co since the beginning.
09 September 2010
Thank you for your reply and can you please let me know the source to find out the applicability of various Sections which are not applicable to private limited company, after getting converted into a public company.
10 September 2010
List of exemptions available to private limited companies
S. No. Section Nature of exemptions
1. 70(3) Statement in lieu of prospectus need not be delivered to the Registrar of Companies before allotting shares1.
2. 77(2) Financial assistance can be given to any one for purchase of or subscribing for its own shares or shares in its holding company.
3. 81(3)(a) Further shares can be issued without passing special resolution or obtaining Central Government’s approval and without offering the same necessarily to existing shareholders1.
4. 90(2) Provisions as to kinds of share capital (section 85), new issues of share capital to be only of two kinds (section 86), voting rights (section 87), and termination of disproportionate excessive voting rights in existing companies (section 89).
5. 149(7) Business can be commenced immediately on incorporation without obtaining a certificate of commencement from Registrar of Companies1.
6. 165(10) It is not necessary to hold a statutory meeting and to send statutory report to shareholders and file the same with Registrar of Companies.1
7. 170(1) Articles of a private company may provide for regulations relating to general meetings without being subject to the provisions of sections 171 to 186.
8. 198(1) Any amount of managerial remuneration can be paid and the same is not restricted to any particular proportion/ percentage of the net profits.
9. 204(6) Private company can appoint a firm or body corporate to an office or place of profit under the company.
10. 252(2) Private company need not have more than two directors.
11. 255(1) A proportion of directors need not retire every year.
12. 257(2) Statutory notice, etc., is not required for a person to stand for election as a director.
13. 259 Central Government’s sanction is not required to effect increase in the number of directors beyond 12 or the number fixed by articles of association.
14. 263(1) In passing resolution for election of directors, all directors can be appointed by a single resolution.
15. 264(3) Consent to act as director need not be filed with Registrar of Companies.
16. 266(5) Restriction on appointment of advertisement of director as regards consent and qualification of shares does not apply.
17. 268 Central Government’s sanction is not required to modify provisions relating to appointment of managing, whole-time or non-rotational directors.
18. 269(2) Central Government’s sanction is not required for appointment of managing or whole-time director or manager.
19.-23. 275 to 278 Restrictive provisions regarding total number of directorships which any person may hold do not include directorships held in private companies which are not subsidiary of public company. Provision as to retiring age of directors does not apply.
24 292A Provision as to Audit Committee does not apply.
25. 293(1) The restrictions on powers of board of directors do not apply.
26. 295(2) Prohibition against loans to directors does not apply.
27. 300(2) Prohibition against participation in board meetings by interested directors does not apply.
28. 303(1) Date of birth of a director need not be entered in the register of directors.
29. 309(9) No restriction on remuneration payable to directors.
30.
310 Any change in remuneration of directors does not require Central Government’s approval.
31. 311 Any increase in the remuneration not being sitting fees beyond specified limit of directors on appointment or reappointment does not require Central Government’s approval.
32. 316(1) Number of companies of which one person may be appointed as a managing director.
33. 317(4) Managing director not to be appointed for more than five years at a time.
34. 349, 350 & 355 Provisions relating to method of determination of net profits and ascertainment of depreciation do not apply.
35. 372A No restriction on making loans to other companies. No prohibition against purchase of shares, etc. in other companies.
36. 388A Provision of sections 386 and 387, which restrict the number of companies of which a person can be appointed as manager, remuneration of the manager, etc. and also provisions of sections 269, 310, 311, 312 and 317, do not apply.
37. 409(3) Central Government cannot exercise its power to prevent change in board of directors which is likely to affect the company prejudicially.
38. 416(1) Persons can enter into contract on behalf of company as undisclosed principal and need not give intimation to the other directors.
S. No. Section Nature of exemptions
1. 70(3) Statement in lieu of prospectus need not be delivered to the Registrar of Companies before allotting shares1.
2. 77(2) Financial assistance can be given to any one for purchase of or subscribing for its own shares or shares in its holding company.
3. 81(3)(a) Further shares can be issued without passing special resolution or obtaining Central Government’s approval and without offering the same necessarily to existing shareholders1.
4. 90(2) Provisions as to kinds of share capital (section 85), new issues of share capital to be only of two kinds (section 86), voting rights (section 87), and termination of disproportionate excessive voting rights in existing companies (section 89).
5. 149(7) Business can be commenced immediately on incorporation without obtaining a certificate of commencement from Registrar of Companies1.
6. 165(10) It is not necessary to hold a statutory meeting and to send statutory report to shareholders and file the same with Registrar of Companies.1
7. 170(1) Articles of a private company may provide for regulations relating to general meetings without being subject to the provisions of sections 171 to 186.
8. 198(1) Any amount of managerial remuneration can be paid and the same is not restricted to any particular proportion/ percentage of the net profits.
9. 204(6) Private company can appoint a firm or body corporate to an office or place of profit under the company.
10. 252(2) Private company need not have more than two directors.
11. 255(1) A proportion of directors need not retire every year.
12. 257(2) Statutory notice, etc., is not required for a person to stand for election as a director.
13. 259 Central Government’s sanction is not required to effect increase in the number of directors beyond 12 or the number fixed by articles of association.
14. 263(1) In passing resolution for election of directors, all directors can be appointed by a single resolution.
15. 264(3) Consent to act as director need not be filed with Registrar of Companies.
16. 266(5) Restriction on appointment of advertisement of director as regards consent and qualification of shares does not apply.
17. 268 Central Government’s sanction is not required to modify provisions relating to appointment of managing, whole-time or non-rotational directors.
18. 269(2) Central Government’s sanction is not required for appointment of managing or whole-time director or manager.
19.-23. 275 to 278 Restrictive provisions regarding total number of directorships which any person may hold do not include directorships held in private companies which are not subsidiary of public company. Provision as to retiring age of directors does not apply.
24 292A Provision as to Audit Committee does not apply.
25. 293(1) The restrictions on powers of board of directors do not apply.
26. 295(2) Prohibition against loans to directors does not apply.
27. 300(2) Prohibition against participation in board meetings by interested directors does not apply.
28. 303(1) Date of birth of a director need not be entered in the register of directors.
29. 309(9) No restriction on remuneration payable to directors.
30.
310 Any change in remuneration of directors does not require Central Government’s approval.
31. 311 Any increase in the remuneration not being sitting fees beyond specified limit of directors on appointment or reappointment does not require Central Government’s approval.
32. 316(1) Number of companies of which one person may be appointed as a managing director.
33. 317(4) Managing director not to be appointed for more than five years at a time.
34. 349, 350 & 355 Provisions relating to method of determination of net profits and ascertainment of depreciation do not apply.
35. 372A No restriction on making loans to other companies. No prohibition against purchase of shares, etc. in other companies.
36. 388A Provision of sections 386 and 387, which restrict the number of companies of which a person can be appointed as manager, remuneration of the manager, etc. and also provisions of sections 269, 310, 311, 312 and 317, do not apply.
37. 409(3) Central Government cannot exercise its power to prevent change in board of directors which is likely to affect the company prejudicially.
38. 416(1) Persons can enter into contract on behalf of company as undisclosed principal and need not give intimation to the other directors.
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