Private Limited Company a better choice than Public Limited Company

Private Limited Company a better choice than Public Limited Company

Ministry of Corporate Affairs granted some exemptions to Private Limited Company. These exemptions are as follows:

·         If a Private Limited Company enters into any contract with a related party requiring prior approval of Company, RELATED PARTIES ARE NOW ALLOWED TO VOTE ON SUCH RESOLUTION.

·         A contract by a private company will not be regarded as a related party transaction if it is entered into by a private company with its holding company, subsidiary company, associated company or subsidiary of its holding company.

·         Private companies will now have full flexibility in structuring their share capital.

·         Private companies are now required to pass Ordinary resolution in General Meeting in place of Special Resolution to issue the shares under the scheme of Employee Stock Option Scheme.

·         Private company can now borrow money from members upto 100 % of paid up share capital & free reserves. They need not to be complying with deposit conditions.

·         Private companies can accept deposit from members by passing Special Resolution in General Meeting.

·         Private companies now have the option to provide their own regulations with respect to notice of general meeting, statement to be annexed to notice, quorum, chairman, proxies, restrictions on voting rights, voting by show of hands and demand for poll to the exclusion of the corresponding provisions.

·         Private company do not have to file resolutions with the Registrar with respect to resolutions passed at Board Meeting for:

1.      Make calls on the shareholders.

2.      Issue securities

3.      Borrow monies

4.      Invest funds of the company

5.      Approve financial statement

6.      Approve merger & amalgamation.

·         The person other than retiring directors may now stand for directorship in company.

·         Now, more than 1 director can be appointed through a single resolution.

·         Board of director of a company not required to seek the approval of members for the following acts:

1.      To sell, lease or otherwise dispose of whole or substantially whole of its undertaking.

2.      To invest compensation received.

3.      To borrow money in excess of paid up share capital & free reserves.

4.      To remit or give time for the repayment.

·         Interested director of the private company can take part in the meetings of board after disclosing interest.

·         In case of private companies the appointment or remuneration of the managing director, whole time director or manager doesn’t require approval at the Board/General Meeting.

·         Requirement of minimum paid up capital of rupees 1 lacs has been dispensed with.

·         Companies issuing further shares to send notice along with offer letter to its equity shareholders and the offer shall remain open for:

1.      Less than 15 days for accepting offer made and

2.      Less than 3 days before opening of the issues for dispatching of offer letter

·         Private company having paid up share capital of less than Rs.100 crores may appoint its auditor irrespective of the limit of 20 audits.

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