CA Inter Law cheat sheet

Companies Act, 2013 definitions: a private company restricts transfer of shares, limits members to 200 (excluding present and past employee-members), and prohibits public invitation for securities; a public company is any company that is not private.

One Person Company: only a natural person who is an Indian citizen may incorporate; a person cannot incorporate more than one OPC or be nominee in more than one OPC. Convert to private/public when paid-up capital exceeds Rs. 50 lakh or average annual turnover exceeds Rs. 2 crore (thresholds as notified).

Small company (s.2(85)): paid-up capital not exceeding Rs. 4 crore and turnover not exceeding Rs. 40 crore, as per prescribed limits; a holding or subsidiary company, s.8 company, or company governed by a special Act cannot be a small company.

Number of directors: public company minimum 3, private company minimum 2, OPC minimum 1; maximum 15, beyond which a special resolution is required. At least one resident director must stay in India for 180 days or more in the financial year.

Independent director criteria (s.149(6)): no material pecuniary relationship with company, promoters, or directors; not a promoter or relative of a promoter; no key managerial personnel relatiship in the preceding 3 financial years; tenure capped at two consecutive terms of 5 years with a 3-year cooling-off.

Board meeting rules (s.173): first meeting within 30 days of incorporation, then at least one meeting every quarter with a maximum gap of 120 days between two meetings; notice of at least 7 days in writing; shorter notice permitted for urgent business if at least one independent director (where applicable) is present.

Related party transactions (s.188): board approval by resolution at a board meeting; prior shareholders' approval by ordinary resolution is needed if specified thresholds are crossed (e.g., sale or purchase of goods or property exceeding 10% of turnover or net worth); an interested director cannot vote on the resolution.

Auditor rotation (s.139(2)): listed companies and prescribed classes (e.g., unlisted public companies with paid-up capital of Rs. 10 crore or more, or borrowings of Rs. 50 crore or more) cannot appoint an individual auditor for more than one term of 5 years or an audit firm for more than two terms of 5 years; cooling-off period is 5 years.

Indian Contract Act, 1872: a contract is an agreement enforceable by law; essentials include offer and acceptance, lawful consideration, capacity of parties, free consent, lawful object, and certainty of terms. Consideration need not be adequate but must be real and lawful.

Limited Liability Partnership Act, 2008: minimum 2 designated partners, at least one of whom must be a resident of India; every designated partner must obtain a DPIN; LLP agreement governs mutual rights and duties, and in its absence the First Schedule applies.

SEBI (ICDR) Regulations: an offer for sale or public issue requires an offer document; minimum promoter contribution and lock-in requirements apply; anchor investor allocation rules govern the QIB portion, and a red herring prospectus is filed before the issue opens.

Negotiable Instruments Act, 1881: a cheque is a bill of exchange drawn on a specified banker and payable on demand; dishonour for insufficient funds attracts s.138 liability only if the cheque was presented within 3 months and a demand notice is issued within 30 days of dishonour.

Interpretation of statutes: the literal rule applies where language is plain; the golden rule permits modification to avoid absurdity; the mischief rule examines the defect the statute intended to remedy; marginal notes and headings are aids to construction but not operative provisions.

General Clauses Act, 1897: repeal does not affect prior rights or liabilities unless a contrary intention appears; where an Act is repealed and re-enacted, references in other enactments are construed as references to the re-enacted provision.

FEMA, 1999: current account transactions are generally permitted unless notified as prohibited or requiring approval; capital account transactions are permitted only to the extent expressly allowed; resident Indians may hold foreign securities subject to prescribed limits and conditions.

Incorporation: file SPICe+ (or the prescribed form) with MOA, AOA, declarations, and fee; the Registrar issues a certificate of incorporation, which is conclusive evidence of the existence of the company; the CIN is allotted on registration.

Share capital: authorized capital is stated in the MOA; issued capital is that allotted; paid-up capital is the amount actually paid; a company may issue equity shares with differential rights, sweat equity shares, and preference shares subject to prescribed conditions and approvals.

Dividend (s.123): declare only out of profits of the year after providing for depreciation, or out of accumulated profits; transfer the prescribed percentage to reserves; unpaid or unclaimed dividend must be transferred to the Unpaid Dividend Account within 7 days of the expiry of 30 days from declaration.

Charges (s.77): a company must register a charge with the Registrar within 30 days of creation; the Registrar may allow registration within 60 days on payment of additional fees; after that, the charge may be registered only with the Regional Director's permission (or the Central Government as prescribed).

Winding up and striking off: the NCLT may order winding up on grounds including inability to pay debts; the Registrar may strike off a defunct company under s.248 if it has not commenced operations within one year of incorporation or has not carried on business for two preceding financial years.

Director disqualification (s.164): a person cannot be appointed if of unsound mind, an undischarged insolvent, has applied to be adjudicated insolvent, has been convicted of an offence involving moral turpitude (5-year bar), or has failed to obtain a DIN; s.167 covers vacation of office.

Compounding and penalties: many offences under the Companies Act are compoundable by the NCLT or the Regional Director depending on the maximum fine; serious frauds and certain offences are non-compoundable; the adjudicating officer under s.454 imposes penalties after a show-cause hearing.

Annual filings: file AOC-4 (financial statements) within 30 days of the AGM and MGT-7 (annual return) within 60 days of the AGM; the first AGM must be held within 9 months of the close of the first financial year, and subsequent AGMs within 6 months of the close of the financial year and within 15 months of the previous AGM.