Exemptions to Private Limited

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Exemptions to Private Limited

Having passed a stricter companies act 2013 for Private Limited companies, Ministry of Corporate Affairs has time to time provided exemptions to private limited companies which effective from 5th June 2015.

S.No.

Exemption Section

Description

1. DEFINITION OF RELATED PARTY not to include Holding, Subsidiary, Associate Company and sister concern(subsidiary of holding) 2(76) Transactions entered 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 REDUCEDSending of offer letter min 3 days period before opening of offerAND

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 can 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 COMPANIESPrivate 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 Circular-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 TO1.  Content & length of notice2.  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 Companymay 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 depositing 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 restrictions in section 106 (section 106(2))

6. MAXIMUM NO. OF AUDIT IN CASE OF PRIVATE COMPANY RELAXEDText 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 REQUIREDFOR 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. INTERESTED 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 tTHE DIRECTOR IS INTERESTED BY CERTAIN PRIVATE COMPANIESA private Company which has:-1. Body Corporate should not be Shareholder

2. Not borrowed money from Bank/ Financial Institution/ 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 REQUIREDFOR APPOINTMENT OF MD/WTD   196(4) &(5) 1. Shareholder’s Ratification in not required.

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

 


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