Some Exemptions to Private Companies u/s 462

Serial number

Section in the Companies Act, 2013

Earlier Provisions

Amendments

 Conclusion

(1)

(2)

(3)

(4)

(5)

1.

Section- 2(40)- Financial Statement

“financial statement” in relation to a company, includes—

(i) a balance sheet

(ii) a profit and loss account/  income and expenditure account

(iii) cash flow statement

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

(v) any      explanatory      note

Provided that the financial statement, with respect to One Person Company, small company       and       dormant company, may not include the cash flow statement;

Provided that the financial statement, with respect to One Person Company, small company, dormant company and Start up private company may not include the cash flow statement;

Note: Start-up company means a private company which are set up in accordance with notification issued by Deptt. of Industrial Policy and Promotion, Ministy of Commerce & Industry.

Apart from OPC, Small Companies & Dormant Companies, Start-up companies are also exempted from mandatory requirement of preparation of Cash Flow Statement.

2.

Section- 73(2) Prohibition on Acceptance of Deposits       from public

As per earlier exemption notification dated 05.06.2015, clause (a) to (e) of section- 73(2) shall not apply to a private company which accepts from its members  monies  not exceeding  100% of aggregate of paid up share capital, free reserves and securities premium account.

Now it shall not apply to a private company-

(A) which accepts from its members  monies  not exceeding  one  hundred percent of aggregate of 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 fulfils 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  no default in repayment of such borrowings  subsisting  at  the time of accepting deposits under this 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.

Now the exemption has been given to Start-up companies and other private companies satisfying 3 specified conditions.

3.

Section- 92(1) – Annual Return

(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;

Private Companies which are also small companies shall prepare annual return disclosing the following:

(g) aggregate amount of remuneration drawn by directors

Private companies which      are      small companies    need    to disclose aggregate amount of remuneration drawn by directors. No individual details are required to be disclosed.

4.

Section- 92(1) – Annual Return

Provided that in relation to One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company  secretary,  by the director of the company.

Provided that in relation to One Person Company, small company and start-up private company, the annual return shall be signed by the company secretary, or where there is no company  secretary,  by the director of the company.

This exemption has been given to start-up private companies also.

5.

Section- 143(3)  Auditors Report

The auditor’s report shall also state whether the company has adequate internal financial controls system in place       and       the       operating effectiveness of such controls; (Additional Annexure- B of Auditors Report)

Shall not apply to a private company

(i)   which is a 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 any body corporate at any point of time during the financial year less than Rs. 25 crore;

Internal          Financial Control Reporting      is      not required  by  a  private company  which  is  a One  Person  company or a small company or Which   has   Turnover- Less than Rs 50 crore or Borrowings-  Less  than Rs 25 crore.

Note: Exemption shall be applicable from ABS of FY 2016-17 onwards which are made on or after 13.06.2017 (notification no. 08/2017 dated 25.07.17

6.

Section- 173(5)-  Meetings of Board

A   One   Person   Company,   small company   and   dormant   company 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 90 days:

Provided  that  nothing  contained  in this sub-section and in section 174 shall apply to One Person Company in which there is only one director on its Board of Directors

A   OPC, small company, dormant   company and Start-up private company 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 90 days:

Provided  that  nothing  contained  in this sub-section shall apply to OPC Company where only one director is there.

Start up companies are also given this exemption to hold only 2 Board Meetings in a year.

7.

Section- 174(3)-  Quorum          for meetings of Board

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.

Shall apply with the exception that in case of private companies the   interested  director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to section 184.

For private companies interested director may also be counted for quorum in such meeting   after disclosure of his interest pursuant to section 184.