On perusal of the Companies Act
2013, many provisions applicable to the private companies were onerous for the
smooth functioning of a company. The Draft Notification by the Ministry of
Corporate Affairs dated 24-06-2014 is in the welcome direction of conducting
business rather than getting entangled in compliance. Let’s have a look at the
proposed changes in the notification applicable for private limited companies
in India:
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SN
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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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Section 43 – Kinds of Share capital & Section 47 – Voting Rights
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Both whole sections shall not apply
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2.
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Section 62 (1) (a) – Rights offer to the existing shareholders shall
be made by notice specifying the no. of shares offered and limiting the time
not being less than 15 days and not exceeding 30 days from the date of offer
within which the offer, if not accepted, shall be deemed declined
Section 62 (2) – The notice referred to above shall be despatched by
RP or Speed Post or electronic mode to all existing shareholders atleast 3
days before the opening of issue
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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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3.
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Section 62 (1) (b) – Further issue of shares under the Employee Stock
Option Plan (ESOP) shall be subject to special
resolution passed by company and subject to such conditions as may be
prescribed
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Shall apply except that instead of special resolution, ordinary
resolution would be required
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4.
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Section 73 (2) – Acceptance of Deposits from public
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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 100% of the paid up capital, whichever is more, and
inform the details of such monies to the Registrar in the prescribed manner.
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5.
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Section 101- Notice for General 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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All whole Shall apply unless
- otherwise specified in respective sections or
- unless articles of the private company otherwise provide.
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6.
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Section 141 (3) (g) – An auditor can be appointed by maximum 20
companies
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Shall not apply in respect of appointment of auditors by private
companies.
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7.
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Section 160 - Right of persons other than retiring directors to stand
for directorship.
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Shall not apply
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8.
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Section 162 - Appointment of 2 or more persons as directors of the
company by a single resolution shall not be moved unless
a proposal to move such a motion has first been agreed to at the
meeting without any vote being cast against it.
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Shall not apply
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9.
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Section 180 – Restrictions on powers of
Board.
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Shall not apply to private companies having 50 or less number of
members
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10.
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Section 185 - no company shall, directly or indirectly, advance any
loan, including any loan represented by a book debt, to any of its directors
or to any other person in whom the director is interested or give any guarantee
or provide any security in connection with any loan taken by him or such
other person
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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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11.
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Section 188 – Related party transactions
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Shall not apply
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12.
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Section 196 (4) and (5) – Appointment and remuneration of managing
director, whole-time director or manager.
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Shall not apply
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13.
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Section 203 (3) - Whole-time key managerial personnel (KMP) 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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The
draft notification has been laid before both the Houses of Parliament and if
notified will be of paramount importance to the private companies in India.
