A BRIEF COMPILATION ON THE

(AMENDMENTS)
UNDER

THE COMPANIES ACT 2013

For, CS Executive/ CS Professional Dec. 2015

By:
CS Vinit Nagar
(Practicing Company Secretary)

Comprising of:
COMPANIES (MANAGEMENT AND ADMINISTRATION) AMENDMENT RULES, 2015.
COMPANIES (ACCEPTANCE OF DEPOSITS) SECOND AMENDMENT RULES, 2015
THE COPMANIES (AMENDEMENT) ACT, 2015
EXCEPTIONS, MODIFICATIONS AND ADAPTATIONS TO A PRIVATE COMPANY- 5TH JUNE 2015
RELAXATIONS TO SECTION 8 COMPANIES- 5TH JUNE 2015

Page 1
 MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION

New Delhi, the 19th March, 2015

In exercise of the powers conferred by section 108 read with sub-sections (1) and (2) of section 469 of
the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further
to amend the Companies (Management and Administration) Rules, 2014, namely:

1. (1) These rules may be called the Companies (Management and Administration)
Amendment Rules, 2015.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Companies (Management and Administration) Rules, 2014, for rule 20, the following
rule shall be substituted, namely:

Voting though electronic means. (1) The Provisions of this rule shall apply in respect of the General
Meetings for which notices are issued on or after the date of commencement of this rule.

(2) Every company other than a company referred to in Chapter XB or Chapter XC of the
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009 having its equity shares listed on a recognized stock exchange or a
company having not less than one thousand members, shall provide to its members facility
to exercise their right to vote on resolutions proposed to be considered at general meetings
by electronic means.

Explanation.For the purposes of this rule, the expression

(i) Agency means the National Securities Depository Limited, the Central Depository Services
(India) Limited or any other entity approved by the Ministry of Corporate Affairs subject to
the condition that the National Securities Depository Limited, the Central Depository
Services (India) Limited or such other entity has obtained a certificate from the
Standardisation Testing and Quality Certification Directorate, Department of Information
Technology, Ministry of Communications and Information Technology, Government of India
including with regard to compliance with parameters specified under Explanation (vi);
(ii) Cut-off date means a date not earlier than seven days before the date of general meeting
for determining the eligibility to vote by electronic means or in the general meeting;
(iii) Cyber security means protecting information, equipment, devices, computer, computer
resource, communication device and information stored therein from unauthorised access,
use, disclosures, disruption, modification or destruction;
(iv) electronic voting system means a secured system based process of display of electronic
ballots, recording of votes of the members and the number of votes polled in favour or
against, in such a manner that the entire voting exercised by way of electronic means gets

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 registered and counted in electronic registry in a centralized server with adequate cyber
security;
(v) Remote e-voting means the facility of casting votes by a member using an electronic
voting system from a place other than venue of a general meeting;
(vi) secured system means computer hardware, software, and procedure that
(a) are reasonably secure from unauthorised access and misuse;
(b) provide a reasonable level of reliability and correct operation;
(c) are reasonably suited to performing the intended functions; and
(d) adhere to generally accepted security procedures;
(vii) Voting by electronic means includes remote e-voting and voting at the general meeting
through an electronic voting system which may be the same as used for remote e-voting.

(3) A member may exercise his right to vote through voting by electronic means or resolutions
referred to in sub-rule (2) and the company shall pass such resolutions in accordance with
the provisions of this rule.
(4) A company which provides the facility to its members to exercise voting by electronic means
shall comply with the following procedure, namely:
(i) the notice of the meeting shall be sent to all the members, directors and auditors of the
company either
(a) by registered post or speed; post; or
(b) through electronic means, namely, registered e-mail ID of the recipient; or
(c) by courier service;
(ii) the notice shall also be placed on the website, if any, of the company and of the agency
forthwith after it is sent to the members;
(iii) the notice of the meeting shall clearly state
(A) that the company is providing facility for voting by electronic means and the business
may be transacted through such voting;
(B) that the facility for voting, either through electronic voting system or ballot or polling
paper shall also be made available at the meeting and members attending the meeting
who have not already cast their vote by remote e-voting shall be able to exercise their
right at the meeting;
(C) that the members who have cast their vote by remote e-voting prior to the meeting may
also attend the meeting but shall not be entitled to cast their vote again;
(iv) the notice shall
(A) indicate the process and manner for voting by electronic means ;
(B) indicate the time schedule including the time period during which the votes may be cast
by remote e-voting;
(C) provide the details about the login ID;
(D) specify the process and manner for generating or receiving the password and for casting
of vote in a secure manner.
(v) the company shall cause a public notice by way of an advertisement to be published,
immediately on completion of despatch of notices for the meeting under clause (i) of sub-

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 rule (4) but at least twenty-one days before the date of general meeting, at least once in a
vernacular newspaper in the principal vernacular language of the district in which the
registered office of the company is situated, and having a wide circulation in that district,
and at least once in English language in an English newspaper having country-wide
circulation, and specifying in the said advertisement, inter alia, the following matters,
namely:-
(a) statement that the business may be transacted through voting by electronic means ;
(b) the date and time of commencement of remote e-voting;
(c) the date and time of end of remote e-voting;
(d) cut-off date;
(e) the manner in which persons who have acquired shares and become members of the
company after the dispatch of notice may obtain the login ID and password;
(f) the statement that
(A) remote e-voting shall not be allowed beyond the said date and time;
(B) the manner in which the company shall provide for voting by members present at the
meeting; and
(C) a member may participate in the general meeting even after exercising his right to vote
through remote e-voting but shall not be allowed to vote again in the meeting; and
(D) a person whose name is recorded in the register of members or in the register of beneficial
owners maintained by the depositories as on the cut-off date only shall be entitled to avail
the facility of remote e-voting as well as voting in the general meeting;
(g) website address of the company, if any, and of the agency where notice of the meeting
is displayed; and
(h) name, designation, address, email id and phone number of the person responsible to
address the grievances connected with facility for voting by electronic means:

Provided that the public notice shall be placed on the website of the company, if any, and of the
agency;

(vi) The facility for remote e-voting shall remain open for not less than three days and shall close
at 5.00 p.m. on the date preceding the date of the general meeting;
(vii) during the period when facility for remote e-voting is provided, the members of the
company, holding shares either in physical form or in dematerialized from, as on the cut-off
date, may opt for remote e-voting:
Provided that once the vote on a resolution is cast by the member, he shall not be allowed
to change it subsequently or cast the vote again:
Provided further that a member may participate in the general meeting even after
exercising his right to vote through remote e-voting but shall not be allowed to vote again;
(viii) at the end of the remote e-voting period, the facility shall forthwith be blocked:
Provided that if a company opts to provide the same electronic voting system as used
during remote e-voting during the general meeting, the said facility shall be in operation till
all the resolutions are considered and voted upon in the meeting and may be used for

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 voting only by the members attending the meeting and who have not exercised their right
to vote through remote e-voting.
(ix) the Board of Directors shall appoint one or more scrutinisers, who may be Chartered
Accountant in practice, Cost Accountant in practice, or Company Secretary in practice or an
Advocate, or any other person who is not in employment of the company and is a person of
repute who, in the opinion of the Board can scrutinise the voting and remote e-voting
process in a fair and transparent manner:
Provided that the scrutinisers so appointed may take assistance of a person who is not in
employment of the company and who is well-versed with the electronic voting system;
(x) the scrutiniser shall be willing to be appointed and be available for the purpose of
ascertaining the requisite majority;
(xi) the Chairman shall, at the general meeting, at the end of discussion on the resolutions on
which voting is to be held, allow voting, as provided in clauses (a) to (h) of sub-rule (1) of
rule 21, as applicable, with the assistance of scrutinisers, by use of ballot or polling paper or
by using an electronic voting system for all those members who are present at the general
meeting but have not cast their votes by availing the remote e-voting facility.
(xii) the scrutinizers shall, immediately after the conclusion of voting at the general meeting, first
count the votes cast at the meeting, thereafter unblock the votes cast through remote e-
voting in the presence of at least two witnesses not in the employment of the company and
make, not later than three days of conclusion of the meeting, a consolidated scrutinisers
report of the total votes cast in favor or against, if any, to the Chairman or a person
authorized by him in writing who shall countersign the same:

Provided that the Chairman or a persona authorized by him in writing shall declare the
result of the voting forthwith:

Explanation. It is hereby clarified that the manner in which members have cast their
votes, that is, affirming or negative the resolution, shall remain secret and not available to
the Chairman, Scrutiniser or any other person till the votes are cast in the meeting.
(xiii) For the purpose of ensuring that members who have cast their votes through remote e-
voting do not note again at the general meeting, the scrutinisers shall have access, after the
closure of period for remote e-voting and before the start of general meeting, to details
relating to members, such as their names, folios, number of shares held and such other
information that the scrutinisers may require, who have cast votes through remote e-voting
but not the manner in which they have cast their votes:
(xiv) the scrutinisers shall maintain a register either manually or electronically to record the
assent or dissent received, mentioning the particulars of name, address, folio number or
client ID of the members, number of shares held by them, nominal value of such shares and
whether the shares have differential voting rights;
(xv) the register and all other papers relating to voting by electronic means shall remain in the
safe custody of the scrutinisers until the Chairman considers, approves and signs the
minutes and thereafter, the securitinisers shall hand over the register and other related
papers to the company.

Page 5
 (xvi) the results declared along with the report of the scrutinizer shall be placed on the website of
the company, if any, and on the website of the agency immediately after the result in
declared by the Chairman :

Provided that in case of companies whose equity shares are listed on a recognized stock exchange, the
company shall, simultaneously, forward the results of the concerned stock exchange or exchanges
where its equity shares are listed and such stock exchange or exchanges shall place the results on its or
their website.

(xvii) subject to receipt of requisite number of votes, the resolution shall be deemed to be passed
on the date of the relevant general meeting.
Explanation. For the purposes of this clause, the requisite number of votes shall be the
votes required to pass the resolution as the ordinary resolution or the special resolution,
as the case may be, under section 114 of the Act.
(xviii) a resolution proposed to be considered through voting by electronic means shall not be
withdrawn.

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 Government of India
Ministry of Corporate Affairs Notification
New Delhi, Dated- 15th September, 2015

Companies (Acceptance of Deposits) Second Amendment Rules, 2015 Ministry of Corporate

affairs vide its notification dated 15.09.2015 has provided that wef 15.09.2015 a private
company can accept unsecured loans apart from director also from a relative of
Director provided that relative of director from whom money is received, furnishes to the
company at the time of giving the money, a declaration in writing to the effect that the amount
is not being given out of funds acquired by him by borrowing or accepting loans or deposits
from others and the company shall disclose the details of money so accepted in the Boards
report. The relative need not be a shareholder of the company.
Further Notification has also provided that balance securities premium account will also be
included in calculation of eligible amount of deposit which a company can raise earlier Rule 3
has provided only paid up share capital and free reserves.

In the said rules, in rule 3, (a) for the words paid-up share capital and free reserves,
wherever they occur, the words paid-up share capital, free reserves and securities premium
account shall be substituted;

Page 7
 MINISTRY OF LAW AND JUSTICE
New Delhi, the 26th May, 2015
THE COPMANIES (AMENDEMENT) ACT, 2015

SECTION EARLIER PROVISION PROVISIONS AFTER AMENDMENT

Private Company required
2 (68) Minimum Paid up Share Capital of No requirement of Minimum Paid Up Capital.
Rs 100,000/-
Public Company required
2 (71) Minimum Paid up Share Capital of No requirement of Minimum Paid Up Capital.
Rs 500,000/-
Affixation of Common Seal is Use of Common Seal is now optional.
9, 12 and 223
Mandatory (Not Mandatory)
No requirement of Commencement of Business
11 Commencement of Business
Certificate. Such section shall be omitted.
Issue of Share Certificate(46(1): A Use of Common Seal is now optional. (Not
share certificate issue under the Mandatory)If company doesnt have common seal
46
common seal of Company{Clause then signed by two Directors or by a director and
substituted) Company secretary (if any)
New Section 76A inserted after Section 76 for
This was not in the Act. punishment for deposits accepted in violation of
76A
the provisions of the said Act.(Bare Act Language
of Section 76A given at the end)
Public cant inspects form MGT-14 filed for the
Public can inspect the form MGT-14
purposes mention in section 179(3).{MGT-14 (filed
filed by the Companies as per
117(3)(g) for purpose of Section 179(3), Board Resolution)
section 179(3) for the Board
will not available for public inspection on MCA
Resolution.
portal.}
After the third proviso of 123(1), the following
proviso is inserted. Proviso, No company shall
declare dividend unless carried over previous
123(1) This was not in the Act.
losses and depreciation not provided in previous
year or years are set off against profit of the
company for the current year.
(i) for the words, brackets and figure unpaid or
unclaimed dividend has been transferred under
sub-section (5) shall also be, the words dividend
has not been paid or claimed for seven consecutive
Unpaid or unclaimed dividend has years or more(ii) after the proviso, the following
124(6) been transferred under sub-section explanation shall be inserted, namely:
(5) Substituted Explanation. In case any dividend is paid or
claimed for any year during the said period of
seven consecutive years, the share shall not be
transferred to Investor Education and Protection
Fund..
134(3) Not Earlier in the Act. After Clause c following clause (ca) is inserted:
Page 8
 Details in respect of frauds reported by auditors
under sub-section (12) of section 143 other than
those which are reportable to the Central
Government
Notwithstanding anything contained in this
section, if any auditor of a company in the course
of the performance of his duties as auditor, has
reason to believe that an offence of fraud involving
such amount or amounts as may be prescribed, is
being or has been committed in the company by its
officers or employees, the auditor shall report the
The Act requires that if the auditor matter to the central government within such time
of a company has reason to believe and in such manner as may be prescribed:
that an offence of fraud has been
committed against the company, by Provided that in case of a fraud involving lesser
143(12)
its employees, he must report the than the specified amount, the auditor shall report
matter to the central government the matter to the audit committee constituted
within a time period and in a under section 177 or to the Board in other cases
manner prescribed within such time and in such manner as may be
prescribed:
Provided further that the companies whose
auditors have reported frauds under subsection 12
to the Audit Committee or the Board but not
reported to the Central Government, shall
disclosed details about such frauds in the Board
Report in such manner as may be prescribed.
After clause (b) Sub Section (1) of Section 185
following clause and proviso added:(c) Any loan
Not Earlier in the Act.Bare Act
made by a Holding Company to its Wholly own
Language of Section 185(1)(b) : A
Subsidiary Company or any guarantee given or
company which in the ordinary
security provided by a Holding Company in respect
course of its business provides
of any loan made to its wholly own subsidiary
loans or gives guarantees or
185 Company,
securities for the due repayment of
(d) Any guarantee given or security provided by a
any loan and in respect of such loan
Holding Company in respect of Loan made by any
an interest in charged at a rate not
Bank or financial institution to its subsidiary
less than the bank rate declared by
CompanyProvided that the loan made under
the RBI.
clauses (c) and (d) are utilized by the subsidiary
company for its principal business activity.
Earlier Special Resolution was
required.(As per the previous
system, the companies with a paid For the word Special Resolution the word
188(1) up capital of Rs 10 crore or more Resolution is substituted under the Act.
were required to get shareholders Now Ordinary resolution will work.
nod through a special resolution in
case of related party transactions)
188(1) Not Earlier in the Act. Not required to follow provision of Section 188.

Page 9
After the third proviso of Section 188(1) the
following proviso inserted:
Provided also that that the requirement of passing
the resolution under the first proviso shall not be
applicable for transactions entered between a
holding company and its wholly owned subsidiary
whose accounts are consolidated with such holding
company and have been placed before the
shareholders for their approval

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 MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 5th June, 2015

In exercise of the powers conferred by clauses (a) and (b) of sub-section (1) of section 462 and in
pursuance of sub-section (2) of said section of the Companies Act, 2013 (18 of 2013), the Central
Government, in the interest of public, hereby directors that certain provisions of the Companies Act,
2013, as specified in column (2) of the Table, shall not apply or shall apply with such exceptions,
modifications and adaptations, as specified in column (3) of the said Table, to a private company,
namely:

Serial Chapter/ Section Exceptions/Modifications/Adaptations

number number/ Sub-
section(s) in the
Companies Act,
2013
(1) (2) (3)
1. Chapter I, sub- Shall not apply with respect to section 188.
clause (viii) of
clause (76) of Sections 2(76)(viii) and second proviso to 188(1) of the Act For
section 2. private Companies, the Holding, Subsidiary or Associate companies and
fellow subsidiaries will no more be related parties, for compliances
under section 188.

Further, the member of the private company shall be able to vote on

resolution, to approve any contract or arrangement which may be
entered into by the company, if such member is a related party.

This will help the company to speed-up the processes by avoiding

certain procedural hurdles.
2. Chapter IV, section Shall not apply where memorandum or articles of association of the
43 and section 47. private company so provides.

Sections 43 and 47 of the Act The provisions of sections 43 (i.e.

Kinds of share capital) and 47 (i.e.Voting rights) will not be applicable
now to private companies. With this, the private companies will have
full freedom to decide on the class of shares of the company and the
voting rights to its members, on such shares.

However, while deciding on the same, such companys memorandum

and articles need to have all clear provisions in respect of class of
shares, rights of voting, dividend, redemption, etc. and the same shall
be subject to the other related provisions of the Act, for which private
companies have no exemption under the Act.

3. Chapter IV, sub- Shall apply with following modifications:

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 clause (i0 of clause In clause (a), in sub-clause (i), the following proviso shall be inserted,
(a) of sub-section namely:
(1) and sub-section Provided that notwithstanding anything contained in this sub-clause
(2) of section 62. and sub-section (2) of this section, in case ninety per cent. of the
members of a private company have given their consent in writing or in
electronic mode, the periods lesser than those specified in the said sub-
clause or sub-section shall apply.

Sections 62(1)(a)(i) and (2) of the Act Section 62 of the Act provides
for provisions in respect of further issue of shares and the sub-sections
(1)(a)(i) and (2) provide periods for certain compliances. In order to
have swift completion of procedures under the said section, subject to
consent in writing or in electronic mode of 90% of its members, the
private companies are allowed to have lesser periods than specified for
procedural compliances.

4. Chapter IV, clause In clause (b), for the words special resolution, the words ordinary
(b) of sub-section resolution shall be substituted.
(1) of section 62.
Section 62(1)(b) of the Act With exemptions granted now, the private
companies can increase subscribed capital by issue of further shares to
employees under a scheme of employees stock option, subject to
ordinary resolution passed by company.

For public companies special resolution is required to be passed

5. Chapter V, clauses Shall not apply to a private company which accepts from its members
(a) to (e) of sub- monies not exceeding one hundred per cent. of aggregate of the paid
section (2) of up share capital and free reserves, and such company shall file the
section 73. details of monies so accepted to the Registrar in such manner as may
be specified.

Sections 73(2)(a) to (e) of the Act The provisions of section 73(2)(a)

to (e) of the Act relating to acceptance of deposits viz. circular about
financial position, credit rating, deposit repayment reserves, deposit
insurance and certification etc. shall not be applicable to private
company which accepts from its members monies not exceeding one
hundred per cent 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.

6. Chapter VII, Shall apply unless otherwise specified in respective sections or the
sections 101 to articles of the company provide otherwise.
107 and section
109. Sections 101 to 107 and 109 of the Act- The provisions of sections 101
to 107 and 109 of the Act stipulate all general meeting compliances for
the companies i.e. Notice of meeting, Statement to be annexed to
notice, Quorum of meetings, Chairman of meetings, Proxies, Restriction

Page 12
 on voting rights, Voting by show of hands and Demand for poll. The
provisions of these sections shall not be applicable to private
companies unless otherwise specified in respective sections or the
articles of the company provide otherwise.

Thus, in order to take advantage of these exemptions, all private

companies need to suitably amend their articles at the earliest and
stipulate required provisions in the same.

7. Chapter VII, clause Shall not apply.

(g) of sub-section
(3) of section 117. Section 117(3)(g) of the Act-The provisions of section 117 state filing
requirements of particular resolutions and agreements with the ROC.
With the exemption, now private companies need not file resolutions
passed under Section 179(3) i.e. Boards powers to be exercised at the
Board meeting. As a result, private companies need not file form:MGT-
14 with ROC on 13 various occasions of exercise of powers of Board
under the provisions of section 179(3) and rule 8 of amended
Companies (Meetings of Board & its powers) Rules, 2014.

8. Chapter X, Clause Shall apply with the modification that the words other than one
(g) of sub-section person companies, dormant companies, small companies and private
(3) of section 141. companies having paid-up share capital less than one hundred crore
rupees shall be inserted after the words twenty companies.

Section 141(3)(g) of the Act- This particular section stipulates the

number of companies i.e. 20 for which Chartered Accountants can
conduct the statutory audits.

This exemption has removed certain companies from the restricted

number of 20 companies i.e. one person companies, dormant
companies, small companies and private companies having paid-up
share capital less than one hundred crore rupees.

As a result, now the Chartered Accountants can conduct statutory

audits of any number of one person companies, dormant companies,
small companies and private companies having paid-up share capital
less than one hundred crore rupees; in addition to 20 companies as
stipulated under the said section.
9. Chapter XI, section Shall not apply.
160.
10. Chapter XI, section Shall not apply.
162.
11. Chapter XII, Shall not apply.
section 180.

Sections 160, 162 and 180 of the Act The provisions of section

Page 13
 160 (i.e. Right of persons other than retiring directors to stand for
directorship), Section 162 (i.e. Appointment of directors to be voted
individually) and section 180 (i.e. Restrictions on powers of Board) are
not applicable to private companies. In a way, this exemption has
provided freedom of operations and a relief from procedural hurdles to
the private companies.

12. Chapter XII, sub- Shall apply with the exception that the interested director may
section (2) of participate in such meeting after disclosure of his interest.
section 184.

Section 184(2) of the Act- The provisions of section 184(2) state that
every director of a company who is in any way, whether directly or
indirectly, concerned or interested in a contract or arrangement or
proposed contract or arrangement entered into or to be entered into

(a) with a body corporate in which such director or such director in

association with any other director, holds more than two per cent
shareholding of that body corporate, or is a promoter, manager, Chief
Executive Officer of that body corporate; or

(b) with a firm or other entity in which, such director is a partner,

owner or member, as the case may be,

shall disclose the nature of his concern or interest at the meeting of the
Board in which the contract or arrangement is discussed and shall not
participate in such meeting.

However, the exemption allows private companys interested directors

to participate in such meeting after disclosure of interest.

As a result, such director can play an important role of active

participation in the decision making process and exercise his
responsibilities in a bona fide manner in the interest of the company.

13. Chapter XII, Shall not apply to a private company

section 185. (a) in whose share capital no other body corporate has invested any
money;
(b) if the borrowings of such a company from banks or financial
institutions or any body corporate is less than twice of its paid up
share capital or fifty crore rupees, whichever is lower; and

Page 14
 (c) such a company has no default in repayment of such borrowings
subsisting at the time of making transactions under this section.
14. Chapter XIII, sub-
section (4) and (5) Shall not apply.
of section 196.

Section 196(4) and (5) of the Act The private companies are now
not required to comply with the provisions of Section 196(4) and (5) of
the Act. These sections put restrictions on the companies to comply
with the provisions of section 197 and schedule V to the Act.

However, with this exemption, a private company may appoint

executive directors without even passing of Board resolution, of course
subject to the provisions of Articles, though this may not be an
intention of the Regulatory.

Page 15
 Ministry of corporate affairs

Notification

New Delhi, the 5th June, 2015

The Ministry of Corporate Affairs, on 5th June released notification granting various relaxations to
Section 8 companies. Section 8 companies of Companies Act, 2013 (Section 25 companies of Companies
Act, 1956) are the companies which

1. have as their object the promotion of commerce, art, science, sports, education, research, social
welfare, religion, charity, protection of environment and such other objects,
2. intend to apply their profits or income in promoting their objects and
3. Intend to prohibit payment to dividends to their members.

Serial Provisions of the Act Exceptions, Modifications and Adaptations

Number
(1) (2) (3)
1. Clause (24) of section 2 The provisions of clause (24) of section 2 shall not apply

The definition of Company Secretary to be appointed by a

company under Section 2(24) defines company secretary
or secretary as a company secretary as defined in clause
(c) of sub-section (1) of section 2 of the Company
Secretaries Act, 1980 who is appointed by a company to
perform the functions of a company secretary under this
Act.
The provision shall not apply to a Section 8 Company.
Hence, the company Secretary or secretary in relation to
Section 8 Company need not be a company secretary as
defined in clause (c) of sub-section (1) of section 2 of the
Company Secretaries Act, 1980.

2. Clause (68) of section 2 The requirement of having minimum paid-up share capital
shall not apply

Definition of private company and public company:

Section 2(68) defines a private company as a company
having a minimum paid-up share capital of Rs 1 lakh and
which has certain restrictions in its articles with reference
to transfer of shares, number of members and invitation to
public to subscribe for its securities.

Section 2(71) defines a public company as a company

which is not a private company and which has a minimum
paid-up share capital of Rs 5 lakhs.

Now, the requirement of having minimum paid-up share

Page 16
 capital shall not apply to Section 8 Companies, irrespective
of whether the Section 8 company is a private or a public
company.

Hence, a Section 8 company need not have a minimum

paid-up share capital of Rs 1 lakh or Rs 5 lakhs, as may be
applicable, resulting in reduction of cost of registration of
such companies.
3. Clause (71) of section 2 The requirement of having minimum paid-up share capital
shall not apply
4. Sub-section (2) of section 96 Time, Date and Place of Annual General Meeting

As per Section 96(2), every company other than a One

Person Company is required to call its Annual General
Meeting (AGM) during business hours (between 9am
and 6pm) on any day except National holiday and such
meeting shall take place at the registered office of the
company or within city, town or village in which the
registered office is situated.

A proviso has been added to this section that the time,

place and date of each AGM will be decided upon before-
hand by the board of directors having regards to the
directions, if any, given in this regard by the company in its
general meeting.

Hence, the time, date and place of each AGM are decided
upon before-hand by the board of directors, as per the
directions, if any, given in this regard by the company in its
general meeting.
5. Sub-section (l) of section 101 In sub-section (l), for the words "twenty one days", the
words "fourteen days" shall be substituted.

Notice period for General Meeting

Section 101(1) requires that a general meeting of a

company may be called by giving not less than clear 21
days notice.
Now, the words twenty one days have been substituted by
the words Fourteen days.

Hence, General Meetings of a Section 8 Company can now

be conducted with notice of 14 clear days instead of 21
days as prescribed earlier.

6. Section I18. The section shall not apply as a whole except that minutes
may be recorded within thirty days of the conclusion of
every meeting in case of companies where the articles of

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 association provide for confirmation of minutes by
circulation.

Section 118 requires a company to prepare and sign the

minutes of the proceedings of every general meeting of
shareholders or creditors within 30 days from the
conclusion of such meeting. It requires the pages of such
meetings to be consecutively numbered. It further details
on what should and should not be included in the minutes
and what shall be the punishment in case of tampering of
such minutes.

A relaxation from Section 118 has been provided to

Section 8 companies, except where the AOA of such
company contains a provision for confirmation of minutes
by circulation.

Hence, no provisions of Section 118 relating to minutes of

proceedings of general meetings, Board meetings etc. shall
apply to Section 8 companies except where its AOA
contains a provision that minutes have to be confirmed by
circulation. Then in such a case, the minutes will have to
be recorded within 30 days.

7. Sub-section (1) of section In sub-section (l), for the words "twenty one days", the
136.
Words "fourteen days" shall be substituted.

Time period for sending financial statements of the

company

Section 136(1) states that a copy of the financial

statements, including consolidated financial statements, if
any, auditors report and every other document required
by law to be annexed or attached to the financial
statements, which are to be laid before a company in its
general meeting, shall be sent to every member of the
company, to every trustee for the debenture-holder of any
debentures issued by the company, and to all persons
other than such member or trustee, being the person so
entitled, not less than twenty-one days before the date of
the meeting.

Now, the words twenty one days have been substituted by

the words Fourteen days.

Hence, a relaxation of 7 days has been granted to Section 8

companies for sending copies of their financial statements,
auditors report, etc. to their members, debenture
trustees, etc.

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8. Sub-section (l) of section 149 Minimum and maximum number of directors
and the first proviso to
subsection
(1). Section 149(1) and its first proviso states that every
company must have a Board of Directors and the minimum
number of directors to be appointed by

A public company are 3,

A private company are 2 and
A one person company is 1

It also states that the maximum number of directors that

can be appointed by any company are 15. Also, if a
company wants to appoint more than 15 directors, it can
do so after passing a special resolution.

As per the notification, Section 149(1) and its first proviso

shall not apply to a Section 8 company.

Hence, a Section 8 company can now appoint any number

of directors. There is no requirement of minimum or no
restriction of maximum number of directors that can be
appointed by such companies. Also it need not pass a
special resolution for appointing more than 15 directors.

9. Sub-sections (4), (5), (6), (7), Independent Directors

(8), (9), (10), (ll), clause (i)
of subsection (12) and
subsection Provisions related to Independent Directors
(13) of section 149.
Sub sections (4) to (13) of Section 149 contain provisions
relating of definition of independent directors, minimum
number of independent directors to be appointed,
requirements to be fulfilled by an independent director, ,
their term on the Board, declarations to be made by them,
their entitlement to stock options and remuneration, their
liability and retirement.

Section 150 contains provisions regarding he manner of

selection of independent directors and the maintenance of
databank of independent directors.

The proviso to Section 152(5) requires that the explanatory

statement for the appointment of an independent director
must be annexed to the notice of the general meeting and
such statement shall include a statement that in the
opinion of the Board, the independent director fulfills the
conditions specified for such an appointment.

As per the notification, sub-sections (4) to (11), 12(i) and

(13) of Section 149, Section 150 and proviso to Section

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 152(5) shall not apply to Section 8 companies.

Hence, any of the provisions relating to requirement of

having Independent Directors, their appointment, and
manner of appointment etc. as contained in any of the
Sections mentioned above shall not be applicable to
Section 8 Companies.

10. Section 150. Shall not apply.

11. Proviso to sub-section (5) of Shall not apply.
section 152.
12. Section 160. Right of persons other than retiring directors to stand for
directorship

As per Section 160, any person other than retiring director

intending to stand for directorship had to
Leave at the registered office of the company, a notice in
writing about his intention to stand for directorship, not
less than 14 day before the meeting,
Pay a deposit of Rs 1 Lakh.

As per the notification, this section shall not apply to

Section 8 companies whose articles provide for election of
directors by ballot.

Hence, if the Articles of the company provide for the

election of directors by ballot, then the provisions of
Section 160 will not be applicable. In case, the companys
Articles do not provide for election of directors by ballot,
Section 160 will continue to apply.
13. Sub-section (1) of section 165.
Number of Directorships

Section 165(1) restricts the number of directorships that

can be held by a person. In case of private companies, the
maximum number is 20 and its 10 in case of a public
company.

This section shall not apply to Section 8 companies.

Hence, a person being a director in 20 companies can still

be appointed as a director in a Section 8 company and he
shall not be contravening the provisions of the Act.
14. Sub-section (l) of section 173 Shall apply only to the extent that the Board of Directors,
of such Companies shall hold at least one meeting within
every six calendar months.

Number of Board meetings

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 Section 173(1) requires every company to hold minimum 4
board meetings in a year such that no two meetings are
more than 120 days apart.

Section 173(1) shall be applicable to Section 8 companies

only to the extent that the Board meetings shall be held
atleast once in every 6 calender months.

Hence, for Section 8 companies, the requirement to hold 4

board meetings in a year have been done away with and
they may hold just one board meeting every 6 calender
months and hence just 2 board meetings in a year.
15. Sub-section (1) of section 174. Quorum of Board meetings

Section 174(1) requires a quorum of 1/3rd of the total

strength of the Board or 2 directors, whichever is higher.

This section has been amended to change the quorum

requirement for Section 8 companies as either 8 directors
or 25% (1/4th )of the total strength, whichever is lower.

Also, a proviso has been added that in any case, the

quorum shall not be less than 2 members.
16. Section 178. Nomination and Remuneration Committee and
Stakeholders Relationship Committee

As per the provisions of Section 178, every listed company

and specified class of companies shall constitute a
nomination and remuneration committee and a
stakeholders relationship committee.

Section 178 shall not apply to Section 8 companies.

Hence, Section 8 companies are not required to form any
of the above mentioned committees.
17. Section 179. Matters referred to in clauses (d), (e) and (f) of sub-section
(3) may be decided by the Board by circulation instead of
ata meeting

Section 179(3) details the powers of the Board that can be

exercised by it only by means of resolutions passed at the
meetings of the Board.

Powers of the Board under clauses (d), (e) and (f) of

Section 179(3) may be exercised by the Board of Section 8
companies by circulation instead of at a meeting.

Hence, now the directors may exercise the following

powers by passing resolutions by circulation instead of at a

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 meeting:
Borrow monies
Invest the funds of the company or
Grant loans or give guarantee or provide security in
respect of loans
18. Sub-section (2) of section Section 184(2) requires every director of a company to
184. disclose its interest in a contract or arrangement at the
meeting to the Board in which the contract or
arrangement is discussed and that such interested director
shall not participate in such meeting.

This section shall apply to Section 8 companies only with

reference to transactions under section 188 exceeding Rs 1
lakh.

Hence, every director of Section 8 company shall disclose

the nature of his concern or interest at a board meeting if
the related party transaction exceeds Rs 1 lakh and he
shall not participate in such a meeting.
19. Section 189. Register of contracts or arrangements- MBP-4

Section 189 requires all companies to maintain one or

more registers which gives separately the particulars of all
contracts and arrangements in which directors are
interested or of all related party transactions. Such register
would be placed at the next meeting of the Board and
signed by all the directors present at the meeting.

This section shall apply to Section 8 companies only with

reference to transactions under section 188 exceeding Rs 1
lakh.

Hence, the details of transactions of Section 8 companies

need to be entered in the register only when in case of
related party contract or arrangement, where the value of
transaction exceeds Rs. 1 lakh.

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