Companies Act,2013 -Important definitions-Section 2

Sections 2(7),143(9)&143(10): Auditing Standards made mandatory

• Section 143(9): Every auditor shall comply with auditing standards 
• Section 2(7) read with section 143(7) define “auditing standards”

Section 2(12): “book and paper” or “book or paper”

• Recognises books/papers maintained in electronic form

Section 2(13)& Section 128: “books of account”

• Requires books of account to be maintained also for sales and purchases of services by company\
• Recognises that books of account maintained in electronic form

Section 2(14):Branch office

• In relation to a company, it means any establishment described as such by the company.
• Company totally at liberty to designate or undesignated any of its establishments as Branch Office
• Company  doesn’t have to comply with any Rules or apply to Central Govt for exemption from Branch audit. It can get exemption from audit of any of its branches by exercising choice on designating or undesignating its offices as branch offices

Section 2(18):Chief Executive Officer

• Means  an officer designated as CEO by the company

Section 2(19):Chief Financial Officer

uMeans  a person appointed as CFO by the company

Section 2(40):Financial Statement

• The term covers “statement of changes in equity” if applicable.  [Section 2(41)(iv)]
• So SOCIE  will be compulsory for companies to whom Ind ASs will be made applicable
• The term covers cash flow statement also.[Section 2(41)(iii) & proviso to section 2(41)]
• Cash flow statement made mandatory for all companies Except 
• (i)One person companies[Section 2(62)]
• (ii)Small companies[Section 2(85)]
• (iii)Dormant companies[Section 455]

Section 2(41): Financial Year

• To make financial statements of all companies comparable, companies have to adopt uniform financial year 1^St April to 31^st March
• The above rule subject to certain exceptions

Section 2(51): Key Managerial Personnel

The term covers

• CEO,
• MD
• Manager
• Company secretary
• Whole-time director
• CFO
• Such other officer as may be prescribed

Section 2(60): Officer in default

Section 2(60)(vii) brings within the ambit of OID the following third parties involved in issue /transfer of securities

• Share transfer agents 
• Registrars
• Merchant bankers to the issue or transfer

 Section 2(62):One person company

• It means a company with only one person as a member 
• Not to be confused with ‘One man company’ of Salomon v Salomon case
• OPC is also a ‘private company’ and must comply with conditions applicable to private company in section 2(68) except the condition to limiting maximum no. of members to 200.(This “ maximum 200 members” limit is meaningless to OPC as it has only one sole member)

Section 2(68):Private Company

• Private Company can have maximum 200 members as against 50 earlier  

Students advised to go through the supplementary study material &RTPs brought out by ICAI