The Companies Act, 2013 (“the New Act”), became effective from 1st April, 2014. After the commencement of this Act, numerous resolutions are required to be filed in e-form MGT-14 with the Registrar of Companies (“ROC”). Though the requirement to file e-form MGT-14 was applicable to all companies but after coming ample of amendments the list of resolutions for filing of e-form MGT-14 has been reduced to certain extent for certain companies. Private companies got numerous exemptions comparatively Listed/Public companies.
The Ministry of Corporate Affairs (“MCA”) vide its Notification No. GSR 464(E) dated June 5, 2015 granted much awaited relief to corporates by allowing certain exemptions to the Private Companies from the applicability of provisions of the New Act. The said decision was taken in respect of privileges/exemptions enjoyed by the Private Companies under the erstwhile Companies Act, 1956 (‘the Old Act’).
It mainly provides respite to Private Companies for related party transactions among private holding-subsidiaries, freedom to have its own class of capital / voting rights. It has reduced certain procedural periodicities under Section 62 of the New Act and removed certain procedures for accepting deposits from members, certain general meeting compliances for the Private Companies. It has provided relief to private Companies from filing of certain resolutions with ROC. The deposition of Rupees One Lakh by a candidate for private company’s directorship is no more required now. Further, the private company directors have been granted a right of participation in the decision making process subject to disclosure of interest. It released certain private companies from the applicability of provisions of loans to directors etc. under section 185 of the Act and provided freedom of voting to members on Related Party Transactions and removed restrictions with regard to appointment of executive directors by the private companies.
The provisions of Section 117 of the New Act state filing requirements of particular resolutions and agreements with the ROC. With the exemption by Notification No. GSR 464(E) dated June 5, 2015 , now private companies need not file resolutions passed under Section 179(3) of the New Act, i.e. Board’s powers to be exercised at the Board meeting. As a result, private companies need not file e-form MGT-14 with ROC on total 13 various occasions of exercise of powers of Board under the provisions of Section 179(3) and Rule 8 of amended Companies (Meetings of Board & its powers) Rules, 2014.
Pursuant to Section 117(1) of the New Act, copy of every resolution or any agreement, in respect of matters specified in sub-section (3) of Sec 117 together with the explanatory statement under section 102, if any, annexed to the notice calling the meeting in which the resolution is proposed, shall be filed with the Registrar within thirty days of the passing or making thereof in such manner and with such fees as may be prescribed.
Proviso to Section 117 (1) of the New Act.
Provided that the copy of every resolution which has the effect of altering the articles and the copy of every agreement referred to in sub-section (3) shall be embodied in or annexed to every copy of the articles issued after passing of the resolution or making of the agreement.
Note: Rule 24 the Companies (Management and Administration) Rules, 2014: A copy of every resolution or any agreement required to be filed, together with the explanatory statement under section 102, if any, shall be filed with the Registrar in Form No. MGT 14 along with the fee.
Accordingly, every company is required to inform ROC through filing of Form No. MGT 14 about major actions taken by the company u/s 117(3) of the New Act either through passing of any resolutions (at Board meeting or Member’s meeting) or by entering into any agreement.
The list of action taken by the company either through passing of any resolutions (at Board meeting or Member’s meeting) or by entering into any agreement, has been provided
- Under Section 117(3) of the New Act;
- Under Section 179(3) of the New Act; and
- Rule 8 of The Companies (Meetings of Board and its Powers) Rules, 2014
With the exemption by Notification No. GSR 464(E) dated June 5, 2015 , regarding non applicability of Section 117(3)(g) of the New Act to Private Companies, resulted that now private companies need not file resolutions passed under Section 179(3) of the New Act, i.e. Board’s powers to be exercised at the Board meeting. Due to non-applicability of Section 117(3)(g) of the New Act to Private Companies, the applicability of Rule 8 of Companies (Meetings of Board & its Powers) Rules, 2014 does not arise.
As a result, Private Companies need not file e-form MGT-14 with ROC on 13 various occasions of exercise of powers of Board under the provisions of Section 179(3) and Rule 8 of amended Companies (Meetings of Board & its Powers) Rules, 2014.
Please note that the above exemption is not a full exemption. It is only regarding Section 179(3) and Rule 8 of amended Companies (Meetings of Board & its Powers) Rules, 2014. Therefore, any action mentioned under Section 117(3) of the New Act, Private Companies still require to file e-form MGT-14 with ROC.
Section 117(3) of the New Act.
The provisions of this section shall apply to—
(a) special resolutions;
(b) resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose unless they had been passed as special resolutions;
(c) any resolution of the Board of Directors of a company or agreement executed by a company, relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director;
(d) resolutions or agreements which have been agreed to by any class of members but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by a specified majority or otherwise in some particular manner; and all resolutions or agreements which effectively bind such class of members though not agreed to by all those members;
(e) omitted – by the companies (Amendment) Act, 2017 w.e.f. 07.05.2018 [prior to its omission, clause (e) read as – “(e) resolution passed by a company according consent to the exercise by its Board of Directors of any of the power under clause (a) and clause (c) of sub-section (1) of Section 180.”];
(f) resolutions requiring a company to be wound up voluntarily passed in pursuance of section 59 of the Insolvency and Bankruptcy Code, 2016;
(g) resolutions passed in pursuance of sub-section (3) of section 179;
Provided that no person shall be entitled under section 399 to inspect or obtain copies of such resolutions;
Provided further that nothing contained in this clause shall apply to a banking company in respect of a resolution passed to grant loans, or give guarantee or provide security in respect of loans under clause (f) of sub-section (3) of section 179 in the ordinary course of its business; and
(h) any other resolution or agreement as may be prescribed and placed in the public domain.
Section 179(3) of the New Act.
The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:—
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;
(g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another company;
(k) any other matter which may be prescribed.
Rule 8 of The Companies (Meetings of Board and its Powers) Rules, 2014.
In addition to the powers specified under sub-section (3) of section 179 of the Act, the following powers shall also be exercised by the Board of Directors only by means of
resolutions passed at meetings of the Board.-
(1) to make political contributions;
(2) to appoint or remove key managerial personnel (KMP);
(3) omitted
(4) to appoint internal auditors and secretarial auditor;
(5) 5 to 9 omitted.
* Sub rule 3 and 5 to 9 of Rule 8 have been omitted by Companies (Meetings of Board and its Power) Amendment Rules, 2015 w.e.f. 18.03.2015.
Exemption.
1. In case of private company – clause (g) of Sub-section 3 of Section 117 shall not apply Notification No. GSR 464(E) dated June 5, 2015.
2. In case of unlisted public company which is licensed to operate by RBI or SEBI or IRDA from the International Financial Service Centre (IFSC) located in an approved multi services SEZ set-up under the SEZ Act, clause (g) of sub-section (3) of section 117, shall not apply- Notification No. G.S.R. 8(E) dated 04th January, 2017.
3. In case of private company which is licensed to operate by RBI or SEBI or IRDA from the International Financial Service Centre (IFSC) located in an approved multi services SEZ set-up under the SEZ Act, in sub-section (1), of Section 117 for the words “thirty days” the words “sixty days” shall be read vide Notification No. G.S.R. 9(E) dated 04th January, 2017.
4. In case of unlisted public company which is licensed to operate by RBI or SEBI or IRDA from the International Financial Service Centre (IFSC) located in an approved multi services SEZ set-up under the SEZ Act, in sub-section (1), of Section 117 for the words “thirty days” the words “sixty days” shall be read vide Notification No. G.S.R. 8(E) dated 04th January, 2017.
Penalty in case of non-filing of resolution or agreement.
If any company fails to file the resolution or the agreement under subsection (1) of Section 117 of the New Act before the expiry of the period specified therein,
- such company shall be liable to penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of twenty-five lakh rupees; and
- every officer of the company who is in default including liquidator of the company, if any shall be liable to penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to maximum of five lakh rupees.
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.
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