Exemptions to pvt company- act 2013

S.No.

Exemption Given

Section

Major Impact

1.

DEFINITION OF RELATED PARTY RELAXED WITH RESPECT TO SECTION 188

Does not include Holding, Subsidiary, Associate Company and sister concern(subsi of holding)

2(76)

Transactions eneterd with them and falling under section 188 does not require compliance of section 188.

Note:- Although Holding company is excluded but Director(other than independent Director), KMP of holding company or their relative are still included in definition of Related Party. (Section 2(76)(ix))

2.

TIME LIMITS IN RIGHT ISSUE CAN BE REDUCED

Sending of offer letter min 3 days period  before opening of offer

AND

Minimum & maximum offer period of 15 & 30 days respectively

Can be reduced, if 90% member give their consent in writing/electronic mode

62(1)(a)

&

62(2)

In case of emergency, the mentioned time limits an be reduced with consent of shareholders.

Note:- The time limits cannot be increased, they can only be reduced.

3.

ACCEPTANCE OF DEPOSITS FROM MEMBERS MADE EASIER FOR CERTAIN PRIVATE COMPANIES

Private Companies borrowing monies from members upto aggregate limit of paid-up share capital & free-reserves need not require to comply with conditions mentioned in section 73(2)(a) to (e).

However details of money so borrowed shall be filed with ROC in manner as may be specified

73(2)

(a) to (e)

If Such Company borrows money from member then no need to:-

·         Issue Ciruclar

·         File circular with ROC

·         Maintain Deposit repayment reserve

·         Provide deposit insurance

4.

NO NEED TO FILE MGT-14 FOR BOARD RESOLUTIONS

Any Board resolution mentioned in section 179 read with rule 8 of Companies (Meeting of Board & its power) Rules, 2014 is  now not required to be filed with ROC.

117(3)(g)

Saving in ROC filing costs

5.

ARTICLES OF A PRIVATE COMPANY MAY OVERRIDE PROVISIONS PERTAINING TO

1.      Content & length of notice

2.      Explanatory Statement

3.      Quorum

4.      Chairman

5.      Proxies

6.      Restriction on voting rights

7.      Show of hands & Poll

(Position brought at par with Companies Act, 1956)

101 to 107 &

109

Private Company  may override by its articles mentioned provisions.

However, a Private Company Cannot:-

1.       Reduce quorum below 2

(In re- Ram Villas Press Publication Pvt. Ltd- Kerela HC)

2.      Increase time limit of 48 hours for deposoting proxy form (Section 105(4))

3.      Reject a proxy form if it fails to comply with specific requirement of

AOA (Section 105(7))

4.      Restrict voting right of a member other than resttrictions in section 106 (section 106(2))

6.

MAXIMUM NO. OF AUDIT IN CASE OF PRIVATE COMPANY RELAXED

Text of notification:-  “Other than OPC, Dormant, Small Companies and Private Companies having paid up capital of less than Rs. 100 Crores shall be inserted after 20 Companies.”

141(3)(g)

Limit of 20 Companies only includes:-

1.     Public Companies

2.     Private Companies having paid up capital of Rs. 100 crore or more

7.

CANDIDATURE NOT REQUIRED FOR APPOINTMENT OF DIRECTOR AT GENERAL MEETING

160

Amount of Rs. 1 lakh not required to be deposited at least 14 days before GM

8.

APPOINTMENT OF DIRECTORS NEED NOT TO BE VOTED INDIVIDUALLY

162

More than 1 director can be appointed via single resolution

9.

RESTRICTIONS ON POWERS OF BOARD NOT TO APPLY

180

Private Company can now without shareholder’s approval:-

1.      Borrow exceeding paid up capital & free reserves.

2.      Sell/lease/dispose off undertaking

10.

INTRESTED DIRECTOR CAN PARTICIPATE IN BOARD MEETING AFTER DISCLOSURE OF INTEREST

184

Interested Director can now participate in agenda in which he is interested.

Note:- He Cannot be counted in Quorum (Section 174(3) explanation)

11.

LOANS/GUARANTEE/SECURITY CAN BE GIVEN TO DIRECTOR AND PERSON IN WHOM HE IS INTERETED BY CERTAIN PRIVATE COMPANIES

A private Company which has:-

1.      No Body Corporate Shareholder

2.      Not borrowed money from Bank/ Finanicial Instituition/ Body Corporate exceeding lower of the following:-

i.      Twice its Paid up capital

ii.    Rs. 50  crore

3.      No repayment default subsisting of such borrowings at time of giving loan

185

Giving of loans/ guarantee/security to Group Companies now possible

12.

RESTRICTION ON VOTING RIGHT IN GENERAL MEETING IN CASE OF RELATED PARTY TRANSACTION NOT APPLICABLE

188(1) 2nd proviso

Member although being related party to the concerned resolution can still cast his vote at GM.

13.

SHAREHOLDER’S RATIFICATION NOT REQUIRED FOR APPOINTMENT OF MD/WTD

196(4) &(5)

2.      Schedule V not applicable.

3.      MR-1 not required to be filed

4.      T&C of appointment, remuneration not        mandatory to be mentioned in          

       resolution