Recent Exemptions to Private Limited Company under Companies Act, 2013

Sub-clause (viii) of clause (76) of section 2.

(A) a holding, subsidiary   or an associate company of such company; or

(B) a subsidiary of   a holding company

The share capital of a company limited by shares shall be of two kinds, namely:—

(a) equity share capital—

(i) with voting rights; or

(ii) with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed; and

(b) preference share capital:

Provided that nothing contained in this Act shall affect the rights of the preference shareholders who are entitled to participate in the proceeds of winding up before the commencement of this Act.

Explanation.—

For the purposes of this section,—

(i) ‘‘equity share capital’’, with reference to any company limited by shares,means all share capital which is not preference share capital;

(ii) ‘‘preference share capital’’, with reference to any company limited by shares, means that part of the issued share capital of the company which carries or would carry a preferential right with respect to—

(a) payment of dividend, either as a fixed amount or an amount calculated at a fixed rate, which may either be free of or subject to income-tax; and

(b) repayment, in the case of a winding up or repayment of capital, of the amount of the share capital paid-up or deemed to have been paid-up, whether or not, there is a preferential right to the payment of any fixed premium or premium on any fixed scale, specified in the memorandum or articles of the company;

(iii) capital shall be deemed to be preference capital, notwithstanding that it is entitled to either or both of the following rights, namely:—

(a) that in respect of dividends, in addition to the preferential rights to the amounts specified in sub-clause (a) of clause (ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to the preferential

right aforesaid;

(b) that in respect of capital, in addition to the preferential right to the repayment, on a winding up, of the amounts specified in sub-clause (b) of clause (ii), it has a right to participate, whether fully or to a limited extent, with capital not entitled to that preferential right in any surplus which may remain after the entire capital has been repaid.

Section – 47 Voting Rights

(1) Subject to the provisions of section 43 and sub-section (2) of section 50,—

(a) every member of a company limited by shares and holding equity share capital therein, shall have a right to vote on every resolution placed before the company;

and

(b) his voting right on a poll shall be in proportion to his share in the paid-up equity share capital of the company.

(2) Every member of a company limited by shares and holding any preference share capital therein shall, in respect of such capital, have a right to vote only on

resolutions placed before the company which directly affect the rights attached to his preference shares and, any resolution for the winding up of the company or for the repayment or reduction of its equity or preference share capital and his voting right on a poll shall be in proportion to his share in the paid-up preference share capital of the company:

Provided that the proportion of the voting rights of equity shareholders to the voting rights of the preference shareholders shall be in the same proportion as the paid-up capital in respect of the equity shares bears to the paid-up capital in respect of

the preference shares:

Provided further that where the dividend in respect of a class of preference shares has not been paid for a period of two years or more, such class of preference shareholders shall have a right to vote on all the resolutions placed before the company.

62 (2) The notice referred to in sub-clause (i) of clause (a) of sub-section (1) shall be

dispatched through registered post or speed post or through electronic mode to all the existing shareholders at least three days before the opening of the issue

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.

Means In case 90%, of the members of a private company have given their consents in writing or in electronic mode then Offer Can Be Close Before 15 Days.

Note: The time limits cannot be increased, they can only be reduced.

(4) Nothing in this section shall affect the right of a company to redeem any preference shares issued by it under this Act or under any previous company law.

I.                   in whose share capital no 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

III.             such a company is not in default in repayment of such borrowings subsisting at the time of making transactions under this section.

security, if any, or for the repayment of such deposits with interest, as may be agreed upon between the company and its members, subject to the fulfillment of the following conditions, namely:

(a) issuance of a circular to its members including therein a statement showing

the financial position of the company, the credit rating obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed;

(e) certifying that the company has not committed any default in the repayment

of deposits accepted either before or after the commencement of this Act or payment of interest on such deposits;

means

Private Limited Company can accept deposit from the Members upto 100% of aggregate of the paid up share capital and free reserves without followings:

·         Issue Circular

·         File circular with ROC

·         Maintain deposit  repayment reserve

·         Provide deposit insurance

Statement to be annexed to notice.

Section Quorum for meetings.

Chairman of meetings.

Proxies.

Restriction on voting rights.

Voting by show of hands.

Demand for poll

If anything else mentioned in AOA then AOA prevail over the section 101-107 & 109.Articles of A Private Company May Override Provisions Pertaining To

·         Content & Length of Notice

·         Explanatory Statement

·         Quorum

·         Chairman

·         Proxies

·         Restriction on Voting Rights

·         Show of Hands & Poll

Section 179(3)

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

Now there is NO NEED TO FILE FORM MGT-14 for the purposes of resolutions passed u/s 179(3) read with rule 8 of Companies (Meeting of Board & its power) Rules, 2014

qualifications

and disqualifi-

cations of

auditors 

a firm holding appointment as its auditor, if such persons or partner is at the date of

such appointment or reappointment holding appointment as auditor of more than twenty companies

·         one person companies,

·         dormant companies,

·         small companies, and

·         Private Companies having paid-up share capital   less than one hundred crore rupees.

Limit of 20 Companies only Includes

1.      Public Companies

2.      Private Companies having paid up capital of Rs. 100 Crore or more

persons other

than retiring

directors to

stand for

directorship

the provisions of this Act, be eligible for appointment to the office of a director at any general meeting, if he, or some member intending to propose him as a director, has, not less than fourteen days before the meeting, left at the registered office of the company, a notice in writing under his hand signifying his candidature as a director or, as the case may be, the

intention of such member to propose him as a candidate for that office, along with the deposit of one lakh rupees or such higher amount as may be prescribed which shall be refunded to such person or, as the case may be, to the member, if the person proposed gets elected as a director or gets more than twenty-five per cent. of total valid votes cast either on

show of hands or on poll on such resolution.

(2) The company shall inform its members of the candidature of a person for the office of director under sub-section (1) in such manner as may be prescribed

Appointment

of directors

to be voted

individually

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.

(2) A resolution moved in contravention of sub-section (1) shall be void, whether or not any objection was taken when it was moved.

(3) A motion for approving a person for appointment, or for nominating a person for appointment as a director, shall be treated as a motion for his appointment

Now more than one director can be appoint via a single resolution.

with the consent of the company by a special resolution, namely

(a) to sell, lease or otherwise dispose of the whole or substantially the whole of

the undertaking of the company or where the company owns more than one undertaking,

of the whole or substantially the whole of any of such undertakings

(b) to invest otherwise in trust securities the amount of compensation received

by it as a result of any merger or amalgamation

(c) to borrow money, where the money to be borrowed, together with the money

already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company’s bankers in the ordinary course of business

(d) to remit, or give time for the repayment of, any debt due from a director.

Now there is no need to pass “Special Resolution” for the purposes of passing of Resolution mentioned under Section 180.

interest by

director

concerned or interested in a contract or arrangement or proposed contract or arrangement

entered into or to be entered into—

(a) with a body corporate in which such director or such director in association

with any other director, holds more than two per cent. shareholding of that body

corporate, or is a promoter, manager, Chief Executive Officer of that body corporate; or

(b) with a firm or other entity in which, such director is a partner, owner or

member, as the case may be, shall disclose the nature of his concern or interest at the meeting of the Board in which the contract or arrangement is discussed and shall not participate in such meeting:

Provided that where any director who is not so concerned or interested at the time of entering into such contract or arrangement, he shall, if he becomes concerned or interested after the contract or arrangement is entered into, disclose his concern or interest forthwith when he becomes concerned or interested or at the first meeting of the Board held after he

becomes so concerned or interested

Loan to directors,

Etc.

o   Twice its Paid up capital

o   Rs. 50  crore

·         No repayment default subsisting of such borrowings at time of giving loan

Note:

Giving of loans/ guarantee/security to Group Companies now possible.

(a) sale, purchase or supply of any goods or materials;

(b) selling or otherwise disposing of, or buying, property of any kind;

(c) leasing of property of any kind;

(d) availing or rendering of any services;

(e) appointment of any agent for purchase or sale of goods, materials, services

or property;

(f) such related party’s appointment to any office or place of profit in the company,

its subsidiary company or associate company; and

(g) underwriting the subscription of any securities or derivatives thereof, of the

company

No member of the company shall vote on such Resolutions, to approve any contract or arrangement which may be entered into by the Company, if such member is related party.

Restriction On Voting Right In General Meeting In Case Of Related Party Transaction Not Applicable:

Now This proviso will not apply on Private Limited Company.“Even if, Member is related then also he can vote on such resolution required to be pass u/s 188 in GM.

Appointment

of managing

director,

whole-time

director or

manager

whole-time director or manager shall be appointed and the terms and conditions of such appointment and remuneration payable be approved by the Board of Directors at a meeting which shall be subject to approval by a resolution at the next general meeting of the company and by the Central Government in case such appointment is at variance to the conditions specified in that Schedule:

Provided that a notice convening Board or general meeting for considering such

appointment shall include the terms and conditions of such appointment, remuneration payable and such other matters including interest, of a director or directors in such appointments, if any:

Provided further that a return in the prescribed form shall be filed within sixty days of such appointment with the Registrar.

(5) Subject to the provisions of this Act, where an appointment of a managing director, whole-time director or manager is not approved by the company at a general meeting, any act done by him before such approval shall not be deemed to be invalid.

Now there is no need to Pass Resolution in General Meeting for appointment of Managerial Personnel and no need to file form MR-1.

Managerial Personnel can be appoint in Private limited Company without following:

·         Shareholder’s Ratification in not required.

·         Schedule V not applicable.

·         MR-1 not required to be filed

·         T&C of appointment, remuneration not        mandatory to be mentioned in resolution