Companies Act 2013: Sections at a Glance

Set A is mandatory for every student under the new scheme, and the Companies Act 2013 carries the largest weight in it. The examiner rarely asks you to explain a concept in depth. What gets asked is: which section, how many days, what threshold. Everything below is built around those three questions.

Part 1Chapter-wise quick notes

Incorporation and company types Ch. II

• Sec 3 — Formation. Public company needs 7 or more persons, private 2 or more, OPC 1 person.
• Sec 3A — If membership falls below the minimum and business continues beyond 6 months, every remaining member aware of the fact becomes severally liable for debts contracted after those 6 months.
• Sec 4 — Memorandum. Name reservation is valid for 20 days from approval (RUN / SPICe+ Part A).
• Sec 7 — Incorporation. Registered office details to be furnished within 30 days of incorporation.
• Sec 8 — Companies with charitable objects. Licence granted by Central Government; profits applied only to objects, no dividend to members.
• Sec 10A — Declaration of commencement of business within 180 days of incorporation. Without it, the company cannot borrow or commence business.
• Sec 12 — Registered office to be capable of receiving communication from the 15th day of incorporation; change intimated in 30 days.

Prospectus and share capital Ch. III & IV

• Sec 26 — Matters to be stated in a prospectus.
• Sec 32 — Red herring prospectus. Filed with Registrar at least 3 days before the opening of the offer.
• Sec 39 — Minimum subscription. If not received within 30 days of issue of prospectus, application money refunded within 15 days from closure.
• Sec 42 — Private placement. Offer to a maximum of 200 persons in a financial year, excluding QIBs and employees under ESOP. Return of allotment in Form PAS-3 within 15 days.
• Sec 43 — Kinds of share capital: equity and preference.
• Sec 52 — Securities premium account and its permitted applications.
• Sec 54 — Sweat equity shares.
• Sec 55 — Preference shares redeemable within 20 years; infrastructure companies may issue up to 30 years.
• Sec 62 — Further issue of capital. Rights offer open for a minimum of 15 days and maximum 30 days.
• Sec 68 — Buy-back. Maximum 25% of aggregate paid-up capital and free reserves; post-buy-back debt-equity ratio not to exceed 2:1. Completion within 1 year of the special resolution.
• Sec 69 — Transfer to Capital Redemption Reserve where buy-back is out of free reserves.

Deposits and charges Ch. V & VI

• Sec 73 — Prohibition on acceptance of deposits from the public. Private companies may accept from members subject to conditions.
• Sec 76 — Eligible public companies may accept public deposits: net worth of ₹100 crore or more, or turnover of ₹500 crore or more.
• Form DPT-3 — Annual return of deposits and of money not treated as deposits, filed by 30 June each year for the year ended 31 March.
• Sec 77 — Registration of charge within 30 days of creation. Extension available on payment of additional fees.
• Sec 82 — Intimation of satisfaction of charge within 30 days.

Management and administration Ch. VII

• Sec 88 — Registers of members, debenture-holders and other security holders.
• Sec 89 — Declaration of beneficial interest.
• Sec 90 — Significant beneficial owner. Threshold is 10% of shares, voting rights, or distributable dividend.
• Sec 92 — Annual return in Form MGT-7, filed within 60 days of the AGM.
• Sec 96 — AGM. First AGM within 9 months of the close of the first financial year; subsequent AGMs within 6 months of close and with a gap of not more than 15 months.
• Sec 100 — Extraordinary general meeting; requisition by members holding 1/10th of paid-up capital carrying voting rights.
• Sec 101 — Notice of general meeting: 21 clear days.
• Sec 103 — Quorum for a public company: 5 members if membership is up to 1,000; 15 if 1,000–5,000; 30 if above 5,000. Private company: 2 members.
• Sec 105 — Proxy may represent up to 50 members holding in aggregate not more than 10% of total voting share capital.

Accounts and audit Ch. IX & X

• Sec 128 — Books of account preserved for 8 financial years.
• Sec 129 — Financial statements to give a true and fair view and comply with notified accounting standards.
• Sec 134 — Board’s report and its signing.
• Sec 135 — CSR. Applies where, in the immediately preceding financial year, the company has net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more. Spend is 2% of average net profit of the preceding three financial years.
• Sec 137 — Financial statements filed in Form AOC-4 within 30 days of the AGM.
• Sec 139 — Appointment of auditor for 5 consecutive years. Rotation applies to listed and prescribed classes: individual auditor one term of 5 years, audit firm two terms of 5 years.
• Sec 141 — Disqualifications of auditors.
• Sec 143(12) — Reporting of fraud to the Central Government where the amount involved is ₹1 crore or above; below that, reported to the Audit Committee or Board.
• Sec 148 — Cost audit and maintenance of cost records.

Directors and Board Ch. XI & XII

• Sec 149 — Minimum directors: public 3, private 2, OPC 1. Maximum 15, exceeded only by special resolution. At least one director must have stayed in India for 182 days or more in the financial year.
• Sec 149(1) proviso — Every listed company to have at least one woman director.
• Sec 152 — Appointment of directors; at least two-thirds of directors of a public company to be liable to retire by rotation.
• Sec 164 — Disqualifications, including failure to file financial statements or annual returns for three continuous financial years.
• Sec 165 — Directorship limit: 20 companies, of which not more than 10 may be public companies.
• Sec 173 — Board meetings. First within 30 days of incorporation, then a minimum of 4 meetings a year with a gap of not more than 120 days between two consecutive meetings.
• Sec 174 — Board quorum: one-third of total strength or 2 directors, whichever is higher.
• Sec 177 — Audit Committee. Sec 178 — Nomination and Remuneration Committee, and Stakeholders Relationship Committee where there are more than 1,000 security holders.
• Sec 179 and Rule 8 — Powers exercisable only at a Board meeting.
• Sec 180 — Restrictions on Board powers; borrowing beyond paid-up capital plus free reserves plus securities premium requires a special resolution.
• Sec 185 — Loan to directors. Sec 186 — Loan and investment by company. Sec 188 — Related party transactions.
• Sec 197 — Managerial remuneration ceiling of 11% of net profits for a public company.
• Sec 203 — Key managerial personnel; applies to listed companies and public companies with paid-up capital of ₹10 crore or more.

Part 2Repeated questions

Part 3Recall rail

Cover the right column. If the section number comes to you unprompted, move on.