ICSB CS Executive flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Company definition

Section 2(20) of the Companies Act, 2013 defines a company as one incorporated under that Act or under any previous company law, giving it separate legal personality.

Private company limit

A private company may have a maximum of 200 members, excluding present and past employee-members who joined while employed; joint holders are counted as a single member.

Board meeting frequency

A company must hold its first board meeting within 30 days of incorporation and at least four meetings every year, with no more than 120 days between consecutive meetings.

Independent directors requirement

A public company with paid-up capital of at least Rs. 10 crore or turnover of at least Rs. 100 crore must appoint at least two independent directors on its board.

SPICe+ incorporation form

SPICe+ is the integrated web form used to incorporate a company, covering name reservation, DIN, PAN, TAN, and EPFO and ESIC registration in a single filing.

OPC nominee requirement

A One Person Company must name a nominee in its memorandum, with the nominee's written consent, and cannot carry out non-banking financial investment activities.

INC-20A filing

After incorporation, a company must file a declaration of commencement of business in Form INC-20A within 180 days before it can start business or borrow funds.

Section 248 strike-off

The Registrar may strike off a defunct company under Section 248 after notice and hearing, provided all liabilities and assets have been extinguished.

Section 115BAA rate

A domestic company opting for Section 115BAA pays tax at 22% plus surcharge and cess, but must forgo specified exemptions and incentives.

Minimum Alternate Tax

Section 115JB requires companies claiming specified exemptions to pay at least 15% of book profit as MAT; the resulting credit can be carried forward for 15 years.

Advance tax instalments

Advance tax is paid in four instalments: 15% by 15 June, 45% by 15 September, 75% by 15 December, and the full 100% by 15 March of the financial year.

GST registration thresholds

GST registration is required above Rs. 40 lakh turnover for goods and Rs. 20 lakh for services, with lower thresholds in special category states; the composition limit is Rs. 1.5 crore.

Break-even point

Break-even point in units equals fixed cost divided by contribution per unit, where contribution is sales less variable cost; at this point profit is zero.

Current ratio formula

The current ratio equals current assets divided by current liabilities; the quick ratio subtracts inventory and prepaid expenses from current assets before dividing.

Weighted average cost of capital

WACC weights the cost of each source of capital, such as debt and equity, by its market value proportion, and is used as the discount rate for projects.

Net present value rule

NPV equals the present value of cash inflows minus outflows; a project is accepted if NPV is positive, and IRR is the rate making NPV zero.

Operating leverage formula

Operating leverage equals contribution divided by EBIT; financial leverage equals EBIT divided by EBT; combined leverage equals contribution divided by EBT.

SEBI establishment

SEBI was set up in 1988 and received statutory powers under the SEBI Act, 1992, which empowers it to regulate securities markets and protect investors.

SAST open offer trigger

Under the Takeover Code, acquiring 25% or more of a target's voting rights triggers a mandatory open offer for at least 26% of the target's shares.

Unpublished price-sensitive information

UPSI is information not generally available that, if published, would likely materially affect the price of securities; trading on it is prohibited.

Minimum public shareholding

Listed companies must maintain at least 25% public shareholding under the Securities Contracts (Regulation) Rules, unless a lower limit applies to specified companies.

Buyback ceiling

A company may buy back up to 25% of its paid-up capital plus free reserves in a financial year; shareholder approval is needed above 10% of that base.

Essentials of a valid contract

A valid contract under the Indian Contract Act, 1872 needs offer, acceptance, lawful consideration, capacity of parties, free consent, and a lawful object.

Restraint of trade void

Section 27 of the Indian Contract Act voids agreements restraining trade, except a sale of goodwill and certain partnership arrangements permitted by law.

Cheque under NI Act

Under the Negotiable Instruments Act, 1881, a cheque is a bill of exchange drawn on a banker payable on demand; dishonour for insufficient funds attracts Section 138.

IBC resolution timeline

The Insolvency and Bankruptcy Code, 2016 allows 180 days for corporate insolvency resolution, extendable by 90 days, with an outer limit of 330 days including litigation.

Wealth maximisation objective

Wealth maximisation is preferred over profit maximisation because it accounts for the time value of money and risk, maximising shareholder value over the long term.

Porter's Five Forces

Porter's framework assesses industry attractiveness through new entrants, buyer power, supplier power, substitute threats, and rivalry among existing competitors.

SWOT analysis

SWOT analysis examines internal strengths and weaknesses alongside external opportunities and threats to inform strategy formulation and environmental scanning.

Working capital cycle

The working capital cycle equals inventory days plus receivable days minus payable days; shortening it reduces the cash locked in operations.

Walter dividend model

Walter's model relates dividend policy to share value using return on investment and cost of capital, holding that optimal payout depends on their comparison.

Capital budgeting techniques

Capital budgeting uses NPV, IRR, discounted payback, profitability index, and accounting rate of return to evaluate long-term investment proposals and rank alternatives.