Chapter 1 Preliminary Revised

Date: 11 May, 2021
VIRTUAL COACHING CLASSES

ORGANISED BY BOS, ICAI
INTERMEDIATE LEVEL
PAPER 2: CORPORATE AND OTHER
LAWS
Faculty: CA S SRIKANTH
May 11, 2021 © The Institute of Chartered Accountants of India 1

Preliminary
-Introduction and certain
important definitions
© THE INSTITUTE OF CHARTERED

9th July, 2020 2
ACCOUNTANTS OF INDIA
TOPIC OVERVIEW
PRELIMINARY
Companies Act, 2013 CHAPTER I
The Companies (Specification of

Definitions Details) Rules, 2014
Note: All references to Sections and Rules are from

the above unless specifically stated otherwise

12th July, 2020 3
INTRODUCTION
The Companies Act is a mammoth legislation
containing 470 sections and 7 schedules.
However, the basic principles are very few.
Once the basic concepts are understood, the details
are easy to learn.
In the lectures that follow, the material is so
arranged as to enable you to remember the details
with ease.

May 11, 2021 4
THE PILLARS OF COMPANY LAW
THE ENTIRE FRAMEWORK OF COMPANY

LAW IS MEANT TO ENABLE THE
FOLLOWING TWO PURPOSES.
WE MAY ALSO ADD “PUBLIC INTEREST”.
THE BIRTH OR DEATH OF A COMPANY MAY HAVE IMPACT UPON THE NATIONAL
ECONOMY.
PROTECTION OF PROTECTION OF
THE INVESTOR THE CREDITORS

May 11, 2021 5
SHORT TITLE, EXTENT, COMMENCEMENT
AND APPLICATION (SECTION 1 (1), (2) & (3))
TITLE
The Companies Act, 2013
It succeeds the Companies Act, 1956.
EXTENT
It extends to the whole of India
COMMENCEMENT
Section 1 came into force at once and
the remaining provisions on different
dates through notifications.

May 11, 2021 6
APPLICABILITY OF THE ACT (SECTION 1 (4))
The provisions of the Companies
(a) companies incorporated under this Act or under any previous

company law;
Act,2013 shall apply to-
(b) Insurance Companies
(c) banking companies
(d) companies engaged in the generation or supply of electricity
(e) Companies governed by any special law.
(f) Notified bodies corporates incorporated by any law subject to

exceptions, modifications or adaptation
In respect of companies mentioned in (b) to (e) the Act shall apply “except in so far
as the said provisions are inconsistent with the provisions of such special Act”
governing such company. i.e. where there is a conflict, the special Act will apply.
11 May 2021 7
DEFINITIONS (SECTION 2))
Section 2 of the Companies Act, 2013 is a definition section, which defines various
terms used in the Act.
Definitional Sections are “internal aids” and can be used to interpret the Act.
words and expressions used and not defined in this Act but defined in the
Securities Contracts (Regulation) Act, 1956 or
Securities and Exchange Board of India Act, 1992
the Depositories Act, 1996
shall have the meanings respectively assigned to them in those Acts. (Sec. 2 (95)
REMEMBER!
When a word or phrase is defined as having a particular meaning in the enactment, it is
that meaning alone which must be given to it while interpreting a Section of the Act unless
there be anything repugnant i.e. unacceptable in the context.
May 11, 2021 8
What is a Company?
"body corporate" or • It does not
"corporation" include a
includes a company Cooperative
incorporated outside Society and
India • Any other
notified Bodies
Sec. 2 (11) Corporate
"company" means a • For example

company Reliance
incorporated under Industries Limited
this Act or under any incorporated
previous company under the
law Companies Act,
1956 is a
Sec. 2 (20) Company
5/11/2021
9
What is a Company?
A COMPANY IS AN ARTIFICIAL PERSON CREATED BY A PROCESS OF LAW
HAVING SEPARATE LEGAL ENTITY AND PERPETUAL SUCCESION;
THEREFORE
1. A COMPANY CAN SUE AND BE SUED IN ITS OWN NAME
2. IT CAN BUY, HOLD AND OTHERWISE DEAL WITH PROPERTY IN ITS OWN
NAME
3. PERPETUAL SUCCESION MEANS THAT THE COMPANY WILL CONTINUE

TO EXIST EVEN IF ALL ITS MEMBERS DIE.
A COMPANY BEING CREATED BY A PROCESS OF LAW CAN BE DESTROYED

ONLY BY A PROCESS OF LAW CALLED DISSOLUTION

May 11, 2021 10
What is a Company?
WHEN THE COMPANY IS OPERATING AND FUNCTIONAL WE USE THE TERM
“MEMBERS “ TO DESCRIBE THE OWNERS.
"member", in relation to a company, means—

(i) the subscriber to the memorandum of the company who shall be
deemed to have agreed to become member of the company, and on
its registration, shall be entered as member in its register of
members;
(ii) every other person who agrees in writing to become a member of the
company and whose name is entered in the register of members of the
company;
(iii) every person holding shares of the company and whose name is
entered as a beneficial owner in the records of a depository;

May 11, 2021 11
What is a Company?
WHEN THE COMPANY IS BEING WOUND UP FOR THE
PURPOSE OF DISSOLUTION WE USE THE TERM
“CONTRIBUTORIES“ TO DESCRIBE THE OWNERS.
"contributory" means a person liable to contribute towards

the assets of the company in the event of its being wound up.
Explanation.—A person holding fully paid-up shares in a

company shall be considered as a contributory but shall have
no liabilities of a contributory under the Act whilst retaining
rights of such a contributory;

May 11, 2021 12
DEFINITIONS
REGISTER OF COMPANIES (SEC. 2 (74))
"register of companies" means the register of

companies maintained by the Registrar on paper
or in any electronic mode under this Act;

11 May 2021 ACCOUNTANTS OF INDIA
2
THE FIRST COMPANY?
The English East India Company was chartered on
31-12-1600 making it the first East India company.
But the first company to issue shares traded on a
recognized Stock Exchange was the VOC or the Dutch East
India Company which issued shares soon afterwards, in 1602,
that were made tradable on the Amsterdam Stock Exchange.
That invention enhanced the ability of joint-stock
companies to attract capital from investors, as they could
now easily dispose of their shares.
In 1612, it became the first 'corporation' in intercontinental
trade with 'locked in' capital and limited liability.
May 11, 2021 14
CLASSIFICATION OF COMPANIES BASED ON LIABILITY
TYPE OF COMPANY LIMITATION OF LIABILITY
Company Limited by Shares (Sec. 2 (22)) The liability of its members is limited by
the MOA to the amount, if any, unpaid
on the shares respectively held by them;
Company Limited by Guarantee (Sec. 2 The liability of its members is limited by

(21)) the MOA to such amount as the
members may respectively undertake to
contribute to the assets of the company
in the event of its being wound up;
Unlimited Liability Company (Sec. 2 (92)) "unlimited company" means a company

not having any limit on the liability of its
members;

May 11, 2021 15
CONCEPT OF LIMITED LIABILITY
During May 2020 Reliance Industries Limited offered
422626894 normal equity shares of Rs. 10 each at a price of
RS. 1257 per rights equity share.
The amount was payable in three installments as follows:
Rs. 314.25 on Application
Rs. 314.25 in May 2021
Rs. 628.50 in November 2021
Mr. Deepak applied for the right shares and was allotted 100
shares. He paid the amount due on application.
What is the liability of Mr. Deepak with respect to his shares in

Reliance Industries Limited as on 30th April 2021?

May 11, 2021 16
CONCEPT OF SHARE CAPITAL
For a sole proprietor, capital is a balancing item. It is

excess of assets over liabilities. A sole trader can
withdraw the capital of the business. This will not
affect the creditors because they can attach his
personal assets.
The same principle applies in the case of a

partnership.

May 11, 2021 17
This changes totally with a company.

As we saw the liability of members of the company is
limited.
Creditors of the company cannot attach the personal
assets of members.
Therefore the share capital of a company has to be a
fixed amount which cannot be withdrawn by a
member at his will and pleasure.

May 11, 2021 18
This capital of a company is called share capital.
It is divided into smaller units called shares.
"share" means a share in the share capital of a

company and includes stock (Sec. 2 (84)
Shares are freely transferable subject to certain

reasonable exceptions which we will learn in the
upcoming lectures

May 11, 2021 19
The share capital of a company can

be classified into different segments

May 11, 2021 20
KINDS OF SHARE CAPITAL
Particulars Definitions
"authorized capital" or "nominal capital" means such capital as is
Authorized Capital authorised by the memorandum of a company to be the maximum
amount of share capital of the company; (Sec. 2 (8))
"issued capital" means such capital as the company issues from time
Issued Capital
to time for subscription; (Sec. 2 (50))
"subscribed capital" means such part of the capital which is for the
Subscribed Capital
time being subscribed by the members of a company; (Sec. 2 (86))
"called-up capital" means such part of the capital, which has been
called-up capital
called for payment; (Sec. 2 (15))
"paid-up share capital" or "share capital paid-up" means such
aggregate amount of money credited as paid-up as is equivalent to
the amount received as paid-up in respect of shares issued and also
Paid up Capital
includes any amount credited as paid-up in respect of shares of the
company, but does not include any other amount received in
respect of such shares, by whatever name called; (Sec. 2 (64))
2
PRACTICAL EXAMPLE
ABC Ltd. was registered with Registrar with an
Authorised capital of Rs. 2,00,00,000 where each share
is of Rs. 10.
In response to the advertisements made by the company
to buy shares in the company, applications have been
received for 10,00,000 shares as against the 700,000
shares actually issued by the company. The amount
called up as of date is Rs.8 per share.
All the dues on shares have been paid in full except for
three shareholders who still owe the final call money of
Rs. 2 on 6000 shares held by them in total.

May 11, 2021 22
KINDS OF SHARE CAPITAL
PARTICULARS AMOUNT
Authorized Capital 20, 00, 000 SHARES X Rs. 10/- = Rs. 2, 00, 00, 000 (Rs. 2 Crores)
Issued Capital 7, 00, 000 SHARES X Rs. 10/- = Rs. 70, 00, 000
Subscribed Capital 7, 00, 000 SHARES X Rs. 10/- = Rs. 70, 00, 000
called-up capital 7, 00, 000 SHARES X Rs. 8/- = Rs. 56, 00, 000
(7, 00, 000 SHARES X Rs. 8/-) – ( 6000 SHARES X Rs. 2)

Paid up Capital ( Rs. 56, 00, 000) – ( Rs. 12, 000)
( Rs. 55, 88, 000)

2
KINDS OF
COMPANIES

2
PUBLIC COMPANY (SEC. 2 (71))

May 11, 2021 25
PUBLIC COMPANY (SEC. 2 (71))
A Pvt. Ltd. Is a subsidiary of AB Ltd., a
AB LIMITED
public company incorporated under the
(HOLDING
Companies Act, 2013.
COMPANY)
A Pvt. Ltd. Wants to avail the exemptions
available to private companies. Can it do
so?
A Pvt. Ltd. Is a subsidiary of AB Ltd., which is

a public company.
Therefore A Pvt. Ltd. will be deemed to be a A PRIVATE

public company and will be not allowed to LIMITED
avail the exemptions available to a private (SUBSIDIARY)
company.

May 11, 2021 26
PRIVATE COMPANY (SECTION 2 (68))
“private company" means a company

having a minimum paid-up share capital as may
be prescribed,
(No minimum paid-up share capital has been prescribed)
and
which by its articles provides for THREE matters
LET US SEE WHAT THEY ARE!

2
PRIVATE COMPANY (SEC. 2 (68))
A PRIVATE COMPANY SHALL BY ITS ARTICLES
(iii) prohibit any invitation to

(i) restrict the right to transfer
the public to subscribe for any
its shares;
securities of the company;
(ii) except in the case of One Person Company (OPC), limit the number of its members
to TWO HUNDRED
Note 1: Joint Shareholders shall be treated as a single member
Note 2: The above limit of 200 members SHALL NOT INCLUDE

a. Employees, and
b. Former employees, who were members of the company while in
that employment and have continued to be members after the
employment ceased,

11 May 2021 28
PRIVATE COMPANY (SEC. 2 (68))
Flora Fauna Limited was registered as a public company. There are 230 members in
the company as noted below:
(a) Directors and their relatives 50
(b) Employees 15
(c) Ex-Employees (Shares were allotted when they were employees) 10
(d) 5 couples holding shares jointly in the name of husband and wife (5*2) 10
(e) Others 145
The Board of Directors of the company propose to convert it into a private company.
Advise whether reduction in the number of members is necessary.
Hint: Employees and members who were employees when shares were allotted can
be ignored and joint shareholders to be taken as one.
Total no. of members is 50 + 145 + 5 = 200
Therefore there is no need for reduction in the number of members while converting
Flora Fauna Limited into a private company.
May 11, 2021 29
HOLDING COMPANY (SEC. 2 (46))
Holding company in relation to one or more other companies,
means a company of which such companies are subsidiary
companies
Company includes Body Corporate
HOLDING COMPANY
HC
SUBSIDIARY SUBSIDIARY SUBSIDIARY

May 11, 2021 30
DEFINITIONS
VOTING RIGHT (SEC. 2 (93))
"voting right" means the right of a member of a

company to vote in any meeting of the company
or by means of postal ballot;

2
DEFINITIONS
TOTAL VOTING POWER (SEC. 2 (89))
"total voting power", in relation to any matter,

means the total number of votes which may be
cast in regard to that matter on a poll at a
meeting of a company if all the members thereof
or their proxies having a right to vote on that
matter are present at the meeting and cast their
votes;

2
DEFINITIONS
POSTAL BALLOT (SEC. 2 (65))
"postal ballot" means voting by post or through

any electronic mode;

2
SUBSIDIARY COMPANY (SEC. 2 (87))
Subsidiary, in relation to any other company (that is to say the
holding company), means a company in which the holding
company
(i)controls the composition of the

Board of Directors; or
(ii) exercises or controls more than one-
the composition of a company’s Board
half of the total voting power either at
of Directors shall be deemed to be
its own or together with one or more of
controlled by another company if that
its subsidiary companies:
other company by exercise of some
power exercisable by it at its discretion
can appoint or remove all or a majority
of the directors;

May 11, 2021 34
DEFINITIONS
CONTROL (SEC. 2 (27))
"control" shall include the right to appoint

majority of the directors or to control the
management or policy decisions exercisable by a
person or persons acting individually or in
concert, directly or indirectly, including by virtue
of their shareholding or management rights or
shareholders agreements or voting agreements
or in any other manner;

2
A company shall be deemed ABC LIMITED
to be a subsidiary company of HOLDING CO
the holding company even if
Holds 60 per cent
the control is of another of the paid up
subsidiary company of the Share Capital
holding company;
BC LIMITED
SUBSIDIARY
In the example shown here
XYZ Limited becomes a Holds 51 per cent
of the paid up
subsidiary of ABC Limited by Share Capital
indirect control through BC
Limited a second level XYZ PRIVATE LIMITED
Subsidiary.
May 11, 2021 36
The expression “company” includes any body corporate;
“layer” in relation to a holding company means its subsidiary or subsidiaries;
• No company, other than a specified company shall have more than two layers of
subsidiaries.
• But, a company may acquire a company incorporated outside India with
subsidiaries beyond two layers as per the laws of such country:
• Specified Companies
a. Banking Company
b. Non-banking Finance Company
c. Insurance Company
d. Government Company
As per the notification dated 27th December 2013, Ministry clarified that the shares held by a
company or power exercisable by it in another company in a fiduciary capacity shall not be
counted for the purpose of determining the holding –subsidiary relationship in terms of the
provision of section 2(87) of the Companies Act, 2013.

May 11, 2021 37
DEFINITIONS
ONE PERSON COMPANY (SEC. 2 (62))
"One Person Company" means a company which

has only one person as a member;

2
SMALL COMPANY (SEC. 2 (85))
"small company" means a company, other than a public company
i. paid-up share capital of which (ii) turnover of which as per

does not exceed profit and loss account for the
FIFTY LAKH RUPEES immediately preceding financial
or such higher amount as may be year does not exceed
prescribed TWO CRORE RUPEES
(TWO CRORES w. e. f. 1.4.21) or such higher amount as may be
AND prescribed
Such higher amount shall not be
(TWENTY CRORES w. e. f. 1.4.21)
more than ten crore rupees
Nothing in Sec. 2 (85) shall apply to—
Such higher amount shall not be
(A) a holding company or a subsidiary company; more than one hundred crore
(B) a company registered under section 8; or rupees
(C) a company or body corporate governed by any special Act;

May 11, 2021 39
As per the profit and loss account
for the previous year ending 31st H LIMITED
March, 2019 of S Pvt. Ltd.,
a. its turnover was Rs. 1.50 crores;
and Holds 51 per cent
b. b. paid up share capital was Rs. of the paid up
40 lacs. Share Capital
S PVT. LIMITED
CAN S PVT. LTD. BE CLASSIFIED AS A
SMALL COMPANY
S Pvt. Ltd. CANNOT be categorized as a ‘small company’ because

it is the subsidiary of another company (H Ltd.).
(What if H Ltd. Satisfies small company definition?)

May 11, 2021 40
MNP Private Ltd. is a company registered under the Companies
Act, 2013 with a paid-up share capital of Rs. 45 lakh and turnover
of Rs.3 crores as per the previous year’s profit and loss account.
(i) Can MNP Private Ltd. avail the status of small company?
(ii) Will be your answer be different if the turnover of the
company is Rs. 1.50 crores?
Since only one criteria of share capital not exceeding Rs. 50 Lakhs
is met, and the second criteria of turnover not exceeding Rs. 2
crores is not met and as the provisions require both the criteria
to be met in order to avail the status of a small company, MNP
Ltd. cannot avail the status of small company.
(ii) If the turnover of the company is Rs. 1.50 crore, then both
the criteria will be fulfilled and MNP Ltd. can avail the status of
small company
May 11, 2021 41
1. Roma along with her six friends has incorporated Roma Trading Ltd. in May 2019.
The paid-up share capital of the company is ` 30 lacs. Further, in April 2020, she
noticed that in the last financial year, the turnover of the company was well below ` 2
crores. Advise whether the company can be treated as a ‘small company’.
(a) Roma Trading Ltd. is definitely a ‘small company’ since its paid- up capital is much
below ` 50 lacs and also its turnover has not exceeded the threshold limit of ` 2
crores.
(b) The concept of ‘small company’ is applicable only in case of a private limited
company/OPC and therefore, despite meeting the criteria of ‘small company’ it being
a public limited company cannot enjoy benefits of ‘small company’.
(c) Unlike a private limited company/OPC which automatically becomes a ‘small
company’ as soon as it meets the criteria of ‘small company’, Roma Trading Ltd. being
a public limited company has to maintain the norms applicable to a ‘small company’
continuously for two years so that, thereafter, it is treated as a ‘small company’.
(d) If all the shareholders of Roma Trading Ltd. give an undertaking to the ROC stating
that they will not let the paid-up share capital and also turnover exceed the limits
applicable to a ‘small company’ in the next two years, then it can be treated as a
‘small company’.
May 11, 2021 42
2. Abhilasha and Amrita have incorporated a ‘not for profit’ private limited company
which is registered under Section 8 of the Companies Act, 2013. One of their friends
has informed them that their company can be categorized as a ‘small company’
because as per the last profit and loss account for the year ending 31st March, 2019,
its turnover was less than Rs. 2.00 crores and its paid up share capital was les than `
fifty lacs. Advise.
(a) A section 8 company, which meets the criteria of ‘turnover’ and ‘paid- up share
capital’ in the last financial year, can avail the status of ‘small company’ only if it
acquires at least 5% stake in another ‘small company’ within the immediately
following financial year.
(b) If the acquisition of minimum 5% stake in another ‘small company’ materializes in
the second financial year (and not in the immediately following financial year) after
meeting the criteria of ‘turnover’ and ‘paid-up share capital’ then with the written
permission of concerned ROC, it can acquire the status of ‘small company’.
(c) The status of ‘small company’ cannot be bestowed upon a ‘not for profit’ company
which is registered under Section 8 of the Companies Act, 2013.
(d) A section 8 company, if incorporated as a private limited company (and not as
public limited company) can avail the status of ‘small company’ with the permission
of concerned ROC, after it meets the criteria of ‘turnover’ and ‘paid-up share capital’.
May 11, 2021 43
GOVERNMENT COMPANIES
ANY COMPANY IN WHICH
NOT LESS THAN 51% OF THE PAID UP CAPITAL
IS HELD BY
CENTRAL ANY STATE GOVERNMENT PARTLY BY THE CENTRAL GOVERNMENT AND

OR GOVERNMENTS PARTLY BY ONE OR MORE STATE
GOVERNMENT GOVERNMENTS
SUBSIDIARY OF A GOVERNMENT COMPANY IS A

GOVERNMENT COMPANY
11 May 2021
44
PRACTICAL PROBLEM 1
The shareholding Pattern of Bharat Biogas Limited is as

follows:
Entity Share Holding Percentage
Central Government 30 Per cent

State Government 15 Per Cent
NTEC Limited (A Government 30 Per Cent
Company)
Is Bharat Biogas Limited a Government Company?
11 May 2021
45
DEFINITIONS
LISTED COMPANY (SEC. 2 (52))
"listed company" means a company which has

any of its securities listed on any recognised stock
exchange;

2
Related Party
[Section 2 (76)]

8
(i)
Who is a Related Party?
Company Director or his Relative.

48
(ii)
Company A KMP or his Relative
KMP CEO, CS, WTD, CFO, such other officer as

may be prescribed
49
(iii)
Company Firm in which Director, Manager

or his relative is a Partner.

50
Related Party Transactions
(iv)
A Private Company in which

Company Director or Manager or his
Relative is a Member or Director.

51
Related Party Transactions
(v) Who is a Related Party?
Director/ Is a Director AND*

Manager holds
holds > 2% of PSC
along with
relatives.
Public
Company Company

52
(vi)
Advice,
Director directions
Or
Manager or instructions BOD,
MD or Exception:
Manage Advice
r etc., given
in
Company
Professional
Capacity
BC

53
(vii)
Director
ANY Advice, Or
PERSON Directions
!!!
Manage Exception: Advice etc.,
or instructions r given in Professional
Capacity
Compan
y

54
(viii)Who is a Related Party?
Director,
HC FOR THE PURPOSE
KMP * or
Relative OF
SEC. 188 THIS
CLAUSE SHALL NOT
Co-
Subsidiary Associated APPLY TO A PRIVATE
Company COMPANY
Company
An investing company or
the venturer (JV Partner)
SC
of the company;

55
(ix)
Comp Such other person as may be

any prescribed.
A director (other than an independent director) or key managerial personnel of the

holding company or his relative
56
DEFINITIONS
ASSOCIATE COMPANY (SEC. 2 (6))
"associate company", in relation to another company, means a

company in which that other company has a significant
influence, but which is not a subsidiary company of the
company having such influence and includes a joint venture
company.
[Explanation.—For the purpose of this clause,—
(a) the expression "significant influence" means control of at
least twenty per cent. of total voting power, or control of or
participation in business decisions under an agreement;
(b) the expression "joint venture" means a joint arrangement
whereby the parties that have joint control of the arrangement
have rights to the net assets of the arrangement;]

2
Relatives – Section 2(77)
1. Members of HUF
2. Husband and Wife.
3. As May be Prescribed

58
As per Rule 4 of Co.(SDD) Rules 2014
Father Mother
INDIVIDU
Brother Sister
AL
S= D=
SW DH

59
Father = Step Father
How about
Mother = Step Mother Step
Son = Step Son Daughter?
Brother / Sister = Step Brother / Sister

60
DEFINITIONS
KEY MANAGERIAL PERSONNEL (SEC. 2 (51))
"key managerial personnel", in relation to a

company, means—

2
DEFINITIONS
(i) the Chief Executive Officer or the managing

director or the manager;
(ii) the company secretary;
(iii) the whole-time director;

2
DEFINITIONS
(iv) the Chief Financial Officer;
(v) such other officer, not more than one level

below the directors who is in whole-time
employment, designated as key managerial
personnel by the Board; and
(vi) such other officer as may be prescribed

2
DEFINITIONS
CHIEF EXECUTIVE OFFICER (SEC. 2 (18))
"Chief Executive Officer" means an officer of a

company, who has been designated as such by it;

2
DEFINITIONS
CHIEF FINANCIAL OFFICER (SEC. 2 (19))
"Chief Financial Officer" means a person

appointed as the Chief Financial Officer of a
company;

2
DEFINITIONS
BOARD OF DIRECTORS OR BOARD (SEC. 2 (10))
"Board of Directors" or "Board", in relation to a

company, means the collective body of the
directors of the company;

2
DEFINITIONS
DIRECTOR (SEC. 2 (34))
"director" means a director appointed to the

Board of a company;

2
DEFINITIONS
MANAGER (SEC. 2 (53))
"manager" means an individual who, subject to

the superintendence, control and direction of the
Board of Directors, has the management of the
whole, or substantially the whole, of the affairs
of a company, and includes a director or any
other person occupying the position of a
manager, by whatever name called, whether
under a contract of service or not;

2
DEFINITIONS
MANAGING DIRECTOR (SEC. 2 (54))
"managing director" means a director who, by

virtue of the articles of a company or an
agreement with the company or a resolution
passed in its general meeting, or by its Board of
Directors, is entrusted with substantial powers of
management of the affairs of the company and
includes a director occupying the position of
managing director, by whatever name called.

2
DEFINITIONS
OFFICER (SEC. 2 (59))
"officer" includes any director, manager or key

managerial personnel or any person in
accordance with whose directions or instructions
the Board of Directors or any one or more of the
directors is or are accustomed to act;

2
DEFINITIONS
OFFICER WHO IS IN DEFAULT (SEC. 2 (60))
"officer who is in default", for the purpose of any

provision in this Act which enacts that an officer
of the company who is in default shall be liable to
any penalty or punishment by way of
imprisonment, fine or otherwise, means any of
the following officers of a company, namely:—

2
DEFINITIONS
REMUNERATION (SEC. 2 (78))
"remuneration" means any money or its

equivalent given or passed to any person for
services rendered by him and includes
perquisites as defined under the Income-tax Act,
1961 (43 of 1961);

2
DEFINITIONS
TURNOVER (SEC. 2 (91))
"turnover" means the gross amount of revenue

recognised in the profit and loss account from the
sale, supply, or distribution of goods or on
account of services rendered, or both, by a
company during a financial year.

2
DEFINITIONS
TRIBUNAL (SEC. 2 (90))
"Tribunal" means the National Company Law

Tribunal constituted under section 408;

2
THANK YOU

May 11, 2021 75

Chapter 1 Preliminary Revised

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 1 Preliminary Revised

Uploaded by

Copyright:

Available Formats

Date: 11 May, 2021

VIRTUAL COACHING CLASSES

May 11, 2021 © The Institute of Chartered Accountants of India 1

© THE INSTITUTE OF CHARTERED

The Companies (Specification of

Note: All references to Sections and Rules are from

© THE INSTITUTE OF CHARTERED

© THE INSTITUTE OF CHARTERED

THE ENTIRE FRAMEWORK OF COMPANY

© THE INSTITUTE OF CHARTERED

© THE INSTITUTE OF CHARTERED

(a) companies incorporated under this Act or under any previous

(b) Insurance Companies

(c) banking companies

(d) companies engaged in the generation or supply of electricity

(e) Companies governed by any special law.

(f) Notified bodies corporates incorporated by any law subject to

Securities Contracts (Regulation) Act, 1956 or

Securities and Exchange Board of India Act, 1992

the Depositories Act, 1996

"company" means a • For example

1. A COMPANY CAN SUE AND BE SUED IN ITS OWN NAME

3. PERPETUAL SUCCESION MEANS THAT THE COMPANY WILL CONTINUE

A COMPANY BEING CREATED BY A PROCESS OF LAW CAN BE DESTROYED

© THE INSTITUTE OF CHARTERED

"member", in relation to a company, means—

© THE INSTITUTE OF CHARTERED

"contributory" means a person liable to contribute towards

Explanation.—A person holding fully paid-up shares in a

© THE INSTITUTE OF CHARTERED

"register of companies" means the register of

© THE INSTITUTE OF CHARTERED

Company Limited by Guarantee (Sec. 2 The liability of its members is limited by

Unlimited Liability Company (Sec. 2 (92)) "unlimited company" means a company

© THE INSTITUTE OF CHARTERED

What is the liability of Mr. Deepak with respect to his shares in

© THE INSTITUTE OF CHARTERED

For a sole proprietor, capital is a balancing item. It is

The same principle applies in the case of a

© THE INSTITUTE OF CHARTERED

This changes totally with a company.

© THE INSTITUTE OF CHARTERED

"share" means a share in the share capital of a

Shares are freely transferable subject to certain

© THE INSTITUTE OF CHARTERED

The share capital of a company can

© THE INSTITUTE OF CHARTERED

© THE INSTITUTE OF CHARTERED

(7, 00, 000 SHARES X Rs. 8/-) – ( 6000 SHARES X Rs. 2)

© THE INSTITUTE OF CHARTERED

© THE INSTITUTE OF CHARTERED

© THE INSTITUTE OF CHARTERED

A Pvt. Ltd. Is a subsidiary of AB Ltd., which is

Therefore A Pvt. Ltd. will be deemed to be a A PRIVATE

© THE INSTITUTE OF CHARTERED

“private company" means a company

LET US SEE WHAT THEY ARE!

© THE INSTITUTE OF CHARTERED

(iii) prohibit any invitation to

Note 1: Joint Shareholders shall be treated as a single member

Note 2: The above limit of 200 members SHALL NOT INCLUDE

© THE INSTITUTE OF CHARTERED

SUBSIDIARY SUBSIDIARY SUBSIDIARY

© THE INSTITUTE OF CHARTERED