MCA
lays draft notification u/s 462 for Private Companies
in Parliament
CS Divesh Goyal
Companies Act, 2013 has brought
massive changes for private companies as barring a very few, all the exemptions
which were available to private companies under the
Companies Act, 1956 have been
withdrawn in the Companies Act, 2013.
MCA has laid down the copy of the draft notification under section 462 of the Companies Act 2013 (“the Act”)
on 24th June, 2014 providing necessary exemptions to private company
from the provisions of the Act. [PUBLISHED IN THE GAZETTE OF INDIA,
EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
On 14th July, 2014 MCA lay
down below given exemption to private company from the provision of the Act. It
is to be expected that MCA placed before the Parliament in Parliamentary
session of 14th July, 2014 following Below mentions Exemptions for
Private Companies.
The details of exemptions provided in comparison to their status under the draft notification issued earlier for public comments
are outlined below.
The matter in given
below signifies new addition to the notification, which was not there in the draft notification issued.
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Serial number
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Chapter/
Section number/ Sub-section(s) in the Companies Act, 2013
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Status
under the draft notification issued for inviting suggestions (Earlier issued)
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Exceptions /
Modifications/ Adaptations: (Placed before Parliamentary session on
14.07.20141)
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1.
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Chapter I- Section- 2 Clause- 76, Sub- Clause
(viii):
Bare Act Language of
Section is Given below:
Section-2 Definition
(76) “related party”,
with reference to a company, means—
Sub Clause (viii) any company
which is—
(A) a holding, subsidiary
or an associate company of such company;
or
(B) a
subsidiary of a
holding company to which it is also a subsidiary::
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Didn’t provide in
Earlier Notification.
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Shall not apply with respect to
section 188.
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2.
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Chapter IV, section 43
and section 47.
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Shall not apply
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Shall not apply where
memorandum or
Articles
of association of the private company
so provides.
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3.
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Chapter IV, Section 62(1)(a)(i) and (2)
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Section 62(1)(a)
and (2) shall apply
with the following modification:-
Words ‘not being less than fifteen days
and not exceeding thirty
days’ shall be substituted with ‘not being less than seven days and
not exceeding fifteen days’
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Shall apply with
following modifications:-
In clause (a), in sub-clause (i), the following proviso
shall be inserted, namely:-
Provided
that notwithstanding anything
contained in this sub- clause and
sub-section (2) of this section, in case 90% , of the members
of a private company have
given their consents in
writing or in electronic mode,
the periods lesser
than those specified in the said sub- ¬clause or sub-section shall
apply
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4.
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Chapter
IV, Section 62(1)(b):
Further
Issue of Share Capital
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No change
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In clause (b), for the
words “special resolution”, the words “ordinary resolution” shall be
substituted.
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5.
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Chapter IV- Section 67:
Restrictions on
purchase by company or giving of loans by it for purchase of its shares.
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Didn’t provide in Earlier Notification.
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Shall not apply to private companies -
I. in whose share capital another body corporate has invested any money;
II.
if the borrowings of such a company from banks or
financial institutions or any body corporate is less than twice its paid up
share capital or fifty crore rupees, whichever is lower; and such a company
is not in default in repayment of such borrowings subsisting at the time of
making transactions under this section.
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6.
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Chapter V- Section-73(2) (a) (b):
Prohibition on acceptance of deposits from public.
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Entire sub-section (2)
was exempted. Shall not apply to private companies having 50 or less number
of members, if they accept monies from their members not exceeding 25% of
aggregate of the paid up capital and free reserves or one hundred per cent of
the paid up capital, whichever is more,
and which
inform the details of such
monies to the Registrar in
the
prescribed manner. |
Shall not apply to a private company which
accepts from its members monies not exceeding one hundred per cent, of
aggregate of the paid up share capital and free reserves, and such company
shall file the details of monies so accepted to the Registrar in such manner
as may be specified.
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7.
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Chapter VII
Section 101- Notice of meeting.
Section 102- Statement to be annexed to notice. Section 103- Quorum for meetings.
Section 104- Chairman of meetings. Section 105- Proxies.
Section 106- Restriction on voting rights.
Section 107- Voting by show of hands.
Section 109- Demand for poll.
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Shall apply
unless otherwise specified in
respective sections or the
articles of the company
Provide
otherwise.
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Shall apply
unless otherwise specified in
respective sections or the articles of
the company Provide otherwise.
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8.
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Chapter VII- Section 117(3)(g)
(g) resolutions passed
in pursuance of sub- section (3) of section 179; and
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Didn’t provide in
Earlier Notification.
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Shall not apply.
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9.
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Chapter X- Section 141(3)(g):
Text of section is reproduced below:
Section 141- Eligibility, qualifications and
disqualifications of auditors. -
Qualifications and disqualifications of auditors.
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Shall not apply in respect of appointment of
auditors by private companies.
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Shall apply with the modification that the words
"other than one person
companies, dormant companies,
small companies, and private companies having paid-up share capital
less than one hundred crore rupees” shall be inserted
after the words “twenty companies”.
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10.
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Chapter XI- Section
160-
Right of persons other than retiring directors to stand
for directorship.
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Shall not apply.
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Shall not apply.
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11.
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Chapter XI- Section 162- Appointment of directors to be
voted individually.
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Shall not apply.
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Same
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12.
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Chapter XII- Section 180-
Restrictions on
powers of Board.
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Shall not apply.
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Not provided
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13.
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Chapter XII- Section 184(2) Section 184- Disclosure of interest by director. |
Didn’t provide in Earlier Notification.
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Shall
apply with the exception that the interested director may participate in such
meeting after disclosure of his interest
|
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14.
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Chapter XII- Section 185- Loan to directors, etc.
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Shall not apply to Private companies –
{a}which have
borrowings from banks or financial institutions or any bodies corporate not
more than twice of their paid up share capital or Rs. 50 crore, whichever is
lower; and
{b}in whose share capital no other body
corporate has invested any money”.
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Shall not apply to a private company -
{a}in whose share capital another body corporate has
invested any money;
{b}if the borrowings of
such a company from banks or financial institutions or any body corporate is
less than twice of its paid up share capital or fifty crore rupees, whichever
is lower; and
{c}such a
company has no default in repayment of such borrowings subsisting at the time
of making transactions under this section.
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15.
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Chapter XII- second
proviso to section 188 (1):
Section
188- Related party transactions.
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Shall not apply
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Shall not apply
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16.
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Chapter XIII-section
196(4) & (5):
Appointment of MD, WTD
& Manager.
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Shall not apply
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Shall not apply
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Details of exemption provided under the draft notification but are missing from the final notification.
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S.No.
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Chapter/ Section number/ Sub-section(s) in the Companies
Act, 2013
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Exceptions/
Modifications/
Adaptations
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1.
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Chapter XIII – section 203(3)
Text of section is reproduced below:
Section 203(3) - Appointment of key
managerial personnel.
(3) A whole-time key
managerial personnel shall not hold office in more than one company except in
its subsidiary company at the same time
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Shall not apply
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