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CS Sakshi Vij

CS Sakshi VijThe Ministry of Corporate Affairs in continuation with Notification No. G.S.R. 464(E) dated the 5th June, 2015 released another Notification dated 13.06.2017 by extending privileges to Private Companies under following Sections of the Companies Act, 2013. Following is the comparative chart of Sections before such notification and after the said notification dated 13.06.2017:-

SECTION BEFORE EXEMPTION NOTIFICATION AFTER EXEMPTION NOTIFICATION
Section 2(40) Financial Statement includes :-  The financial statement, with respect to person company, small company, dormant company & private company (if such private company is a start-up) not include the cash flow statement; one and may
Balance Sheet
A profit and Loss Account , For NPO companies Income and Expenditure Account
Cash Flow Statement ‘start-up’ or “start-up company” means a private company incorporated under the Companies Act, 2013 (18 of 20’l3) or the Companies Act, 1956 (‘l of 1956) and recognised as start-up in accordance with the notification issued by the Department of lndustrial Policy and Promotion, Ministry of Commerce and Industry.”.
A statement of Change in Equity if applicable
Explanatory Statement annexed to above documents
Provided that Financial Statement w.r.t OPC, Small Company & dormant Company, may not include Cash Flow Statement
Section 73(3)(i) Earlier Private Limited Company can accept deposits from the Member after follow up the procedure mention under Section 73 Clause (a) – (e). By the exemption Clause (a) to (e) shall not applicable on following Companies. In the exemption notification dated 5th June, 2015, in the table, for serial number 6 and the entries relating thereto, this serial number and the entries relating thereto shall be substituted. Provision of Section 72(2) clause (a-e) shall not applicable on following Companies:

1) Which accept from its members monies not exceeding 100% percent of aggregate of the paid up share capital, free reserves and Securities Premium account; or

2) Which is a start-up, for five years from the date of its incorporation; or

3) which fulfill all of the following conditions, namely:-

A. Which is not an associate or a subsidiary of any other Company;

B. If the borrowing of such a company from the banks or financial institutions or anybody corporate is less than twice of its paid up share capital or fifty crore rupees, whichever is lower; and

C. Such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under the section.

Provided that the company referred to in clause (A), (B) or (C) shall file the details of monies accepted to the Registrar in such manner as may be specified”

Section 92(1)(g) Particulars in Annual Return: After amendment – for Private Companies which are small companies :-
Remuneration of directors and KMP Instead of (g) point, be read as Aggregate amount of remuneration drawn by directors.
Proviso to Section 92(1) Earlier in relation to One Person Company, small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.” Now, in relation to One Person Company, small company and private company (if such private company is a start-up), the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.”.
 
Section 143 The auditor’s report shall also state—   (i) whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls Clause (i) not apply to a private Company:-

i. Which is one person Company or a Small Company; or ii. Which has turnover less than Rs. 50 Crores as per latest audited financial statement or which has aggregate borrowings from banks or financial institutions or anybody corporate at any point of time during the financial year less then Rs. 25 Crore.

 
Section 173(5) Earlier, One Person Company, small company, dormant company shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days. Now, One Person Company, small company, dormant company and a private company (if such private company is a start-up) shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days:
Section 174 (3) Earlier, Interested Directors were not counted for the purpose of quorum. Now, Interested Directors are counted for the purpose of quorum in such a meeting after disclosing their interest under Section 184.

This exemption shall be applicable to a Private Company which has not committed a default in filing its financial statements under section 137 of the Act or Annual Return u/s 92 of the Act with Registrar.

(Author can be reached at sakshivij92@gmail.com)

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