Companies Act, 2013: Relief For Private Companies

The Ministry of Corporate Affairs has, by issue of a notification dated June 5, 2015, directed that certain provisions of the Companies Act, 2013 shall not apply to private companies, or shall apply with such modifications as may be prescribed. It may be recalled that in July 2014, a draft notification providing for such relaxations for private companies was introduced in the Parliament under section 462 of the Co Act – this step was largely in response to stakeholder feedback expressing the need for greater operational flexibility, and a relatively less stringent regulatory environment, for private companies, which in essence do not involve large public participation.The draft notification having passed through the due process under section 462, and issued as final by the MCA, this attached BMR update takes a look at some of the key relaxations brought about for private companies.  Note that, in the view of BMR experts, these relaxations should be available to private companies coming within the definition given in section 2(68) of the Co Act.  Accordingly, the benefits may not be available to private companies, which are subsidiaries of a public company, since they are deemed to be public under proviso to section 2(71) of the Co Act.

Read More