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.
Category
Educational
