Section 2 — Definitions

In this Act, unless the context otherwise requires,—
(1) “abridged prospectus” means a memorandum containing such salient features of a prospectus as
may be specified by the Securities and Exchange Board by making regulations in this behalf;
(2) “accounting standards ” means the standards of accounting or any addendum thereto for
companies or class of companies referred to in section 133;
(3) “alter” or “alteration” includes the making of additions, omissions and substitutions;
(4) “Appellate Tribunal” means the National Company Law Appellate Tribunal constituted under
section 410;
(5) “articles” means the articles of association of a company as originally framed or as altered from
time to time or applied in pursuance of any previous company law or of this Act;
(6) “associate company”, in relation to another company, means a company in which that o ther
company has a significant influence, but which is not a subsidiary company of the company having such
influence and includes a joint venture company.
1[Explanation.—For the purpose of this clause,—
(a) the expression “significant influence” means control of at least twenty per cent. of total voting
power, or control of or participation in business decisions under an agreement;
(b) the expression “joint venture” means a joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the arrangement;]
(7) “auditing standards” means the standards of auditing or any addendum thereto for companies or
class of companies referred to in sub-section (10) of section 143;
(8) “authorised capital” or “nominal capital” means such capital as is authorised by the
memorandum of a company to be the maximum amount of share capital of the company;
(9) “banking company” means a banking company as defined in clause (c) of section 5 of the Banking
Regulation Act, 1949 (10 of 1949);
(10) “Board of Directors ” or “Board”, in relation to a company, means the collective body of the
directors of the company;
(11) “body corporate” or “corporation” includes a company incorporated outside India, but does not
include—
(i) a co-operative society registered under any law relating to co-operative societies; and
(ii) any other body corporate (not being a company as defined in this Act), which the Central
Government may, by notification, specify in this behalf;
(12) “book and paper ” and “book or paper ” include books of account, deeds, vouchers, writings,
documents, minutes and registers maintained on paper or in electronic form;
(13) “books of account” includes records maintained in respect of—

1. The Explanation subs. by Act 1 of 2018, s. 2 (w.e.f. 7-5-2018).

(i) all sums of money received and expended by a company and matters in relation to which the
receipts and expenditure take place;
(ii) all sales and purchases of goods and services by the company;
(iii) the assets and liabilities of the company; and
(iv) the items of cost as may be prescribed under sec tion 148 in the case of a company which
belongs to any class of companies specified under that section;
(14) “branch office”, in relation to a company, means any establishment described as such by the
company;
(15) “called-up capital” means such part of the capital, which has been called for payment;
(16) “charge” means an interest or lien created on the property or assets of a company or any of its
undertakings or both as security and includes a mortgage;
(17) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section (1)
of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) who holds a valid certificate of practice
under sub-section (1) of section 6 of that Act;
(18) “Chief Executive Officer” means an officer of a company, who has been designated as such by
it;
(19) “Chief Financial Officer” means a person appointed as the Chief Financial Officer of a company;
(20) “company” means a company incorporated under this Act or under any previous company law;
(21) “company limited by guarantee” means a company having the liability of its members limited
by the memorandum to such amount as the members may respectively undertake to contribute to the
assets of the company in the event of its being wound up;
(22) “company limited by shares” means a company having the liability of its members limited by
the memorandum to the amount, if any, unpaid on the shares respectively held by them;
1[(23) “Company Liquidator” means a person appointed by the Tribunal as the Company Liquidator
in accordance with the provisions of section 275 for the winding up of a company under this Act;]
(24) “company secretary” or “secretary” means a company secretary as defined in clause (c) of sub-
section ( 1) of section 2 of the Company Secretaries Act , 1980 (56 of 1980) who is appointed by a
company to perform the functions of a company secretary under this Act;
(25) “company secretary in practice ” means a company secretary who is deemed to be in practice
under sub-section (2) of section 2 of the Company Secretaries Act, 1980 (56 of 1980);
(26) “contributory” means a person liable to contribute towards the assets of the company in the
event of its being wound up.
Explanation.—For the purposes of this clause, it is hereby clarified that a person holding fully paid-
up shares in a company shall be considered as a contributory but shall have no liabilities of a contributory
under the Act whilst retaining rights of such a contributory;
(27) “control” shall include the right to appoint majority of the directors or to control the management
or policy decisions exercisable by a person or persons acting individually or in concert, directly or
indirectly, including by virtue of their shareholding or management rights or shareholders agreements
or voting agreements or in any other manner;

1. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for clause (23) (w.e.f. 15-11-2016).

1[(28) “Cost Accountant” means a cost accountant as defined in clause (b) of sub-section (1) of section 2 of
the Cost and Works Accountants Act, 1959 (23 of 1959) and who holds a valid certificate of practice under
sub-section (1) of section 6 of that Act;]
(29) “court” means—
(i) the High Court having jurisdiction in relation to the place at which the registered office of the
company concerned is situate, except to the extent to which jurisdiction has been conferred on any
district court or district courts subordinate to that High Court under sub-clause (ii);
(ii) the district court, in cases where the Central Government has, by notification, empowered any
district court to exercise all or any of the jurisdictions conferred upon the High Court, within the scope
of its jurisdiction in respect of a company whose registered office is situate in the district;
(iii) the Court of Session having jurisdiction to try any offence under this Act or under any
previous company law;
(iv) the Special Court established under section 435;
(v) any Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to
try any offence under this Act or under any previous company law;
(30) “debenture” includes debenture stock, bonds or any other instrument of a company evidencing a
debt, whether constituting a charge on the assets of the company or not:
2[Provided that—
(a) the instruments referred to in Chapter III-D of the Reserve Bank of India Act, 1934 (2 of 1934);
and
(b) such other instrument, as may be prescribed by the Central Government in consultation with the
Reserve Bank of India, issued by a company,
shall not be treated as debenture ;]
(31) “deposit” includes any receipt of money by way of deposit or loan or in any other form by a
company, but does not include such categories of amount as may be prescribed in consultation with the
Reserve Bank of India;
(32) “depository” means a depository as defined in clause ( e) of sub-section (1) of section 2 of the
Depositories Act, 1996 (22 of 1996);
(33) “derivative” means the derivative as defined in clause ( ac) of section 2 of the Securities
Contracts (Regulation) Act, 1956 (42 of 1956);
(34) “director” means a director appointed to the Board of a company;
(35) “dividend” includes any interim dividend;
(36) “document” includes summons, notice, requisition, order, declaration, form and register,
whether issued, sent or kept in pursuance of this Act or under any other law for the time being in force
or otherwise, maintained on paper or in electronic form;
(37) “employees’ stock option” means the option given to the directors, officers or employees of a
company or of its holding company or subsidiary company or companies, if any, which gives such
directors, officers or employees, the ben efit or right to purchase, or to subscribe for, the shares of the
company at a future date at a pre-determined price;

1. Subs. by Act 1 of 2018, s. 2, for clause (28) (w.e.f. 9-2-2018).
2. The Proviso ins. by s. 2, ibid. (w.e.f. 9-2-2018).

(38) “expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost
accountant and any other person who has the power or authority to issue a certificate in pursuance of
any law for the time being in force;
(39) “financial institution” includes a scheduled bank, and any other financial institution defined or
notified under the Reserve Bank of India Act, 1934 (2 of 1934);
(40) “financial statement” in relation to a company, includes—
(i) a balance sheet as at the end of the financial year;
(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit,
an income and expenditure account for the financial year;
(iii) cash flow statement for the financial year;
(iv) a statement of changes in equity, if applicable; and
(v) any explanatory note annexed to, or forming part of, any document referred to in sub -clause
(i) to sub-clause (iv):
Provided that the financial statement, with respect to One Person Company, small company and
dormant company, may not include the cash flow statement;
(41) “financial year”, in relation to any company or body corporate, means the period ending on the
31st day of March every year, and where it has been incorporated on or after the 1st day of January of a
year, the period ending on the 31st day of March of the following year, in respect whereof financial
statement of the company or body corporate is made up:
1[Provided that where a company or body corporate, which is a holding company or a subsidiary
or associate company of a company incorporated outside India and is required to follow a different
financial year for consolidation of its accounts outside I ndia, the Central Government may, on an
application made by that company or body corporate in such form and manner as may be prescribed,
allow any period as its financial year, whether or not that period is a year:
Provided further that any application pending before the Tribunal as on the date of commencement
of the Companies (Amendment) Act, 2019, shall be disposed of by the Tribunal in accordance with the
provisions applicable to it before such commencement;]
2[Provided also that] a company or body corpo rate, existing on the commencement of this Act,
shall, within a period of two years from such commencement, align its financial year as per the
provisions of this clause;
(42) “foreign company” means any company or body corporate incorporated outside India which—
(a) has a place of business in India whether by itself or through an agent, physically or through
electronic mode; and
(b) conducts any business activity in India in any other manner;
(43) “free reserves” means such reserves which, as per the latest audited balance sheet of a company,
are available for distribution as dividend:
Provided that—
(i) any amount representing unrealised gains, notional gains or revaluation of assets, whether
shown as a reserve or otherwise, or
(ii) any change in carrying amount of an asset or of a liability recognised in equity, including
surplus in profit and loss account on measurement of the asset or the liability at fair value,
shall not be treated as free reserves;

1. The proviso subs. by Act 22 of 2019, s. 2 (w.e.f. 2-11-2018).
2. Subs. by s. 2, ibid., for “Provided further that” (w.e.f. 2-11-2018).

(44) “Global Depository Receipt ” means any instrument in the form of a depository receipt, by
whatever name called, created by a foreign depository outside India and authorised by a company
making an issue of such depository receipts;
(45) “Government company” means any company in which not less than fifty -one per cent. of the
paid-up share capital is held by the Central Government, or by any State Government or Governments,
or partly by the Central Government and partly by one or more State Governments, and includes a
company which is a subsidiary company of such a Government company;
(46) “holding company”, in relation to one or more other companies, means a company of which
such companies are subsidiary companies;
1[Explanation.—For the purposes of this clause, the expression “company” includes any body corporate;]
(47) “independent director” means an independent director referred to in sub -section (6) of section
149;
(48) “Indian Depository Receipt” means any instrument in the form of a depository receipt created
by a domestic depository in India and author ised by a company incorporated outside India making an
issue of such depository receipts;
2* * * * *
(50) “issued capital” means such capital as the company issues from time to time for subscription;
(51) “key managerial personnel”, in relation to a company, means—
(i) the Chief Executive Officer or the managing director or the manager;
(ii) the company secretary;
(iii) the whole-time director;
(iv) the Chief Financial Officer; 3***
4[(v) such other officer, not more than one level below the director s who is in whole -time employment,
designated as key managerial personnel by the Board; and
(vi) such other officer as may be prescribed;]
(52) “listed company” means a company which has any of its securities listed on any recognised
stock exchange:
5[Provided that such class of companies, which have listed or intend to list such class of securities,
as may be prescribed in consultation with the Securities and Exchange Board, shall not be considered as
listed companies.]
(53) “manager” means an individual w ho, subject to the superintendence, control and direction of
the Board of Directors, has the management of the whole, or substantially the whole, of the affairs of a
company, and includes a director or any other person occupying the position of a manager, by whatever
name called, whether under a contract of service or not;
(54) “managing director ” means a director who, by virtue of the articles of a company or an
agreement with the company or a resolution passed in its general meeting, or by its Board of Directors,
is entrusted with substantial powers of management of the affairs of the company and includes a director
occupying the position of managing director, by whatever name called.

1. The Explanation ins. by Act 1 of 2018, s. 2 (w.e.f. 9-2-2018).
2. Clause (49) omitted by s. 2, ibid. (w.e.f. 9-2-2018).