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CS Divesh Goyal


In this Flash editorial, the author begins by referring the powers of central government providing under section 462 of Companies Act, 2013. The Central Government, in the interest of public, amends earlier MCA notification number G.S.R. 464(E) dated the 5th June, 2015  vide notification No. G.S.R. ___ dated 13th June 2017 to provide further exemption for private companies.


Ministry of Corporate Affairs On 5th June, 2015 lay down exemption to private company from the provision of the Companies Act, 2013. According to the exemptions Provisions of companies act, 2013 given in that notification shall not apply or shall apply with such exceptions, modifications and adaptations, as specified in the notification.

MCA has now issued a new notification on 13th June 2017 under section 462 of the Companies Act 2013 (“the Act”) providing some more exemptions to private company from the provisions of the Companies Act, 2013 in addition to the exemption notification dated 5th June, 2015.

New Exemption in addition to earlier exemption- on 13th June, 2017 MCA lay down below given exemption to private company from the provision of the Companies Act, 2013.

S.N Chapter/ Section of the Act Particular


Exemption Provided in MCA Notification
A.      Chapter 1, Proviso of clause (40) of section 2. (40) “financial statement” in relation to a company, includes—

(i) a balance sheet as at the end of the financial year;

(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;

(iii) cash flow statement for the financial year;

(iv) a statement of changes in equity, if applicable; and

(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv):

Provided that the financial statement, with respect to One Person Company, small company, dormant company and private Company (if such private Company is [1]start-up) may not include the cash flow statement;

Private Companies (if such Private Company is a Start up) No need to prepare Cash Flow Statement


B.       Chapter V- Section-73(2) Clause (a) (e):


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, namely:-

[2]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”




Chapter VII- Section-79(1) Clause (g) :


1) Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding—

(g) remuneration of directors and key managerial personnel;

For the purpose of Small Company Clause (g) read as under:

(g) aggregate amount of remuneration drawn by directors.


D.      Chapter VII- Section-79(1) Proviso:


Provided that 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. Private Companies (if such Private Company is a Start up) Annual return can be sign by Director of Company if there is no Company Secretary.



E.        Chapter X- Section-143 (3) (i) Proviso:


(3) 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.


F.        Chapter XII- Section-173 (5)


A One Person Company, small company, dormant company and 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: Private Companies (if such Private Company is a Start up)

Requires to hold at least 1 board meeting during each half of calendar year and the gap between the two meeting is not less than 90 days..

G.      Chapter XII- Section-174 (3)


(3) Where at any time the number of interested directors exceeds or is equal to two- thirds of the total strength of the Board of Directors, the number of directors who are not interested directors and present at the meeting, being not less than two, shall be the quorum during such time.

Explanation.—For the purposes of this sub-section, “interested director” means a director within the meaning of sub-section (2) of section 184.

In case of Private Limited Companies:

Interested director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to section 184.

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION.

[1] Start up or Start-up Company means a private Company incorporated under Companies Act, 1956 or the Companies Act, 2013 and recognized as start-up in accordance with the notification issued by the Department of Industrial Policy and promotion, Ministry of Commerce and Industry”.

[2] 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 – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

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CS Divesh Goyal is Fellow Member of the Institute of Companies Secretaries and Practicing Company Secretary in Delhi and Steering Voice in the Corporate World. He is a competent professional having enrich post qualification experience of a decade with expertise in Corporate Law, FEMA, IBC, SEBI, View Full Profile

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  1. CA ANJANI GOYEL says:

    In your case it is a partnership firm and converting it into a company would not be considered as a new domestic company. Hence, 15% tax rate will not be applicable in your case.

    Please correct me if the above solution has an alternative view.

  2. KANIKA KUMAR says:

    Sir, Very nice article but one doubt is there that the section Quoted in point no. D is 79 or Proviso to Section 92. Please Clarify the same.

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