CS Executive: Setting Up of Business flashcards

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

Separate legal personality

Doctrine from Salomon v Salomon that a company is a distinct legal person from its members, can own property, contract and sue in its own name, and has perpetual succession.

Limited Liability Partnership

Body corporate under the LLP Act, 2008 with perpetual succession and separate legal entity; partners' liability is limited to their agreed contribution, and at least two designated partners are required.

One Person Company

Private company with exactly one member and one director, permitted under the Companies Act, 2013; the sole member must nominate another individual as nominee.

PESTLE analysis

Framework classifying macro-environment factors into Political, Economic, Social, Technological, Legal and Environmental categories to assess external influences on a business.

Memorandum of Association

Charter document of a company containing name, registered office, objects, liability, capital and subscription clauses; defines the scope of the company's activities.

Articles of Association

Internal rulebook governing management and administration of a company; Table F of Schedule I applies where articles are silent for companies limited by shares.

SPICe+ form

Integrated web form under the Companies (Incorporation) Rules, 2014 used for name reservation, incorporation, DIN, PAN, TAN and other registrations in a single application.

Certificate of incorporation

Document issued by the Registrar confirming company registration; under Section 35 it is conclusive evidence that the company has been duly incorporated.

Independent director

Non-executive director meeting Section 149(6) criteria, including no material pecuniary relationship with the company, promoters or subsidiaries and no employment in the preceding three financial years.

Audit Committee

Board committee required for listed and prescribed companies under Section 177, overseeing financial reporting, internal controls, auditor appointment and related party transactions.

Related party transaction

Contract between a company and a related party; requires Audit Committee approval and shareholder approval by ordinary resolution where prescribed thresholds are exceeded.

CSR obligation

Section 135 duty to spend 2% of average net profit of the preceding three years where net worth, turnover or net profit crosses prescribed thresholds.

Board meeting frequency

Minimum four board meetings per calendar year, with the gap between two consecutive meetings not exceeding 120 days; first meeting within 30 days of incorporation.

Paid-up share capital

Total amount of money actually received by the company from shareholders on issued shares, including face value and premium; excludes uncalled or unpaid amounts.

Private placement

Offer of securities to a select group of not more than 200 persons in a financial year under Section 42, excluding qualified institutional buyers and employees under ESOP.

Buy-back of shares

Company purchase of its own shares under Section 68, limited to 25% of paid-up capital plus free reserves, with post-buy-back debt-equity ratio not exceeding 2:1.

Current ratio

Liquidity measure computed as current assets divided by current liabilities; indicates short-term ability to meet obligations as they fall due.

Net worth

Aggregate of paid-up share capital, all reserves and surplus, minus accumulated losses, deferred expenditure and miscellaneous expenditure not written off.

Free consent

Consent not caused by coercion, undue influence, fraud, misrepresentation or mistake; absence of free consent makes a contract voidable at the option of the aggrieved party.

Void versus voidable

Void agreements are unenforceable from the outset; voidable contracts remain valid until the aggrieved party rescinds them, for instance on grounds of coercion or fraud.

Section 138 NI Act

Provision making dishonour of a cheque for insufficient funds an offence; payee must issue notice within 30 days of receiving intimation of dishonour.

Arbitral award challenge

Application under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an award, filed within three months, extendable by up to thirty days.

Patent term

Under the Patents Act, 1970, protection lasts 20 years from the filing date, subject to payment of renewal fees; compulsory licences may be sought after three years from grant.

Copyright duration

For literary, dramatic, musical and artistic works, protection lasts the author's lifetime plus 60 years; films and sound recordings are protected 60 years from publication.

Trademark renewal

Registration under the Trade Marks Act, 1999 is valid for 10 years and renewable indefinitely for successive 10-year periods on payment of renewal fees.

Geographical indication

Registration under the GI Act, 1999 protecting goods originating in a specific place with a given quality or reputation; valid 10 years and renewable.

AOC-4 filing

Form for filing financial statements with the Registrar within 30 days of the annual general meeting; late filing attracts a penalty per day of default.

MGT-7 annual return

Annual return form filed with the Registrar within 60 days of the annual general meeting, disclosing shareholding, directors and other prescribed particulars.

Annual general meeting

First AGM within nine months of the first financial year end; later AGMs within six months of financial year end and not more than fifteen months apart.

GST registration threshold

Registration required on crossing ₹40 lakh turnover for goods and ₹20 lakh for services, with lower limits of ₹20 lakh and ₹10 lakh for special category states.

Startup India recognition

DPIIT recognition for entities up to 10 years old with turnover not exceeding ₹100 crore in any financial year, granting tax and self-certification benefits.

Section 80-IAC deduction

Income tax deduction of 100% of profits for three consecutive years out of ten, available to DPIIT-recognised eligible startups meeting prescribed conditions.

MSME classification

Micro, small and medium classification based on investment and turnover: micro up to ₹1 crore and ₹5 crore, small up to ₹10 crore and ₹50 crore, medium up to ₹50 crore and ₹250 crore.

Business Model Canvas

Nine-block framework covering customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partners and cost structure.