CS Executive Company Law flashcards

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

Doctrine of Ultra Vires

An act beyond the objects clause of the memorandum is void ab initio. Even unanimous shareholder consent cannot ratify it, since the company lacks capacity to perform it.

Doctrine of Constructive Notice

Because the MOA and AOA are public documents, any person dealing with the company is deemed to know their contents, regardless of whether they actually read them.

Indoor Management Rule

Outsiders dealing in good faith may assume internal procedures were complied with. It does not apply where the outsider had notice of irregularity, where the act is ultra vires, or where forgery is involved.

Promoter Definition

A person named in the prospectus or identified in the annual return, or who controls affairs and directs the formation of the company; occupies a fiduciary position toward the company.

Pre-incorporation Contract

A contract made by a promoter on behalf of a company not yet incorporated. The company is not bound, and the promoter remains personally liable unless the contract is novated.

Salomon v Salomon

A landmark case holding that on incorporation the company is a distinct legal person separate from its members, so members' liability is limited to unpaid amounts on shares.

Lifting the Corporate Veil

Courts disregard separate legal personality where the corporate form is used as a sham, façade, or instrument of fraud, tax evasion, or statutory evasion.

Certificate of Incorporation

Conclusive evidence of the company's existence, issued by the Registrar with the Corporate Identity Number; the date of incorporation starts all compliance timelines.

One Person Company

A company with one natural person as member. A natural person may incorporate only one OPC, and conversion to private or public company is permitted.

Small Company

A company with paid-up capital up to Rs 4 crore and turnover up to Rs 40 crore, not being a public, holding, subsidiary, or Section 8 company.

Section 8 Company

A company formed for charitable objects, applying profits to its objects without paying dividends, holding a Central Government licence and enjoying relaxed compliance.

Private Company Restrictions

Restricts share transfers, limits members to 200 excluding present and past employee-members, and prohibits any public invitation to subscribe for its securities.

Memorandum of Association

The company's charter containing the name, registered office state, objects, liability, capital, and subscription clauses; alteration requires special resolution and, for name, Central Government approval.

Articles of Association

Internal regulations governing the company's management. Table F applies to companies limited by shares when articles are silent; alteration requires a special resolution.

Share Definition

A share in the share capital of a company, which is movable property transferable as provided in the articles, representing a bundle of rights and liabilities.

Redeemable Preference Shares

Preference shares redeemable within 20 years under Section 55, with premium payable from securities premium or profits available for dividend.

Private Placement

An offer of securities to not more than 200 persons in a financial year; allotment must occur within 60 days of receipt of application money, failing which refund with 12% interest.

Debenture Definition

An instrument evidencing a debt of the company, whether or not it constitutes a charge on assets, including debenture stock and bonds.

Rights Issue

An offer of new shares to existing equity holders in proportion to their paid-up capital, open for a minimum of 7 days, with a right of renunciation.

Register of Members

A statutory register maintained from incorporation, with entries made within 7 days of allotment or transfer, kept at the registered office and open for inspection.

Share Transfer Timeline

The transfer instrument must be lodged with the company within 60 days; the company then delivers the share certificate within 1 month of receipt.

Oppression and Mismanagement

A member's right under Section 241 to apply to the NCLT where the company's affairs are conducted oppressively or in a manner prejudicial to members or the public interest.

Independent Director

A non-executive director meeting the criteria in Section 149(6), with a maximum tenure of two terms of five consecutive years and a three-year cooling-off period.

Board Meeting Frequency

At least four board meetings must be held in each calendar year, with a maximum gap of 120 days between two consecutive meetings; small companies and OPCs are exempt.

Board Quorum

One-third of the total strength of the Board or two directors, whichever is higher; interested directors are excluded from quorum and voting on related-party matters.

Annual General Meeting

The first AGM must be held within 9 months of the first financial year end, and subsequent AGMs within 6 months of year end, with a gap not exceeding 15 months.

Special Resolution

A resolution passed by at least three times the votes cast against it at a general meeting, required for matters such as altering the articles or objects.

Postal Ballot

A voting method under Section 110 allowing members to vote without a physical meeting, mandatory for listed companies and specified resolutions such as buy-back.

Dividend Payment Timeline

Dividend must be paid within 30 days of declaration; unpaid amounts go to the Unpaid Dividend Account within 7 days thereafter, with 12% interest for delay.

Investor Education and Protection Fund

Unpaid or unclaimed dividends and the underlying shares, outstanding for seven years, are transferred to this fund under Section 124.

Registration of Charge

A company must file particulars of a charge with the Registrar within 30 days of creation; the Registrar may allow a further 30 days with additional fee.

Inter-corporate Loan Limit

Under Section 186, loans and investments are capped at 60% of paid-up capital plus free reserves or 100% of free reserves plus securities premium, whichever is higher, unless a special resolution is passed.

Scheme of Arrangement

A compromise or arrangement under Section 230 requiring NCLT-convened meetings and approval by 75% in value of members or creditors present and voting.

Winding Up Grounds

Section 271 grounds include inability to pay debts, a special resolution, failure to commence business within a year, and just and equitable grounds.

Fast-track Merger

A Section 233 merger available to small companies, holding-subsidiary entities, and startups, approved by members and creditors and the Regional Director without NCLT sanction.