Exemption Notification To Government Companies - Series - 86

DIVESH GOYAL
Practicing Company Secretary

GOYAL DIVESH& ASSOCIATES
Mob: +918130757966
csdiveshgoyal@gmail.com
EXEMPTION TO GOVERNMENT COMPANIES

GOYAL DIVESH & ASSOCIATES,
SERIES NO
86
PROVISIONS OF THE ACT DO NOT APPLY TO GOVERNMENTCOMPANY

OR APPLY WITH MODIFICATIONS
Notification dated 5-6-2015 issued by the Ministry of Corporate Affairs
In exercise of the powers conferred by clauses (a) and (b) of sub-section (1) of
section 462 and in pursuance of sub-section (2) of said section of the Companies Act,
2013 (18 of 2013) and in supersession of notifications issued under section 620 of the
Companies Act, 1956 (1 of 1956), except as respects things done or omitted to be done
before such supersession, the Central Government, in the interest of public, hereby
directs that certain provisions of the Companies Act,2013, as specified in column (2)
of the Table, shall not apply or shall apply with such exceptions, modifications and
adaptations, as specified in column (3) of the said Table, to a Government company,
namely:-
Serial
No.
(1)
1.
2.
Chapter Number/Section
Number/ Sub-section(s) in
the Companies Act,2013
Exceptions, Modifications and Adaptations
(2)
Chapter II, section 4(1)No
need to include "Private"
before "limited" in its name
(3)
In section 4, in sub-section (1), in clause (a), the
words 'in the case of a public limited company, or
the last words "Private Limited' in the case of a
private limited company' shall be omitted.
In sub-section (1), after the proviso, the
following provisos shall be inserted,
namely:
PROVIDED FURTHER that the provisions of this
sub-section, in so far as it requires a proper
instrument of transfer, to be duly stamped and
executed by or on behalf of the transferor and by
Chapter IV, section 56

No
need
to
use
instrument for transfer of
Bonds or securities held
by nominees.
For any query, suggestions and updates on daily basis drop

message on my whatsapp No. 8130757966
DIVESH GOYAL
Mob: +918130757966
or on behalf of the transferee, shall not apply

with respect to bonds issued by a Government
company, provided that an intimation by the
transferee specifying his name, address and
occupation , if any, has been delivered to the
company along with the certificate relating to the
bond; and if no such certificate is in existence,
along with the letter of allotment of the bond:
PROVIDED ALSO that the provisions of this subsection shall not apply to a Government Company
in respect of securities held by nominees of the
Government.
3.
4.
5.
Chapter VII, section 89Declaration of beneficial

interest.
Chapter VII, section 90Investigation of ownership
of shares.
Chapter VII, sub-section (2)
of section 96
Decision of other place for
holding annual general
meeting.
This Section Shall not apply to Government

Company.
This Section Shall not apply to Government
Company.
In sub-section (2), for the words "some other place
within the city, town or village in which the
registered office of the company is situate", the
words "such other place as the Central Government
may approve in this behalf" shall be substituted.
6.
Chapter VIII, second proviso

to sub-section (.1) of section
123
Declaration of dividend
from reserves.
Note:
Annual General Meeting of Company shall be
held at registered office of the Company or such
other place as the Central Government may
approve in this behalf.
Shall not apply to a Government Company in which
entire paid up share capital (100% paid up share
capital) is held by Central Govt, or by any State
Govt. or Govts. Or by Central Govt. and one or more
State Govt.
7.
Chapter VIII, sub-section

(4) of section 123
No need to deposit amount in Separate Bank

Account in Company in which the entire paid up

DIVESH GOYAL
Deposit of dividend in a
scheduled bank.
8.
Chapter IX, section 129Financial Statement
9.
Chapter IX, clause (e) of

sub-section (3) of
section 134-Inclusion of
Directors remuneration
etc., in Boards report.
10.
Chapter IX, clause (p) of

sub-section (3) of section
134Method of annual
evaluation of Board's
performance etc.
Mob: +918130757966
share capital (100% paid up share capital) is held

by Central Govt, or by any State Govt. or Govts. Or
by Central Govt. and one or more State Govt.
In preparation of financial statements, the
requirement of Segment Reporting as per AS 17 has
been relaxed in case of Government Companies
engaged in defense production.
Board of director Report of Government Company
Should Not Include the below given clause, which
shall include
in case of a company covered under sub-section (1)
of section 178, companys policy on directors
appointment and remuneration including criteria
for determining qualifications, positive attributes,
independence of a director and other matters
provided under sub-section (3) of section 178;
The requirement of disclosing the Companys
nomination and remuneration policy etc in the
Boards report has been relaxed for Government
companies.
Provision:
In case of a listed company and every other public
company having such paid-up share capital as may
be prescribed, a statement indicating the manner in
which formal annual evaluation has been made by
the Board of its own performance and that of its
committees and individual directors.
This disclosure Requirement Shall Not Apply in case
the directors are evaluated by the Ministry or
Department of the Central Government which is
administratively in charge of the company, or, as
the case may be, the State Government, as per its
own evaluation methodology.
11.
Chapter
XJ,
section
149(1)(b) and first proviso
to sub-section (1) of section
149.
As per Section 149(1) (b) and first proviso to

Section 149(1), a government company can have
more than 15 directors. Such a company is now no
longer required to pass a special resolution for
appointing more than 15 directors.

DIVESH GOYAL
Mob: +918130757966

12.
Chapter XI, clause (a) of

149Power of Board to
judge the competence of
Directors.
In section 149, in sub-section (6), in clause (a), for

the word Board, the words Ministry or
Department of the Central Government which is
administratively in charge of the company, or, as
the case may be, the State Government shall be
substituted.
13.
Chapter Xi, clause (C) of

149.
The following requirement for selecting a person as

independent director will not apply to a
Government Company:
149(6)(c) who has or had no pecuniary
relationship with the company, its holding,
subsidiary or associate company, or their
promoters, or directors, during the two
immediately preceding financial years or during the
current financial year.
14.
Chapter XI, sub-section (5)

of section 152Consent of
Director
Shall not apply where appointment of such director

is done by the Central Government or State
Government, as the case may be.
15.
Chapter XI, sub-section (2)

of section 164.
Chapter XII, sub-sections
(2),(3) and (4) of section
178-Functions
of
Nomination
and
Remuneration Committee.
Chapter XII, section 185Loan to Directors.
Disqualification of Director due to default by a

company as specified shall not apply.
Shall not apply to Government Company except
with regard to appointment of senior management
and other employees.
16.
17.
18.
Chapter XII, section 186Loan and investment by a

company.
Shall not apply to Government company in case It

Seeks Prior Approval of Their Administrative
Ministry or Department for the Proposed
Transactions.
The requirement of seeking members approval by
means of a special resolution for making
loan/investments or giving guarantee/security in
excess of the threshold limits specified in Section
186 has been relaxed for following government
companies:
Engaged in Defense production and

DIVESH GOYAL
Mob: +918130757966

19.
20.
21.
22.
23.
Other unlisted government companies which

seek prior approval of their administrative
Ministry or Department for the proposed
transactions.
Chapter XII, first and second First and Second proviso to sub-section (1) of
proviso to sub-section (1) of Section 188 shall not apply to following
(a) a Government company in respect of contract or
section 188arrangements entered into by it with any other
Related party transactions.Government company;
Passing of resolution by
general meeting and voting (b) a Government company, other than a listed
company, in respect of contracts or
by a member who is related
arrangements other than those referred to in
period.
clause (a), in case such company obtains
approval of the Ministry or Department of the
Central Government which is administratively in
charge of the company, or, as the case may be,
the State Government before entering into such
contract or arrangement.
Chapter XIII, sub-sections
Provisions regarding duration of appointment of
(2),(4) and (5) of section
managerial personnel, appointment by Board etc.
196.
shall not apply.
Chapter XIII, section 197.
Provisions regarding remuneration of managerial
personnel and commission to directors shall not
apply.
Chapter XIII, sub-sections
After sub-section (4), the following sub-section
(1),(2),(3) and (4) of section shall be inserted, namely:203-Appointment of Key
(4A) The provisions of sub-sections (1), (2), (3)
managerial personnel.
and (4) of this section shall not apply to a managing
director or Chief Executive Officer or manager and
in their absence, a whole-time director of the
Government Company.
Chapter XXIX, sub-section
In sub-section (2), the words the Registrar, a
(2) of section 439-Offences
shareholder of the company, or of shall be omitted.
to be cognizable.

DIVESH GOYAL
Mob: +918130757966
Below given list of provisions not applicable on following Companies

relating to Directors:
(a) A Government Company in which the entire paid up share capital is held by the Central
Government, or by any State Government or Governments or by the Central
Government and one or more State Governments;
(b) A subsidiary of a Government Company, referred in on (a) above, in which entire paid
up share capital is held by that Government Company.
LIST
S .NO.
(a)
(b)
(c)
(d)
OF
PROVISIONS:
Section
Provision
152 (6) (7)

Re-Appointment
Of
Retiring
Directors In AGM
Section 160
Rights of Person other than Retiring
Director to stand for Directorship
The provisions relating to retirement of

directors by rotation in AGM
Section 162
Appointment Of Director To Be
Voted Individually
Section 163
principle
of
Proportional
Representation for Appointment of
Directors
can pass a single resolution for appointment

of 2 or more persons as directors
Seeking deposit of Rs. 1 Lakh, notice of

candidature etc. will not apply in case of
appointment of a director in a general
meeting to those Government Companies
specified in above.
The provisions relating to appointment of

directors on proportional representation
basis, by means of relevant clauses in the
AOA, will not apply in case of specified
Government Companies.
Register of Directors, KMP and their shareholding & its inspection:

Section 170 and 171 shall not apply to a Government Company in which the entire paid up
share capital is held by the Central Government, or by the State Government or
Governments or by the Central Government and one or more State Governments.

DIVESH GOYAL
Mob: +918130757966
IMPACT OF SECTION:
The requirement relating to maintenance of register of Directors, KMP and their
shareholding and the right of members to inspect it has been relaxed for a government
company as specified in the left hand column.
Author View: As per Section 170 no need to file e-form DIR-12 also for Government
Companies.
(Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in

Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)
Disclaimer: The entire contents of this document have been prepared on the basis of
relevant provisions and as per the information existing at the time of the preparation. The
observations of the author are personal view and the authors do not take responsibility of the
same and this cannot be quoted before any authority without the written


Exemption Notification To Government Companies - Series - 86

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DIVESH GOYAL

Practicing Company Secretary

EXEMPTION TO GOVERNMENT COMPANIES

PROVISIONS OF THE ACT DO NOT APPLY TO GOVERNMENTCOMPANY

Exceptions, Modifications and Adaptations

Chapter IV, section 56

For any query, suggestions and updates on daily basis drop

or on behalf of the transferee, shall not apply

Chapter VII, section 89Declaration of beneficial

This Section Shall not apply to Government

Chapter VIII, second proviso

Chapter VIII, sub-section

No need to deposit amount in Separate Bank

For any query, suggestions and updates on daily basis drop

Chapter IX, section 129Financial Statement

Chapter IX, clause (e) of

Chapter IX, clause (p) of

share capital (100% paid up share capital) is held

As per Section 149(1) (b) and first proviso to

For any query, suggestions and updates on daily basis drop

Practicing Company Secretary

Chapter XI, clause (a) of

In section 149, in sub-section (6), in clause (a), for

Chapter Xi, clause (C) of

The following requirement for selecting a person as

Chapter XI, sub-section (5)

Shall not apply where appointment of such director

Chapter XI, sub-section (2)

Disqualification of Director due to default by a

Chapter XII, section 186Loan and investment by a

Shall not apply to Government company in case It

Engaged in Defense production and

For any query, suggestions and updates on daily basis drop

Practicing Company Secretary

Other unlisted government companies which

For any query, suggestions and updates on daily basis drop

Below given list of provisions not applicable on following Companies

152 (6) (7)

The provisions relating to retirement of

can pass a single resolution for appointment

Seeking deposit of Rs. 1 Lakh, notice of

The provisions relating to appointment of

Register of Directors, KMP and their shareholding & its inspection:

For any query, suggestions and updates on daily basis drop

(Author CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in

For any query, suggestions and updates on daily basis drop

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