UNIT- I
DEFINITIONS
Section 2 of the Companies Act, 2013, deals with important definitions.
In this Act, unless the context otherwise requires,—
Section 2 (1) defines ‘Abridged Prospectus’ as 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) defines ‘Accounting standards’ as the standards of accounting or any addendum thereto for companies or class of companies referred to in Section 133.
As per Section 2 (7) ‘auditing standards’‖ means the standards of auditing or any addendum thereto for companies or class of companies referred to in sub-section (10) of section 143.
According to Section 2 (13), ‘books of account’ include 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.
According to 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.
According to 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:
a) Provided that on an application made by a company or body corporate, which is a holding company or a subsidiary of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Tribunal may, if it is satisfied, allow any period as its financial year, whether or not that period is a year.
b) Provided further 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) states that, ‘foreign company’ is 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 (47) states that, ‘independent director’‖is an independent director referred to in sub-section (6) of section 149.
According to 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;
According to Section 2 (62), ‘One Person Company’‖ means a company which has only one person as a member.
Section 2 (85) defines ‘small company’ as a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees; or
(ii) turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act.
Key Takeaway
- Section 2 of the Companies Act, 2013, deals with important definitions.
References:
- Dam, B.B., Choudhury, R.N., Nag, R & Dam, L.B. Company Law, Gayatri Publications, Guwahati, Assam (2020).
- The Companies Act, 2013.
