Corporate Law and Governance
What this domain tests
Corporate Law and Governance tests the Companies Act, 2013 framework and the board’s accountability: incorporation, share capital, meetings, directors, audit committees, related-party transactions, and the distinction between legal form and governance substance.
Core rules to know
- A company is a separate legal person with perpetual succession and limited liability; shareholders own shares, not company assets.
- Incorporation requires MoA, AoA, subscriber details and a registered office; the CIN is the company’s unique identifier. A private company needs at least 2 members and 2 directors; a public company 7 members and 3 directors; an OPC 1 member.
- General meeting quorum under Section 103: public company 5 members present personally; private company 2; OPC 1. Board quorum under Section 174: one-third of total strength or 2 directors, whichever is higher, subject to the private-company proviso of 2 directors.
- Listed public companies need independent directors (at least one-third under Section 149(4)) and an audit committee under Section 177; related-party transactions under Section 188 require specified approvals.
Worked example
ABC Private Limited has six members but only two attend its AGM. Quorum is met: Section 103 prescribes two members for a private company. If the meeting lacked quorum, it would be adjourned; the adjourned meeting’s quorum rules differ and should be checked in the articles and the Act.
Traps that cost marks
Do not treat limited liability as immunity for fraud or veil-lifting. Do not confuse board quorum with general-meeting quorum. Do not assume every private company is exempt from governance provisions: exemptions are specific and conditional.