Important Definitions under Company Law – Part I

Section 

Term 

Definition 

2(1) 

Abridged Prospectus 

A memorandum containing such salient features of a prospectus as may be specified by SEBI by making regulations. 

2(2) 

Accounting Standards 

Standards of accounting or any addendum thereto for companies or class of companies referred to in Section 133. 

2(3) 

Alter / Alteration 

Includes the making of additions, omissions, and substitutions. 

2(4) 

Appellate Tribunal 

The National Company Law Appellate Tribunal constituted under Section 410. 

2(5) 

Articles 

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. 

2(6) 

Associate Company 

A company in which another company has significant influence (at least 20% voting power or control under agreement) but which is not its subsidiary; includes a joint venture company. 

2(7) 

Auditing Standards 

Standards of auditing or any addendum thereto for companies or class of companies referred to in sub-section (10) of Section 143. 

2(8) 

Authorised / Nominal Capital 

Capital authorised by the memorandum of a company to be the maximum amount of its share capital. 

2(9) 

Banking Company 

A banking company as defined in clause (c) of Section 5 of the Banking Regulation Act, 1949. 

2(10) 

Board of Directors / Board 

The collective body of the directors of the company. 

2(11) 

Body Corporate / Corporation 

Includes a company incorporated outside India; excludes co-operative societies and such other bodies as the Central Government may notify. 

2(12) 

Book and Paper / Book or Paper 

Includes books of account, deeds, vouchers, writings, documents, minutes, and registers maintained on paper or in electronic form. 

2(13) 

Books of Account 

Records maintained in respect of money received and expended, sales and purchases, assets and liabilities, and items of cost as prescribed under Section 148. 

2(14) 

Branch Office 

Any establishment described as such by the company. 

2(15) 

Called-Up Capital 

Such part of the capital which has been called for payment. 

2(16) 

Charge 

An interest or lien created on the property or assets of a company or any of its undertakings as security; includes a mortgage. 

2(17) 

Chartered Accountant 

A chartered accountant as defined under the Chartered Accountants Act, 1949, holding a valid certificate of practice. 

2(18) 

Chief Executive Officer 

An officer of a company designated as such by it. 

2(19) 

Chief Financial Officer 

A person appointed as the Chief Financial Officer of a company. 

2(20) 

Company 

A company incorporated under this Act or under any previous company law. 

2(21) 

Company Limited by Guarantee 

A company having the liability of its members limited by the memorandum to such amount as the members undertake to contribute to assets upon winding up. 

2(22) 

Company Limited by Shares 

A company having the liability of its members limited by the memorandum to the amount unpaid on the shares held by them. 

2(23) 

Company Liquidator 

A person appointed by the Tribunal as Company Liquidator under Section 275 for winding up of a company. 

2(24) 

Company Secretary / Secretary 

A company secretary as defined under the Company Secretaries Act, 1980, appointed by a company to perform secretarial functions under this Act. 

2(25) 

Company Secretary in Practice 

A company secretary deemed to be in practice under sub-section (2) of Section 2 of the Company Secretaries Act, 1980. 

2(26) 

Contributory 

A person liable to contribute towards the assets of the company in the event of its being wound up. A holder of fully paid-up shares is a contributory but has no liability as such. 

2(27) 

Control 

Includes the right to appoint majority of directors or to control management or policy decisions, exercisable directly or indirectly — through shareholding, management rights, shareholders' or voting agreements, or otherwise. 

2(28) 

Cost Accountant 

A cost accountant as defined under the Cost and Works Accountants Act, 1959, holding a valid certificate of practice. 

2(29) 

Court 

Includes the High Court having jurisdiction over the company's registered office; the district court where empowered by the Central Government; the Court of Session; the Special Court under Section 435; and any Metropolitan Magistrate or Judicial Magistrate of the First Class. 

2(30) 

Debenture 

Includes debenture stock, bonds, or any other instrument of a company evidencing a debt, whether or not constituting a charge on assets. Excludes instruments under Chapter III-D of the RBI Act, 1934 and such instruments as may be prescribed. 

2(31) 

Deposit 

Includes any receipt of money by way of deposit, loan, or in any other form by a company; excludes such categories as may be prescribed in consultation with the RBI. 

2(32) 

Depository 

A depository as defined under clause (e) of sub-section (1) of Section 2 of the Depositories Act, 1996. 

2(33) 

Derivative 

A derivative as defined in clause (ac) of Section 2 of the Securities Contracts (Regulation) Act, 1956. 

2(34) 

Director 

A director appointed to the Board of a company. 

2(35) 

Dividend 

Includes any interim dividend. 

2(36) 

Document 

Includes summons, notice, requisition, order, declaration, form, and register — whether issued, sent, or kept under this Act or any other law — maintained on paper or in electronic form. 

2(37) 

Employees' Stock Option 

The option given to directors, officers, or employees of a company or its holding or subsidiary company to purchase or subscribe for shares at a future date at a pre-determined price. 

2(38) 

Expert 

Includes an engineer, valuer, chartered accountant, company secretary, cost accountant, and any other person who has the power or authority to issue a certificate under any law in force. 

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(40) 

Financial Statement 

Includes balance sheet, profit and loss account or income and expenditure account, cash flow statement, statement of changes in equity (if applicable), and explanatory notes. Cash flow statement not required for OPC, small company, and dormant company. 

2(41) 

Financial Year 

The period ending on 31st March every year. Where incorporated on or after 1st January, it ends on 31st March of the following year. Central Government may allow a different period for holding/subsidiary/associate companies of foreign companies. 

2(42) 

Foreign Company 

Any company or body corporate incorporated outside India which has a place of business in India (physically or through electronic mode) and conducts any business activity in India in any other manner. 

2(43) 

Free Reserves 

Reserves available for distribution as dividend as per the latest audited balance sheet. Excludes unrealised gains, notional gains, revaluation of assets, and changes in carrying amount of assets or liabilities recognised in equity. 

2(44) 

Global Depository Receipt 

Any instrument in the form of a depository receipt created by a foreign depository outside India and authorised by a company making an issue of such receipts. 

2(45) 

Government Company 

A company in which not less than 51% of paid-up share capital is held by the Central Government, any State Government, or partly by both. Includes a subsidiary of such a company. 

2(46) 

Holding Company 

A company of which one or more other companies are subsidiary companies. The expression "company" includes any body corporate for this purpose. 

2(47) 

Independent Director 

An independent director as referred to in sub-section (6) of Section 149. 

2(48) 

Indian Depository Receipt 

Any instrument in the form of a depository receipt created by a domestic depository in India and authorised by a company incorporated outside India. 

2(50) 

Issued Capital 

Such capital as the company issues from time to time for subscription.