CA Final Paper 4 cheat sheet

Paper 4 - Corporate and Economic Laws: Key Rules

• Companies Act 2013 s.2(87): subsidiary means a company in which the holding company controls the composition of the Board or exercises/controls more than one-half of the total voting power, either on its own or together with one or more of its subsidiary companies.

• Share transfer restrictions: private company articles may restrict transfer under s.58; refusal to register must be communicated within 30 days of receipt of the instrument, and appeal lies to the Tribunal within 60 days of the refusal.

• Related party transactions: s.188 requires prior Board approval and, if prescribed thresholds are crossed, prior approval of members by ordinary resolution; an interested director abstains from voting at the Board meeting.

• Insolvency and Bankruptcy Code 2016: corporate insolvency resolution process must be completed within 180 days from the insolvency commencement date, extendable by the Adjudicating Authority by up to 90 days on an application by the resolution professional.

• SEBI (LODR) Regulations 2015: a listed entity must have at least one-third of its board as independent directors where the chairperson is a non-executive non-promoter; if the chairperson is an executive director, at least half must be independent.

• Competition Act 2002: combinations crossing the assets or turnover thresholds in s.5 require prior notification to the Competition Commission of India; the CCI must form a prima facie opinion within 30 working days of notification.

• Prevention of Money Laundering Act 2002: reporting entities must maintain records of transactions for at least five years from the date of the transaction and verify client identity under the KYC norms.

• FEMA 1999: current account transactions are generally permitted unless restricted by the Rules; capital account transactions require the permission of the Reserve Bank or are permitted to the extent specified in the regulations.

• Companies Act 2013 s.135: companies meeting the net worth, turnover, or net profit thresholds must spend at least 2% of average net profits of the three immediately preceding financial years on CSR; unspent amounts must be transferred to a specified fund within six months.