Section 5 — The Proviso ins. by Act 29 of 2020, s. 2 (w.e.f. 22-1-2021)

Explanation.—For the purposes of this clause, the power to do administrative acts of a routine nature
when so authorised by the Board such as the power to affix the common seal of the company to any
document or to draw and endorse any cheque on the account of the company in any bank or to draw and
endorse any negotiable instrument or to sign any certificate of share or to direct registration of transfer
of any share, shall not be deemed to be included within the substantial powers of management;
(55) “member”, in relation to a company, means—
(i) the subscriber to the memorandu m of the company who shall be deemed to have agreed to
become member of the company, and on its registration, shall be entered as member in its register of
members;
(ii) every other person who agrees in writing to become a member of the company and whose
name is entered in the register of members of the company;
(iii) every person holding shares of the company and whose name is entered as a beneficial owner
in the records of a depository;
(56) “memorandum” means the memorandum of association of a company as originally framed or
as altered from time to time in pursuance of any previous company law or of this Act;
(57) “net worth” means the aggregate value of the paid-up share capital and all reserves created out
of the profits 1[, securities premium account and debit or credit balance of profit and loss account,] after
deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous
expenditure not written off, as per the audited balance sheet, but does not include reserves creat ed out
of revaluation of assets, write-back of depreciation and amalgamation;
(58) “notification” means a notification published in the Official Gazette and the expression “notify”
shall be construed accordingly;
(59) “officer” includes any director, manag er or key managerial personnel or any person in
accordance with whose directions or instructions the Board of Directors or any one or more of the
directors is or are accustomed to act;
(60) “officer who is in default ”, for the purpose of any provision in t his Act which enacts that an
officer of the company who is in default shall be liable to any penalty or punishment by way of
imprisonment, fine or otherwise, means any of the following officers of a company, namely:—
(i) whole-time director;
(ii) key managerial personnel;
(iii) where there is no key managerial personnel, such director or directors as specified by the
Board in this behalf and who has or have given his or their consent in writing to the Board to such
specification, or all the directors, if no director is so specified;
(iv) any person who, under the immediate authority of the Board or any key managerial personnel,
is charged with any responsibility including maintenance, filing or distribution of accounts or
records, authorises, actively participates in, knowingly permits, or knowingly fails to take active steps
to prevent, any default;
(v) any person in accordance with whose advice, directions or instructions the Board of Directors
of the company is accustomed to act, other than a person who gi ves advice to the Board in a
professional capacity;
(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware
of such contravention by virtue of the receipt by him of any proceedings of the Board or participation

1. Subs. by Act 1 of 2018, s. 2, for “and securities premium account” (w.e.f. 9-2-2018).

in such proceedings without objecting to the same, or where such contravention had taken place with
his consent or connivance;
(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents,
registrars and merchant bankers to the issue or transfer;
(61) “Official Liquidator ” means an Official Liquidator appointed under sub -section ( 1) of
section 59;
(62) “One Person Company” means a company which has only one person as a member;
(63) “ordinary or special resol ution” means an ordinary resolution, or as the case may be, special
resolution referred to in section 114;
(64) “paid-up share capital ” or “share capital paid -up” means such aggregate amount of money
credited as paid-up as is equivalent to the amount recei ved as paid-up in respect of shares issued and
also includes any amount credited as paid-up in respect of shares of the company, but does not include
any other amount received in respect of such shares, by whatever name called;
(65) “postal ballot” means voting by post or through any electronic mode;
(66) “prescribed” means prescribed by rules made under this Act;
(67) “previous company law” means any of the laws specified below:—
(i) Acts relating to companies in force before the Indian Companies Act, 1866 (10 of 1866);
(ii) the Indian Companies Act, 1866 (10 of 1866);
(iii) the Indian Companies Act, 1882 (6 of 1882);
(iv) the Indian Companies Act, 1913 (7 of 1913);
(v) the Registration of Transferred Companies Ordinance, 1942 (Ord. 54 of 1942);
(vi) the Companies Act, 1956 (1 of 1956); and
(vii) any law corresponding to any of the aforesaid Acts or the Ordinances and in force—
(A) in the merged territories or in a Part B State (other than the State of Jammu and
Kashmir*), or any part thereof, before the extension thereto of the Indian Companies Act, 1913
(7 of 1913); or
(B) in the State of Jammu and Kashmir*, or any part thereof, before the commencement of
the Jammu and Kashmir (Extension of Laws) Act, 1956 (62 of 1956), in so far as banking,
insurance and f inancial corporations are concerned, and before the commencement of the
Central Laws (Extension to Jammu and Kashmir) Act, 1968 (25 of 1968), in so far as other
corporations are concerned;
(viii) the Portuguese Commercial Code, in so far as it relates to sociedades anonimas; and
(ix) the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961);
(68) “private company” means a company having a minimum paid-up share capital 1*** as may be
prescribed, and which by its articles,—
(i) restricts the right to transfer its shares;
(ii) except in case of One Person Company, limits the number of its members to two hundred:
Provided that where two or more persons hold one or more shares in a company jointly, they shall,
for the purposes of this clause, be treated as a single member:

1. The words “of one lakh rupees or such higher paid-up share capital” omitted by Act 21 of 2015, s. 2 (w.e.f. 29-5-2015).
*. Vide Notification No. S.O. 3912 (E), dated 30th October, 2019, this Act is made applicable to the Union territory of Jammu
and Kashmir and the Union territory of Ladakh.

Provided further that—
(A) persons who are in the employment of the company; and
(B) persons who, having been formerly in the employment of the company, were members of the
company while in that employment and have continued to be members after the employment ceased,
shall not be included in the number of members; and
(iii) prohibits any invitation to the public to subscribe for any securities of the company;
(69) “promoter” means a person—
(a) who has been named as such in a prospe ctus or is identified by the company in the annual
return referred to in section 92; or
(b) who has control over the affairs of the company, directly or in directly whether as a share
holder, director or otherwise; or
(c) in accordance with whose advice, d irections or instructions the Board of Directors of the
company is accustomed to act:
Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional
capacity;
(70) “prospectus” means any document described or issued as a prospectus and includes a red herring
prospectus referred to in section 32 or shelf prospectus referred to in section 31 or any notice, circular,
advertisement or other document inviting offers from the public for the subscription or purchase of any
securities of a body corporate;
(71) “public company” means a company which—
(a) is not a private company; 1[and]
(b) has a minimum paid-up share capital 2*** as may be prescribed:
Provided that a company which is a subsidiary of a company, not being a private company, shall be
deemed to be public company for the purposes of this Act even where such subsidiary company
continues to be a private company in its articles ;
(72) “public financial institution” means—
(i) the Life Insurance Corporation of India, es tablished under section 3 of the Life Insurance
Corporation Act, 1956 (31 of 1956);
(ii) the Infrastructure Development Finance Company Limited, referred to in clause ( vi) of
sub-section (1) of section 4A of the Companies Act, 1956 (1 of 1956) so repealed under section 465
of this Act;
(iii) specified company referred to in the Unit Trust of India (Transfer of Undertaking and Repeal)
Act, 2002 (58 of 2002);
(iv) institutions notified by the Central Government under sub -section (2) of section 4A of t he
Companies Act, 1956 (1 of 1956) so repealed under section 465 of this Act;
(v) such other institution as may be notified by the Central Government in consultation with the
Reserve Bank of India:
Provided that no institution shall be so notified unless—
(A) it has been established or constituted by or under any Central or State Act 1[other than this
Act or the previous company law]; or

1. Ins. by Act 1 of 2018, s. 2 (w.e.f. 9-2-2018).
2. The words “of five lakh rupees or such higher paid-up capital,” omitted by Act 21 of 2015, s. 2 (w.e.f. 29-5-2015).


(B) not less than fifty-one per cent. of the paid-up share capital is held or controlled 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;
(73) “recognised stock exchange ” means a recognised stock exchange as defined in clause ( f) of
section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);
(74) “register of companies” means the register of companies maintained by the Registrar on paper
or in any electronic mode under this Act;
(75) “Registrar” means a Registrar, an Additional Registrar, a Joint Registrar, a Deputy Registrar or
an Assistant Registrar, having the duty of registering companies and discharging various functions under
this Act;
(76) “related party”, with reference to a company, means—
(i) a director or his relative;
(ii) a key managerial personnel or his relative;
(iii) a firm, in which a director, manager or his relative is a partner;
(iv) a private company in which a director or manager 1[or his relative] is a member or director;
(v) a public company in which a director or manager is a director 2[and holds] along with his
relatives, more than two per cent. of its paid-up share capital;
(vi) any body corporate whose Board of Directors, managing director or manager is accustomed
to act in accordance with the advice, directions or instructions of a director or manager;
(vii) any person on whose advice, directions or instructions a director or manager is accustomed
to act:
Provided that nothing in sub -clauses ( vi) and ( vii) shall apply to the advice, directions or
instructions given in a professional capacity;
3[(viii) any body corporate which is—
(A) a holding, subsidiary or an associate company of such company;
(B) a subsidiary of a holding company to which it is also a subsidiary; or
(C) an investing company or the venturer of the company.
Explanation.—For the purpose of this clause, “the investing company or the venturer of a
company” means a body corporate whose investment in the company would result in the company
becoming an associate company of the body corporate];
(ix) such other person as may be prescribed;
(77) “relative”, with reference to any person, means any one who is related to another, if—
(i) they are members of a Hindu Undivided Family;
(ii) they are husband and wife; or
(iii) one person is related to the other in such manner as may be prescribed;
(78) “remuneration” means any money or its equivalent given or passed to any person for services
rendered by him and includes perquisites as defined under the Income-tax Act, 1961 (43 of 1961);
(79) “Schedule” means a Schedule annexed to this Act;

1. Ins. by S.O. 1894 (E), dated 24th July, 2014.
2. Subs. by S.O. 1820 (E), dated 9th July, 2014 for “or holds” .
3. Subs. by Act 1 of 2018, s. 2, for sub-clause (viii) (w.e.f. 9-2-2018).

(80) “scheduled bank” means the scheduled bank as defined in clause (e) of section 2 of the Reserve
Bank of India Act, 1934 (2 of 1934);
(81) “securities” means the securities as defined in clause (h) of section 2 of the Securities Contracts
(Regulation) Act, 1956 (42 of 1956);
(82) “Securities and Exchange Board” means the Securities and Exchange Board of India established
under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
(83) “Serious Fraud Investigation Office” means the office referred to in section 211;
(84) “share” means a share in the share capital of a company and includes stock;
(85) “small company” means a company, other than a public company,—
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may
be prescribed which shall not be more than 1[ten crore rupees]; 2[and]
(ii) turnover of which 3[as per profit and loss account for the immediately preceding financial
year] does not exceed two crore rupees or such higher amount as may be prescribed which shall not
be more than 4[one hundred crore rupees]:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
(86) “subscribed capital” means such part of the capital which is for the time being subscribed by the
members of a company;
(87) “subsidiary company” or “subsidiary”, in relation to any other company (that is to say the
holding company), means a company in which the holding company—
(i) controls the composition of the Board of Directors; or
(ii) exercises or controls more than one -half of the 5[total voting power] either at its own or
together with one or more of its subsidiary companies:
Provided that such class or classes of holding companies as may be prescribed shall not have layers
of subsidiaries beyond such numbers as may be prescribed.
Explanation.—For the purposes of this clause,—
(a) a company shall be deemed to be a subsidiary company of the holding company even if the
control referred to in sub-clause (i) or sub-clause (ii) is of another subsidiary company of the holding
company;
(b) the composition of a company’s Board of Directors shall be deemed to be controlled by
another company if that other company by exercise of some power exercisable by it at its discretion
can appoint or remove all or a majority of the directors;
(c) the expression “company” includes any body corporate;
(d) “layer” in relation to a holding company means its subsidiary or subsidiaries;

1. Subs. by Act 1 of 2018, s. 2, for “five crore rupees” (w.e.f. 9-2-2018).
2. Subs. by notification No. S.O. 504(E), dated 13th February, 2015, for word “or” (w.e.f. 13-2-2015).
3. Subs. by Act 1 of 2018, s. 2, for “as per its last profit and loss account” (w.e.f. 9-2-2018).
4. Subs. by s. 2, ibid., for “twenty crore rupees”(w.e.f. 9-2-2018).
5. Subs. by s. 2, ibid., for “total share capital” (w.e.f. 7-5-2018).

(88) “sweat equity shares” means such equity shares as are issued by a company to its directors or
employees at a discount or for consideration, other than cash, for providing their know-how or making
available rights in the nature of intellectual property rights or value additions, by whatever name called;
(89) “total voting power”, in relation to any matter, means the total number of votes which may be
cast in regard to that matter on a poll at a meeting of a company if all the members thereof or their
proxies having a right to vote on that matter are present at the meeting and cast their votes;
(90) “Tribunal” means the National Company Law Tribunal constituted under section 408;
1[(91) “turnover” means gross amount of revenue recognised in the profit and loss account from the sale,
supply, or distribution of goods or on account of services rendered, or both, by a company during a financial year;]
(92) “unlimited company” means a company not having any limit on the liability of its members;
(93) “voting right” means the right of a member of a company to vote in any meeting of the company
or by means of postal ballot;
(94) “whole-time director” includes a director in the whole-time employment of the company;
2[(94A) “winding up ” means winding up under this Act or liquidation under the Insolvency and
Bankruptcy Code, 2016 (31 of 2016), as applicable;]
(95) words and expressions used and not defined in this Act but defined in the Securities Contracts
(Regulation) Act, 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15
of 1992) or the Depositories Act, 1996 (22 of 1996) shall have the meanings respectively assigned to
them in those Acts.