CA Inter Law key terms

An entity formed and registered under the Companies Act, or an existing company so registered, treated in law as a separate legal person distinct from its members and directors.

Any incorporated association or entity with a legal personality of its own, whether Indian or foreign, but excluding a cooperative society; a company is the typical example.

The principle that a company has an identity independent of its shareholders, so it can own property, contract, sue and be sued in its own name.

A court or statutory power to disregard the company's separate personality and look at the real persons behind it, typically for fraud, tax evasion, or sham arrangements.

A private company with only one member as its shareholder, which must nominate a natural person as nominee to take over on the member's death or incapacity.

A company whose articles restrict the transfer of shares, limit its members to two hundred, and prohibit any invitation to the public to subscribe to its securities.

A company that is not a private company, has a minimum of seven members, and may invite the public to subscribe to its securities, subject to prescribed conditions.

A private company whose paid-up capital and turnover do not exceed the prescribed limits, enjoying relaxations such as fewer board meetings and no cash flow statement.

A company whose securities are listed on a recognised stock exchange, which must additionally comply with SEBI regulations on governance and disclosure.

A company incorporated outside India that has a place of business in India, whether through an agent or otherwise, and must file prescribed documents with the Registrar.

The company's charter, stating its name, registered office state, objects, liability of members and authorised capital, and defining the scope of its activities.

The internal rulebook of a company governing its management, meetings, share transfers and other administrative matters, subordinate to the memorandum and the Act.

The rule that acts beyond the objects stated in the memorandum are void and cannot be ratified even by unanimous shareholder consent.

The rule protecting outsiders who deal with a company in good faith, letting them assume internal procedures were properly followed unless they had notice of irregularity.

A person who takes the initiative to form a company, arranges its capital and incorporation, and owes fiduciary duties including disclosure of interest in property brought to the company.

The process of registering a company with the Registrar by filing the memorandum, articles and declarations, upon which the certificate of incorporation is issued.

The conclusive evidence issued by the Registrar that a company has been duly registered and has come into existence from the date stated on it.

A unique twenty-one character alphanumeric code assigned to every registered company by the Registrar, used for identification in all regulatory filings.

Any document, notice, circular or advertisement inviting the public to subscribe to securities of a company, which must contain prescribed disclosures and be filed with the Registrar.

A prospectus that does not state the exact price or quantity of securities offered, used for book-building, and must be filed at least three days before the opening.

An offer of securities by a company to a selected group of identified persons, not exceeding the prescribed number, through a private placement offer letter.

An issue of shares or convertible securities to a select group of investors, such as promoters or strategic partners, at a price determined under applicable SEBI or company law rules.

An offer of new shares by a company to its existing shareholders in proportion to their holding, which must remain open for a minimum prescribed period.

A free allotment of additional shares to existing shareholders out of capitalised reserves or profits, made in proportion to their current holding and without any consideration.

The aggregate amount of capital raised by a company through the issue of shares, divided into equity and preference components and shown in the balance sheet.

The maximum amount of share capital a company is permitted to issue, as stated in its memorandum and subject to alteration by the prescribed procedure.

The portion of called-up share capital actually received by the company from shareholders, forming part of its real funds.

Shares that form the residual ownership of a company, carrying voting rights and entitlement to dividends and surplus after preference shareholders are paid.

Shares that carry a preferential right to dividends at a fixed rate and to repayment of capital on winding up, ahead of equity shareholders.

A written instrument acknowledging a debt owed by a company, usually carrying a fixed interest rate and often secured by a charge on its assets.

A right created in favour of a creditor over a company's assets as security for a debt, which must be registered with the Registrar within the prescribed period.

Any receipt of money by a company from the public or members by way of loan or otherwise, excluding amounts specifically exempted under the prescribed rules.

A person appointed to the board of a company to manage its affairs, owing duties of care, good faith and avoidance of conflict of interest.

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

The collective body of directors entrusted with the management and governance of the company, exercising powers through meetings and resolutions.

Senior officers such as the managing director, chief executive officer, chief financial officer and company secretary, who are responsible for day-to-day management and compliance.

A qualified professional responsible for compliance with company law, board and general meeting procedures, and statutory records, often a key managerial person.

A yearly meeting of shareholders held within the prescribed period, at which ordinary business such as adoption of accounts and appointment of auditors is transacted.

Any general meeting of shareholders other than the annual general meeting, convened as needed to consider urgent business requiring member approval.

A shareholder resolution passed at a general meeting by a majority of at least three times the votes cast against it, required for major changes.

A resolution passed by a simple majority of votes cast by shareholders present and voting at a general meeting, used for routine matters.