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.
|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
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