Exemptions Notification to Private Companies dated 13/06/2017

EXEMPTIONS NOTIFICATION AVAILABLE TO PRIVATE COMPANIES;DATED 13/06/2017.

KNOWLEDGE AS PER THE BARE ACT;

In this article, the author will initially start with referring the respective sections of the Act (hereinafter refers to The Companies Act, 2013).

SECTION 462 UNDER COMPANIES ACT, 2013: POWER TO EXEMPT A CLASS OR CLASSES OF COMPANIES FROM PROVISION OF THIS ACT:

This section gives power to Central Government by notification direct that any provision of this Act apply or not to apply to such class or classes of companies specified in the public interest. Under the 1956 Act, the provision of this Act which would apply/not apply was applicable only with regard to Government companies.

EXEMPTIONS TO THE PRIVATE LIMITED COMPANIES: notification dated 13^th June 2016:

In exercise of the powers conferred by clauses (a) and (b) of subsection (1) of section 462 and in pursuance of sub-section (2) of section 462 of the Companies Act, 2013 ('18 of 2013) (hereinafter referred to as the said Act); MCA lays down exemptions to the private limited companies through issue of notification dated 13^th June 2016 in addition to the principal notification so issued dated 05^th June 2016.

http://www.mca.gov.in/Ministry/pdf/Exemptions_to_private_companies_05062015.pdf (LINK OF ORIGINAL NOTIFICATION)

MCA LAYS DOWN FOLLOWING EXEMPTION TO PRIVATE COMPANIES UNDER COMPANIES ACT 2013 THROUGH A NOTIFICATION DATED 13-06-2017

IN ADDITION TO PRINCIPAL NOTIFICATION

SR.NO	SECTION NO/CHAPTER NO	EARLIER		AMENDMENTS
	Chapter I, clause (40) of section 2.	Provided that the financial statement, with respect to person company, small company, dormant company not include the cash flow statement;		For the proviso, the following shall be SUBSTITUTED, namely: - Provided that the financial statement, with respect to person company, small company, dormant company private company (if such private company is a start-up)1 not include the cash flow statement; Now the Private Companies (Start-up only) are not required to provide “Cash Flow Statement along with financial statements.
1Explanation. - For the purposes of this Act, the term 'start-up' or "start-up company" means a private company incorporated under the Companies Act, 2013 (18 of 20'l3) or the Companies Act, 1956 ('l of 1956) and recognised as start-up in accordance with the notification issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry."
	Chapter V, clauses (a) to (e) of Section 73(2)	Earlier with the notification dated 05th June 2015, Chapter V, clauses (a) to (e) of subsection (2) of SECTION 732: Shall not apply to Private Company: A)  Which accepts from its members' monies not exceeding one hundred per cent, of aggregate of the paid-up share capital and free reserves B)  Such company shall File the details of monies so accepted to the Registrar. in such manner as may be specified		In the principal notification, in relating thereto, the following serial SUBSTITUTED, namely: - the Table, for serial number 6 and the entries number and the entries relating thereto shall be: Chapter V, clauses (a) to (e) of subsection (2) of SECTION 732: shall not be applicable to following private companies. A)  Which accepts from its member's 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 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 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.”
2Section 73 (2) states that companies can accept deposits from members by passing a special resolution and by complying with such terms and conditions as are prescribed in  section 73(2)(a) to (f) of the Act
	Chapter VII Section 923(1) clause (g)		Earlier; Section 92(1) clause (g) : remuneration of directors and key managerial remuneration	In the principal notification, in the Table, after serial number 6 and the entries relating thereto, the following serial numbers 6A and the entries shall be INSERTED, namely: Shall apply to private companies which are small companies, namely:- "(g) the aggregate amount of remuneration drawn by directors
			Earlier; For the proviso, the following proviso 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.".	For the proviso, the following proviso shall be SUBSTITUTED, namely: and serial number 6B- Provided that in relation to One Person Company, small company and private company (if such private company is a start-up)1, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.".
3Section 92 (1) Every Company shall prepare return (hereinafter referred to as “the annual return”) in the prescribed form containing particulars as they stood at the close of the financial year regarding
	Chapter X Section 143(3) CLAUSE (i)		(3) The auditor report states shall also state that: (i)  Whether the company has adequate internal financial controls systems in the place and the operative effectiveness of such controls.	In the principal notification, in the Table, after serial number 9 and the entries relating thereto, the following serial numbers 9A and the entries shall be INSERTED, namely Shall not apply to a private company:- (i)                which is a one-person company or a small company; or (ii)              which has a 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 crores.
	Chapter X II Section 173 (5)		(5) 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 ninety days: Provided that nothing contained in this subsection and in section 174 shall apply to One person Company in which there is only one director on its Board of Directors.	In the principal notification, in the Table, after serial number 11 and the entries relating thereto, the following serial numbers 11A and the entries shall be INSERTED, namely: For sub-section (5), the following sub-section shall be substituted, namely:- (5) A One Person Company, small company, dormant company and a private company (if such private company is a start-up)1 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: Provided that nothing contained in this subsection and in section 174 shall apply to One person Company in which there is only one director on its Board of Directors.
	Chapter X II Section 174(3)		Explanation: Where at any time the number of interested directors exceeds or is equal to two-thirds of the total strength of the Board, the number of remaining directors, being not less than two, shall be the quorum during such time	serial numbers 11B and the entries shall be INSERTED, namely Shall apply with the exception that the interested director4 may also be counted towards in such meetings after disclosure of interest pursuant to section 184
4For the purpose of this subsection, “interested director” means the director within the meaning of subsections (2) of section 184

In the principal notification, after paragraph 2, the following paragraph shall be inserted, namely:-

"2A' The exceptions, modifications, and adaptations provided in column (3) of the aforesaid Table shall be applicable to a private company which has not committed a default in filing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar.

Note: – 1. A copy of this notification has been laid in draft before both Houses of Parliament as required by sub-section (2) of section 462 of the said Act.

2. The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i) vide number G.S.R. 464(E) dated the 5th June 2015.

SOURCE OF INFORMATION:

http://www.mca.gov.in/Ministry/pdf/ExemptionPrivateCompanies.pdf

DISCLAIMER: The entire contents of this document have been developed on the basis of relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors expressly disclaim all or any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document. READER SHOULD SEEK APPROPRIATE COUNSEL FOR YOUR OWN SITUATION. I SHALL NO BE HELD LIABLE FOR ANY OF THE CONSEQUENCES DIRECTLY OR INDIRECTLY. 

(Author: ACS ANJALI GORSIA, Company Secretary in Practice from Nagpur( Maharashtra), and contacted at csanjali,gorsia@gmail.com)