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Filing of Mgt14 in Respect of Various Resolutions by Private Companies

Filing of Mgt14 in Respect of Various Resolutions by Private Companies

Companies Act, 2013 requires the filing of various resolutions with the registrar of Companies of the state where the registered office of the company is situated. Section 117 prescribes the filing of these resolutions. It reads as under

117. (1) A copy of every resolution or any agreement, in respect of matters specified in
sub-section (3) together with the explanatory statement under section 102, if any, annexed to
the notice calling the meeting in which the resolution is proposed, shall be filed with the
Registrar within thirty days of the passing or making thereof in such manner and with such
fees as may be prescribed within the time specified under section 403:

Provided that the copy of every resolution which has the effect of altering the articles
and the copy of every agreement referred to in sub-section (3) shall be embodied in or
annexed to every copy of the articles issued after passing of the resolution or making of the
agreement.

(2) If a company fails to file the resolution or the agreement under
sub-section (1) before the expiry of the period specified under section 403 with additional
fee, the company shall be punishable with fine which shall not be less than five lakh rupees
but which may extend to twenty-five lakh rupees and every officer of the company
who is in default, including liquidator of the company, if any, shall be punishable
with fine which shall not be less than one lakh rupees but which may extend to
five lakh rupees.

(3) The provisions of this section shall apply to—special resolutions;
resolutions which have been agreed to by all the members of a company, but
which, if not so agreed to, would not have been effective for their purpose unless they
had been passed as special resolutions;

(c) any resolution of the Board of Directors of a company or agreement executed
by a company, relating to the appointment, re-appointment or renewal of the
appointment, or variation of the terms of appointment, of a managing director;
resolutions or agreements which have been agreed to by any class of members
but which, if not so agreed to, would not have been effective for their purpose unless
they had been passed by a specified majority or otherwise in some particular manner;
and all resolutions or agreements which effectively bind such class of members though
not agreed to by all those members;

(e) resolutions passed by a company according consent to the exercise by its
Board of Directors of any of the powers under clause (a) and clause (c) of sub-section
(1) of section 180;

(f) resolutions requiring a company to be wound up voluntarily passed in pursuance of section 304;

(g) resolutions passed in pursuance of sub-section (3) of section 179; and

(h) any other resolution or agreement as may be prescribed and placed in the public domain.

Section 180 referred in Section 117(3)(e) runs as under:

180. (1) The Board of Directors of a company shall exercise the following powers only
with the consent of the company by a special resolution, namely:—

(a) to sell, lease or otherwise dispose of the whole or substantially the whole of
the undertaking of the company or where the company owns more than one undertaking,
of the whole or substantially the whole of any of such undertakings.
Explanation.—For the purposes of this clause,—

(i) “undertaking” shall mean an undertaking in which the investment of
the company exceeds twenty per cent. of its net worth as per the audited balance
sheet of the preceding financial year or an undertaking which generates twenty
per cent. of the total income of the company during the previous financial year;

(ii) the expression “substantially the whole of the undertaking” in any
financial year shall mean twenty per cent. or more of the value of the undertaking
as per the audited balance sheet of the preceding financial year;

(b) to invest otherwise in trust securities the amount of compensation received
by it as a result of any merger or amalgamation;

(c) to borrow money, where the money to be borrowed, together with the money
already borrowed by the company will exceed aggregate of its paid-up share capital
and free reserves, apart from temporary loans obtained from the company’s bankers in
the ordinary course of business:

Provided that the acceptance by a banking company, in the ordinary course of
its business, of deposits of money from the public, repayable on demand or otherwise,
and withdrawable by cheque, draft, order or otherwise, shall not be deemed to be a
borrowing of monies by the banking company within the meaning of this clause.
Explanation.—For the purposes of this clause, the expression “temporary loans”
means loans repayable on demand or within six months from the date of the loan such
as short-term, cash credit arrangements, the discounting of bills and the issue of other
short-term loans of a seasonal character, but does not include loans raised for the
purpose of financial expenditure of a capital nature;

(d) to remit, or give time for the repayment of, any debt due from a director.

(2) Every special resolution passed by the company in general meeting in relation to
the exercise of the powers referred to in clause (c) of sub-section (1) shall specify the total
amount up to which monies may be borrowed by the Board of Directors.

(3) Nothing contained in clause (a) of sub-section (1) shall affect—
(a) the title of a buyer or other person who buys or takes on lease any property,
investment or undertaking as is referred to in that clause, in good faith; or

(b) the sale or lease of any property of the company where the ordinary business
of the company consists of, or comprises, such selling or leasing.

(4) Any special resolution passed by the company consenting to the transaction as is
referred to in clause

(a) of sub-section (1) may stipulate such conditions as may be specified
in such resolution, including conditions regarding the use, disposal or investment of the sale
proceeds which may result from the transactions:
Provided that this sub-section shall not be deemed to authorise the company to effect
any reduction in its capital except in accordance with the provisions contained in this Act.

(5) No debt incurred by the company in excess of the limit imposed by clause (c) of
sub-section (1) shall be valid or effectual, unless the lender proves that he advanced the loan
in good faith and without knowledge that the limit imposed by that clause had been exceeded.

Section 179 referred in Section 117(3)(g) runs as under:

179. (1) The Board of Directors of a company shall be entitled to exercise all such
powers, and to do all such acts and things, as the company is authorised to exercise and do:
Provided that in exercising such power or doing such act or thing, the Board shall be
subject to the provisions contained in that behalf in this Act, or in the memorandum or
articles, or in any regulations not inconsistent therewith and duly made thereunder, including
regulations made by the company in general meeting:

Provided further that the Board shall not exercise any power or do any act or thing
which is directed or required, whether under this Act or by the memorandum or articles of the
company or otherwise, to be exercised or done by the company in general meeting.

(2) No regulation made by the company in general meeting shall invalidate any prior
act of the Board which would have been valid if that regulation had not been made.

(3) The Board of Directors of a company shall exercise the following powers on behalf
of the company by means of resolutions passed at meetings of the Board, namely:—

(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;
(g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another
company;
(k) any other matter which may be prescribed:

Provided that the Board may, by a resolution passed at a meeting, delegate to any
committee of directors, the managing director, the manager or any other principal officer of
the company or in the case of a branch office of the company, the principal officer of the
branch office, the powers specified in clauses (d) to (f) on such conditions as it may specify:

Provided further that the acceptance by a banking company in the ordinary course of
its business of deposits of money from the public repayable on demand or otherwise and
withdrawable by cheque, draft, order or otherwise, or the placing of monies on deposit by a
banking company with another banking company on such conditions as the Board may
prescribe, shall not be deemed to be a borrowing of monies or, as the case may be, a making
of loans by a banking company within the meaning of this section.

Explanation I.—Nothing in clause (d) shall apply to borrowings by a banking company
from other banking companies or from the Reserve Bank of India, the State Bank of India or
any other banks established by or under any Act.

Explanation II.—In respect of dealings between a company and its bankers, the exercise
by the company of the power specified in clause (d) shall mean the arrangement made by the
company with its bankers for the borrowing of money by way of overdraft or cash credit or
otherwise and not the actual day-to-day operation on overdraft, cash credit or other accounts
by means of which the arrangement so made is actually availed of.

(4) Nothing in this section shall be deemed to affect the right of the company in general
meeting to impose restrictions and conditions on the exercise by the Board of any of the
powers specified in this section

Section 304 referred in Section 117(3)(f) runs as under:

304. A company may be wound up voluntarily,—
(a) if the company in general meeting passes a resolution requiring the company
to be wound up voluntarily as a result of the expiry of the period for its duration, if any,
fixed by its articles or on the occurrence of any event in respect of which the articles
provide that the company should be dissolved; or

(b) if the company passes a special resolution that the company be wound up voluntarily

MCA issued notification under Section 462 of the Companies Act , 2013 granting exemption to private companies from various provisions of the Act. However these exemptions were not given to companies who were the subsidiaries of public companies. These exemptions granted to private companies which are not subsidiary of a public company included amongst others the following:

Exemption from provisions of Section 117(3)(g) of the Act which referred the resolutions passed under section 179(3) of the Act. Thus following resolutions were not required to be filed with ROC:

to make calls on shareholders in respect of money unpaid on their shares;
to authorise buy-back of securities under section 68;
to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;
(g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another
company;
(k) any other matter which may be prescribed

Section 180 was made inapplicable to private companies with the effect that requirement of passing special resolution under Section 180 is no more existed and also filing of resolutions as required by Section 117(3)(d) relating to according consent for the exercise by its Board of Directors of any of the powers under clause (a) and clause (c) of sub-section(1) of section 180 is also not required.

CONCLUSION

Thus now after 5th June, 2015 only for following resolutions Form MGT 14 is required to be filed in case of a private company which is not a subsidiary of public company:

special resolutions;
resolutions which have been agreed to by all the members of a company, but
which, if not so agreed to, would not have been effective for their purpose unless they
had been passed as special resolutions; (There were only two sections which referred such resolutions-
one is Section 5(3) and (4) relating to provision of entrenchment and another Section 162 relating to
appointment of directors to be voted individually. Now Section 162 has also been made inapplicable
to private companies)
any resolution of the Board of Directors of a company or agreement executed by a company, relating to the
appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a
managing director;
resolutions or agreements which have been agreed to by any class of members but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by a specified majority or otherwise in some particular manner; and all resolutions or agreements which effectively bind such class of members though not agreed to by all those members
resolutions requiring a company to be wound up voluntarily passed in pursuance of section 304

For ready reference Exemption notification is reproduced below:

GOVERNMENT OF INDIA MINISTRY OF CORPORATE AFFAIRS NOTIFICATION
New Delhi’ The 5th June,2015
G.S.R. _ (E). – 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), 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 private company, namely:-


 

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