AS PER THE PROVISIONS OF THE COMPANIES ACT 2013

SL NO. SECTION/RULES APPLICABILITY ANALYSIS
1.       Rule 9A of Companies (Prospectus and Allotment of Securities) Rules, 2014

(Dematerialization of Shares)

Every unlisted public company shall –

(a) Issue the securities only in dematerialized form; and

(b) Facilitate dematerialization of all its existing securities

 

Not apply to private company.
2.       Section 91 Closure of Register of Members or Debenture Holders or Other Security Holders A company closing the register of members or the register of debenture holders shall give at least seven days previous notice by advertisement at least once in 2  newspapers prescribed in section and publish the notice on the website as may be notified by the Central Government and on the website, if any, of the Company. Shall not be applicable to a private company provided that the notice has been served on all members of the private company not less than seven days prior to closure of the register of members
3.       Section 108 Voting through Electronic Means Every company which has listed its equity shares on a recognized stock exchange and every company having not less than one thousand members shall provide to its members facility to exercise their right to vote on resolutions proposed to be considered at a general meeting by electronic means. Not apply to private company
4.       Section 110 Postal ballot A company shall, in respect of such items of business as prescribed, declare to be transacted only by means of postal ballot.

 

One Person Companies and other companies having members up to two hundred are not required to transact any business through postal ballot, so private companies are not required to transact any business through postal ballot.
5.       NFRA Rules, 2018 a. Listed Companies

b. Unlisted companies having paid up share capital of not less than INR 500 Crores or turnover of not less than INR 1000 Crores or having, in aggregate, outstanding loans, debentures and deposits of not less than INR 500 crores

c.Insurance companies, Banking companies, Companies engaged in the generation or supply of electricity.

d.a body corporate incorporated or registered outside India, which is a subsidiary or associate company of any company or body corporate incorporated or registered in India as referred to in clauses (a) to (c), if the income or net worth of such subsidiary or associate company exceeds twenty per cent. of the consolidated income or consolidated networth of such company or the body corporate, as the case may be, referred to in clauses (a) to (c).

Not apply to private companies
6.       Second proviso to section 149(1) Woman Director (i) every listed company;

(ii) every other public company having :-

(a) paid–up share capital of one hundred crore rupees or more; or

(b) turnover of three hundred crore rupees or more

Not apply to private companies
7.       Section 149(4) Independent Director (i) Every listed public company or

(ii) Public Companies having paid up share capital of ten crore rupees or more; or

(iii) Public Companies having turnover of one hundred crore rupees or more; or

(iv) Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees

Not apply to private companies
8.       Section 152(6) Director retire by rotation At the every annual general meeting of a public company, one-third of such of the directors for the time being as are liable to retire by rotation,  shall retire from office. Not apply to private companies
9.       Section 177 and 178 Audit Committee and NRC (i) Every listed public company or

(ii) Public Companies having paid up share capital of ten crore rupees or more; or

(iii) Public Companies having turnover of one hundred crore rupees or more; or

(iv) Public Companies which have, in aggregate, outstanding loans, debentures and deposits, exceeding fifty crore rupees

Not apply to private companies
10.    Section 197 Overall Maximum Managerial Remuneration The total managerial remuneration payable by a public company, to its directors, in respect of any financial year shall not exceed eleven per cent. of the net profits. Not apply to private companies
11.    Section 203 KMP Every listed company and every other public company having a paid-up share capital of ten crore rupees or more shall have whole-time key managerial personnel. Not apply to private companies
12.    Section 204 Secretarial Audit (a) Every Listed Company

(b) Every public company having a paid-up share capital of fifty crore rupees or more; or

(c) Every public company having a turnover of two hundred fifty crore rupees or more

Not apply to private companies

2. AS PER NOTIFICATION DATED 5Th JUNE, 2015 AND 13TH JUNE, 2017

SL NO. SECTION Exemption / Modification / Adaptation Analysis
1.       2(40) Financial Statement definition Provided that the financial statement, with respect to one person company, small company, dormant company and private company (if such private company is a start-up) may not include the cash flow statement

For the purposes of this Act, the term ‘start-up’ or “start-up company” means a private company incorporated under 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.

This means that a one person company, small company, dormant company and private company (if such private company is a start-up) need not include cash flow statement in its financial statement.
2. 2(76)(viii) Related party definition Shall not apply with respect to section 188 Transactions with a holding company, subsidiary or an associate company or a fellow subsidiary and an investing company shall not be considered as Related Party Transactions (RPT)
3. 43 and 47 Kinds of Share Capital and voting rights Shall not apply where memorandum or articles of association of the private company so provides Accordingly, private companies, by way of providing relevant provisions in their charter documents, are now free to structure voting rights (including voting rights to preference shares in case of non-payment of dividend), coupon on preference shares, etc
4. 62(1)(a)(i) and 62(2) Right Issue Shall apply with following modifications:-

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 ninety per cent. of the members of a private company have given their consent in writing or in electronic mode, the periods lesser than those specified in the said sub-clause or sub-section shall apply

This would basically mean that in case of a rights issue, if at least 90% of the shareholders of the company agree (either in writing or in the form of an e-mail response) then the period of notice as well as the duration of rights offer can be shortened
5.       62(1)(b) ESOP for the words ‘special resolution’, the words ‘ordinary resolution’ shall be substituted This would mean that for the purpose of approving employee stock option plans, a private company would require an ordinary resolution and not a special resolution
6.       67 Restrictions on Purchase by Company or Giving of Loans by it for Purchase of its Shares Section 67 Will not apply to private companies:

1. In whose share capital no other body corporate has invested any money;

2. if the borrowings of such a company from banks / financial institutions / any Body Corporate is less than twice its paid up capital or Rs. 50 crs whichever is lower; and

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

A private limited company can buy its own shares without effecting a consequent reduction of share capital if the company complies with the prescribed qualifications.
7.       73(2)(a) to (e) Terms and conditions for deposit from members Not apply to private company if :

(A) which accepts from its members monies not exceeding one hundred per cent. of aggregate of the paid up share capital, free reserves and securities premium account; or

(B) which is a start-up, for five years from the date of its incorporation; or

(C) which fulfills all of the following conditions, namely:-

(a) which is not an associate or a subsidiary company of  any other company;

(b) if the borrowings of such a company from banks or financial institutions or any body 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 this section:

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

This means that private companies which accepts prescribed threshold of monies from its members will not require to issue circular to its members, file a copy of the circular to the ROC, deposit certain amount of money in its deposit repayment reserve account, provide a deposit instance and certify that no default has been committed in repayment of deposits and interest thereon.
8.       92(1)(g) Annual Return (Form MGT-7) In case of Private Company – Clause(g) of Sub-Section (1) of Section 92 shall apply to private companies which are small company namely:-

“(g)  “aggregate amount of remuneration drawn by directors;”

Small Company will only disclose the aggregate amount of remuneration drawn by all directors. No need to bifurcate the amount.
9.       Proviso to section 92(1) Signing of annual return “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.” Annual Return can be signed by any one director of the Company if there is no company secretary.
10.    101 to 107 and 109 Notice of General Meeting, Explanatory Statements, Quorum of General Meeting, Chairman of the General Meeting , Proxies

Restrictions on Voting Rights, Voting by show of hands and Demand for poll

Shall apply unless otherwise specified in respective sections of the articles of the company provide otherwise. A private co. can provide separate provisions in its articles with respect to its general meeting notice, explanatory statement, quorum, chairman, proxies, voting (by show of hands or by way of poll) and most importantly it can also specify voting rights in case of partly paid up shares.
11.    117(3)(g) MGT-14 in case of resolution passed u/s 179(3) Section 117(3)(g) shall not apply The provisions of Section 117 shall not apply to the resolutions passed by private limited company in pursuance to the provisions of clause 179(3). No MGT- 14 shall be filed by the Company for the above Board Resolutions passed.
12.    143(3)(i) Reporting of internal financial controls in Financial statements by auditor Section -143(3)(i) shall not apply to the following private companies:

1. which is a one person company or a small company; or

2. which has turnover less than rupees fifty crores as per latest audited financial statement or which has aggregate borrowings from banks or financial institutions or any body corporate at any point of time during the financial year less than rupees twenty five crore.

The clause i of Section 143(3) focus about the requirement of having adequate Internal Financial Control System & its operating effectiveness in the Company and Disclosure of the same in Auditors Report. Now the OPCs, Small Companies and Specified Private Companies are not obligated to maintain these control systems in their respective Company.
13.    141(3)(g) eligibility for appointment as an auditor  In case of private company – in clause (g) of sub-section 3 after the words twenty companies”, the following words shall be inserted;

“other than one person companies, dormant companies, small companies and private companies having paid-up share capital less than one hundred crore rupee”

 

Persons shall not be eligible for appointment as an auditor of a company if he/she is in full time employment elsewhere or a person or a partner of 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 other than one person companies, dormant companies, small companies and private companies having paid-up share capital less than one hundred crore rupee.
14.    160 Right of Persons Other than Retiring Directors to Stand for Directorship shall not apply In case of regularization of additional directors and appointment of any director other than retiring director, that the requirement of Rs. 1 lakh deposit and the 14 days’ notice period is no more required
15.    162 Appointment of Directors to be Voted Individually shall not apply A private company can move the motion to appoint two or more persons as directors by a single resolution.
16.    173(5) Minimum number of Board Meeting A 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 Minimum number of board meetings to be conducted in every year has been at least one in each half of a calendar year and min gap between two meetings is 90 days.
17.    174(3) Interest director for the purpose of Quorum Section 174(3) shall apply with the exception that the interested director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to Section 184 This means that if the number of Interested Directors exceeds or is equal to two-thirds of the total strength of the Board of Directors, the Interested Director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to Section 184
18.    180 Restrictions on power of the Board shall not apply This means that all the powers / decisions listed u/s 180 can now be taken by the board of a private limited company without obtaining approval from the shareholders of the company.
19.    184(2) Disclosure of Interest by Director Section 184 (2) shall apply; with the exception that the interested director may participate in such meeting after disclosure of his interest. This means that a director can participate in a meeting wherein such matters are discussed in which he / she is interested, only after he/she discloses his/her interest.
20.    185 Loan to Directors Section 185 shall not apply to a private company:

1. in whose share capital no other body corporate has invested any money;

2. if the borrowings of such a company from banks / financial institutions / any body corporate is less than twice of its paid up share capital or Rs. 50 crores, whichever is lower; and

3. such a company has no default in repayment of such borrowings subsisting at the time of making transactions under this section.

Only prescribed type of companies are eligible for an exemption from the provisions of Section 185 and can advance, directly or indirectly, any loan (including any loan represented by book debt) or give any guarantee or provide any security in connection with a loan taken by a director or any other person in whom the director is interested.
21.    Second proviso of Section 188(1) Voting by related party Second proviso to Sub-section (1) of Section 188  shall not apply In private company, even a related party member can also vote on resolutions, to approve any contract or arrangement with the related party
22.    196(4) and (5) Appointment of Managerial Personnel shall not apply The applicability of remuneration related provisions / restrictions in case of managerial personnel of private limited companies, especially in case of companies having losses or inadequate profits. Furthermore,  no disclosures in the board or general meeting agenda will be required in case of remuneration of managerial personnel of private limited companies and such companies are also not required to file return with the RoC in this regard.

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