MCA on 24th
June 2014 has issued Notice inviting Public Comments for the Draft
Notification for the Draft Notification under
Section 462 of the Companies Act, 2013 for providing various Exemptions to Private Limited Companies. Suggestions/Comments
on the proposed draft notification may be addressed/sent latest by 1st July,
2014 through email at exemptions@mca.gov.in. It is requested
that the name, Telephone number and address of the sender should be indicated
at the time of sending suggestions/comments.
We have incorporated proposed
changes and their effects these are as below.
|
Section
|
Exemption/Modification
|
Tentative Effect
|
|
Chapter
IV
Section
43 (Kind of Share Capital)
Section
47 (Voting Right)
(Both
whole)
|
Shall
not apply
|
Private
Limited Companies now can issue equity shares with differential voting rights
without complying the requirement of Rule No. 4 of Companies (Share Capital
and Debenture) Rules, 2014, which require track record of distributable
profit for last three years, authority in AOA and ordinary resolutions etc.
|
|
Chapter
IV
Section
62(1)(a)
Section
62 (2)
(Further
issue of Share Capital)
|
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”
|
The
time limit to renounce the right issue by existing equity shareholder has
been reduced. Minimum time is proposed
to reduced to 7 days from 15 days and maximum time is reduced to 15 days form
30 days.
|
|
Chapter
IV
Section
62(1)(b)
(Further issue of
Share Capital)
|
Shall
apply except instead of ‘special resolution’,
“ordinary resolution” would be
required.
|
As
per section 62(1)(b) the company must offered shares to its employees under
ESOP scheme at the time of allotment of shares, subject to special
resolution. Now Ordinary resolution
will be sufficient for Pvt. Limited Companies.
|
|
Chapter
V
Section
73(2)
(Prohibition
on acceptance of Deposits from Public)
|
Shall
not apply to Private Companies-
-
having 50 or less number of members if they accept monies from their member
not exceeding 25% of aggregate of the paid up capital and free reserve or
100% of the paid up capital, whichever is more and
-which
inform the details of such monies to the Registrar of Companies in the
prescribed manner
|
As
per sub section (2) of section 73 of the Act, Private limited Companies were
allowed to take deposit form its member only after complying strict
procedure, including issue of circular, creating deposit insurance etc.
Taking
loan from their members will be hassle free for private companies covered in exemption
limit.
|
|
Chapter
VII,
Section
101
(Notice
of Meeting)
|
Shall
apply unless
-otherwise
specified in respective sections or
-unless
articles of private company otherwise provide.
|
General
meetings provisions from section 101 to section 107 and section 109 are
proposed to be exempt for private limited companies.
|
|
Section
102
(Statement to be
annexed to notice)
|
||
|
Section
103
(Quorum
for meeting)
|
||
|
Section
104
(Chairman
of meeting)
|
||
|
Section
105
(Proxies)
|
||
|
Section
106
(Restriction
on Voting Right)
|
||
|
Section
107
(Voting
by show off hands)
|
||
|
Section
109
(Demand
for poll)
|
||
|
Chapter
X Sect. 141(3)(g)
(Eligibility,
Qualifications and Disqualifications of Auditor)
|
Shall
not apply in respect of appointment of auditor by Private Companies
|
Big relief to
Chartered Accountant, now Chartered Accountant can be appointed as auditor in
as many private Limited Companies as they want.
|
|
Chapter
XI Section 160 (whole)
(Right
of persons other than retiring directors to stand for directorship)
|
Shall
not apply
|
Now
no need to summit candidature of a person to appoint him as director in
general meeting.
|
|
Chapter
XI Section 162 (whole)
(Appointment
of directors to be voted individually)
|
Shall
not apply
|
Single
motion in general meeting to appoint two or more person as director are
allowed for private companies.
|
|
Chapter
XII Section 180 (whole)
(Restriction
on Powers of Board)
|
Shall
not apply to private companies having 50 or less members
|
Board
of Directors of private companies having upto 50 members, now can exercise
certain power (borrowing money, investing, selling or leasing undertakings of
company) without obtaining consent of members by way of special resolution.
Corresponding
section of Companies Act 1956 is section 295.
|
|
Chapter
XII, Section 185 (Loan
to Directors)
|
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 Core whichever is lower; and
(b) in whose share
capital no other body corporate has invested any money.
|
Now
a private limited company fulfilling the exemption criteria can advance loan
to its director and any person in whom directors are interested.
|
|
Chapter
XII
Section
188
(Related
Party Transaction)
|
Shall
not apply
|
Now
private companies can enter into contract with related parties in which
directors are interested.
|
|
Chapter
XIII
Section
196(4)
Section
196 (5)
(Appointment
of Managing Director, Whole Time Director or Manager)
|
Shall
not apply
|
No
need to take central government and shareholder approval for appointing and
fixing terms and conditions and remuneration of MD, WTD or Manager by Pvt.
Ltd. Companies.
|
|
Chapter
XIII
203(3)
(Appointment
of Key Managerial Person)
|
Shall
not apply
|
|
Download notice from following links;
Thanks & Regards:
Kashif Ali & Megha Aggarwal
268, Business India Complex,
Uday Park, New Delhi-110049
Call us : +91 9718483209,
9555250231, 011-41407878
Mail:
info@makbizadvisors.com
Note: Kindly note that the entire contents of this article
have been developed on the basis of relevant statutory provisions and as per
the information existing at the time of preparation i.e. Act, notification, clarifications &
circular issued till 25th June 2014. Though we have made upmost
efforts to provide authentic information, however we do not undertake any
liability in any way whatsoever, to any person in respect of anything arising
by reliance upon the content of this article
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