20 Corporate Law Terms Every CLAT, UPSC, and Judiciary Aspirant Must Know
- The Legal Watch
- 5 days ago
- 3 min read
Corporate law is a crucial subject for competitive exams like CLAT, UPSC, and Judiciary, especially for those aspiring to specialize in commercial law, corporate governance, or business regulations. Understanding key corporate law terms not only helps in answering objective questions but also strengthens your legal reasoning and essay-writing skills.
Here’s a list of 20 essential corporate law terms every aspirant should know:
1. Memorandum of Association (MoA)
The MoA is a foundational document of a company that defines its scope, objectives, and relationship with shareholders. It includes clauses like the Name Clause, Registered Office Clause, Object Clause, Liability Clause, and Capital Clause.
2. Articles of Association (AoA)
The AoA contains the internal rules and regulations governing a company’s management, shareholder rights, and board procedures. It supplements the MoA.
3. Board of Directors (BoD)
A group of elected individuals responsible for managing a company’s affairs and making strategic decisions on behalf of shareholders.
4. Corporate Governance
A system of rules, practices, and processes by which a company is directed and controlled, ensuring transparency, accountability, and fairness.
5. Limited Liability Partnership (LLP)
A hybrid business structure where partners have limited liability (like a company) but operate with the flexibility of a partnership.
6. Insider Trading
The illegal practice of trading a company’s stocks or securities based on non-public, material information, violating SEBI (Prohibition of Insider Trading) Regulations.
7. Takeover
The acquisition of control over a company by purchasing a majority of its shares, either through a friendly or hostile bid.
8. Mergers & Acquisitions (M&A)
Merger: Two companies combine to form a new entity.
Acquisition: One company takes over another.Governed by the Companies Act, 2013, and SEBI Regulations.
9. Shareholder vs. Stakeholder
Shareholder: Owns shares in the company (equity interest).
Stakeholder: Anyone affected by the company (employees, customers, society).
10. Dividend
A portion of a company’s profits distributed to shareholders, declared by the Board of Directors.
11. Proxy Voting
When a shareholder authorizes another person to vote on their behalf in company meetings.
12. Debentures
A long-term debt instrument issued by companies to raise capital, with a fixed interest rate.
13. Corporate Veil
A legal concept that separates a company’s identity from its shareholders. Courts can pierce the corporate veil in cases of fraud or misuse.
14. Intellectual Property Rights (IPR) in
Business
Legal rights protecting trademarks, patents, copyrights, and trade secrets of a company.
15. SEBI (Securities and Exchange Board of India)
The regulatory body overseeing stock markets, insider trading, and investor protection in India.
16. Fiduciary Duty
The legal obligation of directors to act in the best interests of the company and shareholders, avoiding conflicts of interest.
17. Winding Up
The legal process of dissolving a company, either voluntarily or by court order (compulsory winding up).
18. Corporate Social Responsibility (CSR)
Under Section 135 of the Companies Act, 2013, certain companies must spend a portion of profits on social welfare activities.
19. Oppression & Mismanagement (Section 241-242, Companies Act)
Remedies available to shareholders if a company’s affairs are conducted in an oppressive or prejudicial manner.
20. Due Diligence
A thorough investigation conducted before mergers, acquisitions, or investments to assess risks and legal compliance.
Why Are These Terms Important?
CLAT: Corporate law questions appear in Legal Aptitude and Current Affairs.
UPSC (Law Optional): Key for Paper I (Company Law, Regulatory Bodies).
Judiciary Exams: Corporate cases often feature in objective and descriptive papers.
Final Tips for Aspirants
✔ Relate terms to real cases (e.g., Satyam Scam for corporate fraud).
✔ Compare Indian laws with global standards (e.g., LLP vs. LLC in the US).
✔ Revise SEBI regulations and Companies Act, 2013 frequently.
By mastering these terms, you’ll build a strong foundation for corporate law sections in competitive exams. Keep revising and applying them in case studies for better retention!
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