What Is a Section 462 Exemption Notification?

A section 462 exemption notification is how the Companies Act, 2013 gets bent for a class of companies without being amended. Under it the Central Government can switch a provision off for a class, or leave it on in a modified form. For anyone reading a company's filings against the Act, this is the provision that makes a bare reading of a section unsafe: the duty that applies to that company is the section as the notifications for its class leave it.

What can a section 462 exemption notification actually do?

Sub-section (1) gives the Central Government a power exercisable in the public interest, by notification, and it comes in two clauses that do different work.

• Clause (a): a provision shall not apply to such class or classes of companies. A clean disapplication.
• Clause (b): a provision shall apply to the class or classes with such exceptions, modifications and adaptations as may be specified in the notification. The provision stays on the books for that class but reads differently.

Clause (b) is the harder one to work with. A modified provision is not visible from the Act's own text: the section reads as printed, and the modification lives in a separate instrument. Two companies can be subject to the same numbered section and owe materially different duties under it.

The power runs to any of the provisions of this Act, and it operates on a class or classes of companies rather than on named companies. It is a class instrument, not a dispensation.

The parliamentary check, and how the thirty days are counted

Sub-sections (2) to (4) put a laying procedure around the power. They were substituted by Act 21 of 2015, section 23, for sub-section (2), with effect from 29 May 2015, which is a rare case of a consolidation footnote naming precisely which provision it replaced.

The procedure has three steps.

1. The draft goes to Parliament first. A copy of every notification proposed to be issued shall be laid in draft before each House, while it is in session, for a total period of thirty days.
2. Either House alone cannot stop it. The notification is blocked only if both Houses agree in disapproving its issue, and it is altered only if both Houses agree in making any modification, in which case it may be issued only in such modified form as may be agreed upon by both the Houses.
3. The issued notification goes back. Sub-section (4) requires copies of every notification issued under the section to be laid before each House as soon as may be after it has been issued.

Sub-section (3) governs the arithmetic of the thirty days.

Because the thirty days are a total and exclude prorogations and adjournments longer than four consecutive days, the period can run across more than one session and is not a calendar month.

Two different ways the Act treats classes of company

It helps to keep section 462 separate from the class-conditioning the Act does on its own face. Several duties are already drafted to apply only to prescribed companies, and that has nothing to do with a notification under this section.

• Corporate social responsibility under section 135 applies to companies meeting stated net worth, turnover or net profit figures. The class test is inside the section.
• Independent directors under section 149 are required of every listed public company, which must have at least one-third of its directors independent, with the Central Government empowered to prescribe the minimum number for classes of public companies. The class test is partly in the section and partly in rules.
• Deposits under the Companies Act work through a definition with carve-outs rather than through a class exemption.

Section 462 is a second, external layer on top of all of that: an instrument that can disapply or modify any of those sections for a class, after the parliamentary procedure above. When the two layers disagree about what a company owes, the notification is where the answer is.

What this page does not tell you

This page sets out the mechanism in section 462 and not the content of any notification issued under it. Notifications are separate instruments with their own dates, their own class definitions and their own schedules of modified text, and none of them is reproduced or summarised here because none was sourced for this page. Anyone working out whether a particular duty binds a particular company has to read the notifications for that class, from the Ministry of Corporate Affairs, alongside the section.

Two neighbouring provisions are worth separating from this one, because all three end in a notification. Section 458 lets the Central Government delegate its powers or functions under the Act, other than the power to make rules, to a specified authority or officer, with a copy of the notification laid before each House. Section 459 lets the Central Government or the Tribunal attach conditions, limitations or restrictions to an approval, sanction, consent, confirmation, recognition, direction or exemption in an individual matter, and to rescind or withdraw it on contravention. Neither operates on classes, and neither changes the text of the Act.

That last point connects back to enforcement by wording rather than by cross-reference. The list section 459 uses for the conditions it permits, a condition, limitation or restriction attached to an approval, sanction, consent, confirmation, recognition, direction or exemption, is the same list that forms the second trigger limb of the residual penalty in section 450. Neither section names the other. The two filing duties the Act singles out for its own concessions, in the first proviso to section 403(1) and in the section 454(3) proviso, are the financial statements under section 137 and the annual return under section 92.

Flock reports the filings themselves, each stamped with its date and linked back to the exchange or regulator that published it. What any of it means for you is your call to make.