Private limited Company Privileges and Exemptions
Here, we are going to see the Privileges and exemptions which can be enjoyed by the private company. The companies act, 1956, confers certain privileges or concession to private companies when compared to public companies.
The moment when the private company got ceased, would lose its privileges and exemptions. Beneficiary things will be discussed here. They are as follows:
Privileges and Exemptions:
- Financial assistance will be given for purchase or subscribe its own shares or shares in its holding company.
- Shares can be issued without obtaining the certificate from the central government or passing a special resolution.
- Lieu of prospectus need not be given to the registrar before allotting the shares.
- Commencement of business can be done immediately after the incorporation without even obtaining the certificate from the registrar.
- There is no necessity to hold a statutory meeting and to send those reports to the shareholder or file the same with the registrar.
Privileges and exemptions:
- A private company can appoint a body corporate or a firm to an office or the place of profit under the company.
- It need not have more than two directors.
- Statutory notice will not be required to a person who stands for election as a director.
- Central government sanction is not required in the case of increasing the directors above 12 or the number which is fixed by the articles of association.
- While passing the resolution for electing the directors, a single resolution is enough to appoint all directors.
- Consent to act as a director need not be filed with the registrar.
- Central government sanction is not required in the case of modifying the provisions related to appointment of directors, whether its whole time or part time.
- There are no certain restrictions on the power of Board of directors and no prohibition against loans to directors.
- No need of government approval if any changes in the remuneration of the directors, appointment or reappointment of directors.
- A method of determining the net profits and ascertainment of depreciation do not apply.
- Provisions as to kinds of voting rights, share capital, an issue of shares with disproportionate rights, termination of disproportionate excessive rights.
- Date of birth need not mention in the register of the directors.
- Managing director need not be appointed more than 5 years.
- There is no restriction on investments or making of loans or guarantee.
- The Central government cannot exercise its powers to prevent the change in the board of directors which may affect the company prejudicially.
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