Photo by Kaboompics .com on Pexels.com Companies Act, 2013 Definitions Companies Act, 2013 By EduTaxTuber Team June 3, 2020April 3, 2022 15 minutes, 19 seconds Read Definitions Companies Act 2013 Section 2 – Definitions Companies Act 2013 of the Companies Act, 2013 deals with important definitions Section 2(1) Abridged Prospectus means a memorandum containing such salient features of a prospectus as may be specified by the Securities and Exchange Board by making regulations in this behalf; Section 2(2) Accounting Standards Means the standards of accounting or any addendum thereto for companies or class of companies referred to in section 133; Section 2(3) Alter or Alteration includes the making of additions, omissions and substitutions; Section 2(4) Appellate Tribunal Means the National Company Law Appellate Tribunal constituted under section 410; Section 2(5) Articles means the articles of association of a company as originally framed or as altered from time to time or applied in pursuance of any previous company law or of this Act; Definitions Companies Act 2013 Section 2(6) Associate Company in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company. *[Explanation.—For the purpose of this clause,— (a) the expression “significant influence” means control of at least twenty per cent. of total voting power, or control of or participation in business decisions under an agreement; (b) the expression “joint venture” means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement;] *Substituted by the Companies (Amendment) Act, 2017 :- Effective From 7th May 2018 in section 2,for clause (6),for the Explanation:- For the purposes of this clause, “significant influence” means control of at least twenty per cent of total share capital, or of business decisions under an agreement the following Explanation shall be substituted, namely :- Explanation.—For the purpose of this clause,— (a) the expression “significant influence” means control of at least twenty per cent. of total voting power, or control of or participation in business decisions under an agreement; (b) the expression “joint venture” means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement; Section 2(7) Auditing Standards Definitions Companies Act 2013 Means the standards of auditing or any addendum thereto for companies or class of companies referred to in sub-section (10) of section 143; Section 2(8) Authorised Capital or Nominal capital Means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company; Section 2(9) Banking Company Means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) Section 2(10) Board of Directors in relation to a company, means the collective body of the directors of the company; Section 2(11) Body Corporate includes a company incorporated outside India, but does not include— (i) a co-operative society registered under any law relating to co-operative societies; and (ii) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf; Section 2(12) Book and Paper and Book or Paper include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form; 2(13) Books of account Definitions Companies Act 2013 includes records maintained in respect of— (i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place; (ii) all sales and purchases of goods and services by the company; (iii) the assets and liabilities of the company; and (iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section; Section 2(14) Branch office in relation to a company, means any establishment described as such by the company; Section 2(15) Called-up Capital Means such part of the capital, which has been called for payment; Section 2(16) Charge Means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage; Section 2(17) Chartered Accountant Means a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice under sub-section (1) of section 6 of that Act; Section 2(18) Chief Executive Officer Means an officer of a company, who has been designated as such by it; Section 2(19) Chief Financial Officer Means a person appointed as the Chief Financial Officer of a company; Section 2 (20) Company Means a company incorporated under this Act or under any previous company law Section 2(21) Company limited by guarantee Means a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up; Section 2(22) Company limited by shares Means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them; Section 2 (23) Company Liquidator in so far as it relates to the winding up of a company, means a person appointed by— (a) the Tribunal in case of winding up by the Tribunal; or(b) the company or creditors in case of voluntary winding up,as a Company Liquidator from a panel of professionals maintained by the Central Government under subsection (2) of section 275; Section 2(24) Company Secretary or Secretary Means a company secretary as defined in clause (c) of sub-section (1) of section 2 of the Company Secretaries Act, 1980 (56 of 1980) who is appointed by a company to perform the functions of a company secretary under this Act;] Section 2(25) Company Secretary in Practice Means a company secretary who is deemed to be in practice under sub-section (2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980); Section 2(26) Contributory Means a person liable to contribute towards the assets of the company in the event of its being wound up. Explanation.—For the purposes of this clause, it is hereby clarified that a person holding fully paid-up shares in a company shall be considered as a contributory but shall have no liabilities of a contributory under the Act whilst retaining rights of such a contributory Section 2(27) Control Shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner; Section 2(28) Cost Accountant Means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act;] Substituted by the Companies (Amendment) Act,2017 in section 2,for clause (28):- “cost accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959); the following Clause shall be substituted, namely :- “Cost Accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of the Cost and Works Accountants Act, 1959 and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act; Section 2(29) Court Means— (i) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any district court or district courts subordinate to that High Court under sub-clause (ii); (ii) the district court, in cases where the Central Government has, by notification, empowered any district court to exercise all or any of the jurisdictions conferred upon the High Court, within the scope of its jurisdiction in respect of a company whose registered office is situate in the district; (iii) the Court of Session having jurisdiction to try any offence under this Act or under any previous company law; (iv) the Special Court established under section 435 (v) any Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any previous company law; Section 2(30) Debenture Includes debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not; Provided that— (a) the instruments referred to in Chapter III-D of the Reserve Bank of India Act, 1934; and (b) such other instrument, as may be prescribed by the Central Government in consultation with the Reserve Bank of India, issued by a company, shall not be treated as debenture;] Section 2(31) Deposit includes any receipt of money by way of deposit or loan or in any other form by a company, but does not include such categories of amount as may be prescribed in consultation with the Reserve Bank of India; Section 2(32) Depository Means a depository as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996); Section 2(33) Derivative Means the derivative as defined in clause (ac) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); Section 2(34) Director Means a director appointed to the Board of a company; Section 2(35) Dividend includes any interim dividend; Section 2(36) Document includes summons, notice, requisition, order, declaration, form and register, whether issued, sent or kept in pursuance of this Act or under any other law for the time being in force or otherwise, maintained on paper or in electronic form; Section 2(37) Employees’ Stock Option Means the option given to the directors, officers or employees of a company or of its holding company or subsidiary company or companies, if any, which gives such directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the company at a future date at a pre-determined price; Section 2(38) Expert includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force; Section 2(39) Financial Institution includes a scheduled bank, and any other financial institution defined or notified under the Reserve Bank of India Act, 1934 (2 of 1934); Section 2(40) Financial Statement Financial statement” in relation to a company, includes— (i) a balance sheet as at the end of the financial year; (ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year; (iii) cash flow statement for the financial year; (iv) a statement of changes in equity, if applicable; and (v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to sub-clause (iv): [Provided that the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement;] Section 2(41) Financial year in relation to any company or body corporate, means the period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year, in respect whereof financial statement of the company or body corporate is made up: Provided that where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Central Government may, on an application made by that company or body corporate in such form and manner as may be prescribed, allow any period as its financial year, whether or not that period is a year: [Provided further that]] any application pending before the Tribunal as on the date of commencement of the Companies (Amendment) Ordinance, 27[2019], shall be disposed of by the Tribunal in accordance with the provisions applicable to it before such commencement]]] [Provided also that]] a company or body corporate, existing on the commencement of this Act, shall, within a period of two years from such commencement, align its financial year as per the provisions of this clause; Section 2(42) Foreign Company Means any company or body corporate incorporated outside India which,— (a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and (b) conducts any business activity in India in any other manner. Section 2(43) Free Reserves Means such reserves which, as per the latest audited balance sheet of a company, are available for distribution as dividend: Provided that— (i) any amount representing unrealised gains, notional gains or revaluation of assets, whether shown as a reserve or otherwise, or (ii) any change in carrying amount of an asset or of a liability recognized in equity, including surplus in profit and loss account on measurement of the asset or the liability at fair value, shall not be treated as free reserves; Section 2(44) Global Depository Receipt Means any instrument in the form of a depository receipt, by whatever name called, created by a foreign depository outside India and authorised by a company making an issue of such depository receipts; Section 2(45) Government Company Means any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company; Section 2(46) Holding Company in relation to one or more other companies, means a company of which such companies are subsidiary companies; Section 2(47) Independent Director Means an independent director referred to in sub-section (6) of section 149; Section 2(48) Indian Depository Receipt Means any instrument in the form of a depository receipt created by a domestic depository in India and authorised by a company incorporated outside India making an issue of such depository receipts; Section 2(49) Interested Director Means a director who is in any way, whether by himself or through any of his relatives or firm, body corporate or other association of individuals in which he or any of his relatives is a partner, director or a member, interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into by or on behalf of a company; Note: Omitted by the Companies (Amendment )Act,2017 Section 2(50) Issued Capital Means such capital as the company issues from time to time for subscription; Section 2(51) Key Managerial Personnel in relation to a company, means— (i) the Chief Executive Officer or the managing director or the manager; (ii) the company secretary; (iii) the whole-time director; (iv) the Chief Financial Officer; (omitted) *[(v) such other officer, not more than one level below the directors who is in whole-time employment, designated as key managerial personnel by the Board; and (vi) such other officer as may be prescribed] *Substituted by the Companies (Amendment) Act,2017 In clause 51,for clause (v) such other officer as may be prescribed; the following sub-clauses shall be substituted, namely :- “(v)such other officer, not more than one level below the directors who is in whole-time employment, designated as key managerial personnel by the Board; and (vi) such other officer as may be prescribed” Section 2(52) Listed Company Means a company which has any of its securities listed on any recognised stock exchange; Section 2(53) Manager Means an individual who, subject to the superintendence, control and direction of the Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a company, and includes a director or any other person occupying the position of a manager, by whatever name called, whether under a contract of service or not; Section 2(54) Managing Director Means a director who, by virtue of the articles of a company or an agreement with the company or a resolution passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called. Explanation.—For the purposes of this clause, the power to do administrative acts of a routine nature when so authorised by the Board such as the power to affix the common seal of the company to any document or to draw and endorse any cheque on the account of the company in any bank or to draw and endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer of any share, shall not be deemed to be included within the substantial powers of management; Section 2(55) Member in relation to a company, means— (i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company, and on its registration, shall be entered as member in its register of members; (ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company; (iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository; Section 2(56) Memorandum Means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act; Section 2(57) Net Worth Means the aggregate value of the paid-up share capital and all reserves created out of the profits *[,securities premium account and debit or credit balance of profit and loss account], after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation; *Substituted by the Companies (Amendment) Act,2017 in clause (57), for the words and securities premium account the following words shall be substituted, namely :- “,securities premium account and debit or credit balance of profit and loss account” Section 2(58) Notification Means a notification published in the Official Gazette and the expression “notify” shall be construed accordingly; Source http://www.mca.gov.in/MinistryV2/homepage.html Share Your Valuable Feedback below in comment box Your feedback is highly appreciated and will help us to improve our ability to serve you better. 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