New Delhi, June 8 (IANS): In an attempt to retain or attract talent, the central government has exempted government companies from the limits pertaining to managerial remuneration, it was announced here on Monday.
According to a statement issued by the corporate affairs ministry, private companies have also been allowed to accept deposits from members without creating deposit repayment reserve, offer of circular and others.
The ministry has also issued the final notifications under Section 462 of the Companies Act, 2013 providing exemptions to government/private/nidhi and charitable companies formed under section 8 of the Act (formerly called section 25 companies).
As per the notification, government-owned companies have been exempted from the limits pertaining to managerial remuneration, restriction on maximum number of directorships and disqualification of directors in certain cases.
The provisions in respect of nomination and remuneration committee have also been relaxed in respect of their applicability to directors/managerial people, the statement said.
Similarly flexibility is provided to government companies by modifying the provisions relating to loans to directors, loans and investments by companies and related party transactions.
The exemption for government companies to retain the suffix "Ltd." even if incorporated as private limited company, has been continued as per the exemption available under Companies Act, 1956.
Modifications in the provisions relating to place of holding general meetings have also been made.
According to the statement, provisions in respect of rotation of directors and right of persons to stand for directorship are exempted for wholly owned government companies, while provisions on forming opinion about integrity, expertise/experience of independent directors have been modified to provide flexibility to concerned ministry/department.
For government companies engaged in producing defence equipment, the provisions of section 186 (loans and investments by companies) and Accounting Standard-17 (Segment Reporting) will not be applicable.
As for the private companies, the exemptions relax the provisions pertaining to related party transactions; shorter period for offering securities to members through rights offer; simple majority approval for employee stock option plans and easier procedure for holding annual general meetings, the statement said.
The government has also provided flexibility to private companies in the types of share capital that could be issued and exemptions from filing board resolutions.
The requirement of mandatory consent of shareholders with regard to certain transactions relating to sale of undertaking, investments, borrowings and others have been omitted.
Keeping the auditors happy, the government has exempted one person/dormant companies and those with less than Rs.100 crore share capital from calculating the limit of 20 companies for audit, as per the statement.
Private companies not having any investment by any incorporated body have been allowed to extend loans to directors subject to certain conditions relating to bank borrowings and default thereof.
An interested director of a private company can now participate in the board meeting after declaring his interest.
Charitable companies have been allowed to give 14 days notice for holding general meeting instead of 21 days and have also been exempted from provisions dealing with appointment of independent directors, nomination and remuneration committees.
The charitable companies need not have independent directors on their audit committees and the restrictions on the number of directorships does not apply to them.
These companies are allowed to hold board meetings once in six months instead of four meetings in a year, as prescribed for other companies.
On the other hand, provisions relating to serving of documents to members of Nidhi companies and payment of dividend have been modified to provide more flexibility.
According to the statement, provisions relating to private placement have been partially relaxed for such companies.
These companies have also been exempted from the requirements of section 62 which relates to further issue of share capital, and the notice amount of Rs. 100,000 provided under section 160 has been reduced to Rs. 10,000 for these companies.
Provisions of section 185 in respect of loans to directors have been relaxed for these companies with the condition that loan is given to a director or his relative in his capacity as member and the disclosure is made in the accounts.