Government
issues final notifications under section 462 of the Companies Act, 2013 (Act)
that provide Exemptions under various provisions of the Act to (i) Private
Companies (ii) Government Companies (iii) Section 8 Companies and (iv) Nidhis
The Ministry of Corporate Affairs, Government of India
issued the final notifications under Section 462 of the Companies Act, 2013
(Act), which provide exemptions under various provisions of the Act to (i)
Private Companies; (ii) Government Companies; (iii) Section 8 Companies and
(iv) Nidhis. The notifications are available at the Ministry’s website
at www.mca.gov.in
For Private Companies, the exemptions relax the provisions for
entering into related party transactions; provide a shorter period for offering
securities to members through right offers; provide for approving issue of
employee stock option plans through a simple majority and allow an easier
procedure and flexibility in holding general meetings. Private companies have
also been allowed to accept deposits from members without the requirement of
offer circular and creation of deposit repayment reserve etc. Flexibility has
also been provided in the types of share capital that can be issued by private
companies. Exemption has been given from filing of board resolutions with the
registry and giving of notice for standing for directorships. Requirement of
mandatory consent of shareholders with regard to certain transactions relating
to sale of undertaking, investments, borrowings etc has been omitted. Further,
OPCs, dormant companies, small companies and private companies having paid up
share capital less than Rs. 100 crore have been excluded for calculating the
limit of 20 companies for audit by an auditor. Private companies not having any
investment by any body corporate have been allowed to extend loans to directors
etc subject to certain conditions relating to bank borrowings and default
thereof. An interested director of a private company can now participate in the
Board meeting after declaring his interest…………………………………………………………………………………….
Government
Companies have been exempted from the limits pertaining to
managerial remuneration; restriction on maximum number of directorships and
disqualification of directors in certain cases. The provisions in respect of
Nomination and Remuneration Committee have also been relaxed in respect of
their applicability to directors/managerial persons. The provisions relating to
loans to directors; loans and investments by companies and related party transactions
have been modified to provide flexibility to Government companies in complying
with such provisions. The exemption for Government companies to retain the
suffix “Limited” even if incorporated as private limited company, has been
continued as per the exemption available under Companies Act, 1956.
Modifications in the provisions relating to place of holding general meetings
have also been made. Provisions in respect of rotation of directors and
right of persons to stand for directorship are exempted for wholly owned
Government companies. The provisions in respect of forming opinion about
integrity, expertise/experience of independent directors have been modified to
provide flexibility to concerned Ministry/Department. For the Government
companies engaged in producing defence equipment, the provisions of section 186
(loans and investments by companies) and Accounting Standard - 17 (Segment
Reporting) shall not be applicable………………………………………………………………
For Charitable Companies the provisions in respect of notice for
general meeting have been modified to enable such companies to save time and
resources in sending notices. The notice for general meeting and financial
statements may be circulated at notice of 14 days instead of 21 days. The
provisions in respect of appointment of independent directors (IDs) and
Nomination and Remuneration Committee will not be applicable to such companies.
The audit committees of such companies need not have Independent Directors. The
restrictions on number of directorships have also been exempted for these
companies. These companies are allowed to hold board meetings once in six
months instead of four meetings in a year, as prescribed for other companies.
These companies have been exempted from provisions requiring notice to be given
for standing for directorship if their articles provide for election of
directors by ballot. Flexibility from the provisions on passing of board
resolutions in a board meeting only and on disclosure and participation in
board meetings by an interested director have also been provided……………………
In case of Nidhis, provisions
relating to serving of documents to members and payment of dividend have been
modified to provide more flexibility to such companies. Provisions relating to
private placement have been partially relaxed for such companies. These
companies have also been exempted from the requirements of section 62 which
relates to further issue of share capital. The notice amount of Rs. 1
lakh provided under section 160 has been reduced to Rs. 10,000 for these companies.
Provisions of section 185 in respect of loans to directors have been relaxed
for these companies with the condition that loan is given to a director or his
relative in his capacity as member and the disclosure is made in the accounts…………………………………………………………………………
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