On June 26, 2025, the Ministry of Corporate Affairs (“MCA”), vide Notification No. 1/32/2013-CLV(Part),[1] proposed the extension of Section 186 of the Companies Act relating to the exemption to the finance companies which are registered with the International Financial Services Centres Authority (“IFSCA”).
Background
In accordance with Section 186(11)(a) of the Companies Act, 2013 read with Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, Non-Banking Financial Companies (“NBFCs”) registered with the Reserve Bank of India and engaged in lending or providing guarantees/ security in the ordinary course of business are exempt from compliance with Section 186 of the Companies Act, 2013 (except Section 186(1)).
In furtherance of the same, IFSCA has requested the MCA to extend this exemption to Finance Companies registered with IFSCA, to align regulatory treatment with NBFCs and promote ease of doing business within jurisdictions of IFSCA.
Key Highlights of the Proposed Amendment:
- The aim is to include Finance Companies registered with IFSCA under the exemption provided in Rule 11(2) of the Companies (Meetings of Board and its Powers) Rules, 2014, thereby allowing them to carry out lending or guarantee/ security operations in the ordinary course of business without needing to comply with Section 186 (except sub-section (1)) of the Companies Act, 2013.
- The proposal has been examined by the MCA in consultation with the Department of Economic Affairs, Reserve Bank of India and IFSCA.
- MCA has invited stakeholders to submit comments/ suggestions along with brief justifications via the e-Consultation Module on the MCA portal, latest by July 17, 2025.
[1]https://www.mca.gov.in/bin/dms/getdocument?mds=59LhEfk%252FvRv8DioW%252Fo4yVA%253D%253D&type=open