ICSB CS Executive key terms

The charter document that states a company's name, registered office state, objects, liability of members and authorised capital, and defines the boundary of activities the company may lawfully undertake.

The internal rulebook governing a company's management, board composition, share transfers, meetings and voting, subordinate to the memorandum and to the Companies Act.

The principle that acts beyond the objects clause in a company's memorandum are void and cannot bind the company, even if every shareholder approves them.

The rule protecting outsiders who deal in good faith with a company, presuming internal procedures were followed; it does not excuse an outsider who had actual notice of irregularity.

The legal fiction that anyone dealing with a company is deemed to have read its public filings, so registered documents bind them whether or not they actually inspected the records.

The collective body elected by shareholders that directs the company's affairs, exercises powers on its behalf and owes duties of care and good faith to the company.

A non-executive director with no material pecuniary relationship with the company, its promoters or management, appointed to bring objective judgement to board decisions.

A contract or arrangement between a company and a director, key managerial person, promoter or their relatives or associated entities, requiring disclosure and often prior shareholder approval.

A board committee, chaired by an independent director and composed mostly of independent directors, that oversees financial reporting, internal controls and the statutory auditor's appointment.

An independent chartered accountant appointed by shareholders to examine the company's accounts and report whether the financial statements present a true and fair view.

A compliance review conducted by a practising company secretary that checks whether a company has complied with the Companies Act, rules and other applicable laws.

A qualified governance professional responsible for board procedures, statutory registers, filings with the Registrar and advising directors on their legal and fiduciary obligations.

A private company with a single member and a nominee whose name is recorded in the memorandum, enjoying limited liability and simplified compliance compared with other companies.

A company whose articles restrict share transfers and cap the number of members, and which may not invite the public to subscribe for its securities.

A company that is not a private company, may have any number of members and can raise capital from the public through an offer of securities.

A body corporate formed under the LLP Act whose partners manage it as agents of one another but whose liability is limited to agreed contributions, with no minimum capital requirement.

A business relationship between two or more persons who share profits and who are jointly and severally liable without limit for the firm's obligations.

The registration certificate issued by the Registrar of Companies that brings a company into existence as a legal person from the date stated on it.

The statutory officer who registers companies, maintains the public register of filings and takes enforcement action for default in statutory compliance.

The separation between a company and its members that shields shareholders from company debts, though courts may lift it in cases of fraud or deliberate misuse.

The process of collecting a company's assets, paying creditors and distributing any surplus to members, after which the company is dissolved and ceases to exist.

A members' or creditors' liquidation initiated by the company itself when it has no debt or can prove solvency, conducted under the insolvency framework with a resolution professional.

The time-bound process under the insolvency code in which a resolution professional runs the debtor's business, invites plans and seeks creditor approval to revive it as a going concern.

The test determining whether a person is a resident or non-resident for tax purposes, based on days of stay in India and, for residents, whether they are ordinarily resident.

The financial year in which income is earned and which immediately precedes the assessment year in which that income is taxed.

The twelve-month period beginning on 1 April in which income earned in the preceding financial year is assessed and taxed.

The aggregate of income from all sources computed under the five heads after applying permissible deductions and set-offs, on which tax is finally levied.

Profit arising on the transfer of a capital asset, classified as short-term or long-term by holding period, with concessional rates and exemptions available in specified cases.

The credit a registered person may claim for tax paid on inward supplies of goods or services used in business, set off against tax payable on outward supplies.

The statutory location that determines whether a supply of goods or services is intra-state or inter-state, and therefore whether central and state tax or integrated tax applies.

The systematic allocation of the cost of a fixed asset over its useful life, reflecting consumption of economic benefit and reducing reported profit each period.

The excess of current assets over current liabilities, measuring the short-term funds available to run day-to-day operations and meet near-term obligations.

A liquidity measure dividing current assets by current liabilities, indicating how many rupees of near-term resources cover each rupee of near-term obligations.

The sales volume at which total contribution equals total fixed cost, so the business earns neither profit nor loss.

Sales revenue less variable costs, representing the amount available to absorb fixed costs and then generate profit.

A financial statement classifying cash movements into operating, investing and financing activities to explain the change in cash during a period.

A first sale of shares by an unlisted company to the public through a prospectus, raising capital and listing its securities on a recognised stock exchange.

A formal disclosure document inviting the public to subscribe for securities, containing material information about the issuer, the offer and the associated risks.

A prospectus that omits the exact price and number of securities offered, used to gauge investor demand before the final price is determined.

A price discovery mechanism in which investors bid within a price band and the issuer, with the lead manager, sets the final price from the demand gathered.

The segment where securities are issued and sold for the first time by companies to investors, with proceeds flowing to the issuer.

The exchange-based market where already-issued securities trade between investors, providing liquidity and price discovery without raising new funds for the issuer.

A recognised marketplace that provides trading facilities, surveillance and settlement infrastructure for listed securities under regulatory oversight.

Dealing in a listed company's securities while in possession of unpublished price-sensitive information, prohibited to protect market fairness and investor confidence.

The regulatory framework governing acquisitions of substantial voting rights in listed companies, triggering mandatory open offers to remaining shareholders.

The purchase of shares or voting rights beyond prescribed thresholds in a listed company, which obliges the acquirer to make a public offer to other shareholders.

The Foreign Exchange Management Act, which regulates dealings in foreign exchange, cross-border payments and foreign investment in Indian entities.

Investment by a non-resident in an Indian entity that confers control or a lasting interest, permitted under automatic or government approval routes.

A foreign exchange transaction relating to trade, services, interest, remittances or expenses, which is generally permitted unless specifically restricted.

A dispute resolution method in which parties refer their disagreement to a neutral tribunal whose award is binding and enforceable like a court decree.

A voluntary, confidential process in which a neutral facilitator helps disputing parties negotiate a settlement, without imposing a binding outcome.

An agreement enforceable by law, formed by offer, acceptance, lawful consideration, capacity of parties and free consent for a lawful object.

Something of value, whether an act, forbearance or promise, given by each party in exchange for the other's promise, making an agreement legally enforceable.

The minimum return a firm must earn on its investments to satisfy lenders and shareholders, computed as a weighted average of debt and equity costs.

The mix of debt and equity a company uses to finance its assets, which affects financial risk, cost of capital and shareholder returns.

The use of fixed-cost funds such as debt to magnify returns to shareholders, increasing both potential profit and financial risk.

The sum of a project's expected cash flows discounted at the cost of capital, less the initial outlay; a positive value indicates value creation.

The discount rate at which a project's net present value equals zero, used to compare a project's return with the required rate.

A strategic planning tool that maps an organisation's internal strengths and weaknesses against external opportunities and threats to inform strategy formulation.

The process of setting long-term direction, choosing competitive positioning and allocating resources to achieve organisational objectives in a changing environment.