The Ministry of Corporate Affairs has issued a notification to give exemptions to private companies under the Companies Act to improve ease of doing business in India.
ICAI is happy that the Government has issued the long awaited Notification to give exemptions to the private companies. The Institute of Chartered Accountants of India- Partner in Nation building has been giving suggestions to the Government which will help India to improve its position globally in terms of ease of doing business.
Some important exemptions that have been provided in the Notification with respect to the private companies are that the transactions between any company which is holding, subsidiary or an associate of such company and subsidiary of holding shall not be treated as Related Party Transactions. With the removal of restrictions on the powers of Board, it would be easy for the private companies to operate their business.
In terms of achieving the main objective i.e., Ease of doing business in India, the Notification provides that the interested directors of a private company may participate in such meeting wherein contract or arrangement or proposed contract or arrangement entered into or to be entered into is discussed after disclosure of interest. Also, the member of a private company can vote on such resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party.
Further, Loan to Directors etc., may be provided by a private company in whose share capital another body corporate has invested any money and 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 such a company has no default in repayment of such borrowing subsisting at the time of making transactions under this section.
Now, a big relief to the private companies which will help in the capital formation is that the companies can accept deposits from members which is not exceeding 100% of aggregate of the paid up share capital and free reserves.
The private companies need not file with the Registrar the resolutions passed by the Board with respect to Section 179 (3) which will in turn help the private companies to reduce cost of compliance.
For appointment of managing director, whole-time director or manager by a private company, there is no requirement that the terms and conditions of such appointment and remuneration payable be approved by the Board of Directors at its meeting and by the Central Government in case such appointment is at variance to the conditions specified in that Schedule.
CA.Manoj Fadnis, President, ICAI said “Now it would be easy for the private companies to run their business smoothly and further a Committee has also been constituted to recommend to the Govt. further changes that are required in the Companies Law.”
President ICAI is a member of the Committee which has been constituted to review and suggest recommendations to the Government on further issues arising from the implementation of the Companies Act, 2013. With this move, recommendations may be made to the Government that would bring out further modifications in the Companies Act 2013 wherever the provisions are required to be changed in order to achieve the main objective of “Ease of Doing Business in India”.
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