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Section 47 of Companies Act, 2013

15 July 2018

There is exemption to section sec47 of co act, 2013 that this section shall NOT apply to private company where MOA or AOA so provides. What can be the reason behind this exemption?

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Dhanesh Bansal (17 Points)
Replied 16 July 2018

Private companies are exempted to comply with the provisions of section 47 of co. act, 2013 if the articles of association or the memorandum of association of such private company provides so.

Therefore, the private company can have any kind of share capital in accordance with their articles. In short, a private limited company is free to issue any kind of shares subject to their charter documents providing for it.

Impact of the exemption: The relaxation can aid the private limited companies looking to raise capital and issue special classes of shares to the investors. This relaxation will avoid difficulties in structuring shares and can earn priority on the dividend, liquidation and the entitlement to vote on an conversion basis.