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, CA Shubham Singhal (AIR 4)
Chapter 1
Preliminary
Objective of this Act
Act to consolidate and amend the law relating to companies.
Enactment
• Received the assent of the Hon’ble President of India on 29th August 2013
• Notified in Official Gazette on 30th Aug 2013 (different dates may be appointed for
enforcement)
Flow
29 Chapters 470 Sections 7 Schedules
Company: An incorporated association which is an artificial person, having a separate legal entity,
with a perpetual succession, a common seal (optional).
Section 1: Short Title, Extent, Commencement and Application:
Short Title Companies Act, 2013
Extent Whole of India (by default includes J&K)
Commencement From date as appointed by CG by notification in OG
Applicability The provision of this Act shall apply to:
a. companies incorporated under this Act or under any previous company law.
b. insurance cos., except where provisions are inconsistent with that of
Insurance Act, 1938 or IRDA Act, 1999;
c. banking companies, except where provisions are inconsistent with that of
Banking Regulation Act, 1949
d. cos. engaged in generation/supply of electricity, except where provisions
are inconsistent with that of Electricity Act, 2003
e. other company governed by any Special Act, except where provisions are
inconsistent with that of Special Act (Ex: LIC, RBI)
f. such body corporate, incorporated by any Act for the time being in force, as
may be notified by CG [Example - Food Corporation of India (FCI), National
Highway Authority of India (NHAI)]
Section 2: Definitions: (‘Internal aids to construction’)
In this Act, unless the context otherwise requires:
1 Abridged Prospectus
Means a memorandum containing such salient features of a prospectus as may be specified by
the Securities and Exchange Board by making regulations in this behalf
Preliminary 1.1
, CA Shubham Singhal (AIR 4)
2 Accounting Standards (AS)
Means AS or any addendum thereto for companies or class of companies referred u/s 133;
Section 133: Central Government to Prescribe Accounting Standards
As per Sec 133, CG may prescribe the AS or any addendum thereto, as recommended by
ICAI, constituted u/s 3 of the CA Act, 1949, in consultation with and after examination of
recommendations made by National Financial Reporting Authority (NFRA)
Rule 7 of Companies (Accounts) Rules, 2014: Accordingly,
i. The standards of accounting as specified under Companies Act, 1956 shall be deemed to be
AS until AS are specified by CG u/s 133.
ii. Till the NFRA is constituted u/s 132 of the Act, the CG may prescribe AS or any
addendum thereto, as recommended by ICAI in consultation with and after examination of
recommendations made by National Advisory Committee(NAC) on AS constituted u/s 210A
of Companies Act, 1956.
Further, in exercise of powers conferred u/s 133, the CG in consultation with the NAC on AS
prescribed that Companies (AS) Rules, 2006 and Companies (Ind AS) Rules, 2015 may be followed.
3 Alter or Alteration
Includes the making of additions, omissions and substitutions;
5 Articles
Means the articles of association of a company:
• as originally framed, or
• as altered from time to time, or
• applied in pursuance of any previous company law or this Act;
6 Associate Company
In relation to another co., means a company in which that other co. has a significant influence,
but which is not a subsidiary co. of the co. having such influence and includes a joint venture.
Explanation: For the purpose of this clause:
(a) "Significant influence" means control of at least 20% of total voting power, or control of or
participation in business decisions under an agreement;
(b) "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
Clarification: Shares held by a company in another company in a fiduciary capacity shall not be
counted for the purpose of determining the relationship of associate company
A fiduciary is a person who holds a legal or ethical relationship of trust with one of more parties
(persons or group of persons). Typically, a fiduciary prudently takes care of money or other
assets for another person.
1.2 Preliminary
, CA Shubham Singhal (AIR 4)
7 Auditing standards
means the standards of auditing or any addendum thereto for companies or class of companies
referred to u/s 143(10)
Section 143(10) - CG may prescribe the standards of auditing or any addendum thereto, as
recommended by ICAI, constituted u/s 3 of the CA Act, 1949, in consultation with and after
examination of recommendations made by NFRA.
Provided that until any auditing standards are notified, any standard or standards of auditing
specified by the ICAI shall be deemed to be the auditing standards.
8 Authorised Capital or Nominal Capital
means such capital as is authorised by the memorandum of a company to be the maximum
amount of share capital of the company;
10 Board of Directors or Board
means the collective body of the directors of the company
11 Body corporate or Corporation
Includes a company incorporated outside India, but does not include:
i. a co-operative society registered under any law relating to co-operative societies; and
ii. any other body corporate (not being a company as defined in this Act), notified by CG;
12 “Book and Paper” and “Book or Paper”: Includes: [WARM DVD]
Books of
Deeds Voucher Writings Documents Minutes Registers
Accounts
maintained on paper or in electronic form;
13 “Books of account” includes records maintained in respect of:
(i) all sums of money received and expended by a company and matters in relation to which the
receipts and expenditure take place;
(ii) all sales and purchases of goods and services by the company;
(iii) the assets and liabilities of the company; and
(iv) the items of cost as may be prescribed u/s 148 in the case of a company which belongs to
any class of companies specified under that section;
14 Branch office, in relation to a company, means any establishment described as such by the co.;
15 Called-up capital means such part of the capital, which has been called for payment;
16 Charge means an interest or lien created on the property or assets of a company or any of its
undertakings or both as security and includes a mortgage;
Preliminary 1.3
www.shubhamsinghal.com
Follow me
, CA Shubham Singhal (AIR 4)
Chapter 1
Preliminary
Objective of this Act
Act to consolidate and amend the law relating to companies.
Enactment
• Received the assent of the Hon’ble President of India on 29th August 2013
• Notified in Official Gazette on 30th Aug 2013 (different dates may be appointed for
enforcement)
Flow
29 Chapters 470 Sections 7 Schedules
Company: An incorporated association which is an artificial person, having a separate legal entity,
with a perpetual succession, a common seal (optional).
Section 1: Short Title, Extent, Commencement and Application:
Short Title Companies Act, 2013
Extent Whole of India (by default includes J&K)
Commencement From date as appointed by CG by notification in OG
Applicability The provision of this Act shall apply to:
a. companies incorporated under this Act or under any previous company law.
b. insurance cos., except where provisions are inconsistent with that of
Insurance Act, 1938 or IRDA Act, 1999;
c. banking companies, except where provisions are inconsistent with that of
Banking Regulation Act, 1949
d. cos. engaged in generation/supply of electricity, except where provisions
are inconsistent with that of Electricity Act, 2003
e. other company governed by any Special Act, except where provisions are
inconsistent with that of Special Act (Ex: LIC, RBI)
f. such body corporate, incorporated by any Act for the time being in force, as
may be notified by CG [Example - Food Corporation of India (FCI), National
Highway Authority of India (NHAI)]
Section 2: Definitions: (‘Internal aids to construction’)
In this Act, unless the context otherwise requires:
1 Abridged Prospectus
Means a memorandum containing such salient features of a prospectus as may be specified by
the Securities and Exchange Board by making regulations in this behalf
Preliminary 1.1
, CA Shubham Singhal (AIR 4)
2 Accounting Standards (AS)
Means AS or any addendum thereto for companies or class of companies referred u/s 133;
Section 133: Central Government to Prescribe Accounting Standards
As per Sec 133, CG may prescribe the AS or any addendum thereto, as recommended by
ICAI, constituted u/s 3 of the CA Act, 1949, in consultation with and after examination of
recommendations made by National Financial Reporting Authority (NFRA)
Rule 7 of Companies (Accounts) Rules, 2014: Accordingly,
i. The standards of accounting as specified under Companies Act, 1956 shall be deemed to be
AS until AS are specified by CG u/s 133.
ii. Till the NFRA is constituted u/s 132 of the Act, the CG may prescribe AS or any
addendum thereto, as recommended by ICAI in consultation with and after examination of
recommendations made by National Advisory Committee(NAC) on AS constituted u/s 210A
of Companies Act, 1956.
Further, in exercise of powers conferred u/s 133, the CG in consultation with the NAC on AS
prescribed that Companies (AS) Rules, 2006 and Companies (Ind AS) Rules, 2015 may be followed.
3 Alter or Alteration
Includes the making of additions, omissions and substitutions;
5 Articles
Means the articles of association of a company:
• as originally framed, or
• as altered from time to time, or
• applied in pursuance of any previous company law or this Act;
6 Associate Company
In relation to another co., means a company in which that other co. has a significant influence,
but which is not a subsidiary co. of the co. having such influence and includes a joint venture.
Explanation: For the purpose of this clause:
(a) "Significant influence" means control of at least 20% of total voting power, or control of or
participation in business decisions under an agreement;
(b) "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
Clarification: Shares held by a company in another company in a fiduciary capacity shall not be
counted for the purpose of determining the relationship of associate company
A fiduciary is a person who holds a legal or ethical relationship of trust with one of more parties
(persons or group of persons). Typically, a fiduciary prudently takes care of money or other
assets for another person.
1.2 Preliminary
, CA Shubham Singhal (AIR 4)
7 Auditing standards
means the standards of auditing or any addendum thereto for companies or class of companies
referred to u/s 143(10)
Section 143(10) - CG may prescribe the standards of auditing or any addendum thereto, as
recommended by ICAI, constituted u/s 3 of the CA Act, 1949, in consultation with and after
examination of recommendations made by NFRA.
Provided that until any auditing standards are notified, any standard or standards of auditing
specified by the ICAI shall be deemed to be the auditing standards.
8 Authorised Capital or Nominal Capital
means such capital as is authorised by the memorandum of a company to be the maximum
amount of share capital of the company;
10 Board of Directors or Board
means the collective body of the directors of the company
11 Body corporate or Corporation
Includes a company incorporated outside India, but does not include:
i. a co-operative society registered under any law relating to co-operative societies; and
ii. any other body corporate (not being a company as defined in this Act), notified by CG;
12 “Book and Paper” and “Book or Paper”: Includes: [WARM DVD]
Books of
Deeds Voucher Writings Documents Minutes Registers
Accounts
maintained on paper or in electronic form;
13 “Books of account” includes records maintained in respect of:
(i) all sums of money received and expended by a company and matters in relation to which the
receipts and expenditure take place;
(ii) all sales and purchases of goods and services by the company;
(iii) the assets and liabilities of the company; and
(iv) the items of cost as may be prescribed u/s 148 in the case of a company which belongs to
any class of companies specified under that section;
14 Branch office, in relation to a company, means any establishment described as such by the co.;
15 Called-up capital means such part of the capital, which has been called for payment;
16 Charge means an interest or lien created on the property or assets of a company or any of its
undertakings or both as security and includes a mortgage;
Preliminary 1.3
