ABC Ltd is a company where 40% of share capital is held by Central Government, 40% by Uttar Pradesh Government and 10% each by LIC and ONGC. During secretarial audit it was noticed that the company has not maintained a r

Pursuant to the provisions of Exemption Notification No. G.S.R. 463(E) dated 05-Jun-2015 providing exemptions for Government companies, 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. This implies that 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. In the present case, total of 80% of the ownership is held by Central Government and state government. The remaining 20% held by government owned agencies of LIC and ONGC cannot be counted as government ownership for the purpose of this section. So, the argument of the directors that that being a government company, provisions of Section 170 are not applicable is wrong. It is clearly specified that the exemption from Section 170 are applicable only 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. So, compliance to Section 170 by SPIC Ltd is mandatory and maintenance of register of directors and their shareholding cannot be done away with.