Companies Act 2013 · Section 462 · MCA notifications
Exemptions to private companies
Under section 462, the Central Government can exempt a class of companies from provisions of the Act, or apply them with modifications. For private companies, this was done by MCA Notification G.S.R. 464(E) dated 5 June 2015, as later amended . The table lists each exemption section by section, in plain English.
Condition: Paragraph 2A (inserted by G.S.R. 583(E), 13.06.2017): the exceptions in the WHOLE Table apply only to a private company that has not defaulted in filing its financial statements under section 137 or its annual return under section 92 with the Registrar. The condition is not limited to some rows: it covers every row. Paragraph 2: the company must ensure that shareholders' interests are protected. Several rows also carry their own conditions (see each row).
Last checked: 23 October 2026 against the notifications and their amendments.
22 exemptions, section by section
| Section | Provision | Exemption or modification | Condition / status |
|---|---|---|---|
| 2(40) | Financial statement: cash flow statement Chapter I |
The proviso is substituted so that a start-up private company, like a one person company, small company or dormant company, need not include a cash flow statement in its financial statements. A "start-up" means a private company recognised as a start-up under the notification of the Department of Industrial Policy and Promotion (now the Department for Promotion of Industry and Internal Trade, DPIIT). The Act's own proviso to section 2(40) (India Code consolidated text) covers one person companies, small companies and dormant companies only. Start-ups get this relief from the notification alone. |
Only for a private company that is a recognised start-up. In force Inserted as serial 1 by G.S.R. 583(E) dated 13.06.2017 |
| 2(76)(viii) | Related party: holding, subsidiary and associate companies Chapter I |
For section 188 (related-party transactions) only, a holding, subsidiary or associate company (and the other bodies corporate in section 2(76)(viii)) is not treated as a related party of a private company. Section 2(76)(viii) was substituted by the Companies (Amendment) Act 2017 (Act 1 of 2018, w.e.f. 09.02.2018), which added "an investing company or the venturer of the company". The notification still refers to sub-clause (viii) as a whole. It is generally read as covering the substituted text, but this has not been confirmed by an MCA clarification. |
In force G.S.R. 464(E) serial 1, renumbered 1A by G.S.R. 583(E) |
| 43 and 47 | Kinds of share capital and voting rights Chapter IV |
Sections 43 (kinds of share capital) and 47 (voting rights) do not apply where the memorandum or articles of the private company so provide. | Only where the memorandum or articles so provide. In force G.S.R. 464(E) |
| 62(1)(a)(i) and 62(2) | Rights issue: offer period and notice Chapter IV |
A proviso is inserted: if 90 per cent of the members consent in writing or electronically, the rights offer may be open for less than the 15-to-30-day period, and the notice may be sent less than 3 days before the issue opens. The Act (as amended by Act 1 of 2018) now also allows "such lesser number of days as may be prescribed" in section 62(1)(a)(i). The notification route (90% consent) remains a separate option. |
Consent in writing or electronic mode of 90% of the members. In force G.S.R. 464(E) |
| 62(1)(b) | Employee stock options (ESOP) Chapter IV |
An ordinary resolution, instead of a special resolution, is enough to issue shares under an employee stock option scheme. | In force G.S.R. 464(E) |
| 67 | Restrictions on purchase by a company of its own shares, or financial assistance for it Chapter IV |
Section 67 does not apply to a private company that meets all three conditions in the next column. | (a) No other body corporate has invested in its share capital; (b) its borrowings from banks, financial institutions or any body corporate are less than twice its paid-up share capital or Rs 50 crore, whichever is lower; and (c) it is not in default in repaying those borrowings when the transaction is made. In force G.S.R. 464(E) |
| 73(2)(a) to (e) | Deposits from members Chapter V |
The procedure in clauses (a) to (e) of section 73(2) (circular, deposit repayment reserve, deposit insurance, certification of no default, security) does not apply to a private company in any one of the three cases in the next column. The company must file details of money accepted with the Registrar. The 2015 version covered only case (A), without securities premium. Section 73(2) clauses were themselves amended by Act 1 of 2018; the exemption still refers to clauses (a) to (e). The return form for filing these details is not named in the notification; confirm the current form under the Companies (Acceptance of Deposits) Rules 2014 before publishing a form number. |
Any one of: (A) it accepts from members no more than 100% of paid-up share capital, free reserves and securities premium; or (B) it is a start-up, for 5 years from incorporation; or (C) it is not an associate or subsidiary of another company, its borrowings from banks, financial institutions or any body corporate are less than twice its paid-up capital or Rs 50 crore (whichever is lower), and it has not defaulted in repaying those borrowings when accepting deposits. In every case, details must be filed with the Registrar. In force G.S.R. 464(E) / serial 6 substituted by G.S.R. 583(E) dated 13.06.2017 |
| 92(1)(g) | Annual return: remuneration of directors Chapter VII |
For a private company that is a small company, the annual return need show only the aggregate amount of remuneration drawn by directors. Section 92(1) now also allows an abridged annual return for one person companies and small companies (second proviso, inserted by Act 1 of 2018). Which form applies is a rules question and is outside this file. |
Only for a private company that is a small company. In force Inserted as serial 6A by G.S.R. 583(E) dated 13.06.2017 |
| Proviso to 92(1) | Annual return: who signs Chapter VII |
For a one person company, a small company and a start-up private company, the annual return may be signed by the company secretary or, if there is none, by a director. The Act's own proviso (India Code text) covers one person companies and small companies only. Start-ups depend on the notification. |
Start-up relief only for a private company that is a recognised start-up. In force Inserted as serial 6B by G.S.R. 583(E) dated 13.06.2017 |
| 101 to 107 and 109 | General meeting procedure (notice, statement, quorum, chairman, proxies, voting by show of hands, demand for poll) Chapter VII |
These sections apply unless the respective section says otherwise or the articles of the company provide otherwise. | Only where the articles provide otherwise. In force G.S.R. 464(E) |
| 117(3)(g) | Filing of board resolutions with the Registrar Chapter VII |
Board resolutions passed under section 179(3) need not be filed with the Registrar. | In force G.S.R. 464(E) |
| 141(3)(g) | Limit of 20 company audits for an auditor Chapter X |
One person companies, dormant companies, small companies and private companies with paid-up share capital below Rs 100 crore are not counted in the limit of 20 companies an auditor may audit. The Act's own section 141(3)(g) (India Code text) still says simply "more than twenty companies". The carve-out lives only in this notification. The ICAI's own professional limits are separate. |
Private company with paid-up share capital below Rs 100 crore (or a one person, dormant or small company). In force G.S.R. 464(E) |
| 143(3)(i) | Auditor's report on internal financial controls Chapter X |
The auditor need not report on the adequacy and operating effectiveness of internal financial controls for a one person company, a small company, or a private company with turnover below Rs 50 crore AND aggregate borrowings below Rs 25 crore. The printed G.S.R. 583(E) says "or"; the corrigendum makes it "and", so both tests must be met. The corrigendum text was taken from secondary reproductions (the Gazette PDF could not be retrieved). Applies to years beginning on or after 01.04.2016 (General Circular 08/2017). The wording in the Act changed in 2018 to "internal financial controls with reference to financial statements". |
One person company or small company; or turnover below Rs 50 crore as per the latest audited financial statement AND aggregate borrowings from banks, financial institutions or any body corporate below Rs 25 crore at all times in the year. In force Inserted as serial 9A by G.S.R. 583(E) dated 13.06.2017; "or" corrected to "and" by corrigendum S.O. 2218(E) dated 13.07.2017 |
| 160 | Right of persons other than retiring directors to stand for directorship Chapter XI |
Section 160 does not apply. | In force G.S.R. 464(E) |
| 162 | Appointment of directors to be voted on individually Chapter XI |
Section 162 does not apply. Several directors may be appointed by a single resolution. | In force G.S.R. 464(E) |
| 173(5) | Minimum board meetings for small entities Chapter XII |
Sub-section (5) is substituted so that a start-up private company, like a one person company, small company and dormant company, complies if it holds at least one board meeting in each half of a calendar year with a gap of at least 90 days between the two meetings. A one person company with only one director is outside sections 173 and 174. The Act's own section 173(5) covers one person, small and dormant companies only. Start-ups depend on the notification. |
Start-up relief only for a private company that is a recognised start-up. In force Inserted as serial 11A by G.S.R. 583(E) dated 13.06.2017 |
| 174(3) | Quorum when interested directors exceed the quorum Chapter XII |
An interested director may also be counted towards the quorum after disclosing his interest under section 184. | In force Inserted as serial 11B by G.S.R. 583(E) dated 13.06.2017 |
| 180 | Restrictions on powers of the board (borrowing, selling undertaking, etc.) Chapter XII |
Section 180 does not apply. No special resolution of members is needed for these board actions. | In force G.S.R. 464(E) |
| 184(2) | Interested director to abstain Chapter XII |
An interested director may take part in the board meeting after disclosing his interest. | In force G.S.R. 464(E) |
| 185 | Loans to directors Chapter XII |
Section 185 does not apply to a private company that meets all three conditions in the next column. Section 185 was wholly substituted by the Companies (Amendment) Act 2017 (Act 1 of 2018, s.61, w.e.f. 07.05.2018). The notification still says "section 185" and is generally read as exempting the substituted section too. MCA has not issued a clarification on this, and a company relying on it should take advice. |
(a) No other body corporate has invested in its share capital; (b) its borrowings from banks, financial institutions or any body corporate are less than twice its paid-up share capital or Rs 50 crore, whichever is lower; and (c) it has no default in repaying those borrowings when the transaction is made. In force G.S.R. 464(E) |
| Second proviso to 188(1) | Related party may not vote on the resolution Chapter XII |
A member who is a related party may vote on the resolution approving a related-party contract. The Act now has a narrower, similar relief for all companies: a further proviso inserted by Act 1 of 2018 (w.e.f. 09.02.2018) removes the voting bar where 90% or more of members in number are relatives of promoters or related parties. The notification relief for private companies is wider and still applies. |
In force G.S.R. 464(E) |
| 196(4) and (5) | Approval of managing director or whole-time director appointment Chapter XIII |
The requirements in section 196(4) and (5) (approval of terms by board and general meeting, and Central Government approval where applicable) do not apply. | In force G.S.R. 464(E) |
Amendments to G.S.R. 464(E)
- G.S.R. 583(E) dated 13 June 2017: Renumbered old serial 1 as 1A and inserted new serial 1 (section 2(40): no cash flow statement for a start-up). Substituted serial 6 (section 73 deposits from members, widened). Inserted 6A and 6B (section 92 annual return), 9A (section 143(3)(i) internal financial controls reporting), 11A (section 173(5) board meetings) and 11B (section 174(3) quorum). Inserted paragraph 2A, the no-default condition on the whole Table.
- S.O. 2218(E) (corrigendum) dated 13 July 2017: Corrected G.S.R. 583(E), paragraph 5, column (3), item (ii) (serial 9A): "statement or" is replaced by "statement and". As a result, both the turnover test and the borrowings test must be met.
- General Circular 08/2017 (clarification, not an amendment) dated 25 July 2017: Clarified that the section 143(3)(i) exemption (serial 9A) applies to audit reports on financial statements for years beginning on or after 01.04.2016, if the report is made on or after 13.06.2017.
Other section 462 exemptions
Exemptions to Section 8 companies (G.S.R. 466(E)) · Exemptions to Government companies (G.S.R. 463(E)) · all section 462 exemptions
See also the small company definition and Companies Act thresholds.
Sources: MCA notifications under section 462 published in the Gazette of India (web.archive.org, web.archive.org, www.simpliance.in, ca2013.com ). This page is a plain-English guide, not the notification text. Check the official notification before relying on an exemption.