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Microlesson · 5-min read

Foundational Definitions: Standards, Articles, Memorandum, Alteration

# Foundational Definitions under Section 2

Section 2 is the dictionary of the Companies Act, 2013. These foundational terms reappear in almost every later chapter — master them first.

## 1. Accounting Standards [Sec 2(2)]

The standards of accounting (or any addendum thereto) for companies or class of companies referred to in Section 133.

> Think: AS / Ind-AS notified by the Central Government in consultation with NFRA.

## 2. Auditing Standards [Sec 2(7)]

The standards of auditing (or any addendum thereto) for companies or class of companies referred to in Section 143(10).

## 3. Alter / Alteration [Sec 2(3)]

Includes additions, omissions and substitutions. The definition is inclusive — wider than its ordinary meaning.

ActionCovered?
Adding a new clauseYes (addition)
Deleting a clauseYes (omission)
Replacing one clause with anotherYes (substitution)

## 4. Articles [Sec 2(5)]

Articles of Association (AoA) — the internal rule book of the company. Covers AoA:

  • as originally framed, OR
  • as altered from time to time, OR
  • applied in pursuance of any previous company law or this Act.

## 5. Memorandum [Sec 2(56)]

Memorandum of Association (MoA) — the constitution / charter of the company. Same inclusivity logic as AoA (original or altered).

> Mnemonic — MoA = Macro (external relations, objects), AoA = Activity (internal management).

## 6. Notification [Sec 2(58)]

A notification published in the Official Gazette. The verb “notify” is construed accordingly. Until publication in the Gazette, a notification has no legal effect.

## 7. Prescribed [Sec 2(66)]

Means prescribed by rules made under this Act — i.e., by the Central Government via Rules (e.g., Companies (Incorporation) Rules, 2014).

> Whenever the Act says “as may be prescribed”, you must check the relevant Rules.

Worked example

### Example 1

Q: A company replaces the words 'Mumbai' with 'New Delhi' in Clause II of its MoA. Is this an alteration?

A: Yes. Substitution is expressly included in the inclusive definition of 'alter' under Sec 2(3).

### Example 2

Q: Where would you look to find what 'minimum paid-up capital' for a private company actually is?

A: The Act uses the phrase 'as may be prescribed' [Sec 2(68)]. By Sec 2(66), you must consult the Companies (Incorporation) Rules, 2014 — the Rules carry the actual figure.

⚠️ Common exam mistakes

  • Confusing MoA (external charter) with AoA (internal rule book).
  • Treating 'alter' as only meaning 'change' — forgetting it also covers additions and omissions.
  • Assuming a Central Government order takes effect on the date of signing — it actually takes effect only on Gazette publication (Sec 2(58)).
  • Forgetting that 'Accounting Standards' refers to Sec 133 and 'Auditing Standards' to Sec 143(10) — students often swap the two.
Bare-Act text Section 2(2), 2(3), 2(5), 2(7), 2(56), 2(58), 2(66) · Companies Act, 2013 · click to expand
Sec 2(2): 'Accounting standards' means the standards of accounting or any addendum thereto for companies or class of companies referred to in section 133. Sec 2(3): 'Alter' or 'alteration' includes the making of additions, omissions and substitutions. Sec 2(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. Sec 2(7): 'Auditing standards' means the standards of auditing or any addendum thereto for companies or class of companies referred to in section 143(10). Sec 2(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. Sec 2(58): 'Notification' means a notification published in the Official Gazette and the expression 'notify' shall be construed accordingly. Sec 2(66): 'Prescribed' means prescribed by rules made under this Act.
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