Section 2(1) to 2(9) of the Companies Act, 2013: Definitions Explained

Section 2(1): "Abridged prospectus"

An abridged prospectus is a memorandum containing the salient features of a prospectus as specified by the Securities and Exchange Board of India through regulations. In practical terms, it is a concise statutory summary intended to present the principal information from the prospectus in a shorter form.

Section 2(2): "Accounting standards"

Accounting standards mean the standards of accounting, including any addendum to them, applicable to companies or classes of companies and referred to in Section 133 of the Companies Act, 2013. Section 133 deals with accounting standards prescribed by the Central Government in the manner provided by the Act.

Section 2(3): "Alter" or "alteration"

The expressions "alter" and "alteration" are inclusive terms. They include making additions, omissions and substitutions. The definition is therefore wider than merely changing existing words and can cover adding, deleting or replacing relevant matter.

Section 2(4): "Appellate Tribunal"

"Appellate Tribunal" means the National Company Law Appellate Tribunal (NCLAT) constituted under Section 410 of the Companies Act, 2013. NCLAT exercises appellate jurisdiction in matters assigned to it by the Companies Act and other applicable enactments.

Section 2(5): "Articles"

"Articles" means the articles of association of a company, whether originally framed, altered from time to time, or applied under any previous company law or under the Companies Act, 2013. The articles operate as the company's internal governance rules, subject to the Act and its memorandum.

Section 2(6): "Associate company"

An associate company, in relation to another company, is a company in which that other company has significant influence but which is not its subsidiary company. The definition also includes a joint venture company.

Meaning of "significant influence"

For this clause, significant influence means control of at least twenty per cent of the total voting power, or control of or participation in business decisions under an agreement.

Meaning of "joint venture"

A joint venture is a joint arrangement under which the parties having joint control of the arrangement have rights to its net assets.

Section 2(7): "Auditing standards"

Auditing standards mean the standards of auditing, including any addendum to them, for companies or classes of companies referred to in Section 143(10) of the Companies Act, 2013. These standards provide the framework relevant to the conduct of statutory audits under the Act.

Section 2(8): "Authorised capital" or "nominal capital"

Authorised capital or nominal capital means the capital authorised by the memorandum of a company as the maximum amount of share capital that the company may have. It represents the ceiling stated in the memorandum and is distinct from the amount actually issued, subscribed or paid up.

Section 2(9): "Banking company"

A banking company has the meaning assigned to that expression in clause (c) of Section 5 of the Banking Regulation Act, 1949. The Companies Act therefore incorporates the specialised banking-law definition rather than creating a separate definition for this purpose.