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Exceptions to Pvt Company

by rohit

www.cakart.in

Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
A.Chapter 1, Sub-clause (viii) of clause (76) of section 2Section 2(76)(viii) states “Related party”, with reference to a company, means- any company which     is—Shall not apply with respect to section 188For Private Companies, the transactions entered between Holding, Subsidiary and Associate Company will not be covered as Related Party for the purpose of section 188.
 (A) a holding, subsidiary   or an associate company of such company;                         or
(B) a subsidiary of   a holding company		This means transactions entered between them and falling under section 188 does not require compliance of section 188.
Section 188 deals with Related Party TransactionsNote:-  Although Holding company is excluded but Director (other than independent Director), KMP  of holding company or their relative are still included in definition of Related Party. (Section 2(76)(ix))
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
B.Chapter IV, Section 43 and Section 47Section 43- Kind of CapitalSection – 47 Voting RightShall not apply where MOA & AOA of the Private Company so provides.If anything else mentioned in MOA & AOA, then MOA & AOA prevail over the section 43 and 47.
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
C.Chapter IV, Section 62(1)(a)(i) and (2)The offer of Right issue of shares shall be open for minimum 15 days not exceeding 30 days from the date of the offer within which offer made.Shall apply with following modifications:- In clause (a), in sub-clause (i), the following proviso shall be inserted, namely:-In case of emergency, the mentioned time limits an be reduced with consent of shareholders.
Provided   that     notwithstanding anything contained in this sub- clause and sub-section (2) of this section, in case 90% , of the     members   of   a     private company   have   given    their consents in writing or in electronic mode, the periods   lesser than those specified in the said sub- ¬clause or sub-section shall apply.In case 90%, of the members   of   a     private company   have   given their consents in writing or in electronic mode then Offer Can Be Close Before 15 Days.Note:-  The time limits cannot be increased, they can only be reduced.
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
DChapter IV, Section 62(1)(b): Further Issue of Share CapitalFor ESOP Special Resolution  Required.For The words “special resolution”, the words “ordinary resolution” shall be substituted.Now for ESOP Ordinary Resolution is enough.
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
EChapter IV- Section 67Restrictions on purchase by company or giving of loans by it for purchase of its shares.Shall not apply to private companies –
I.   in whose share capital another body corporate has invested any money;
II.   if the borrowings of such a company from banks or financial institutions or any body corporate is less than twice its paid up share capital or fifty crore rupees, whichever is lower; and
III.   such a company is not in default in repayment of such borrowings subsisting at the time of making transactions under this section.
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
FChapter V- Section-73(2) (a) (e):Earlier Private Limited Company were allowed to accept deposits from the Member after following the procedure mention under Section 73.Shall not apply to a private company 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.If Such Company borrows money from member then no need to:
a) Issue Circular
b) File circular with ROC
c) Maintain deposit  repayment reserve
d) Provide deposit insurance
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
GChapter VII, sections 101 to 107 and section 109.Sec 101- Notice of meeting.
Sec 102- Statement to be annexed to notice.
Sec 103- Quorum for meetings.
Sec 104- Chairman of meetings.
Sec 105- Proxies.
Sec 106- Restriction on voting rights.
Sec 107- Voting by show of hands.
Sec 109- Demand for poll.		Shall   apply     unless   otherwise specified in respective sections or the     articles   of   the company Provide otherwise.If anything else mentioned in AOA then AOA prevail over the section 101-107 & 109.Articles of A Private Company May Override Provisions Pertaining to
1.       Content & Length of Notice
2.       Explanatory Statement
3.       Quorum
4.       Chairman
5.       Proxies
6.       Restriction on Voting Rights
7.       Show of Hands & Poll –
However, a Private Company Cannot:-
1. Reduce quorum below two
2. Increase time limit of 48 hours for depositing proxy form
3. Reject a proxy form if it fails to comply with specific requirement of AOA
4. Restrict voting right of a member other than restrictions in section 106
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
HChapter   VII- Section:117 (3)(g)Earlier Provision: Copy of Resolution passed in pursuance of sub-section (3) of Section 179 required filing with ROC.Will not apply on Private Limited Company.Now there is No Need To File MGT -14 For Board Resolutions for the purposes of resolutions passed u/s 179(3) read with rule 8 of Companies (Meeting of Board & its power) Rules, 2014
This would result in Saving ROC filing costs
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
IChapter X- Section 141 (3)(g):Earlier Auditor can’t be appointed as auditor in more than 20 (Twenty) Companies.Shall apply with the modifications that the words “Other than OPC, Dormant, Small Companies and Private Companies having paid up capital of less than Rs. 100 Crores shall be inserted after 20 Companies.”Now under the limit of 20 (Twenty) Companies only following include:
1. Public Companies
2. Private Companies having paid up capital > Rs. 100 crores
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
JChapter XI- Section   160-Candidature Not Required For Appointment of Director at General MeetingShall not applyNow there is no need to deposit Rs. 100,000/- by the Director at the time of appointment.
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
KChapter XI- Section 162-Appointment of directors Need not to be voted individually.Shall not applyNow more than one director can be appoint via a single resolution.
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
LChapter XII- Section 180-Restrictions on powers of Board Not ApplyShall not applyNow there is no need to pass “Special Resolution” for the purposes of passing of Resolution mentioned under Section 180. Example:
1. Borrowing exceeding paid up capital & free reserves.
2. Sell/lease/dispose off undertaking
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
MChapter XII- Section 184(2)Disclosure of interest by director.Shall not apply with the exception that the interested director may participate in such meeting after disclosure of his interestNow Interested directors can participate in the meeting and vote in the meeting after disclosure of his interest.
Note:-  He Cannot be counted in Quorum (Section 174(3) explanation)
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
NChapter XII- Section 185-Loan to Director was earlier not allowed.Provisions of Section 185 not apply to a private companyLoan to director are allowed for Private Limited Companies if it fulfills the below mentioned conditions:
(a) in whose share capital another body corporate has invested any money;1. Other Body Corporate should not be Shareholder of the 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; and2. Not borrowed money from Bank/ Financial Institution/ Body Corporate exceeding lower of the following:-
i. Twice its Paid up capital
ii. Rs. 50  crore
(c)  such a company has no default in repayment of such borrowings subsisting at the time of making transactions under this section.3. No repayment default subsisting at time of giving loan
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
OChapter XII- second proviso to section 188 (1):No member of the company shall vote on such Resolutions, to approve any contract or arrangement which may be entered into by the Company, if such member is related party.Shall not applyNow This proviso will not apply on Private Limited Company.“Even if, Member is related then also he can vote on such resolution required to be passed u/s 188 in GM.
Exceptions to Pvt Company
Sl. No.Section No.Bare Act Dealt withException/Modification/Adaptation as per MCAImpact
     
P.Chapter XIII-section 196(4) & (5):Appointment of MD, WTD & Manager.Shall not applyNow there is no need to Pass Resolution in General Meeting for appointment of Managerial Personnel and no need to file form MR-1.
Managerial Personnel can be appointed in Private limited Company :
1.  Shareholder’s Ratification in not required.
2.  Schedule V not applicable.
3.  MR-1 not required to be filed
4.  T&C of appointment, remuneration not        mandatory to be mentioned in resolution

 

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