Making things easier, the government has allowed private companies to accept deposits without an offer circular while government firms have been exempted from managerial remuneration limits.
As part of its ongoing efforts to improve ease of doing business in the country, the Corporate Affairs Ministry has notified changes that further relax compliance requirements for private, government, charitable and nidhi companies.
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,” the Ministry said in a press release today.
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,” the release said.
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.
“The provisions relating to loans to directors; loans and investments by companies and related party transactions have been modified to provide flexibility to government companies in complying with such provisions,” the release said further.
The Ministry has already made a raft of changes to the Companies Act, 2013 — whose most provisions came into effect from April 1, 2014 — amid concerns from various stakeholders.