Preliminary Revision Notes
Ch 1: Preliminary
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1. Introduction

  • The Companies Act, 2013 consolidates & amends company law.
  • It extends to the whole of India.
  • Provisions came into force on different dates via notifications.

Application of the Act

The Act applies to:

  • Companies under this Act or any previous company law.
  • Insurance Companies (unless inconsistent with Insurance Act).
  • Banking Companies (unless inconsistent with Banking Regulation Act).
  • Electricity Companies (unless inconsistent with Electricity Act).
  • Companies governed by a Special Act.
  • Other bodies corporate notified by Central Govt.
Ch 1: Preliminary
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2. Core Company Definitions

  • Company: A company incorporated under this Act or any previous company law.
  • Private Company: Restricts share transfer, limits members to 200, and prohibits public subscription.
  • Public Company: A company that is not a private company. A subsidiary of a public company is deemed a public company.
  • Holding Co.: A company that has one or more subsidiary companies.
  • Subsidiary Co.: A company where the holding co. controls the Board composition OR controls more than 1/2 of the total voting power.
  • Body Corporate: Includes a company incorporated outside India, but excludes co-op societies.
Ch 1: Preliminary
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3. Capital & Financials

Share Capital

  • Authorised Capital: Max capital a company is authorised to issue.
  • Issued Capital: Capital the company issues for subscription.
  • Subscribed Capital: Part of capital subscribed by members.
  • Called-up Capital: Part of capital called for payment.
  • Paid-up Capital: Aggregate money credited as paid-up.

Financials

  • Financial Year: Period ending on 31st March every year.
  • Financial Statement: Includes Balance Sheet, P&L Account, Cash Flow Statement, Statement of Changes in Equity & Explanatory Notes.
  • Free Reserves: Reserves available for dividend distribution. Excludes revaluation reserves.
Ch 1: Preliminary
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4. People & Management

  • Director: A director appointed to the Board.
  • Promoter: Named in prospectus, controls affairs, or whose advice the Board follows.
  • Key Managerial Personnel (KMP): Includes CEO, MD, Manager, CS, WTD, CFO, and other designated officers.
  • CEO: An officer designated as such.
  • CFO: A person appointed as the Chief Financial Officer.
  • Manager: Has management of substantially the whole of the company's affairs.
  • Managing Director (MD): A director entrusted with substantial powers of management.
  • Member: Subscriber to memorandum, or anyone who agrees in writing & is on the register of members.
Ch 1: Preliminary
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5. Key Concepts & Other Terms

  • Small Company: A private company with paid-up capital up to ₹4 crore AND turnover up to ₹40 crore. (Not applicable to holding/subsidiary co. or Sec 8 co.)
  • Associate Company: A company where another company has significant influence (at least 20% voting power or control of business decisions).
  • Related Party: Includes directors, KMPs & their relatives; firms/companies where they are partners/directors; holding, subsidiary & associate companies.
  • Relative: Includes spouse, members of HUF, and a prescribed list (father, mother, son, daughter, brother, sister & their spouses).
  • Officer in Default: Any officer liable for penalty/punishment, including WTD, KMP, and any person responsible for compliance.
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