This page is only for

470 Sections Principles of

prescribed Companies
Act, 2013
+7 Law (What is parliament
Schedules to be done)
Formats t
Implementation .
&
Companies Rules
Rules on Various Guidance of Law MCA
Chapters (How it is to be
done)

MCA
Notifications Legal Announcement

Doubts
McA

e
clear
Circulars -
Clarifications

Case DEcisions of Court/ count .

Laws Tribunal =

a
special
under
NCLT = National Company Law Tribunal [Original Jurisdiction) =>
Primarily adjudicates (pass judgement) cases relating to:-
A. Companies Act, 2013
B. Insolvency and Bankruptcy Code, 2016
NCLAT = National Company Law Appellate Tribunal [Appellate Jurisdiction'
Appeal can be filed against the orders of NCLT before NCLAT.

Corporate and Other Laws 3|Page

 Co law Tribunal tribunal.
National .
=

NCLT =

NCLAT = -11--11-Appellateanal = Appellate

tribunal .

3 Wings of Government

Legislative Executive Judiciary

Interprets Laws
Makes Laws Enforces Laws
(NCLT, NCLAT,
(Parliament) (MCA)
Special Courts)

B
Company Law Administration

Points Details
MCA Ministry of Corporate Affairs (New Delhi)
Minister Cabinet Minister who heads Ministry of Corporate Affairs (New Delhi).
Minister of Minister of State is actually a Junior Central Minister, who assists the
State Cabinet Minister.
Regional The 7 Regional Directors (RD) are in-charge of the respective regions,
Director (RD) each region comprising a number of States and Union Territories. They
supervise the working of the offices of the Registrars of Companies and
the Official Liquidators working in their regions.
Certain powers of the Central Government under the Act have been
delegated to the Regional Directors.
Registrars of Registrars of Companies (ROC) are appointed for almost every State and
Companies Union Territory. They maintain Details of Every Company and LLP
(ROC) registered in their State.
They ensure that such companies and LLPs comply with statutory
requirements under the Act. These offices function as registry of
records, relating to the companies registered with them, which are
available for inspection by members of public on payment of the
prescribed fee. The Central Government exercises administrative
control over these offices through the respective Regional Directors.
Central The CRC is located in Gurugram (Haryana).
↓

roach website mi
Corporate and Other Laws 4|Page
 CoA6.
.I
Co Act
.
- consolidating
2013. Statute
SICA , 1985
As
industries .
Chapter I sick
Co Act
.

PRELIMINARY

Short Title, Extent, Commencement and Application [Sec.1]

B Title This Act may be called "The Companies Act, 2013".=>

Long Title: "An Act to consolidate and amend the law relating to
companies".
short-title
me
.

Came into force The Companies Act, 2013 received the assent of the Hon’ble President of
India on 29th August 2013 and was notified in the Official Gazette on 30th
August 2013 for public information stating that different dates may be
appointed for enforcement of different provisions of the Companies Act,

Re 2013, through notifications.

Section 1 came into force on 30th August 2013; 98 sections came into force
on 12th September 2013; 143 sections were enforced from 1st April 2014
and so on
Application The provisions of this Act shall apply to:
[Sec. 1(4)] (a) Companies defined u/s 2(20);
(b) Insurance Companies, except if inconsistent with Insurance Act, 1938 or
IRDA Act, 1999;
(c) Banking Companies, except if inconsistent with Banking Regulation Act,
1949;
(d) Companies engaged in the generation or supply of electricity, except if

for dela inconsistent with Electricity Act, 2003;

C(e) Statutory Companies unless inconsistent with its Special Act;
(f) Body corporate, incorporated by any Act for the time being in force, as
eg
. .
1CAInating the CG may, by notification, specify in this behalf.
Company [Section
2(20)]
Company means a company incorporated: (Registered)
(a) Under this Act; or -> 2013.
1912.
(b) Under any previous company law.+ 1956 , 1936 ,
-

Note:
 The word "Company" when used in Companies Act, does NOT include
Foreign Companies or Company Incorporated Outside India
Body Corporate or Section 2(11) of the Companies Act, 2013 provides that body corporate or
Corporation corporation includes a company incorporated outside India, but does not
[Section 2(11)] include- CIOI
a (i) a co-operative society registered under any law relating to co-

learnvision (ii)
operative societies; and
any other body corporate (not being a company as defined in this
is Act), which the Central Government may, by notification, specify
rest in this behalf.
for Note:
ref 1 Body Corporate is an entity which has these characteristics:-
u ①  Separate Legal Entity (Artificial Person)
 Perpetual Succession
② under Act
Incorporated
.
some
③
Corporate and Other Laws 6|Page
 Body company
- .

corporate
-

- LLP .

- C102/Foreign Co.
LIC RBI SBI
Co Eg ICAL ,
Statutory
-
. , ,
~

 Common
men Seal (optional)
Incorporate
mini under any Statute.
2 Thus the term body corporate includes not only companies within the
meaning of Companies Act, 2013 and corporations established under
Special Acts of Parliament but also foreign companies. It will further
include all public financial institutions as well as nationalized banks.
-

Thus the term 'body corporate' is wider than the expression company.
3 LLP is also a Body Corporate.
4 All companies are body corporate but all body corporate are not
company.

1 The provisions of Companies Act, 2013 b. ABC Private Limited, incorporated

apply to: under Companies Act, 1956
a. XYZ Ltd., a company incorporated -
c. Both (a) and (b)
under Indian Companies Act, 1913 d. Neither (a) nor (b)
Types of Companies

* Types of Companies

On Basis of
↑

Registration in Companies Act Other Classification

-and
yes
1. Government Co.
Registered Statutory 2. Sec. 8 Co.
Company Company 3. Foreign Co.
4. Pubic Financial Institution
DomesticCompany,
Normally Liability Listing Control

1. Public Co. 1. Ltd Co. 1. Listed Co. 1. Holding &

2. Pvt. Co. a) Ltd by 2. Unlisted Subsidiary
a) Normal Shares Co. Co.
b) OPC b) Ltd by 2. Associate
c) Small Co. guarantee Co.
↓
c) Both
PVCo 2. Unlimited Co.
poczyer
To 2400 .

Corporate and Other Laws 7|Page

 R Statutory Company
↑

 Company which is not formed under companies act, but formed under special act of
parliament.
 Such special act governs this company
 E.g.  LIC, ICAI, ICSI, RBI etc.
 Normally these Companies are formed for some public utility.

Private Company [Sec. 2(68)] Reno

Private company means a company whose articles have following restrictions:-
(i) Restriction on right to transfer shares.
(ii) They cannot invite public to subscribe for any securities of the company.
(iii) Limits the number of members to 200.
Note :
1 If no. of members exceeds 200, it is deemed to be public co. and all rules of public co applies
to it.
2 Only for purpose of this clause, while calculating no. for 200 calculation:-
a. Past and present employee members are not counted.
b. Joint holders on single shares are counted as 1.
3 There can be restriction but not prohibition on transfer of shares.
4 Limit on 200 is for membership and no other cases
5 A private company cannot make a public offer of securities like IPO, [Link], a private
company can issue securities on private placement basis u/s 42, whereby it invites only
selected persons to subscribe for Securities.
employee
pat
1 A private company has 210 members M b. The private company will have to
including 11 members who have been cancel Oforfeit the shares of 10 members so
.

-
=
employees of the company and acquired that the number of members can be
shares while in employment of the limited to 200.
company. In view of provisions of
Companies Act, 2013, which of the
- of 200, the shares held by ex-
c. For the purposes of reckoning the limit

following statement is correct? employees of the company are

a. The private company has to convert to excluded.
a public company since the number of d. None of the above
members exceed 200.

Public Company [Sec. 2(71)]

A Company which:
a. Is not a private company
2 condition
-b. Is a private company, but is subsidiary of public company;
cal Is a public company.

Corporate and Other Laws 8|Page

 R Deemed Public Company:
Provided that a Private company which is a subsidiary of a Public company shall be
deemed to be public company for the purposes of this Act even where such subsidiary
company continues to be a private company in its articles.
Teacher's Note:
Such deemed public Company will have to follow more legal compliances like any other
Public Company but it will not be able to enjoy the benefits of a Public Company until it
actually converts into a Public Company.

0
One Person Company [Sec. 2(62)] Palmcg
-
.

Read with Rule 3 of The Companies (Incorporation) Rules, 2014)

Definition ‘One Person Company’ means a company which has only one person as a
member.
[Sec. 2(62)]

Basics (i)It is basically a private company with some unique features.

(ii)As regards the name of a one person company, the act provides that
② the words "one person company" or OPC" shall be mentioned in
brackets below the name of such company, wherever its name is
printed, affixed or engraved.
Qualifications for (i) Only a natural person who is an Indian citizen whether resident in
being a India or otherwise shall be eligible
80 .

Member/Nominee (a) to incorporate OPC;

(b) to be a nominee for the sole member of a OPC.
(ii) For the purpose of this rule, the term ‘resident in India’ means a
person who has stayed in India for a period of not less than 120 days
mca
F during the immediately preceding FY.
this
sentence Statement – Even a Non-Resident Indian can form and become member of OPC. (module)
can a Answer – True. Only a natural person, other than minor; who is an Indian citizen and whether
C
b

in law
resident in India or otherwise shall be eligible to incorporate a One Person Company.
Restrictions (i) A natural person shall not be member of more than 1 OPC at any point
sectionof [Rule 3]
of time and the said person shall not be a nominee of more than 1
ep
.

OPC. [Rule 3(2)]

(ii) However, if a natural person is member in a OPC and becomes a
death C nominee
-
in another OPC, such person shall meet the eligibility

member
F
:
criteria specified in Rule 3(2) within 180 days.
[Rule 3(3)]
(e)
(iii) A minor shall no become a member or nominee of the OPC. [Rule
3(4)] Po .

D (iv) Such company cannot be incorporated or converted into a

company under section 8 of the Act. [Rule 3(5)] Pome.
(v) OPC cannot carry out non-banking financial investment activities and
② cannot invest in securities of a body corporate.

* opc can be
only NBNFL
Corporate and Other Laws i.e non-banking non financial 9 |company
Page
 see conversion sec 18 .
we will in
.

Teacher
-

note of OpC
chpz of
in
⑥ following rules are given ICAI module .

s Rule 4 1. Withdrawal by Nominee and new appointment Citday). F

nee
loge
The person nominated by the subscriber or member of a OPC may,
-
No withdraw his consent by giving a -
notice in writing to ICAI MCQ
=
.

 such sole member and to OPC.

① ② Mom
Appointment of New Nominee Sole member shall:-
Refe  nominate another person as nominee within 15 days of the receipt of

radiene
the notice of withdrawal and ODC -

 send an intimation of such nomination in writing to the Company, along

with the written consent of such other person so nominated in Form
[Link].3.
OpC
form Roc
30 days.
InC-4
Cay-Boday)
·

2. Change of Nominee by Member

The member may change the Nominee at any time for any reason.
The company shall file with the Registrar:-
 a notice of such change in Form No INC.4 and
 the written consent of the new nominee in Form [Link].3 within 30
days of receipt of intimation of the change.

Intimation to ROC of withdrawal & new appointment

-
The company shall within 30 days of receipt of the notice of withdrawal
of consent, file with the Registrar:-
 a notice of such withdrawal of consent and
 the intimation of the name of another person nominated by the sole
member in Form No INC.4 and Form [Link].3.

Points of Difference OPC Private Co. Public Co.

Number of Members
 Minimum 1 2 7
 Maximum 1 200 Unlimited
Cas per sec
Number of Directors 2(60) calculation
 Minimum 1 2 3
 Maximum 15 15 15
Name ends with: Private Limited (OPC) Private Limited Limited
Ite
Put
(P) It Ed :
In OPC
you can even increase no of director
Ref
*
-
Put Co
Public Co from 15 by passing social resolution.

Corporate and Other Laws 10 | P a g e

director in 20 Co
.
② one person can be
it doesn't
Co. be put or public Co But if it put Co .

③ Got
.

can
use the word Put Htel.
I
Q-12/14
Put Co
Esmall
do not exceed
Small Company [Sec. 2(85)] E

Conditions for
G
A company shall be a small company only if it satisfies both the following
being a ‘Small conditions: minetolac mon-lock-an
, prescribed
and crule)
Company’ [Sec.
(i) Its paid-up share capital does not exceed Rs. 4 crore;O
2(85)]
(ii) Its turnover (as per profit and loss account for the immediately

AsMino
preceding FY) does not exceed Rs. 40 crore As
T
Certain Companies A company shall not be a small company, if:
not to be ‘Small
It is a public company; or p Aus
Jama
(i)
.

Companies’
.

(ii) It is a holding or a subsidiary company; or

[Proviso to Sec. (iii) It is a company registered u/s 8 ; or
2(85)]
1
(iv) It is a O
company or body corporate governed by any special Act.
Define the term ‘Small Company’ as contained in the Companies Act, 2013.(MAY 2015)
Istatuary
2 MNP Private Ltd. is a company registered under the Companies Act, 2013 with a, Paid up
Share Capital of 2cr and turnover of 60cr crores. Explain the meaning of the "Small Company"
and examine the following in accordance with the provisions of the Companies Act, 2013:
(i) Whether the MNP Private Ltd. can avail the status of small company?
(ii) What will be your answer if the turnover of the company is 30 crore?(MTP NOV
2020)(module)

1. As on 31st March 2023, paid up capital of a. Roma Trading Ltd. is definitely a

ABC Pvt. Ltd. was 2.5 crores and turnover ‘small company’ since its paid- up
was 36 crores. For categorizing it a small capital is much below 4cr and also its
company, ABC Pvt. Ltd. needs to have turnover has not exceeded the

publico
following paid up capital and turnover threshold limit of 40 crores.
which shall not exceed, as per sub-clause -b. The concept of ‘small company’ is
applicable only in case of a private
(i) and sub-clause (ii) of clause (85) of
section 2 of the Companies Act, 2013 :
(Nov 23)
limited company/OPC and therefore,
despite meeting the criteria of ‘small
company’ it being a public limited
ma
a. Paid up capital Rupees two crores company cannot enjoy benefits of
or turnover Rupees twenty crores. ‘small company’.
b. Paid up capital Rupees two crores c. Unlike a private limited company/OPC
and turnover Rupees twenty which automatically becomes a ‘small
crores. company’ as soon as it meets the
criteria of ‘small company’, Roma
c. Paid up capital Rupees four crores Trading Ltd. being a public limited
or turnover Rupees forty [Link] company has to maintain the norms

· d. Paid up capital Rupees four crates

and turnover Rupees forty crores.
applicable to a ‘small company’
continuously for two years so that,
thereafter, it is treated as a ‘small
2. Roma along with her six friends has
incorporated Roma Trading Ltd. in May company’.
2019. The paid-up share capital of the d. If all the shareholders of Roma Trading
Ltd. give an undertaking to the ROC
company is 2 cr. Further, in April 2020, she
stating that they will not let the paid-
noticed that in the last financial year, the up share capital and also turnover
turnover of the company was well below exceed the limits applicable to a
40 crores. Advise whether the company ‘small company’ in the next two years,
can be treated as a ‘small company’. then it can be treated as a ‘small
(module) company’.

Corporate and Other Laws 11 | P a g e

 mic
3. The paid-up capital of Akash Ltd. is 25
Lakh and its turnover as per profit and loss
has to be fulfilled for minimum 2
successive years. Therefore, Akash Ltd.
account for the year ended 31st March, cannot be categorised as a small
2020 is 1.80 Crore. In view of provisions of company.
Companies Act, 2013, which of the d. None of the above
following statement is correct? 4. The provisions relating to 'small company'
a. Akash Ltd. is a 'small company' since it as given in Section 2(85) of the Companies
fulfils both, the paid-up capital and Act, 2013 does not apply to:
turnover criteria. a. A Holding company or a Subsidiary
- b. The concept of 'small company' is company
applicable only to private companies b. A company registered under Section 8
and therefore, Akash Ltd. cannot be c. A company or body corporate governed
categorised as a small company. by any special act
c. The paid-up capital and turnover criteria d. All of the above

On the basis of liability

Point of Company Limited by Company Limited Company Limited Unlimited
Distinction Shares by Guarantee by Guarantee with Company
without Share Share Capital [Sec. 2(92)]
[Sec.2(22)]
Capital
[Sec.2(21)]
Extent of Amount unpaid on Amount agreed by (a) Amount unpaid Liability of
Liability the shares held by the Members and on the shares members is
the members stated in the MOA. held by the unlimited
members; and
(b) Amount agreed
by the Members
and stated in the
MOA
Timing of (a) During the After (a) During the
Liability continuance of commencement of continuance of
the Company ; or winding up of the Company ;
(b) At the time of company and
winding up (b) At the time of
winding up

Listed Company
[Sec. 2(52)]
>
On the basis of listing on Stock Exchange
Geb
'Listed company' means a company which has any of its securities listed on
any recognised stock exchange.
Newly Inserted [The Companies (Amendment) Act, 2020]

-so CProvided &

that such class of companies, which have listed or intend to list
such class of securities, as may be prescribed in consultation with the SEBI
↓
Exception C
(Securities and Exchange Board of India), shall NOT be considered as listed
F S
companies.

Ngahie list .

Corporate and Other Laws 12 | P a g e

 convent ahones
int
future
-

convertible >
-

o
The CG has notified that the following companies shall NOT be considered
as Listed Company for the purpose of compliance with provisions of
Companies Act 2013:-
1. PUBLIC Companies which have NOT listed their Equity Shares on a
recognized Stock Exchange BUT have listed their
a) Non-Convertible Debt Securities (Debentures - NCD) issued on
Private Placement basis.
b) Non-Convertible Redeemable Preference Shares (NCPS) issued on
Private Placement basis.
2. PRIVATE Companies which have listed their Non-Convertible Debt
Securities (Debentures - NCD) issued on Private Placement basis on a
recognized Stock Exchange.
3. PUBLIC Companies which have NOT listed their Equity Shares on a
recognized Stock Exchange in India BUT whose Equity Shares are listed
on FOREIGN Stock Exchanges.

s Newage Private Limited issued 9% Non-convertible Debentures worth ` 10 lakh and thereafter,
the directors contemplated to get them listed. After due formalities, these privately placed non-

s
convertible debentures of ` 10 lakh were listed. Which of the following options is applicable in
the given situation: (RTP Nov 23)

- a. Newage Private Limited shall be considered as a listed company.

- b. Newage Private Limited shall not be considered as a listed company.
c. Newage Private Limited shall be considered as a listed company only when minimum
amount of listed privately placed non-convertible debentures is ` 15 lakh.
d. Newage Private Limited shall be considered as a listed company only when minimum
amount of listed privately placed non-convertible debentures is minimum ` 20 lakh.
Unlisted Company It means a company other than a listed company.

Herein
homedented
-
On the basis of Control
Holding Company (i) Holding company, in relation to one or more other companies, means
a company of which such companies are subsidiary companies.
[Sec. 2(46)]
(ii) For the purposes of this clause, the expression ‘company’ includes
any Body corporate.
Subsidiary Section 2(87) provides that a company shall be deemed to be a subsidiary
Company of another, if any of the following conditions are satisfied:
(a) That other controls the composition of its board of directors;
[Sec. 2(87)] (b) That other exercises or controls more than one-half of the total voting

see
power ↑
 either at its own or
3 TO %

Q .
no-  together with one or more of its subsidiary companies; or
-  through its Subsidiaries
Note –
(i) The Subsidiary of the Subsidiary will also be treated as the Subsidiary
·

of the holding company: A company shall be deemed to be a

subsidiary company of the holding company even if the control
referred to in sub-clause (i) or (ii) is of another subsidiary company
of the same holding company

Corporate and Other Laws 13 | P a g e

 /(ii) For the purpose of clause (a) above, the composition of the board
of directors of a company means that the holding company has
power, at its discretion, to appoint or remove all or majority of
the directors of the subsidiary company without the consent of the
other persons.
(iii) Company shall not have more than two layers of subsidiaries.
(a) However, this provision is not applicable to Banking
Company, Registered NBFC, Government Company and
Insurance Company.
(b) However , this rule shall not effect a company from company
acquiring outside India with subsidiaries beyond 2 layers as
per rules of that country (Foreign Chain)
(c) For purpose of counting layer, one layer which consist of
wholly owned subsidiary or subsidiaries will not be taken into
account (100% Subsidiary)
(iv) For the purpose of this clause, the term 'company' includes any
Body corporate.
(v) Indian company can become holding as well as subsidiary of foreign
company
The paid-up share capital of Saras Private Limited is ` 1 crore, consisting of 8 lacs Equity Shares
of ` 10 each, fully paid-up and 2 lacs Cumulative Preference Shares of `10 each, fully paid-up.
Jeevan (JVN) Private Limited and Sudhir Private Limited are holding 3 lacs Equity Shares and
50,000 Equity Shares respectively in Saras Private Limited. Jeevan Private Limited and Sudhir
Private Limited are the subsidiaries of Piyush Private Limited. With reference to the provisions
of the Companies Act, 2013 examine whether Saras Private Limited is a subsidiary of Piyush
Private Limited? Would your answer be different if Piyush Private Limited has 8 out of 9 Directors
on the Board of Saras Private Limited? (RTP MAY 2018) (RTP MAY 2019) 20 % to to Y.

Associate -
1. "Associate Company", in relation to another company, means a
Company company in which that other company has a significant influence, but
which is not a subsidiary company of the company having such influence
[Sec. 2(6)] -more than 50 %
to 2. O
And includes a joint venture company.
-

croi Explanation — For the purpose of this clause,—

50 %)
.

a) the expression "significant influence" means control of at least 20%

- of total voting power, or control of or participation in business
decisions under an agreement; contract
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.

1. A Ltd. is the holding company of B Ltd. holding company of C Ltd. provided A

Another company C Ltd. is the subsidiary Ltd. acquires at least 10% stake in C
company of B Ltd. Is there any relationship Ltd.
between A Ltd. and C Ltd. (RTP MAY 2019) d. C Ltd. shall be deemed to be the
a. There is no relationship between A subsidiary of A Ltd. if the latter
Ltd. and C Ltd. company acquires minimum 10% stake
- C Ltd. is deemed to be the subsidiary
b. in the former company within six
of A Ltd. months after C Ltd. becomes
c. A Ltd. shall be deemed to be the subsidiary of B Ltd.

Corporate and Other Laws

↑ 14 | P a g e
 requirement to get (b) the company intends to apply its profits in promoting its objects; and
licence (c) the company intends to prohibit the payment of dividendIto its
[Sec. 8(1)]
members. surplus .

pa) =

G
Explain the provisions of the Companies Act, 2013- who can get a licence to operate as a section
&

>
-
Icondition
8 company (non-profit organization)?(5 Marks) (MTP Nov 24) -
fulfill
Issue of license by Where CG is satisfied that an association of persons proposed to be
CG and registered under this Act as a limited company satisfying all the conditions
registration of given u/s 8, CG may:
company by the (i) by issue of a licence in the prescribed manner;
Registrar (ii) allow, that the company may be registered as a limited
.
c .

GROC) company, but without using the word(s) 'Limited' or 'Private

Limited'.
Privileges of No use of word ‘Pvt’ or “ltd’
, many tax emer exemptions
limited company

Revocation of (i) The CG (R.D) may revoke the licence issued to the company if the
license company:Cavitation .

E
O
(a) contravenes any of the provisions of Sec. 8; or
i
lear
(b) contravenes any condition subject to which the licence was
issued; or
(c) the affairs of the company are carried on fraudulently or not as
within the object of the company.
(ii) Before
-
passing any such order, CG shall give a reasonable opportunity
of being heard to the company. (AUDI ALTEREM PARTEM).
(iii) Where the licence granted u/s 8 had been revoked, the company shall
apply to the Registrar in Form No. INC. 20 along with the fee to convert
its status and change of name accordingly. ·
Other Imp points (1) A firm may become a member of a company registered u/s 8

m (2) the A non-profit company may alter the provisions of its MOA or AOA with
(m.
-
prior approval of the CG.
(3) CG may order a section 8 Company to: Do
convent into other Co .

on
of
revocation e (a) wound up; or
(b) amalgamated with any other company registered u/s 8 and
Samp()
having similar objects; .

only if CG has revoked the licence or is satisfied that such order is

necessary in public interest and the company has been given a
reasonable opportunity of being heard.

O
(4) Can convert into any other co – G.M – S.R ,take permission from R.D ,
file copy of S.R with ROC f
A group of enthusiastic women is planning to establish the Nursing Medicare Association, a limited
liability company with the objective of providing comprehensive theory and practical training to
aspiring nurses. The association aims to operate under the provisions of section 8 of the
Companies Act, 2013, with a core objective of education. The intended duration for the
association's operation is set at ten years, after which a dissolution will be initiated. In the event
of dissolution, any remaining assets exceeding liabilities will be allocated among the members

Corporate and Other Laws 16 | P a g e

 according to the standard procedures permitted by the Companies Act. Assess the viability of the
proposal and offer guidance to the promoters, taking into account the regulations outlined in the
Companies Act, 2013. 5 M (Nov 23)
Alpha Ltd., a Section 8 company is planning to declare dividend in the Annual General Meeting
for the Financial Year ended 31-03-2020. Mr. Chopra is holding 800 equity shares as on date.
State whether the act of the company is according to the provisions of the Companies Act, 2013.
[May 2018 2M]
Trinity school started imparting education on 1st April, 2010, with the sole objective of providing
education to children of weaker society either free of cost or at a very nominal fee depending
upon the financial condition of their parents. However, on 30th March 2024, it came to the
knowledge of the Central Government that the said school was operating by violating the objects
of its objective clause due to which it was granted the status of a section 8 company under the
Companies Act, 2013. Describe what powers can be exercised by the Central Government against
the Trinity school, in such a case?(5 Marks) (MTP Dec 24)

1. Abhilasha and Amrita have incorporated a acquire the status of ‘small company’.
‘not for profit’ private limited company -c. The status of ‘small company’ cannot
which is registered under Section 8 of the be bestowed upon a ‘not for profit’
Companies Act, 2013. One of their friends company which is registered under
has informed them that their company can Section 8 of the Companies Act, 2013.
be categorized as a ‘small company’ d. A section 8 company, if incorporated
because as per the last profit and loss as a private limited company (and not
account for the year ending 31st March, as public limited company) can avail
2019, its turnover was less than` 2.00 the status of ‘small company’ with the
crores and its paid up share capital was permission of concerned ROC, after it
less than ` fifty lacs. Advise. ( ICAI) meets the criteria of ‘turnover’ and
(module)
a. A section 8 company, which meets the
Ashish
‘paid-up share capital’.
2. Mr. Anurag and Mr. Sumit, both are
criteria of ‘turnover’ and ‘paid- up teacher of Mathematics and want to open
share capital’ in the last financial a coaching academy for poor children.
year, can avail the status of ‘small
company’ only if it acquires at least 5%
stake in another ‘small company’
They seek to raise money for their
operational expenses by way of
sponsorship from some like-minded
a
e

within the immediately following friends and reinvest any surplus left for
financial year. this noble cause only. In your opinion,
b. If the acquisition of minimum 5% stake what kind of entity should be incorporated
in another ‘small company’ for this purpose?
materializes in the second financial a. A One Person Company
year (and not in the immediately b. A Private Limited Company
following financial year) after meeting
the criteria of ‘turnover’ and ‘paid-up
-c. A Section 8 Company
d. A Limited Liability Partnersh
share capital’ then with the written
permission of concerned ROC, it can

Corporate and Other Laws 17 | P a g e

 Other Types of Companies & ⑲
grights .

O
Government Government Company means any company:
Company [Section (i) in which not less than 51% of the paid up share capital is held –

u
2(45) (a) by the Central Government; or
(b) by any State Government(s); or
(c) jointly by the Central Government and any State
Government(s). can mon
hold
(ii) which is a subsidiary of a Government company.
Note - For the purposes of Sec. 2(45), the term "paid-up share capital" shall
be construed as "total voting power", where shares with differential voting
rights have been issued.

Foreign Company Discuss later in specific chapter "I

[Section 2(42)]
Bas in enter
.

sa
⑤Dormant Company Where a company is formed and registered under this Act for:-
G
[Sec. 455]
 a future project and has no Significant Accounting Transaction or,
↓

Not in Syllabus.  to hold an asset or intellectual property and has

O Significant Accounting

fa Transaction , or doesn't
have SAT
Dormant Co
.
 an INACTIVE company, - NO SAT :

definition -
-

fo then such a company may make an application (MSC-1) to the Registrar for
in our obtaining the status of DORMANT company.
labus Inactive Company" means a company which:-

registe
-
 has not been carrying on any business or operation during the last
2 financial years or
 has not made any Significant Accounting Transaction during the last
2 financial years or
 has not filed Financial Statements and Annual Returns during the
last 2 financial years.
"Significant Accounting Transaction means any transaction other than
—(RAAM) R

R (i) payment of fees by a company to the [

Registrar;

allowed[
A

A (ii) payments made by it to fulfil the requirements of this Act or any

other law; Eg-licence renew
A (iii) allotment of shares to fulfil the requirements of this Act (Sec 3);
and Eg convertible debentures-surt shares
M (iv) Payments for maintenance of its office and records.
than this 4-
other SAT
-

Corporate and Other Laws 18 | P a g e

 Explain the concept of "Dormant Company" as envisaged in the Companies Act, 2013.(MAY 2016)

Meaning of ‘Nidhi’ ‘Nidhi' means a company which has been incorporated as a Nidhi with the
w.r.t to Sec. 406 object of cultivating the habit of thrift and savings amongst its members,
receiving deposits from, and lending to, its members only, for their mutual
Ref benefit, and which complies with such Rules as are prescribed by CG for
regulation of such class of companies.

&
Public Financial
Institution
(i) The Life Insurance Corporation of India, established under the Life
Insurance Corporation Act, 1956;
-FD
2(72)
(ii)
(iii)
The Infrastructure Development Finance Company Limited,
Dis
Specified company referred to in the Unit Trust of India (Transfer
of Undertaking and Repeal) Act, 2002;
(iv) Institutions notified by the CG u/s 4A(2) of the Companies Act,
1956 so repealed u/s 465 of this Act; Eg - NBARD.
.

(v) Such other institution as may be notified by the CG in consultation

·
with the RBI:
Provided that no institution shall be so notified unless:
(a) it has been established or constituted by or under any Central
or State Act or other than this act or previous company law, or
(b) not less than 51% of the paid up share capital is held or
controlled by theO CG or by any O SG or Governments or partly
by the CG and partly by one or more SG.
.
xity
IFSC Company
Specified IFSC It means an public company which is licensed to operate by the RBI or SEBI
Public Company or IRDA from the international Financial Services Centre located in an
approved multi-services Special Economic Zone.
EgGET
Specified IFSC It means a private company which is licensed to operate by the RBI or SEBI
Private Company or IRDA from the International Financial Services Centre located in an
approved multi services Special Economic Zone.

' In your syllabus

Teachenote - all laws on IFSC Co . take it
Some Important Definitions asf
Relative 'Relative', with reference to any person, means any one who is related to
another, if-
[Sec. 2(77)]
(i) they are members of a Hindu Undivided Family;
↓
(ii) they are husband and wife; or
Hum
(iii) one person is related to the other in such manner as may be prescribed.
77 hai As per Rule 4 of the Companies (Specification of definitions details) Rules,
2014, a person shall be deemed to be the relative of another, if he or she is
related to another in the following manner, namely:-
1. Father (including step-father)
2. Mother (including step-mother)

Corporate and Other Laws 19 | P a g e

 3. Son (including step-son)
4. Son's wife
5. Daughter
6. Daughter's husband
7. Brother (including step-brother)
8. Sister (including step-sister)
Director "Director" means a director appointed to the Board of a company.
R [Section 2(34)]
Managing "Managing Director" means a director who, by virtue of the:-
Director  Articles of a company or
[Section 2(54)]  Agreement with the company or
 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.
Explanation — For the purposes of this clause, the power to do
ADMINISTRATIVE acts of a ROUTINE nature when so authorised by the
Board such as the power:-
 to affix the common seal of the company to any document or
 to draw and endorse any cheque on the account of the company in
any bank or
 to draw and endorse any negotiable instrument or
 to sign any certificate of share or
 to direct registration of transfer of any share, shall NOT be included
in the substantial powers of management.
Whole — Time "'Whole-Time Director" includes a director in the whole-time
Director employment of the company.
[Section 2(94)] Teacher's Note: Whole-Time Director is also known as Executive
Director or
R Technical Director.
Key Managerial 'Key managerial personnel', in relation to a company, means:
Personnel [Sec.
(i)the Chief Executive Officer or the managing director or the manager;
2(51)]
(ii)the company secretary;
(iii)the whole-time director;
most (iv) the Chief Financial Officer ;-
Mostly CA , MBA
(v) such other officer, not more than one level below the directors who is
Imp
6
in whole-time employment, designated as key managerial personnel

meton
by the Board; and
(vi) such other officer as may be prescribed.

Corporate and Other Laws 20 | P a g e

 Officer "Officer" includes:-
[Section 2(59)]  any Director,
 Manager or
 Key Managerial Personnel or
 any person in accordance with whose directions or instructions the
Board of Directors or any 1 or more of the directors is or are
accustomed to act {Instructional Control}.
Net Worth "Net worth" means the aggregate value of the paid-up share capital and all
[Section 2(57)] reserves created out of the profits, securities premium account and debit or
① credit balance of profit and loss account after deducting the aggregate value
of the accumulated losses, deferred expenditure and miscellaneous
learn expenditure not written off, as per the audited balance sheet, but does not
-10 chp include reserves created out of revaluation of assets, write-back of
.

other pd. depreciation and amalgamation.

z
Free Reserves Free reserves means such reserves which, as per the latest audited balance
2(43) sheet of a company, are available for distribution as dividend:
Provided that—
learn (i) any amount representing unrealised gains, notional gains or
revaluation of assets, whether shown as a reserve or otherwise, or
Q9
:

(ii) any change in carrying amount of an asset or of a liability recognized

.

= in equity, including surplus in profit and loss account on measurement

Co
of the asset or the liability at fair value, shall not be treated as free
reserves.
The statutory auditors of a company were required to issue a certificate on the net worth of the
company as per the requirement of the management as on 30th September 2024 computed as
per the provision of section 2(57) of the Companies Act, [Link] company had fair valued its
property, plant and equipment in the current year which was mistakenly taken into retained
earnings of the company in its books of accounts. Advise whether this fair valuation would be
covered in the net worth of the company as per the legal requirements.(module)
Even if the company has taken the fair valuation to the retained earnings in its books of accounts,
the resultant credit in reserves (by whatever name called) would be in the category of ‘reserves
created out of revaluation of assets’ which is specifically excluded in the definition of ‘net worth’
in section 2 (57) and hence should be excluded by the company.
MNO Limited are finalising its financial statements and found that the value of one of its
properties has increased. The company came across certain other transactions also and got
confused as to what should be included as ‘free reserves’.The company has approached you to
define to them the meaning of the term "free reserves" for dividend distribution as per the
provisions of the Companies Act, 2013.(5 Marks) (MTP Nov 24)

1. Under the provisions of Companies Act, 2013, a person, with reference to another person, shall
be considered as 'relative' if:
a. He is a member of a Hindu Undivided Family
b. He is spouse (husband or wife) of that another person
c. He is related in the manner prescribed in Rule 4
d. All of the above

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