CS Professional Advanced Company Law and Practice Syllabus

What is the doctrine of 'commencement of business' requirement under Section 10A?

A company having share capital cannot commence business or exercise borrowing powers unless directors file a declaration (Form INC-20A) within 180 days confirming every subscriber has paid the value of shares agreed to be taken, and verification of registered office is filed.

What is the time limit to verify the registered office of a company under Section 12?

A company must have a registered office within 30 days of incorporation and verify it (Form INC-22) within 30 days of incorporation.

What is the effect of the 'Memorandum and Articles' on members under Section 10?

They bind the company and its members to the same extent as if signed by each member, constituting a contract; members are bound to observe their provisions.

Explain the doctrine of constructive notice.

Every person dealing with a company is deemed to have notice of the contents of its public documents (MOA and AOA) filed with the Registrar, and is presumed to have read and understood them.

Explain the doctrine of indoor management (Turquand Rule).

Outsiders dealing in good faith with a company can assume that internal procedures/required formalities have been duly complied with, and need not inquire into the regularity of internal proceedings.

Can a private company be converted into a public company, and under which section?

Yes. Under Sections 14 and 18, by altering its Articles via special resolution to remove private-company restrictions, complying with public-company requirements, and filing the change with the Registrar.

What is the procedure to convert a public company into a private company?

Pass a special resolution, alter the Articles, and obtain approval of the Regional Director (RD) under Section 14 read with the relevant rules, then file with the Registrar; the conversion is effective on the RD's approval and ROC filing.

When is an OPC mandatorily required to convert into a private or public company (pre-2021 thresholds, now voluntary)?

Earlier conversion was mandatory if paid-up capital exceeded Rs. 50 lakh or average annual turnover exceeded Rs. 2 crore; post the 2021 amendment an OPC may convert voluntarily at any time and these thresholds were removed.

Can a company limited by guarantee be registered, and can a Section 8 company be converted into a normal company?

Yes; a Section 8 company may convert into a company of another kind by passing a special resolution and obtaining the approval of the Regional Director, subject to compliance with conditions to protect public interest.

What is conversion of a private company into an OPC subject to?

A private company (other than a Section 8 company) with paid-up capital and turnover within prescribed limits may convert into an OPC by special resolution after obtaining a No Objection from members and creditors and filing the prescribed forms.

What is the minimum and maximum number of directors for a public company and a private company under Section 149?

Minimum: Public company 3, Private company 2, OPC 1. Maximum: 15 directors for any company (more than 15 requires a special resolution).

Which classes of companies must appoint at least one woman director under Section 149(1)?

Every listed company and every other public company with paid-up share capital of Rs. 100 crore or more, OR turnover of Rs. 300 crore or more.

What is the residency requirement for directors under Section 149(3)?

Every company must have at least one director who has stayed in India for at least 182 days during the financial year (resident director).

How many independent directors are required for a listed public company and prescribed public companies?

Listed public companies must have at least one-third of the Board as independent directors; prescribed unlisted public companies must have at least 2 independent directors.

Define an 'independent director' in essence under Section 149(6).

A director, other than a managing/whole-time/nominee director, who has no material pecuniary relationship with the company, its holding/subsidiary/associate, promoters or directors that may affect independence, and meets the integrity, expertise and experience criteria.

What is the maximum tenure of an independent director under Section 149(10)/(11)?

Up to two consecutive terms of five years each; thereafter eligible for reappointment only after a cooling-off period of 3 years (during which he must not be associated with the company).

What is the maximum number of companies in which a person can be a director under Section 165?

20 companies in total, of which not more than 10 can be public companies (dormant and Section 8 companies are excluded for the limit, with conditions).

What is a Director Identification Number (DIN) and under which section is it allotted?

A unique identification number allotted by the Central Government to an individual intending to be a director, under Sections 153-154; it is mandatory for appointment as a director.

What is the requirement of board diversity/rotation regarding retirement by rotation under Section 152(6)?

In a public company, not less than two-thirds of the total directors must be liable to retire by rotation, and one-third of those retire at each AGM (the longest in office retiring first).

Which companies are mandatorily required to constitute an Audit Committee under Section 177?

Every listed public company and prescribed classes: public companies with paid-up capital of Rs. 10 crore or more, or turnover of Rs. 100 crore or more, or aggregate outstanding loans/borrowings/debentures/deposits exceeding Rs. 50 crore.

What is the composition of the Audit Committee under Section 177?

Minimum of three directors with independent directors forming a majority; majority of members (including the chairperson) must be able to read and understand financial statements.

Which companies must constitute a Nomination and Remuneration Committee (NRC) under Section 178?

Every listed public company and the same class of public companies as for the Audit Committee (paid-up capital >= Rs.10 cr, or turnover >= Rs.100 cr, or aggregate borrowings/deposits/debentures > Rs.50 cr).

What is the composition of the Nomination and Remuneration Committee under Section 178?

Three or more non-executive directors, of whom not less than one-half must be independent directors; the chairperson of the company may be a member but cannot chair the committee.

Which companies must constitute a Stakeholders Relationship Committee under Section 178(5)?

A company which has more than 1,000 shareholders, debenture-holders, deposit-holders and any other security holders at any time during a financial year.

What is the threshold for constituting a Corporate Social Responsibility (CSR) Committee, and what is its composition under Section 135?

Companies meeting CSR thresholds must form a CSR Committee of three or more directors, at least one being an independent director (relaxations for companies not required to have independent directors and for amounts up to Rs. 50 lakh).

State the three financial thresholds under Section 135(1) that trigger CSR applicability.

In the immediately preceding financial year: net worth of Rs. 500 crore or more, OR turnover of Rs. 1,000 crore or more, OR net profit of Rs. 5 crore or more.

What is the mandatory CSR spending amount under Section 135(5)?

At least 2% of the average net profits of the company made during the three immediately preceding financial years (or such fewer years for newer companies).

How is 'net profit' for CSR computed and what is excluded?

Net profit is computed as per Section 198, excluding profits from overseas branches and dividends received from other Indian companies already covered under and complying with Section 135.

What happens to unspent CSR amount relating to an ongoing project versus a non-ongoing project?

For an ongoing project, the unspent amount must be transferred within 30 days of the financial year-end to a special 'Unspent CSR Account' and spent within 3 financial years; for non-ongoing obligations, the unspent amount must be transferred within 6 months to a Schedule VII fund (e.g., PM CARES/PMNRF).

What is the treatment of CSR amount exceeding the requirement (excess CSR spend)?

Excess amount spent may be set off against the CSR obligation of up to the immediately succeeding three financial years, subject to conditions and Board resolution.