The Ministry of Corporate Affairs (MCA) has granted certain exemptions to private companies vide notification dated 13 June 2017. This notification is an addendum to the exemptions earlier granted by the MCA vide notification dated 05 June 2015. The notification dated 13 June 2017 is yet to be published in the Official Gazette of India. The majority of exemptions announced in this notification apply to start-up companies. The Department of Industrial Policy and Promotion (DIPP) had notified G.S.R. 189 (E) dated 17 February 2016 which laid down the definition of start-up companies. On 23 May 2017, the DIPP notified G.S.R. 501 (E) which supersedes G.S.R. 180 (E) with immediate effect.
We have listed down the exemptions and benefits announced in the notification dated 13 June 2017 as under:
- Exemption from the preparation of a cash-flow statement.
- Exemptions from select compliances on the prohibition on acceptance of deposits from the public.
- Directors being allowed to sign the annual returns in the absence of company secretary.
- Exemption from reporting on the adequacy of internal financial controls and the operating effectiveness of such controls by the statutory auditors.
- To hold a Board meeting once every six months with a gap not exceeding 90 days between each board meeting.
- Interested directors counted towards quorum on disclosure of interest.
It must be noted that the above exemptions and benefits can only be availed by private companies who have not committed a default in filing their financial statements and annual return as prescribed by the Companies Act, 2013.
For referring to the bare text of the notification click
on:
http://www.mca.gov.in/Ministry/pdf/ExemptionPrivateCompanies.pdf
SKP's Comments
- The exemptions announced in this notification are a welcomed change in the sphere of reporting and compliance.
- Start-ups shall benefit greatly from a reduction in compliance burden.
- Start-ups in booming sectors like Biotechnology shall enjoy benefits for an additional period.
- These exemptions in compliance and reporting are in line with the Government's on-going efforts to bring about ease of doing business in India and for the furtherance of initiatives like "Make in India". They aim at creating a conducive environment for start-ups as envisioned under the "Start-up India" initiative announced by the Government of India.
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