SECTION 

PARTICULARS

EXEMPTION/MODIFICATION FOR PRIVATE COMPANIES

Section 2(76)

Related Party Definition

Holding, subsidiary, and associate companies (including fellow subsidiaries) are not treated as related parties for private companies.

Section 43 & 47

Kinds of Share Capital & Voting Rights

Provisions do not apply if the memorandum or articles of association provide otherwise.

Section 62(1)(a)(i)

Rights Issue Notice Period

Notice period for rights issue can be less than 15 days if 90% of members consent in writing/electronic mode.

Section 62(1)(b)

ESOPs

Employee Stock Options can be issued by passing an ordinary resolution (instead of special resolution).

Section 67

Restrictions on purchase of own shares

Does not apply if: 

(a) no body corporate has invested in the share capital, 

(b) borrowings are < twice paid-up share capital or ?50 crore (whichever lower), and

 (c) company is not in default.

Section 73(2)(a)–(e)

Acceptance of Deposits

Private companies can accept deposits from members without complying with conditions in section 73(2) (a–e).

Section 101–107 & 109

General Meetings Provisions

Certain provisions relating to notices, explanatory statements, quorum, chairman, proxies, restrictions on voting rights, voting by show of hands and demand for poll do not apply to private companies (if their articles provide otherwise).

Section 117(3)(g)

Filing of Board Resolutions (MGT-7/117)

Resolutions passed under Section 179(3) not required to be filed with Registrar.

Section 141(3)(g)

Auditor’s Limit on Number of Audits

The ceiling of 20 company audits per auditor excludes private companies.

Section 160

Right of Person to Stand for Directorship

Not applicable to private companies – No requirement of deposit of ?1 lakh.

Section 162

Appointment of Directors

Directors can be appointed through single resolution (instead of individual resolutions).

Section 180

Restrictions on Powers of Board

Not applicable to private companies – Board can exercise powers without shareholder approval.

Section 184

Disclosure of Interest by Director

Shall apply with the exception that the interested director may participate in such meeting after disclosure of his interest.

Section 185

Loan to Directors

Not applicable if:

 (a) no body corporate has invested in share capital, 

(b) borrowings < 2x paid-up share capital or ?50 crore, whichever lower, and

(c) company has not defaulted in repayment.

Section 188(1)

Related Party Transactions

Members who are related parties can vote on resolutions.

Section 196(4) & (5)

Terms of Appointment of MD/WTD/Manager

Not applicable – No need for board/shareholder approval under conditions of Section 197 & Schedule V or filing of terms with ROC.