In a significant relaxation, private companies have been exempted from certain provisions for related party transactions under the Companies Act, 2013.
Besides, private firms can now provide a shorter period for offering securities to members by way of right offers, approve employee stock options through a simple majority and follow “an easier procedure” for holding general meetings.
Private companies have also been allowed to accept deposits from members without the requirement of offer circular and creation of deposit repayment reserve etc… Flexibility has also been provided in the types of share capital that can be issued by private companies.
These entities will not be required to file their board resolutions with the registry and give notice for directorships.”Requirement of mandatory consent of shareholders with regard to certain transactions relating to sale of undertaking, investments, borrowings etc has been omitted,”.
Moreover, one-person companies, dormant, small and private firms with less than Rs 100 crore paid-up share capital, would not be taken into account while calculating the maximum limit of 20 companies for audit by an auditor.
Among others, private companies with no investment by any corporate have been allowed to extend loans to directors subject to certain conditions. An interested private company director has now been allowed to participate in board meeting after declaring his interest, the release stated.
For government companies, the Ministry has done away with limits on managerial remuneration as well as restrictions on maximum number of directorships and disqualification of directors in certain cases.
Also, changes have been effected with respect to the place of general meetings.
Further, the norms for board evaluation as mentioned in the Act will not be applicable if directors are evaluated by the ministry or department concerned or the state government as per its own evaluation methodology.
In the case of nidhi companies, norms related to serving of documents to members and payment of dividend as well as those pertaining to related party transactions have been modified.
“The notice amount of Rs 1 lakh provided under section 160 has been reduced to Rs 10,000 for these companies,”
Loosening the norms for four categories of companies, the Corporate Affairs Ministry came out with four separate notifications.
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Source – TheEconomicTimes