Summary of "Companies Act 2013 One Shot | Complete Syllabus in 1 Video | SEBI Grade A 2025 & PFRDA Exam Prep|"

Summary of Main Ideas and Concepts

1. Introduction to Companies Act 2013 & Exam Preparation Tips

The Companies Act is factual; memorize key numbers such as penalties, percentages, years, and member counts.
Use pen and paper to write important facts while studying.
The Act has undergone many amendments, the latest being in 2020 with 61 sections amended and 4 new sections added.

2. Chapter 3: Prospectus and Allotment of Securities

Companies issue shares publicly or privately.
Public issue can be done by the company or through intermediaries like merchant bankers or underwriters.
Prospectus: A document disclosing company info, share details, financial risks, products, and material information for investors.
Prospectus must include:
- Company name, registered office, contact details
- Minimum subscription, allotment mode, refund policy
- Declaration by directors
Private placement involves issuing shares to select investors, with proper documentation to avoid fraud.
Liability for incorrect or misleading prospectus lies with the company and its directors.
SEBI regulates share issuance, trading, and listing.
Important sections:
- Section 23: Public offer and private placement rules
- Section 25: Allotment through intermediaries and liability
- Section 26: Contents and filing of prospectus, signing requirements, and penalties for non-compliance
- Section 27: Variations in terms require special resolution and exit option for dissenting shareholders
- Section 28: Offer for sale (OFS) where promoters sell shares through the company acting as facilitator
Shares must be issued in dematerialized form except for government companies or wholly owned subsidiaries.
Filing forms (e.g., Form PAS-6) with ROC is mandatory within specified timeframes.
Penalties for violations include fines on companies and responsible persons, but criminal liability has been reduced post-amendment.

3. Types of Prospectuses

Shelf Prospectus: Issued once for multiple issues over time with uniform terms.
Red Herring Prospectus: An incomplete prospectus without final price, followed by a final prospectus after subscription closes.
Summary (abridged) prospectus: Must be provided with application forms in public issues.

4. Misstatements and Fraud in Prospectus

False or misleading statements lead to civil liability and compensation to investors.
Fraudulent claims can lead to prosecution, fines, and imprisonment.
Investors can file suits for misleading statements or omissions.
Multiple applications or applying in fictitious names for shares is punishable under Section 447 (fraud).

5. Allotment Conditions and Refunds

Minimum subscription (usually 90%) must be received before allotment.
Refunds must be made within 15 days if minimum subscription is not met.
Directors may be personally liable for interest and penalties if refunds are delayed.
Application money must be kept in a separate bank account until allotment or refund.

6. Securities and Stock Exchanges

IPOs must be approved by stock exchanges like BSE and NSE.
Money received must be kept in a separate bank account.
Underwriters may be paid commissions as per Articles of Association.

7. Global Depository Receipts (GDRs)

Indian companies can issue GDRs to list shares on foreign stock exchanges.
Depository banks (e.g., Citibank) issue receipts backed by underlying shares.
Requires special resolution and compliance with terms.

8. Private Placement (Section 42)

Private placement limited to 50 investors at a time (excluding qualified institutional buyers and employees).
Securities must be allotted within 60 days of receipt of application money.
Refunds must be made within 15 days after 60 days if allotment not done.
Penalties and interest apply for non-compliance.
Offer letters must be sent to named persons only and recorded in a register.
Forms PAS-4 and PAS-5 must be filed with ROC regarding private placements.

9. Chapter 4: Share Capital and Debentures

Types of shares: Equity shares and Preference shares.
Preference shares get priority in dividend and repayment during winding up.
Cumulative preference shares accumulate unpaid dividends.
Equity shares usually have voting rights; differential voting rights shares have limited voting but higher dividends.
Shares and debentures are movable property and transferable as per Articles of Association.
Share certificates are issued with distinctive numbers unless shares are dematerialized.
Duplicate share certificates can be issued on loss or damage with a fee.
Voting rights depend on paid-up capital and timely dividend payment.
Variation in shareholder rights requires consent of 75% of affected class and tribunal intervention if opposed.
Calls on shares must be uniform within a class.
Acceptance of unpaid capital voluntarily paid is allowed.
Dividends paid proportionally to paid-up capital.

10. Securities Premium Account

Premium received on issue of shares credited here.
Can be used for:
- Issuing bonus shares
- Writing off preliminary expenses
- Commission/discount on issue
- Redemption of preference shares or debentures
- Buyback of shares
Shares cannot be issued at a discount except in sweat equity or debt-to-equity conversion.

11. Sweat Equity Shares

Issued to directors or employees for their contribution other than cash.
Price is based on current market value.
Limits on issuance:
- 15% of paid-up equity capital or Rs. 5 crore per year
- Overall 25% of paid-up capital
Lock-in period of 3 years from allotment.
Special provisions for startups allow 50% of paid-up equity for 10 years.
Register of sweat equity shares to be maintained (Form SH-3).

12. Redeemable Preference Shares

Must be redeemed within 20 years (30 years for infrastructure companies).
At least 10% of redeemable shares redeemed annually.
Redemption can be out of profits or fresh issue proceeds.
Capital Redemption Reserve (CRR) must be created equal to nominal value of shares redeemed.
Premium on redemption can be paid out of profits.
CRR can be used for issuing bonus shares.

13. Transfer and Transmission of Shares

Transfer: Voluntary transfer by shareholder to another person with company’s approval.
Transmission: Transfer on death or insolvency of shareholder without consideration.
Transfer instrument must be stamped, dated, executed, and delivered within 60 days.
Company must register transfer unless objection is raised within 14 days.
Penalties for fraudulent transfers or impersonation of shareholders include fines and imprisonment.

14. Refusal and Appeal for Registration of Transfer

Company must notify transferor and transferee within 30 days if transfer is refused.
Transferee can appeal to tribunal within 60 days of refusal or 90 days of non-registration.
Penalties for non-compliance include imprisonment and fines.

15. Alteration of Share Capital (Section 61)

Companies can alter authorized share capital by passing ordinary resolutions.
Consolidation, subdivision, conversion between stock and shares allowed without changing voting rights.
Cancellation of unissued shares possible.
Changes must be filed with ROC.

16. Further Issue of Share Capital (Section 62)

Existing shareholders have right to subscribe to new shares to avoid dilution (rights issue).
Time given for acceptance is 15-30 days.
If shareholders refuse, shares can be offered to others with special resolution.
Preferential allotment to any person requires special resolution and valuation report.

17. Bonus Shares (Section 63)

Issued to shareholders from free reserves, securities premium, or capital redemption reserve.
Not allowed from revaluation reserves or if company has unpaid liabilities.
Shares must be fully paid before bonus issue.
Approval needed from board and general meeting.
Filing of notice with ROC within 30 days mandatory.
Penalties for non-compliance apply.

18. Reserve Share Capital on Conversion of Unlimited Company (Section 65)

On conversion to limited company, portion of nominal capital may be reserved.
Used only in winding up.

19. Reduction of Share Capital

Requires special resolution and NCLT approval.
Protection of creditors mandatory.
Capital reduction can be by extinguishing unpaid capital or returning surplus funds.
Penalties for concealment or fraud.

20. Loans for Purchase of Own Shares (Section 67)

Companies cannot provide loans, guarantees, or securities to buy their own shares except in limited cases (banking companies, employee share schemes).
Penalties include fines and imprisonment.

21. Buyback of Securities

Company can buy back shares up to 25% of paid-up capital and free reserves in a year.
Debt-equity ratio post-buyback should not exceed 2:1.
Buyback requires special or board resolution depending on amount.
Shares bought back must be extinguished within 7 days.
Restrictions on buyback from subsidiaries or if company defaults on payments.
Penalties for non-compliance.

22. Debentures

Types: Convertible and Secured.
Convertible debentures require special resolution.
Secured debentures have a maximum maturity of 10 years (30 years for infrastructure companies).
Debenture Redemption Reserve (DRR) must be created annually (15% of maturing debentures).
Appointment of debenture trustees mandatory if debenture holders exceed 500.

23. Nomination Facility (Section 72)

Available to all security holders.
Nomination recorded by company within 2 months.

24. Chapter 8: Declaration and Payment of Dividend

Dividend is a share of profits paid to shareholders.
Can be declared from current or past profits (free reserves).
Cannot be declared from unrealized gains or revaluation reserves.
Interim dividend can be declared before final accounts.
Dividend must be paid in cash or electronic mode, not in kind.
Restrictions if company defaults on deposits, loans, or statutory dues.
Penalties for non-payment within 30 days include imprisonment and fines.
Unclaimed dividends transferred to Unpaid Dividend Account and after 7 years to Investor Education and Protection Fund.
Shareholders can claim unpaid dividends anytime.
Investor Education and Protection Fund used for investor awareness, legal costs, and compensation.
Fund managed by chairperson, CEO, and members; audited by Comptroller and Auditor General of India.

25. Chapter 10: Auditors

Appointment of auditors by board or members depending on company type.
Tenure till conclusion of sixth AGM.
Filing of forms (ADT-1, ADT-2, ADT-3) with ROC required for appointment, removal, and resignation.
Disqualifications include employees, relatives of directors, persons with business relationships, convicted persons, etc.
Auditor’s remuneration fixed by general meeting or board.
Auditors have powers to access books, vouchers, and seek explanations.
Audit report must give true and fair view, mention qualifications, reservations, and adverse remarks.
Auditing standards formulated by National Advisory Committee on Accounting Standards.
Fraud above ₹1 crore must be reported to Central Government; below ₹1 crore to board or audit committee.
Penalties for non-compliance include fines and imprisonment.

Key Methodologies and Instructions

Studying Companies Act for Exams:
- Memorize factual data: penalties, percentages, years, member counts.
- Write down important facts while studying.
Issuing Prospectus:
- Prepare detailed prospectus with all mandatory disclosures.
- File prospectus with ROC before public issue.
- Prospectus must be signed by directors or authorized persons.
- Ensure accuracy to avoid liability.
Private Placement:
- Limit to 50 investors (excluding qualified institutional buyers).
- Allot securities within 60 days of application money receipt.
- Refund within 15 days if allotment not done.
- Maintain register of offers and file forms PAS-4 and PAS-5.
Bonus Shares:
- Issue only from free reserves, securities premium, or capital redemption reserve.
- Shares must be fully paid.
- Approval via board recommendation and general meeting.
- File notice with ROC within 30 days.
Buyback of Shares:
- Max 25% of paid-up capital and free reserves in a year.
- Maintain debt-equity ratio ≤ 2:1.
- Buyback to be completed within one year.
- File declaration with ROC and SEBI.
- Extinguish shares within 7 days.
Auditors:
- Appointment by board or members; tenure till 6th AGM.
- File ADT forms within prescribed time.
- Disqualifications to maintain independence.
- Auditors must comply with auditing standards.
- Report frauds appropriately.
- Auditors have rights to access company records and report to members.
Dividend Payment:
- Declare from profits or free reserves.
- Pay dividend within 30 days.
- Transfer unclaimed dividends to Investor Education and Protection Fund after 7 years.
- Publish statement of unpaid dividends on company website.

Speakers / Sources Featured

Primary Speaker: RP Academy Instructor (name not specified) — provides detailed explanation and teaching of the Companies Act 2013 for SEBI Grade A, PFRDA, and other exam preparations.
References to Regulatory Bodies:
- SEBI (Securities and Exchange Board of India)
- ROC (Registrar of Companies)
- NCLT (National Company Law Tribunal)
- CAG (Comptroller and Auditor General of India)
- Central Government (in context of approvals and fraud reporting)

This summary captures the core lessons, sections, procedural steps, and penalties discussed in the video, structured for exam preparation and conceptual clarity.