Companies Act may lose teeth

New Delhi: To ease the regulatory burden for private companies, the government on Tuesday proposed relaxing certain provisions of the new Companies Act for such entities.

The proposed relaxations include certain provisions relating to prohibition on acceptance of public deposits, share capital, voting rights, further issuance of shares, appointment of auditor and director, restriction on board powers, loans to directors, related party transactions, as also appointment of top management personnel.

Through a draft notification, the corporate affairs ministry has proposed as many as 13 relaxations for private companies from the various provisions of the Companies Act which came into effect at the beginning of current fiscal.

While the draft notification would be placed before each house of the Parliament, suggestions and comments are invited from the public till July 1, the ministry said. Among various proposals, it has been proposed that a private company be exempted from having a share capital of either equity share capital or preference share capital.

The other exemption include the requirement of every shareholder of a company having a right to vote on every resolution placed before the company, and his voting right being in proportion to the share holding.