IMPORTANT PROVISIONS OF COMPANIES ACT, 2013 FOR PRIVATE LIMITED COMPANIES
· Most of the privileges, concessions and or exemptions which were hitherto available to a private limited company under the existing Act have been proposed to be removed. e.g Rights issue, commencement of business, private placement of shares, acceptance of deposits from members, directors and their relatives etc. This means that in most of the provisions, they will be on par with public limited companies.
· Definition of officer in default is widened. It includes a person who under the immediate authority of the Board or KMP is charged with any responsibility. The earlier provision that the person has given his consent is absent now. This means that Dy. or Asst Company secretary or some other officers would also be held liable for offences under the Act, if the Board designate them as such.
· One of the most important changes is the change in the definition of a private limited company. In private company's definition, the clause of prohibition of invitation or acceptance of deposits from persons other than directors, shareholders or their relatives is gone.
· In the new Act, even private companies have to issue further shares on rights basis. For issue of shares to non-members and non employees, a special resolution is required to be passed and the price should be determined by a registered valuer subject to rules as may be prescribed.
· Practice of accepting Share application money and showing the same as pending allotment in accounts for years cannot continue. Company has to allot shares within 60 days or refund it within next 15 days otherwise liable to pay interest at 12% pa. No such allotment can be made unless the previous allotment is completed or abandoned. Elaborate procedure is prescribed for private placement to ensure that it is truly a private placement including recording names of the persons to whom offer is made and filing of particulars of such persons within 30 days of the offer with ROC.
· Annual Return should be filed within 60 days of the annual general meeting or the last day by which the annual general meeting should have been held or within 270 days with additional fee as may be prescribed, otherwise a fine of minimum of Rs. 50000/- and maximum of Rs. 5 lakh is imposable on the company and the officer in default is also liable to pay the fine and or may be imprisoned.
· AR to be signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice
· Special courts are proposed to be constituted for trying offences under the Act. They may try the offences having punishment of imprisonment not exceeding three years in a summary way.
· The scope of and ambit of disclosures in Directors' Report is enhanced. Notable among them is the specified extract of annual return, the disclosures in respect of directors' and independent director's appointment, criteria etc., risk management policy, details of related party contracts and in case of a listed company or some public companies, a statement on formal annual evaluation by the Board of Directors of its own performance and that of its committees and individual directors. This is a welcome step. For the first time, the government is going beyond mere financial disclosures by giving importance to non-financial disclosures as well.
· Now for the first time, a notice is required to be filed by the company as well with the ROC for the appointment of an Auditor within 15 days of the appointment.
· Unlike in the past, now the director of a private company also has to file his consent for appointment as director.
· Maximum number of directorship including alternate directorship should not exceed twenty in which directorship of public companies should not be more than 10. A lot of ornamental/professional directors will have to resign from many companies.
· Loans to directors are subject to restrictions in case of both private and public companies. Earlier, there were no restrictions in case of private companies.
· In case of inter corporate loans and other loans it is now compulsory to charge interest at a rate which is not lower than the yield on Government security of the similar tenor. This will put restrictions on transfer of funds within the group companies as and when required by promoters.
· In case of related party transactions in case of some companies having specified paid up capital or transactions specified certain limit, a special resolution is necessary and members who are related parties are debarred from voting.