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