Summary of "CMA Inter Law Marathon in English Dec 2025 | Company Law Revision"

Summary of CMA Inter Law Marathon | Company Law Revision

1. Introduction & Exam Context

The video provides a fast, concise revision of Corporate Laws, which constitute 40% of the CMA Inter syllabus.
Delivered fully in English, it is designed for quick exam preparation and not as a substitute for detailed classes.
Covers the syllabus strictly as per Institute guidelines.
Encourages early revision and offers support via comments and additional resources (bookmyvideo.in).

2. Basics of Company Law

What is a Company?

General meaning: Voluntary association of people for a common objective or profit.
Legal definition (Companies Act 2013): An entity incorporated under the Companies Act 2013 or previous laws.
All companies incorporated under previous or current laws are covered.

Features of a Company

Separate legal entity (an artificial person distinct from members/directors).
Limited liability of members (limited by shares or guarantee).
Perpetual succession (exists despite changes in membership).
Separate property (can hold assets in its own name).
Transferability of shares (freely transferable in public companies; restricted in private companies).
Common seal (optional post-2015 amendment).
Capacity to sue and be sued.

Corporate Veil (Wheel)

The legal separation (“curtain”) between the company and its members/directors.

Can be lifted in cases of:
- Fraud
- Tax evasion
- Public policy violation
- Trading with enemy
- Company acting as agent of shareholders
- Contempt of court
- Misuse of company for improper conduct
Judicial precedents like Jones vs Lipman illustrate lifting of the veil.

3. Types of Companies (Section 2 Definitions)

Private Company

No minimum paid-up capital prescribed.
Articles contain three restrictions:
- Restriction on share transfer.
- Limit on members (minimum 2, maximum 200; joint members counted as one).
- Prohibition on public invitation for securities.
Employees holding shares under ESOP are excluded from member count.
Suffix: “Private Limited”.

Public Company

Not a private company.
No minimum paid-up capital prescribed.
Deemed public company: A private company subsidiary of a public company loses private exemptions.
Minimum directors: 3.

One Person Company (OPC)

Introduced by Companies Act 2013.
Single member and director.
Nominee required to ensure continuity.
Benefits: Limited compliance, limited liability, separate legal entity.
Restrictions:
- Cannot be a public company.
- Cannot invest in other corporates.
- No NBFC activities.
- Cannot be a Section 8 company.
No compulsory conversion to private/public company.

Holding, Subsidiary & Associate Companies

Holding company: Controls board or >50% voting power in subsidiary.
Subsidiary: Can be multiple layers but max 2 layers (exceptions for banks, NBFCs, government).
Associate company: 20% or more but less than 50% voting power (significant influence).

Small Company

Private company meeting thresholds:
- Paid-up capital ≤ ₹4 crore
- Turnover ≤ ₹40 crore
Excludes public, holding, subsidiary, Section 8, and special act companies.
Benefits include relaxed compliance.

Section 8 Company

Formed for charitable/nonprofit objectives (commerce, science, education, sports, environment, etc.).
No dividend distribution; surplus reinvested.
Requires Central Government license (granted/revoked by CG).
Can be private or public but not OPC.
Conversion requires special resolution and Regional Director approval.

Government Company

Company where 51% or more paid-up capital held by Central/State Government(s).
Subsidiaries of government companies are also government companies.

Foreign Company

Incorporated outside India but has a place of business in India (physical or electronic).
Must comply with certain Indian laws (filing documents with ROC, maintaining accounts).
Deemed Indian Company: ≥50% paid-up capital held by Indian citizens/companies, subject to Indian company provisions.

Listed Company

Securities listed on recognized stock exchange.
Private companies can list debt securities.
Public companies listing only debt securities or foreign-listed shares may not be treated as listed under Companies Act.

Producer Company

Group of farmers/agriculturists incorporated to promote their welfare (production, harvesting, marketing, etc.).
Governed under Companies Amendment Act 2020.

4. Incorporation of Company (Chapter 2, Sections 3-22)

Formation of Company (Section 3)

Company formed for lawful purpose.
Minimum members:
- Public company: 7
- Private company: 2
- OPC: 1 (with nominee)
Registrar of Companies (ROC) issues Certificate of Incorporation and Corporate Identity Number (CIN).

Promoters

Person(s) who take preliminary steps for formation.
Named in prospectus and annual return.
Control affairs directly or indirectly.

Name Reservation

Name must be unique, not offensive, not misleading.
Certain words restricted or require Central Government approval.
Name reserved for 20 days (extendable by 20 days).
Penalty for furnishing false information.

Documents for Incorporation

Memorandum of Association (MOA): Name, situation, object, liability, capital, succession (nominee for OPC).
Articles of Association (AOA): Internal rules.
Declarations of compliance and no offense by professionals and directors.
Particulars of subscribers, directors, registered office.

Alteration of MOA & AOA

Requires special resolution.
Entrenchment provisions can make alteration harder.
Changes include name, registered office, object clause, capital clause.
Central Government approval required for certain alterations (name, registered office outside state).

Section 3A - Minimum Members

Minimum members must be maintained throughout the life of the company.
If below minimum for more than 6 months, members liable for debts contracted during that period.

Effect of MOA & AOA (Sections 10, 10A)

Bind company and members.
Business commencement for companies with share capital requires filing declaration (INC-20A).

5. Prospectus & Allotment of Securities (Chapter 3, Sections 23-42)

Modes of Issue

Private placement (private and public companies).
Rights issue, bonus issue.
Public offer (public company) via prospectus.

Prospectus (Section 26)

Invitation to offer, not an offer.
Must be dated, signed, filed with ROC.
Contains material facts for investor decision.
Expert statements included with consent.
Valid for 90 days after filing.

Public Offer (Section 40)

Requires in-principle approval from stock exchanges.
Application money kept in separate escrow account.
Minimum subscription: 90% of issue amount.
Refund if minimum subscription not met.
Return of allotment filed within 30 days.

Liability for Misstatements

Section 34: Criminal liability for untrue/misleading statements.
Section 35: Civil liability for loss due to misstatement.
Defenses include bona fide belief in truthfulness.
Section 36: Punishment for fraudulent inducement.
Section 38: Punishment for personation.

Types of Prospectus

Abridged Prospectus: Summary attached with application.
Shelf Prospectus: Valid for 1 year; subsequent offers via information memorandum.
Red Herring Prospectus: Preliminary document with price band.
Deemed Prospectus: Document deemed prospectus when securities allotted with view to public offer.

Underwriting & Commission

Underwriting commission allowed if authorized and disclosed.
Max 5% for shares, 2.5% for debentures.

Private Placement (Section 42)

Offer to identified persons (max 200 per year, excluding QIB and ESOP).
Requires special resolution.
No renunciation allowed.
Allotment within 60 days; refund within 15 days if not allotted.
Return of allotment filed.

6. Share Capital & Shares (Chapter 4, Sections 43-72)

Types of Share Capital

Authorized, issued, subscribed, called-up, paid-up.
Equity shares (ordinary shares) and preference shares.

Equity Shares

Voting rights (one share = one vote).
May have differential rights (dividend, voting).
Convertible/non-convertible.

Preference Shares

Preferential dividend and repayment.
Types:
- Cumulative
- Non-cumulative
- Participating
- Non-participating
- Redeemable
- Irredeemable (not allowed)
Redeemable within prescribed period (20 years, 30 years for infrastructure).

Shares with Differential Rights

Allowed up to 74% of post-issue paid-up capital.
Requires authorization in AOA and special resolution.
Conditions include no defaults, no offenses, disclosure in board report.

Issue of Shares

At par, premium, discount (discount generally not allowed except sweat equity or debt restructuring).
Sweat Equity shares issued to employees/directors for value addition.
Shares issued at premium credited to securities premium account (restricted uses).

Further Issue of Shares (Section 62)

Rights issue (offer to existing shareholders proportionate to holding).
ESOP (Employee Stock Option Plan) as incentive.
Conversion of loan/debentures into equity.
Bonus shares (capitalization of reserves).

Buyback of Shares (Sections 67-70)

Buyback allowed within limits (max 25% of paid-up equity capital and free reserves).
Requires special resolution (except up to 10% where board resolution suffices).
Cannot buy back partly paid shares.
Restrictions on timing (no buyback within 1 year of previous buyback).
Letter of offer to shareholders; filing with ROC.

Transfer & Transmission of Shares

Transfer deed (Form SH-4) required.
Company must register transfer within time limits.
Transmission by operation of law (death, insolvency) does not require transfer deed.
Remedies available if company refuses registration without cause.

7. Debentures (Section 71)

Debt instruments issued by company.
Secured debentures require charge creation and debenture trustee.
Convertible and non-convertible debentures.
Redemption within 10 years (30 years for infrastructure).
Debenture trustee duties include protecting debenture holders, calling meetings, monitoring company’s compliance.

8. Acceptance of Deposits (Sections 73-76A)

Deposit: Receipt of money by company (loan, deposit, or any other name), excluding certain categories (bank loans, inter-company loans, share application money, government funds, etc.).
Private company can accept deposits only from members.
Eligible public company (net worth ≥ ₹100 crore or turnover ≥ ₹500 crore) can accept deposits from public after passing special resolution and filing with ROC.
Credit rating mandatory for eligible companies accepting public deposits.
Deposit Repayment Reserve (DPR) account to be maintained with at least 20% of maturing deposits.
Penalties for non-compliance and fraud.

9. Charges (Sections 77-87)

Charge: Security interest created on company’s assets (movable/immovable).
Must be registered with ROC within 30 days (extendable with fees).
Charge registration protects charge holder’s priority.
Modification and satisfaction of charge must also be registered.
Register of charges maintained by company and ROC; open for inspection.
Appointment of receiver/manager in case of default must be informed to ROC.

10. Management & Administration (Sections 88-122)

Registers & Records

Registers of members, debenture holders, other security holders, foreign registers.
Registers to be maintained, preserved, and open for inspection.
Registers can be closed for limited periods with notice.
Declaration of beneficial ownership and significant beneficial ownership (SBO) required.

Meetings & Resolutions

Types: AGM, EGM, Board meetings, Class meetings.
Notice requirements:
- 21 clear days (general)
- 14 days for Section 8 companies
Quorum rules for private and public companies.
Chairman election and proxy rules.
Voting methods: show of hands, poll, electronic voting, postal ballot.
Special business requires explanatory statement.
Annual general meeting mandatory for all except OPC.
Penalties for non-compliance.

Directors (Sections 2(34), 149, 164, etc.)

Definition and role as trustees and agents.
Minimum and maximum number of directors.
Appointment, resignation, removal procedures.
Disqualifications (unsound mind, insolvency, conviction, non-payment of calls, offenses).
Duties under Section 166 (good faith, care, no conflict).
Remuneration limits (max 11% of profits for managerial personnel).
Powers of board and delegation.

Key Managerial Personnel (KMP)

CEO, MD, Manager, Company Secretary, CFO, and prescribed officers.
Roles in operational and financial control.

Financial Statements & Audit (Section 134)

Approval and signing by board and auditor.
Board’s report contents.
Auditor’s duties, rights, and reporting (including fraud).
Audit committee constitution and functions.
Vigil mechanism (whistleblower policy).

Shareholder Rights

Voting, dividends, inspection, requisition, proxy, appointment/removal of directors and auditors.
Remedies against oppression and mismanagement.

Speakers / Sources Featured

Primary Speaker: Female instructor (referred to as “ma’am”) conducting the marathon revision.
References to:
- Companies Act 2013 (various sections).
- Judicial cases (e.g., Jones vs Lipman).
- Securities and Exchange Board of India (SEBI) regulations.
- Central Government and Registrar of Companies (ROC).
- National Financial Reporting Authority (NFRA).
- Controller and Auditor General (CAG).

Summary Notes

The video is a comprehensive, fast-paced revision covering almost the entire Company Law syllabus for CMA Inter.
Emphasis on understanding definitions, features, legal provisions, and procedural steps.
Covers incorporation, types of companies, prospectus, share capital, debentures, deposits, charges, management, meetings, directors, audit, and shareholder rights.
Practical examples and case law references are used to explain complex concepts like lifting corporate veil, deemed prospectus, and buyback.
Important forms, timelines, and penalties are highlighted.
Encourages use of official resources for detailed study beyond revision.

This summary provides a structured overview of the video content, capturing the main ideas and instructional points for exam preparation.

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