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Company Law PDF
Company Law PDF
Company Law PDF
COMPANY LAW
CORPORATE AND OTHER LAWS: A CAPSULE FOR QUICK RECAP
(THE COMPANIES ACT, 2013)
“At the Intermediate level, for the Company Law portion of the subject “Corporate and Other Laws”
largely involves analysis and application of provisions of the Companies Act, 2013 to solve application-
oriented issues. This subject is very dynamic on account of the large number of amendments/ circulars/
notification as issued by the Ministry of Corporate Affairs.
In this capsule for students, an attempt has been made to capture the significant provisions of
Companies Act, 2013 (Sections 1 to 148). You are advised to read the Study Material for a thorough
understanding of the relevant provisions of Companies Act, 2013 and solve the examples and
exercise questions given therein to hone your application skills. This capsule on Intermediate
Paper 2: Corporate and Other Laws is intended to assist you in the process of revision of concepts
discussed in the Study Material.”
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COMPANY LAW
3. On the basis of control
Holding and Subsidiary company Foreign company [Section 2(42)]
Holding company [Section 2(46)]: Holding company, in relation Any company or body corporate incorporated outside India
to one or more other companies, means a company of which such which—
companies are subsidiary companies. ^ has a place of business in India whether by itself or through an
Subsidiary company [Section 2(87)]: means a company in which agent, physically or through electronic mode; and
the holding company— ^ conducts any business activity in India in any other manner
^ controls the composition of the Board of Directors; or
^ exercises or controls more than one-half of the total share Formation of companies with charitable objects etc.
capital either at its own or together with one or more of its [Section 8]
subsidiary companies. ^ Formed for the promotion of commerce, art, science, religion,
charity, protection of environment, sports, etc.
Associate Company [Section 2(6)]
^ Uses its profits for the promotion of the objective for which
In relation to another company, means a company in which that
formed
other company has a significant influence, but which is not a
^ Does not declare dividend to members
subsidiary company of the company having such influence and
^ Operates under a special licence from Central Government
includes a joint venture company.
^ Need not use the word Ltd./ Pvt. Ltd. in its name and adopt a
“Significant influence” means control of at least 20% of total
more suitable name such as club, chambers of commerce etc.
share capital, or of business decisions under an agreement.
^ Licence revoked if conditions contravened
The term “Total Share Capital”, means the aggregate of the
^ Can call its general meeting by giving a clear 14 days notice
instead of 21 days
^ Requirement of minimum number of directors, independent
directors etc. does not apply
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COMPANY LAW
INCORPORATION OF COMPANIES
I. MEMORANDUM OF ASSOCIATION
Alteration: Special Resolution (SR) +
NAME Name with which Co. is registered Approval of CG
CLAUSE New certificate of Incorporation will be issued
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COMPANY LAW
PROSPECTUS AND ALLOTMENT OF II. POWER OF SEBI TO REGULATE ISSUE AND
TRANSFER OF SECURITIES ETC. [SECTION 24]
SECURITIES
I. ISSUE OF SECURITIES Authorities to exercise Power related to
Allotment of securities
Return of allotment filed with registrar with complete list of
Minimum amount application money application money shall security holders
subscribed, and have been paid and not be less than 5% or
received by the such other percentage
company or amount as specified
by SEBI In case of contravention, Company, promoters and directors shall
be liable for penalty
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COMPANY LAW
SHARE CAPITAL AND DEBENTURES REGISTRATION OF CHARGES
I. TYPES OF SHARE CAPITAL I. DEFINITION OF CHARGE [SECTION 2(16]]
With voting rights
Equity
share Interest or Lien
Kinds capital With differential
of share rights as to dividend,
capital voting or otherwise
As security
and includes Charge Created on
property or
Preference Carries w.r.t.payment of mortgage assets
share preferential dividend and
capital right repayment of
capital at time of
winding up Of a Co. or any of
its undertakings
or both
II. TYPES OF PREFERENCE SHARES
II. NOTICE OF CHARGE
Type of Prefernce
Shares
Date of
Notice of From Registration of
Charge Charge
Participatory
Omission to Omission Omission Any other
file with the to register or Mis- grounds
Registrar the Charge Statement / – just &
particulars of within modification equitable
Charge time wrt MOA
Non-
participatory
IV. SATISFACTION OF CHARGE
On the basis On the basis of On the basis of Registrar on receipt Exception: No notice,
of security convertibility to redeeemability of intimation, send in case the intimation
shares show cause notice to to the Registrar is in
holder of charge within the specified form and
14 days signed by the holder of
Convertible charge.
Secured Redeemable
(mandatorily
or optionally;
partially or fully)
If any cause is shown, the Registrar
shall record a note in the register of
Non- charges and shall inform the company.
Un-secured Irredeemable
convertible
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COMPANY LAW
MEETINGS OF THE COMPANY III (B). Signing of annual return
I. GENERAL MEETINGS Signing of Annual Returns
General Meetings
If CS is not
Register of Register of Register of any there
Members (Both debentures other security By
Equity & Pref.) holders holders By CS Director
of Co.
If CS If CS
is is not
Contains each class of Equity/ there there
Pref. shares held by each member
residing in India or Outside India Certified
by Director By Certified
+ Certified Director by
If articles permit to keep register outside by CS in + CS Director
India: “Foreign Register” may be maintained Practice +
containing the memo & particulars of members, Certified
debenture holders, other security holders or by CS in
beneficial owners residing outside India. Practice
Without payment
9. Matters relating to certification of compliances, disclosures of fees With payment of fees
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COMPANY LAW
V. MEETINGS OF MEMBERS Period of Holding EGM
V(A). AGM
meeting may be
Question Answer If board within Proceed to called & held by
21 days from call EGM on requisitionists
Maximum time duration 15 months + 3 months the date of a day not later themselves
between two AGMs (for special reasons) receipt of than 45 days within 3
Requisition of receipt of months from
Date of AGM Any day except National does not requisition the date of
requisition
Holiday
VI. NOTICE OF MEETING
When is AGM held?
V(B). EGM
Calling of EGM 1.
Consideration
of financial
statement and
The Board shall call EGM the reports of
on requisition made by the Board of
Directors and
auditors
4.
Appointment 2.
of, and ORDINARY Declaration
fixing of the BUSINESS of any
remuneration dividend
Shareholders holding Such Number of members of the auditors
not less than 1/10th having not less than 1/10th
of paid up capital (in of total voting power of 3.
case of co. having sh. all members (in case of Co. Appointment
cap.) NOT having sh. cap.) of Directors in
place of those
retiring
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COMPANY LAW
VIII. QUORUM FOR MEETINGS XI. TYPES OF RESOLUTION
Public Company
Resolutions
No. of Members QUORUM
ORDINARY SPECIAL
Number of members 5 members personally present RESOLUTION RESOLUTION
≤ 1000 - passed by simple majority, - passed by three times
i.e. more than 50% majority, i.e. 75%
A proxy shall not have the right to speak at such meeting and XII. MINUTES
shall not be entitled to vote except on a poll. Minutes of the proceedings of meeting shall be kept within 30 days
of the conclusion of every such meeting concerned or passing of
A person appointed as proxy shall act on behalf of such resolution by postal ballot in books.
member or number of members not exceeding fifty and
holding in aggregate not more than 10 per cent of the total ^ The minute book shall be consecutively numbered.
share capital of the company carrying voting rights
A proxy received 48 hours before the meeting will be valid ^ The minutes of each meeting shall contain a fair and correct
even if the articles provide for a longer period. summary of the proceedings that took place at the concerned
meeting.
Voting by
electronic means ^ Any of the following matter shall not be included in the
minutes of the meeting, which in the opinion of the Chairman
of the meeting
h Is or could reasonably be regarded as defamatory of any
Voting person; or
h Is irrelevant or immaterial to the proceedings; or
h Is detrimental to the interests of the company
Voting by Poll
^ The matter to be included or excluded in the minutes of the
meetings shall be at the absolute discretion of the Chairman of
the meeting.
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COMPANY LAW
DIVIDEND III. RULES TO BE FOLLOWED WHILE DECLARING
DIVIDEND OUT OF RESERVES
I. DIVIDEND PAYABLE ON DIFFERENT TYPES OF SHARES
1. Rate of Dividend ≤ (RD1 +RD2 + RD3)/ 3
Shares Where, RD1, RD2, RD3 are rates at which dividend was
declared by it in the 3 years immediately preceding that year.
However, this rule will not apply if a company has not
Equity Shares Preference Shares declared any dividend in each of the 3 preceding financial
years.
2. Total amount that can be ≤ 1/10 of (Paid up share
Dividend dependent Cumulative Non-cumulative drawn from accumulated capital + Free reserves)
on dividend policy Preference Preference profits (as per latest audited
and the availability Shares Shares Financial statement)
of profits after 3. Drawn amount be first utilized to set off losses incurred in
satisfying the No arrears of FY in which dividend is declared
dividend
rights of preference dividend in
accumulates 4. Balance of Reserve ≥ 15% of Paid up capital
shareholders. future
unless it is paid (after drawal of Amt)
in full (as per latest audited
Financial statement)
Section 2(35) of the Companies Act, 2013, states that “dividend” IV. PAYMENT OF DIVIDEND
includes any interim dividend
Payment of dividend
II. DECLARATION OF DIVIDEND
Payable in Payable to Nidhi Co.
Dividend can be
declared out of Cash the registered any dividend
shareholder of payable in cash
may be paid
the share, or by crediting
cheque the same to
Current year Out of the profits of Money provided the account of
profits after the company for any by the Central to his order, or the member,
depreciation previous financial Government warrant if the dividend
year or years arrived or a State is not claimed
within 30 days
at after providing Government to his banker from the date of
for depreciation in for the payment any electronic declaration of
accordance with the of dividend by mode the dividend.
provisions of that sub- the company
section and remaining in pursuance V. UNPAID DIVIDEND ACCOUNT (UPA)
undistributed of a guarantee
given by that Declared Dividend
Government
30 Days
Or Both
Dividend Not Paid/ Claimed
7 Days
Any person claiming for the amount transferred in UPA may apply
to Co. for the payment of money claimed
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COMPANY LAW
VI. PUNISHMENT FOR FAILURE TO DISTRIBUTE EXCEPTIONS UNDER WHICH NO OFFENCE SHALL BE
DIVIDENDS DEEMED TO HAVE BEEN COMMITTED
Declared Dividend
Dividend could not be paid
by reason of operation of
any law; those directions
Dividend not paid/Warrant not Posted
cannot be
(within 30 days from the date of
complied
declaration) Shareholder gave with and the
Exception directions regarding same has been
under 127 payment of dividend, AND communicated
Consequences to him;
Dispute regarding right to
receive dividend;
Every Director
(If knowingly a party to Company Dividend has been lawfully
default) adjusted against any sum
due from shareholder to
Co.; or
Imprisonment Fine ` 1,000 per Simple Interest for any other reason, the failure to pay/ post
≤ 2 years day (during which @18% per annum dividend/ warrant within prescribed time,
default continues) was not due to any default on the part of the
company.
ACCOUNTS OF COMPANIES
I. FINANCIAL STATEMENT (FS) Company shall
Prepare
Financial Statement is defined under Section 2 (40), to include –
Cash flow
Books of Books and Financial
Statement
accounts papers statement
Profit and Loss Statement
account or Income of change
and Expenditure in equity, if
account applicable
Keep at its registered
any explanatory office/any other place in
notes annexed India as BOD may decide
Balance Sheet Financial
Statement to or forming
part of financial
statements
Open for inspection
by directors
Financial statement shall:
If the Co. has subsidiary or associate or Joint Venture, Imprisonment Fine (R50,000-
Consolidated Financial Statement (CFS) is also to be laid before (upto 1 yr) 5 lacs)
AGM
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COMPANY LAW
II. RE-OPENING OF ACCOUNTS ON COURT’S OR V. CONTENTS OF BOARD REPORT
TRIBUNAL ORDERS
Application to be made by: Board of Director’s Report:
Following informations
Central IT SEBI Statutory Any other
Govt. authorities regulatory person Extract of Annual return No. of meetings of Board
body
Such revised or re-casted accounts shall be final VI. ENTITLEMENT TO RECEIVE FINANCIAL STATEMENT
III. VOLUNTARY REVISION OF FINANCIAL Copies of audited FS +CFS+ Audit Report+ other document
STATEMENTS OR BOARD’S REPORT
Financial Statement
Trustee for
Member debenture
chairperson holders
(authorised by Chief Chief Company
the Board)/ Executive Financial secretary
two directors Officer Officer (if (if
(1 shall be (if he is appointed) appointed) At Least 21 days
MD,if any) director) before GM
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COMPANY LAW
VII. MANNER OF CIRCULATION OF FINANCIAL IX. INTERNAL AUDIT
STATEMENTS Companies required to conduct internal audit
Circulation of Financial statement Listed co. Paid up share capital (50 cr or more
AGM
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COMPANY LAW
II. APPOINTMENT OF SUBSEQUENT AUDITOR III. ROTATION OF AUDITORS
Subsequent Auditor Rotation of Auditors (in listed companies or specified
class of companies)
IV. STEPS FOR REMOVAL OF AUDITOR VI. PUNISHMENT UNDER SECTION 147
A Special Notice is received for Removal of auditor IN CASE OF COMPANY AND OFFICER OF COMPANY
After approval from CG, Special Notice to be sent for AGM IN CASE OF AUDITOR
Auditor shall be given a reasonable opportunity of being heard Contravention by Auditor of sec 139, 143 to 145
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