Taxmann's Company Law Manual

CONTENTS

Exemptions to Private CompaniesI-11

Exemptions to Section 8 CompaniesI-17

Exemptions to NidhisI-20

Exemptions to Government CompaniesI-23

Exemptions to private company which is licensed to operate by RBI or SEBI or IRDA from the International Financial Services Centre located in an approved multi services SEZ set-up under the SEZ ActI-29

Exemptions to an unlisted public company which is licensed to operate by RBI or SEBI or IRDA from the International Financial Services Centre located in an approved multi services SEZ set-up under SEZ ActI-36

Exemptions to Financial Products, Financial Services or Financial Institutions in an International Financial Services CentreI-44

Table of FeesI-49

Table of Fees Payable to National Company Law TribunalI-60

List of documents to be attached with a petition or application made before National Company Law TribunalI-62

Table of Fees Payable to National Company Law Appellate TribunalI-67

Fees payable under Companies (Compromises, Arrangements and Amalgamations) Rules, 2016I-68

Table showing sections of Companies Act, 2013 & Corresponding Provisions of Companies Act, 1956I-69

Table showing sections of Companies Act, 1956 & Corresponding Provisions of Companies Act, 2013I-81

Table showing sections of Companies Act, 1956 not covered in Companies Act, 2013I-95

List of Circulars & NotificationsI-98

DIVISION ONE

COMPANIES ACT, 2013 WITH RULES

Arrangement of Sections of Companies Act, 2013 iii-xxxii

Arrangement of Rules framed under Companies Act, 2013 xxxiii-lxiv Companies (Specification of Definitions Details) Rules, 2014 (see also Division Two)

(Restriction on Number of Layers)

tion

(Prospectus and Allotment of Securities)

(Procedure

*Page(s) represents ‘range of pages’ where relevant Rules occur. For detailed Arrangement of Rules and page number(s), see ‘Arrangement of Rules framed under Companies Act, 2013’.

Appendix

Appendix

DIVISION TWO

OTHER RULES

National Financial Reporting Authority (Recruitment, Salary, Allowances and Other Terms and Conditions of Service of Secretary, Officers and Other Employees of Authority) Rules, 2019

National Company Law Tribunal and National Company Law Appellate Tribunal (Procedure for Investigation of Misbehaviour or Incapacity of Chairperson, President and Other Members) Rules, 2020

DIVISION THREE

CIRCULARS & NOTIFICATIONS

EXEMPTIONS TO PRIVATE COMPANIES

In exercise of the powers conferred by clauses (a) and (b) of sub-section (1) of section 462 and in pursuance of sub-section (2) of said section of the Companies Act, 2013 (18 of 2013), the Central Government, in the interest of public, hereby directs that certain provisions of the Companies Act, 2013, as specified in column (2) of the Table, shall not apply or shall apply with such exceptions, modifications and adaptations, as specified in column (3) of the said Table, to a private company, namely:—

SerialChapter/Section number/sub-section(s)Exceptions/Modifications/ numberin the Companies Act, 2013 Adaptations

(1) (2) (3)

1.Chapter I, clause (40) of section 2. For the proviso, the following shall be substituted, namely:—

Provided that the financial statement, with respect to one person company, small company, dormant company and private company (if such private company is a start-up) may not include the cash flow statement.

Explanation.—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 2013) or the Companies Act, 1956 (1 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.

1A.Chapter I, sub-clause (viii) of clause Shall not apply with respect to (76)of section 2. section 188.

SerialChapter/Section number/sub-section(s)Exceptions/Modifications/ numberin the Companies Act, 2013Adaptations (1)(2)(3)

2.Chapter IV, section 43 and section 47.Shall not apply where memorandum or articles of association of the private company so provides.

3.Chapter IV, sub-clause (i) of clause (a)Shall apply with following modiof sub-section (1) and sub-section (2)fications:— of section 62.

In clause (a), in sub-clause (i), the following proviso shall be inserted, namely:—

Provided that notwithstanding anything contained in this subclause and sub-section (2) of this section, in case ninety per cent of the members of a private company have given their consent in writing or in electronic mode, the periods lesser than those specified in the said sub-clause or sub-section shall apply.

4.Chapter IV, clause (b) of sub-section (1)In clause (b), for the words “speof section 62.cial resolution”, the words “ordinary resolution” shall be substituted.

5.Chapter IV, section 67.Shall not apply to private companies—

( a)in whose share capital no other body corporate has invested any money;

(b)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

(c )such a company is not in default in repayment of such borrowings subsisting at the time of making transactions under this section.

6.Chapter V, clauses (a) to (e) of sub-Shall not apply to a private comsection (2) of section 73.pany—

(A )which accepts from its members monies not exceeding one hundred per cent of ag-

SerialChapter/Section number/sub-section(s)Exceptions/Modifications/ numberin the Companies Act, 2013Adaptations (1)(2)(3)

gregate 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 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 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 clause (A), (B) or (C) shall file the details of monies accepted to the Registrar in such manner as may be specified.

6A.Chapter VII, clause (g) of sub-sectionShall apply to private companies (1) of section 92 which are small companies, namely:—

(g)aggregate amount of remuneration drawn by directors;

6B.Chapter VII, proviso to sub-section (1) For the proviso, the following of section 92 proviso shall be substituted, namely:—

Provided that in relation to One Person Company, small company and private company (if such private company is a start-up), the annual return shall be signed by the company secretary, or where

SerialChapter/Section number/sub-section(s)Exceptions/Modifications/ numberin the Companies Act, 2013Adaptations (1)(2)(3)

there is no company secretary, by the director of the company.".

7.Chapter VII, sections 101 to 107 andShall apply unless otherwise spesection 109.cified in respective sections or the articles of the company provide otherwise.

8.Chapter VII, clause (g) of sub-section (3)Shall not apply. of section 117.

9.Chapter X, Clause (g) of sub-section (3)Shall apply with the modification of section 141. that the words “other than one person companies, dormant companies, small companies and private companies having paid-up share capital less than one hundred crore rupees” shall be inserted after the words “twenty companies”.

9A.Chapter X, clause (i) of sub-section (3)Shall not apply to a private comof section 143.pany:—

( i )which is a one person company or a small company; or

(ii)which has turnover less than rupees fifty crores as per latest audited financial statement and 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 crore.

10.Chapter XI, section 160.Shall not apply.

11.Chapter XI, section 162.Shall not apply.

11A.Chapter XII, sub-section (5) of sectionFor sub-section (5), the following 173.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) shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Di-

SerialChapter/Section number/sub-section(s)Exceptions/Modifications/ numberin the Companies Act, 2013Adaptations (1)(2)(3)

rectors 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 sub-section and in section 174 shall apply to One Person Company in which there is only one director on its Board of Directors.

11B.Chapter XII, sub-section (3) of section Shall apply with the exception that 174. the interested director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to section 184.

12.Chapter XII, section 180.Shall not apply.

13.Chapter XII, sub-section (2) of section Shall apply with the exception that 184the interested director may participate in such meeting after disclosure of his interest.

14.Chapter XII, section 185.Shall not apply to a private company—

(a)in whose share capital no other body corporate has invested any money;

(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 making transactions under this section.

15.Chapter XII, second proviso to sub-Shall not apply. section (1) of section 188.

16.Chapter XIII, sub-sections (4) and (5)Shall not apply. of section 196.

2. The private companies, while complying with such exceptions, modifications and adaptations, as specified in column (3) of the aforesaid Table, shall ensure that the interests of their shareholders are protected.

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.

3. 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 Companies Act, 2013.

Notification : No. GSR 464(E), dated 5-6-2015, as amended by Notification No. GSR 583(E), dated 13-6-2017 (As Corrected by Corrigendum No. S.O. 2218(E), dated 13-7-2017).

EXEMPTIONS TO SECTION 8 COMPANIES

In exercise of the powers conferred by clauses (a) and (b) of sub-section (1) of section 462 and in pursuance of sub-section (2) of said section read with section 8 of the Companies Act, 2013 (18 of 2013), and in supersession of notifications issued under section 25 of the Companies Act, 1956 (1 of 1956) except as respects things done or omitted to be done before such supersession, the Central Government in the interest of public, hereby directs that certain provisions of the Companies Act, 2013, as specified in column (2) of the Table, shall not apply or shall apply with such exceptions, modifications and adaptations, as specified in column (3) of the said Table, to a body to which a licence is granted under the provisions of the aforesaid section 8, namely :—

SerialProvisions of the ActExceptions, Modifications and NumberAdaptations (1)(2)(3)

l.Clause (24) of section 2.The provisions of clause (24) of section 2 shall not apply.

2. Clause (68) of section 2.The requirement of having minimum paidup share capital shall not apply.

3.Clause (71) of section 2.The requirement of having minimum paidup share capital shall not apply.

4.Sub-section (2) of section 96.In sub-section (2), after the proviso and before the explanation, the following proviso shall be inserted, namely:—

Provided further that the time, date and place of each annual general meeting are decided upon before-hand by the board of directors having regard to the directions, if any, given in this regard by the company in its general meeting.

5.Sub-section (1) of section 101.In sub-section (1), for the words “twenty one days”, the words “fourteen days” shall be substituted.

SerialProvisions of the ActExceptions, Modifications and NumberAdaptations (1)(2)(3)

6.Section 118. The section shall not apply as a whole except that minutes may be recorded within thirty days of the conclusion of every meeting in case of companies where the articles of association provide for confirmation of minutes by circulation.

7.Sub-section (1) of section 136.In sub-section (1), for the words “twenty one days”, the words “fourteen days” shall be substituted.

8.Clause (b) and first proviso toShall not apply. sub-section (1) of section 149.

9.Sub-sections (4), (5), (6), (7), (8),Shall not apply. (9), (10), (11), clause (i) of subsection (12) and sub-section (13) of section 149.

10.Section 150.Shall not apply.

11.Proviso to sub-section (5) ofShall not apply. section 152.

12.Section 160. Shall not apply to companies whose articles provide for election of directors by ballot.

13.Sub-section (1) of section 165.Shall not apply.

14.Sub-section (1) of section 173. Shall apply only to the extent that the Board of Directors, of such Companies shall hold at least one meeting within every six calendar months.

15.Sub-section (1) of section 174.In sub-section (1),— (a)for the words “one-third of its total strength or two directors, whichever is higher”, the words “either eight members or twenty five per cent of its total strength whichever is less” shall be substituted; (b)the following proviso shall be inserted, namely:—

“Provided that the quorum shall not be less than two members”.

16.Sub-section (2) of section 177. The words “with independent directors forming a majority” shall be omitted.

17.Section 178.Shall not apply.

SerialProvisions of the ActExceptions, Modifications and NumberAdaptations (1)(2)(3)

18.Section 179.Matters referred to in clauses (d), (e) and (f) of sub-section (3) may be decided by the Board by circulation instead of at a meeting.

19.Sub-section (2) of section 184.Shall apply only if the transaction with reference to section 188 on the basis of terms and conditions of the contract or arrangement exceeds one lakh rupees.

19A.Sub-section (7) of section 186.In sub-section (7), the following proviso shall be inserted, namely:—

Provided that nothing contained in this subsection shall apply to a company in which twenty-six per cent or more of the paid-up share capital is held by the Central Government or one or more State Governments or both, in respect of loans provided by such company for funding Industrial Research and Development projects in furtherance of its objects as stated in its memorandum of association.

20.Section 189.Shall apply only if the transaction with reference to section 188 on the basis of terms and conditions of the contract or arrangement exceeds one lakh rupees.

2. The companies covered under section 8 of the Companies Act, 2013, while complying with such exceptions, modifications and adaptations, as specified in column (3) of the aforesaid Table, shall ensure that the interests of their shareholders are protected.

2A. The exceptions, modifications and adaptations provided in column (3) of the aforesaid Table shall be applicable to a company covered under section 8 of the said Act which has not committed a default in filing its financial statements under section 137 or annual return under section 92 of the said Act with the Registrar.

3. 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 Companies Act, 2013.

Notification : No. GSR 466(E), dated 5-6-2015, as amended by Notification No. GSR 584(E), dated 13-6-2017.

Company Law Manual

AUTHOR : TAXMANN’S

EDITORIAL BOARD

PUBLISHER : TAXMANN

DATE OF PUBLICATION : JUNE 2024

EDITION : 22ND EDITION

ISBN NO : 9789357787659

NO. OF PAGES : 1912

BINDING TYPE : PAPERBACK

Description

This book is a unique compendium of the annotated text of the Companies Act 2013, along with relevant Rules framed thereunder. In other words, it contains a compilation of amended, updated & annotated text of the Companies Act, 2013 & Rules along with Circulars, Notifications and Secretarial Standards.

What sets this book apart is the unique way of presenting the text of the Companies Act and relevant Rules mapped with the relevant Section of the Act. In other words, the annotation under each Section shows:

• Relevant Rules framed under the relevant Section

• Reference to relevant Forms prescribed

• Exemptions available to private companies/Government companies/Nidhis/ Charitable Companies/Unlisted Public Company/Private Companies operating from IFSCs located in SEZ

• Exemption to Financial Products/Services/Institutions in IFSCs

• The gist of relevant Circulars and Notifications

• Date of enforcement of the provisions

• Corresponding provision under the 1956 Act

• Words & Phrases judicially noticed

• Allied Laws referred to in the provision(s) and

• Relevant provisions of SEBI Rules/SS-1 to SS-4/Listing Obligations/Table F of Schedule I

The Present Publication is the 22 nd Edition & amended upto 10 th June 2024. This book is edited by Taxmann’s Editorial Board, with the following noteworthy features:

• [ Taxmann’s series of Bestseller Books ] on Company Laws

• [ Follows the six-sigma approach ] to achieve the benchmark of ‘zero error.’