The Corporate Affairs Ministry has allowed the relaxation following representations by many entities that they are facing difficulties since under the new Companies Act, matters related to borrowings and creation of security have to be approved through special resolution.
As per Companies Act, 1956, such matters could be approved by way of an ordinary resolution.An ordinary resolution requires approval of minimum 50 per cent of shareholders whereas for special resolution, nod of more number of stakeholders' is required.
In a circular, the Ministry has said there have been representations with regard to difficulties arising out of implementation of section 180 of the Companies Act, 2013 with reference to borrowings and/or creation of security, based on the basis of ordinary resolution.
Providing a clarification yesterday, the Ministry said "the resolution passed under section 293 of the Companies Act, 1956 prior to 12.09.2013 with reference to borrowings (subject to the limits prescribed) and/or creation of security on assets of the company will be regarded as sufficient compliance of the requirements of section 180 of the Companies Act, 2013".
This would be in place for a period of one year from September 12, 2013 -- the date when section 180 of the new Act was notified.
Majority of the provisions of new legislation that replaces Companies Act, 1956, are expected to be in force from April 1.