comapnies act imp definitions 31.08.2013
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NEW DEFINITIONS
COMPANIES Act, 2013
Private Company
Sec.2(68)
Private company means a company having:-
Paid-up share capital of 1 Lakh rupees or
Such higher paid-up share capital as may be
prescribed.
Prohibit any invitation to public to subscribe for any
securities of the company
And which by its articles :-
Restricts the rights to transfer its shares
Limits the number of its members to 200,excepts in case of
One Person Company,
(provided where 2 or more person hold 1 or more
shares jointly shall be treated as single member)
Public Company
Sec 2 (71)
Provided that subsidiary of a public company shall be deemed to be a public company even if such company continues to be
a private company in its articles
has minimum paid up share capital of 5 Lakh rupees or such higher paid up share capital as may be prescribed.
is not a private company
Public Company means a company which-
Promoter
Sec 2(69)(Notified)
Promoter means a
person who :-
has been named as such in
prospectus or is identified in the annual return by
the company
has control over the affairs of the
company directly or indirectly
In accordance with whose
advice, directions or
instructions the Board of
Directors of the company is
accustomed to act.
Subsidiary Company
Sec.2(87)(Notified)
A subsidiary company means a company in which
the holding company :-
Controls the composition of Board of Directors or
exercise or controls more than one-half of the
total share capital.
Provided that such holding companies as may be
prescribed shall not have layers of subsidiaries
beyond such numbers as may be prescribed.
Layers in relation to a holding company means its
subsidiary or subsidiaries.
It means the requirement as contained in sec 4(7) of the act is
dispensed with.
Definition of Share capital under
Draft Rule 1.2 (s)
“Total Share Capital means aggregate of
=
(i)paid-up equity share capital-
+
(ii) paid - up preference share capital;
Which means now along with equity share , preference shares shall
be counted to decide about total share capital
Foreign company
Sec. 2(42)
A foreign company means any company or body corporate incorporated outside
India which;
has a place of business in India whether by itself or through an agent, physically
or through electronic mode ; and
Conducts any business activity in India in any other manner.
Company Secretary
Sec. 2(24)(Notified)
A CS , defined under Sec.2(1)(c) of theCompany Secretaries Act 1980, and
Appointed by the company to performthe functions of Company Secretariesunder this Act.
Every listed company or such other asmay be prescribed is required toannexed with its Boards report, asecretarial audit report given bycompany secretary in practice inprescribed form.
Functions of CS as prescribed in the
Act(Sec.205)
To report to the Board about compliance
with the provisions, the rules made
thereunder and other Laws applicable to
the company.
To ensure that the company complies with
the applicable secretarial standards.
To discharge such other duties as may be
prescribed.
Secretarial standards means secretarial standards issued by the
Institute of Company Secretaries of India constituted under section 3 of
the Company Secretaries Act 1980 and approved by the Central
Government
Duties of CS perscribed under Draft
Rule 13.8(Sec.205)
Some of duties are as follow:
To provide guidance to directors with
respect to their duties, responsibility
and powers
To convene, attend and maintain
minutes of these meetings
To obtain approval from Board,
general meeting, Government and
other authority.
Company Secretary to assist Board on good corporate governance
Company Liquidator
Sec.2(23)
A person appointed by :-
The tribunal in case of winding up by the
Tribunal.
The company or creditors in case of
voluntary winding up , from the panel of
professionals maintained by Central
Government.The Panel will consist of CA/CS/CWA/Advocates or other as
prescribed and will have at least 10 years of experience.
Control
Sec.2(27)( Notified)
Control shall include the right :-
to appoint majority of the directors.
to control the management or policy
decisions Exercisable by the persons by
virtue of their :-
Shareholding rights or
Management rights or
Shareholding agreements or
Voting agreements or
In any other manner
“The definition of subsidiary also talk about exercise or control
one half of total share capital”.
Key Managerial Personnel
Sec.2(51)(Notified)
Key Managerial Personnel in relation to a
company means :-
the Chief Executive Officer or the managing Director
or the Manager.
The Company Secretary
The Whole-time Director
The Chief Financial Officer
Such other officer as may be prescribed
The definition of KMP IS not provided under the Companies
Act 1956.
Chief Executive Officer
Sec.2(18)(Notified)
Chief Executive Officer” means an officer
of a company, who has been designated
as such by it.
The definition of KMP IS not provided under the Companies
Act 1956.
Chief Financial Officer
Sec.2(19) (Notified)
Chief Financial Officer” means a person
appointed as the Chief Financial Officer of
a company.
The definition of KMP IS not provided under the Companies
Act 1956.
Whole-time director
Sec.2(94)(Notified)
whole-time director” includes a
director in the whole-time employment
of the company.
The definition of KMP IS not provided under the Companies
Act 1956.
Managing Director
Sec.2(54)(Notified)
A managing director means a director who by
virtue of:-
AOA or
An agreement with the company or
A resolution passed in General Meeting or
By its Board of Directors
Entrusted with substantial powers of
management
And includes a director occupying the position
of managing director by whatever name called.
Subject to superintendence, control and direction of its board
of directors is deleted.
ESOP (Employees Stock Option)
Sec.2(37)(Notified)
ESOP means the option given to the
Director, Officers, or employees of a :-company, its holding company or subsidiary company, if any
Which gives them the benefits or rights to
purchase or subscribe for :- the shares of the
company at a future date at a pre-determined price.
The term ESOP is recognized in Company Act, otherwise
the definition used in ICDR was being used by stakeholders.
BOOKS OF ACCOUNTS
Sec. 2(18)(Notified)
It includes all the records maintained
in respect of :-
All sums of money received and expended
All receipts and expenditure took place
All sales & purchase of goods & services
All the assets and liabilities of the company
All other items as prescribed under section
148.
First time defined, which was required to be elaborated
Expert
Sec. 2(38)(Notified)
Experts include an engineer, a valuer, a
chartered accountant, a company secretary,
a cost accountant or any other person with
powers to issue any certificate under any law
in force.
Financial Statement
Sec.2 (40) (Notified)
Financial statement in relation to a company includes:-
a balance sheet
A profit & loss account
Non Profit company - Income & Expenditure account
Cash flow statement
A statement of changes in equity , if applicable &
Any explanatory note annexed to any document
referred above.
cash flow statement in not required in case of one person, small
, dormant company
Net Worth
Sec. 2(57)(Notified)
Net worth means the aggregate value of the paid up
share capital and all reserves created out of:-
the profit &
securities premium account
after deducting the aggregate value of the
accumulated losses, deferred expenditure &
miscellaneous expenditure not written off As per
the audited balance sheet
But does not include reserves created out of
revaluation of assets, write-back of depreciation &
amalgamation
Net worth used for issuance of deposits, CSR, Appointment of cost
auditor, sale of undertaking etc.
Turnover
Sec.2(91)(Notified)
Turnover means the aggregate value of the realization of amount Of goods & services rendered or both during
a financial year made by the company from :-
sale Supply Distribution
Officer in default
Sec.2(60)(Notified)
Officer in default includes any of the followingofficer of the company :-
key managerial personnel,
Whole time director
If no key managerial personnel, then such director,as specified by the Board in this behalf.
Any person who is under the immediate authority ofboard or any KMP and is charged with anyresponsibility including maintenance, filing ordistribution of accounts etc., by the board.
Any person in accordance with whose advice ordirections the board is accustomed to act, otherthan those who gives advice under professionalcapacity.
Officer in default (Contd……….)
Every director who is aware of anycontravention :-by virtue of the receipt by him of any proceedings of the
Board or
by participating in such proceedings without anyobjection or
Where such contravention had taken place with hisconsent or connivance.
In respect of the issue or transfer of any shares, theshare transfer agents, registrars & merchantbankers to the issue or transfer
Who is in default shall be liable to any penalty, Punishment by way of imprisonment, fine or otherwise
“Nobody can go back and start a new
beginning, but anyone can start today and
make a new ending”
Thanks
Arun Gupta
managing counsel
factum legal , advocates & solicitors
Tel : (O) 011-41066313 (M) 9810275571
www.factumlegal.com;
arun@factumlegal.com
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