Section 462 of the Companies Act, 2013: Power to exempt class or classes of companies from Act

#class #exemption #notification #privatecompany

The section states that:

(1) The Central Government may in the public interest, by notification direct that any of the provisions of this Act,— (a) shall not apply to such class or classes of companies; or (b) shall apply to the class or classes of companies with such exceptions, modifications and adaptations as may be specified in the notification.

[(2) A copy of every notification proposed to be issued under sub-section (1), shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days, and if, both Houses agree in disapproving the issue of notification or both Houses agree in making any modification in the notification, the notification shall not be issued or, as the case may be, shall be issued only in such modified form as may be agreed upon by both the Houses.

(3) In reckoning any such period of thirty days as is referred to in sub-section (2), no account shall be taken of any period during which the House referred to in sub-section (2) is prorogued or adjourned for more than four consecutive days.

(4) The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.]

Exemptions made on private companies are:

1. For private companies, the definition of the term “related party” as provided in clause (76) of section 2 has been changed in relation to section 188 i.e. related party transactions. Thus, there is no need to comply with the provisions of section 188 of CA 2013 for such transactions by any private company as such contract or arrangement shall not be treated as related party transactions. In other words, there is no need to receive the consent of Board of Directors of a private company by passing BR at BM for such transactions to comply with the provisions of section 188 of CA 2013.

2. The provisions of section 43 of the Companies Act, 2013 shall not apply to a private company where memorandum or articles of association of the private company so provides. That means the provisions related to kinds of share capital [Section 43 of CA 2013] shall not apply to a private company if and only if the memorandum or articles of association of such private company provides that this section shall not apply. Moreover, this section may be applicable with such modifications as provided in these documents. Consequently, a private company may have any kind of share capital in accordance with their articles.

3. The provisions of section 47 of the Companies Act, 2013 shall not apply to a private company except when memorandum or articles of association of the private company so provides. Accordingly, the provisions related to Voting Rights shall not apply to a private company where memorandum or articles of association of the private company provides that this section shall not apply to them. Thus, a private company may have shares with either voting rights or without voting rights or may have with differential rights as per their articles.

4. The provisions of clauses (a) to (e) of sub-section (2) of section 73 of the Companies Act, 2013 shall not apply to a private company which accepts from its members monies not exceeding 100% of aggregate of the paid up share capital and free reserves, and such company shall file the details of monies so accepted to the Registrar in such manner as may be specified.

5. The provision of section 101 shall apply to a private companies unless otherwise specified in that section or the articles of such companies provide otherwise. That means, if a private company provides for the Notice of its General Meeting in the articles then the provision of section 101 of the Companies Act, 2013 shall not apply to such private company.

6. If a private company provides in its articles for the statement to be annexed to notice then the provision of section 103 of the Companies Act, 2013 shall not apply to such private company. Accordingly, the provision of section 103 shall apply to a private companies unless otherwise the articles of such companies provide otherwise.