Therajpicz: 🏛️ Companies Law – Limits Simplified : ICSI LIVE UPDATE

🏛️This blog breaks down the most important limits and timelines under the Companies Act, 2013. Whether you're a CS, CA, or law student—or just someone dealing with company compliance—this is your cheat sheet!


🔹 Company Types and Definitions

Type of Company / ConceptKey Limit / Rule
Illegal AssociationMax 50 members if not registered.
Private CompanyMax 200 members.
Small CompanyPaid-up capital ≤ ₹4 Cr and Turnover ≤ ₹40 Cr.
Associate CompanyHas ≥ 20% of the total voting power in another.
Subsidiary CompanyHolds > 50% of total voting power. Can have a max of 2 layers.
Government CompanyThe government holds ≥ 51% of the share capital.
One Person Company (OPC)Only 1 member allowed. Cannot be a member of more than 1 OPC. Must be a resident (≥ 120 days stay in India).

📄 Important Filings and Timelines

SectionComplianceTime Limit
Sec. 10aDeclaration of subscription money receivedWithin 180 days of incorporation
Sec. 12Verify the registered officeWithin 30 days of incorporation
Sec. 14File changes in Articles (AOA)Within 15 days of passing the resolution
Sec. 16Change name (by order)Within 3 months
Sec. 26Issue prospectusWithin 90 days of filing with the ROC
Sec. 42Allot private placement sharesWithin 60 days, a refund in 15 days if the request fails.
Sec. 56Issue share certificates2 months for shares, 6 months for debentures
Sec. 62Rights issue open period7 to 30 days (3 days prior dispatch of the offer)

🧾 Shares and Dividends

ComplianceLimit
Sweat EquityMax 15% of existing equity or ₹5 Cr/year, max 25% overall. For startups: 50% allowed up to 10 years.
Buy-back of sharesMax 25% of paid-up equity + free reserves. Destroy within 7 days.
Dividend declarationMust deposit in a separate bank A/C within 5 days of declaration.
Unclaimed dividendTransfer to Unclaimed Dividend A/C in 7 days; to IEPF in 7 years.
Interim dividend (if loss)Can't exceed an average of the past 3 years.

💰 Deposits & Loans

ComplianceLimit
Deposit repayment reserve20% of deposits to be kept in reserve by 30 April.
Loan for buying company shares (public company)Max 6 months’ salary for employees (not for directors/KMP).

📋 Meetings & Resolutions

ComplianceRule
First AGMWithin 9 months of the FY end.
Subsequent AGMsWithin 6 months of FY end, not more than 15 months apart.
EGM (on requisition)The board must act within 21 days; an EGM must be held within 45 days.
Quorum (Public Co.)5 members for ≤1,000, 15 for 1,001–5,000, 30 for >5,000.
Proxy formSubmit 48 hours before the meeting.
E-votingMandatory for listed or Co. with ≥1,000 members.

📊 Registers, Records, & Returns

RecordDuration
Books of accountPreserve for 8 years.
Register of membersPermanently.
Annual returnFile within 60 days of the AGM. OPC: within 180 days from FY end.
Minutes of meetingsPrepare within 30 days of the meeting.

🔍 Auditors & Audit

ComplianceRule
Auditor AppointmentFor 5 years (till 6th AGM). Rotation after 1 term (individual) / 2 terms (firm).
DisqualificationAuditor/relatives cannot hold securities > ₹1 lakh or loans> ₹5 lakh in the company.
Fraud Reporting< ₹1 Cr → inform board; ≥ ₹1 Cr → inform CG.
Cost AuditIf turnover & specified services cross thresholds (₹50/100 Cr). Report in 180 days.

🌐 CSR (Corporate Social Responsibility)

ComplianceRule
ApplicabilityIf Net Worth ≥ ₹500 Cr, Turnover ≥ ₹1,000 Cr, or Net Profit ≥ ₹5 Cr.
CSR SpendMin 2% of the average net profits of the last 3 FYS.
Unspent amountTransfer to fund within 6 months (or CSR A/C in 30 days for ongoing projects).
Impact Assessment Mandatory if avg CSR ≥ ₹10 Cr in the last 3 years. 

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