Exemptions To Private Limited Companies

Sl.

No

Chapter/Section number/Sub-section(s) in the Companies

Act, 2013 and Description of the Section, under which the

changes were proposed.

Exceptions/Modifications/Adaptations, as the case

may be, as per the Notification

Remarks

1

Chapter 1, sub-clause (viii) of Clause 76 of Section2

(Related Party definition)

Exception:-

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

Private company; or

(B) a subsidiary of a holding company to which it is

also a subsidiary; is /are not a Related Party to such

Private Company for the purpose of Section 188.

For the purpose of Sec.188,

the Holding, Subsidiary or

Associate Company of a

Private Limited Company not

be considered as a related

party.

Sl.

No

Chapter/Section number/Sub-section(s) in the Companies

Act, 2013 and Description of the Section, under which the

changes were proposed.

Exceptions/Modifications/Adaptations, as the case

may be, as per the Notification

Remarks

2

Chapter IV, section 43 (Kinds of Capital) and 47 (Voting

Rights)

Exception:-

Shall not apply

So,     a   Private         Limited

Company, now, can have

Capital other than Two Types

as given in Section 43, and

also have voting rights in the

form other than as given in

Section 47.

3

Chapter IV, sub-clause (i) of clause (a) of sub-section (1) of

section 62) (Rights Issue) and sub-section (2) of section 62

(relating to Despatch of Notice of Rights issue)

Modification:-

As to inclusion of a proviso aftersub-clause (i) of

clause (a), for having a lesser period of notice,

subjection to obtaining of consent from 90 %

members of a Private Limited Company.

Enables the Private Company

to have rights offer with

lesser period, if approved by

90 % of the members of the

Company.

4

Chapter IV, clause (b) of sub-section (1) of section 62

(Issue of Shares to Employees under ESOPS)

Modification:-

Shall apply except that instead of Special resolution,

Ordinary resolution would be enough.

Reduction in requirement as

to the nature of resolution,

from Special to Ordinary

Resolution.

5

Chapter IV, Section 67 (Restrictions on purchase by

company or giving of loans by it for purchase of its

shares)

Modification/Adaptation/Exception:-

Shall not apply to Private Companies:

– In whose share Capital no other Body corporate

has invested any money;

– Whose borrowings from Banks/FI or other Body

Corporates is less than (a) Twice its Paid-up capital

or (b) Rs. 50 Crores, whichever is less; and

– Has not defaulted in repayment of such

borrowings, subsisting at the time of making

transactions under this section.

Benefit to closely held Private

c o m pa n i e s with                                  s ma ll

amounts of borrowings and

who does not have any

equity investment from

other Body Corporates.

Certain Limits have been

prescribed,                      thereby,                        any

private Company not hitting

any of the said limits, is free

to purchase its shares or give

loans for purchase of its

shares.

Sl.

No

Chapter/Section number/Sub-section(s) in the Companies

Act, 2013 and Description of the Section, under which the

changes were proposed.

Exceptions/Modifications/Adaptations, as the case

may be, as per the Notification

Remarks

6

Chapter V, Clauses (a) to (e) of sub-section (2) of section

73 (Acceptance of deposits from its Members)

Exemption/Adaptation:-

Shall not apply to private companies which accepts

from its members monies not exceeding 100 % of

aggregate of the Paid-up Share Capital and Free

Reserves and such company shall file the details of

monies so accepted to the registrar in such manner

as may be specified.

Exemption to                         private

companies which propose to

accept      mon iesfrom                 its

members not exceeding 100

% of aggregate of the Paid‑

up Share Capital and Free

Reserves.

However, the details of

deposits accepted needs to

be informed to the Registrar.

7

Chapter VII, sections 101 to 107 and section 109 (Notice of

Meetings, Statement to be annexed to the notice, Quorum

for meetings, Chairman of meetings, Proxies, Restrictions

on voting rights, voting by show of hands, and Demand for

Poll)

Exemption/Adaptation:

Shall apply unless:

– otherwise specified in respective sections or

– articles of the private company otherwise provide.

8

Chapter VII, Clause (g) of sub-section (3) of Section 117

(Filing of Resolutions passed by the Board)

Exemption:

Shall not apply.

Accordingly the resolutions

passed by the Board of

Directors of the Company

pursuant to Section 179 (3)

read with Rule 8 of the

Companies (Meetings of

Board and its Powers) Rules,

2014, as amended from time

to time, are not required to

be filed with ROC

Sl.

No

Chapter/Section number/Sub-section(s) in the Companies

Act, 2013 and Description of the Section, under which the

changes were proposed.

Exceptions/Modifications/Adaptations, as the case

may be, as per the Notification

Remarks

9

Chapter X, Clause (g) of sub-section (3) of section 141

(Appointment of a person as a Auditor, who is already an

auditor of more than 20 Companies)

Exception/Modification:

Shall not apply in respect of appointment of

auditors by private companies.

In calculating 20 companies,

the    following         shall             be

excluded:

– One Person Companies;

– Dormant Companies;

– Small Companies; and

– Private Companies having

paid-up Share capital less

than Rs.100 Crores.

10

Chapter XI, section 160 (Right of person other than the

retiring director to stand for directorship)

Exception:

Shall not apply

Relief as to deposit of Rs.1

Lakh by the member making

the     proposal           as           to

candidature of a particular

person for directorship.

11

Chapter XI, section 162 (Appointment of Directors to be

voted individually)

Exception:

Shall not apply

Accordingly,   for a                       Private

Company, a motion for

appointment of two or more

persons as directors of the

company can be moved by a

single resolution.

12

Chapter XII, Section 180 (Restrictions on the Powers of the

Board)

Exception:

Shall not apply

The provisions of Section

180 are not applicable to

Private Companies,                               and

accordingly,      in                          case                          of

borrowingsin excess of paid‑

up capital and free reserves,

approval of members is not

required and no approval is

required for mortgaging the

properties of the Company

Sl.

No

Chapter/Section number/Sub-section(s) in the Companies

Act, 2013 and Description of the Section, under which the

changes were proposed.

Exceptions/Modifications/Adaptations, as the case

may be, as per the Notification

Remarks

13

Chapter XII, Sub-Section (2) of Section 184 (Disclosure of

Interest in a particular part and participating in the Board

meeting)

Modification/Exception:-

Shall apply with the exception that the interested

director may participate in such meeting after

disclosure of interest.

Keeping in view of the

practical     difficulties,                   the

earlier harsh restriction that

the said interested Director

shall not participate in the

Board meeting has been

relaxed, and now allowing

him to      participate in the

meeting,       after     he                     has

disclosed his interest to the

Board

14

Chapter XII, section 185 (Loans to Directors)

Modification/Adaptation/Exception:-

Shall not apply to Private Companies:

– In whose share Capital no other Body corporate

has invested any money;

– Whose borrowings from Banks/FI or other Body

Corporates is less than (a) Twice its Paid-up capital

or (b) Rs. 50 Crores, whichever is less; and

– Has not defaulted in repayment of such

borrowings, subsisting at the time of making

transactions under this section.

Benefit to closely held Private

companies   with                         small

amounts of borrowings and

who does not have any equity

investment from other Body

Corporates.

Sl.

No

Chapter/Section number/Sub-section(s) in the Companies

Act, 2013 and Description of the Section, under which the

changes were proposed.

Exceptions/Modifications/Adaptations, as the case

may be, as per the Notification

Remarks

15

Chapter XII, section 188 (Related Party Transactions)

Exception:

Shall not apply.

Total     relief    to             Private

Companies.

16

Chapter XIII, section 196, sub-section (4) and sub-section

(5)     (Appointment of MD, WTD or MGR), approval of

Member, filing of Form etc.,.)

Exception:

Shall not apply.

Exemption from obtaining of

Members approval for the

appointment, and filing of

return on appointment with

ROC.