Summary of Notification dated 13th June, 2017 to exempt private companies as per Section 462 of the Companies Act 2013
Serial Chapter/ Amendment Section Exceptions/ Modifications Remarks
number Section /Adaptations
number/ Sub-
section(s) in
the Companies
Act, 2013
(1) (2) (3)
1. Chapter I, clause New "financial statement" in relation to a The proviso would apply as A Start up private
(40) of section 2- Exemption company, includes-- under:- company is not
Financial (i) a balance sheet as at the required to include the
Statement end of the financial year; Provided that the financial cash flow statement in
(ii) a profit and loss account, or statement, with respect to One the financial
in the case of a company Person Company, small statements
carrying on any activity not company, dormant company
for profit, an income and and private company (if such a
expenditure account for the private company)s a start-up),
financial year; may not include the cash flow
(iii) cash flow statement for the statement;
financial year;
(iv) a statement of changes in
equity, if applicable; and
(v) any explanatory note
annexed to, or forming part
of, any document referred
to in sub-clause (i) to sub-
clause (iv):
Provided that the financial
statement, with respect to One
Person Company, small
company and dormant
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company, may not include the
cash flow statement;
2. Chapter V, clauses Amendment (2) A company may, subject to the Shall not apply to a private (i) Substitution of the
(a) to (e) of sub- notification passing of a resolution in company- Clause 6 in the 5th
section (2) of incorporated general meeting and subject to June, 2015
section 73.- such rules as may be (A) which accepts from its exemption
in the law
prescribed in consultation with members monies not Notification to a
Prohibition on after further the Reserve Bank of India, exceeding one hundred private company
Acceptance of modification accept deposits from its percent of aggregate of paid which provided for
Deposits from members on such terms and up share capital, free reserves exemption from
public conditions, including the and securities premium accepting from its
provision of security, if any, or account; or members not
for the repayment of such exceeding 100%
deposits with interest, as may (B) which is a start-up, for five of the paid up
be agreed upon between the years from the date of its capital and free
company and its members, incorporation; or reservesto 100%
subject to the fulfilment of the of the paid up
following conditions, namely:-- (C) which fulfils all of the capital, free
(a) issuance of a circular to its following conditions ; namely- reserves and
members including therein a securities
statement showing the financial (a) which is not an associate premium.
position of the company, the or a subsidiary company of
credit rating obtained, the total any other company (ii) Exemption has
number of depositors and the been provided to a
amount due towards deposits (b) if the borrowings of such a Start up private
in respect of any previous company from banks or company for 5
deposits accepted by the financial institutions or any years from its
company and such other body corporate is less than incorporation.
particulars in such form and in twice of its paid up share
such manner as may be capital or fifty crore rupees, (iii) Also, exemption
prescribed; whichever is lower; and has been provided
(b) filing a copy of the circular along to a private
with such statement with the (c) such a company has no company which is
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Registrar within thirty days default in repayment of such not an associate
before the date of issue of the borrowings subsisting at the or a subsidiary of
circular; time of accepting deposits a company,
(c) depositing such sum which shall under this section.
not be less than fifteen per having borrowings
cent. of the amount of its Provided that the company less than twice of
deposits maturing during a referred to in Clause (A), (B) its paid up share
financial year and the financial or (C) shall file the details of capital or Rs 50
year next following, and kept in monies accepted to the crorewhich ever is
a scheduled bank in a separate Registrar in such manner as less
bank account to be called as may be specified. Default in
deposit repayment reserve repayment of
account; borrowings is not
(d) providing such deposit insurance subsisting at the
in such manner and to such time of acceptance
extent as may be prescribed; of deposits
(e) certifying that the company has
not committed any default in Some exemptions are
the repayment of deposits same as earlier
accepted either before or after Exemptions given to
the commencement of this Act private companies in
or payment of interest on such June, 2015 under
deposits; and Section 185.
(f) providing security, if any for the
due repayment of the amount
of deposit or the interest
thereon including the creation
of such charge on the property
or assets of the company:
Provided that in case where a
company does not secure the
deposits or secures such
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deposits partially, then, the
deposits shall be termed as
,,,,unsecured deposits and shall
be so quoted in every circular,
form, advertisement or in any
document related to invitation
or acceptance of deposits.
3. Chapter VII, New (1) Every company shall prepare a Shall apply to private Private companies
clause (g) of sub- Exemption return (hereinafter referred to companies which are small which are small
section (1) of as the annual return) in the companies as under:- companies need to
section 92- prescribed form containing the disclose aggregate
Annual Return particulars as they stood on the (g) aggregate amount of amount of
close of the financial year remuneration drawn by remuneration drawn by
regarding-- directors directors.
(g) remuneration of directors
and key managerial They need not give
personnel; details of remuneration
of all the directors and
key managerial
personnel individually.
4. Chapter VII, New Provided that in relation to One The proviso shall apply as In Start up companies,
proviso to sub- Exemption Person Company and small company, under:- where there is no
section (1) of the annual return shall be signed by company secretary, the
section 92- the company secretary, or where Provided that in relation to annual return may be
Annual Return there is no company secretary, by One Person Company, small signed by the director
the director of the company. company and a private of the company.
company(if such private
company is a start-up), the
annual return shall be signed
by the company secretary, or
where there is no company
secretary, by the director of
the company.
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5. Chapter X, clause New The auditors report shall also state Shall not apply to a private Internal Financial
(i) of sub-section Exemption whether the company has adequate company Reporting is not
(3) of section internal financial controls system in required by a private
143.- place and the operating (i) which is a one person company which is a
Powers and effectiveness of such controls; company; or a small company; One Person company
Duties of auditors or or a small company or
and Auditing
Standards (ii) which has turnover less Which has Turnover-
than rupees fifty crores as per less than Rs 50 crore
latest audited financial
statement or which has Borrowings- less than
aggregate borrowings from Rs 25 crore.
banks or financial institutions
or any body corporate at any
point of time during the
financial year less than rupees
twenty five crore;
6. Chapter XII, sub- New A One Person Company, small For subsection (5), the Start up companies are
section (5) of Exemption company and dormant company following subsection shall be required to hold only 2
section 173- shall be deemed to have complied substituted:- meetings of the Board
Meetings of Board with the provisions of this section if in an year
at least one meeting of the Board of (5) A One Person Company,
Directors has been conducted in small company, dormant
each half of a calendar year and the company and a private
gap between the two meetings is not company (if such private
less than ninety days: company is a start-up) shall be
deemed to have complied with
Provided that nothing contained in the provisions of this section if
this sub-section and in section 174 at least one meeting of the
shall apply to One Person Company Board of Directors has been
in which there is only one director on conducted in each half of a
its Board of Directors calendar year and the gap
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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.
7. Chapter XII, sub- New Where at any time the number of Shall apply with the exception For private companies
section (3) of Exemption interested directors exceeds or is that the interested director interested director may
section 174.- equal to two thirds of the total may also be counted towards also be counted for
Quorum for strength of the Board of Directors, quorum in such meeting after quorum in such
meetings of Board the number of directors who are not disclosure of his interest meeting after
interested directors and present at pursuant to section 184. disclosure of his
the meeting, being not less than two, interest pursuant to
shall be the quorum during such section 184.
time.
Explanation.--For the purposes of
this sub-section, "interested director"
means a director within the meaning
of sub-section (2) of section 184.
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