Modi Govt gives more fillips to private investors. Know how?

In order to attract more investment in India, the Narendra Modi government has been constantly making efforts to improve ease of doing business in the country. The Corporate Affairs Ministry has now exempted private companies from certain provisions for related party transactions under the Companies Act, 2013.

Private companies can now provide a shorter period for offering securities to members by way of right offers, approve employee stock options through a simple majority and follow "an easier procedure" for holding general meetings. These changes will further relax compliance requirements for private, government, charitable and nidhi companies, which the ones that have been set up with the aim of cultivating thrift and savings habit among their members.

As per a statement issued by the Ministry of Corporate Affairs, "Private companies have also been allowed to accept deposits from members without the requirement of offer circular and creation of deposit repayment reserve etc... Flexibility has also been provided in the types of share capital that can be issued by private companies."

As per a PTI report, these private entities will not be required to file their board resolutions with the registry and give notice for directorships. The statement further added that “Requirement of mandatory consent of shareholders with regard to certain transactions relating to sale of undertaking, investments, borrowings etc has been omitted."

While calculating the maximum limit of 20 companies for audit by an auditor, one-person companies, dormant, small and private firms with less than Rs 100 crore paid-up share capital, would not be taken into account.

Among others, private companies with no investment by any corporate have been allowed to extend loans to directors subject to certain conditions. The official statement added that an interested private company director has now been allowed to participate in board meeting after declaring his interest.

On the other hand, for government companies, the Ministry has done away with limits on managerial remuneration as well as restrictions on maximum number of directorships and disqualification of directors in certain cases.
(Image: PIB)