MCA notification for exemption to certain Companies

The Ministry of Corporate Affairs (Ministry) vide its notification dated June 13, 2017 (current Notification) grants much awaited exemption to Start-ups, OPCs and prescribed private companies from compliances of the Companies Act, 2013 (The Act). Prior to this notification, Ministry had granted certain exemptions to private companies vide its notification dated June 5, 2015 (earlier Notification). 

The exemptions granted through the current notification are as under:

1. Exemption from the preparation of a cash-flow statement.
2. Exemptions to select compliances on the prohibition on acceptance of deposits from its members.
3. Directors being allowed to sign the annual returns in the absence of company secretary.
4. Exemption from reporting on the adequacy of internal financial controls and the operating effectiveness of such controls by the statutory auditors in audit report.
5. To hold a Board meeting once every six months of a calendar year with a gap not exceeding 90 days between each board meeting.
6. Interested directors counted towards quorum on disclosure of interest.
7. Exemption from disclosing remuneration paid to KMP by small companies in Annual Return

The revised regulatory framework for the Start-ups, OPCs and prescribed private companies should allow such entities to have focused business growth, than handling certain cumbersome compliances.

It may be noted that these exemptions along with exemptions under earlier notification are allowed only to Private Companies which have filed their financial statements and annual return.

This notification will also encourage more start ups to be registered with Department of Industrial Policy & Promotion so that they can avail the exemptions.