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CITY ACADEMY DEGREE COLLEGE

STUDY NOTES
COMPANY LAW
(2024-25)
B.COM 3RD YEAR 5TH SEMESTER (N.E.P)

❖ SYLLABUS
❖ PREVIOUS YEAR QUESTIONS
❖ QUESTION WISE NOTES
❖ PRACTICE WORKSHEET
❖ YOUTUBE LINKS
SYLLABUS
UNIT – 1

Definition and nature of company , types of companies , formation of companies , liability of

promoters , incorporation of companies , commencement of business.

UNIT - 2
Memorandum of association, content of memorandum of association, doctrine of ultra-
Qvires, articles of association, doctrine of indoor management and exception to it

UNIT - 3
Prospectus, statement in lieu of prospectus, mis-statement and their remedies, share
capital, allotment of shares, definition of share, share warrant and certificates, difference
between shares and stocks, calls on shares, types of shares, voting right and right issue.

UNIT - 4
Management of company, appointment of directors, legal positions, duties and liabilities and power ,
meeting:- statutory, annual general meeting, extraordinary meeting, meeting of board of directors,
guidelines for managerial remuneration, quorum of different meetings, kinds of resolution, provisions
regarding borrowing, issue of debenture, dividend, bonus shares and winding up.
PREVIOUS YEAR QUESTIONS
Q1.) What Is Meant By ‘Lifting Of Corporate Veil’ In Case Of A Public Limited Company? Under What Conditions The
Corporate Veil Can Be Lifted In Such Organizations? Elaborate.(2023)

Q2.) Why Is Company Called As Artificial Person? Explain Important Features Of A Company Form Of A
Business.(2023)

Q3.) Explain The Process Of Formation Of A Company Form Of Business. Bring Out Duties, Liabilities, Of And Rewards
For A Promoter In This Regard.(2023)

Q4.) What Are The Different Type Of Companies? Differentiate Among Private Public And One Person
Companies.(2023)

Q5.)What Are The Objectives And Content Of Memorandum Of Association? How Is Memorandum Different From
Articles Of Association?(2023)

Q6.) Differentiate Between Doctrine Of Indoor Management And Doctrine Of Constructive Notice Along With
Exception Of Each.(2023)

Q7.) Explain The Different Types Of Prospectuses. What Are The Implications And Remedies For Mis-Statement In The
Prospectus? (2023)

Q8.) Differentiate Between Preference And Equity Share Capital. How Many Features Can Be Created Into Preference
Share? Discuss.(2023)

Q9.) What Is The Legal Position Of Directors In The Company? Explain The Procedures And Appointment Retirement
Of Directors.(2023)

Q10.) Write short notes on any three of the following: (2023)

a) Annual general meeting

b) Types of resolution
c) Bonus shares
d) Winding up of the company
Q1.) Why Is Company Called As Artificial Person? Explain Important Features Of A Company Form Of A Business.(2023)

Q1(a) What do you mean by Company?

MEANING OF COMPANY : The word 'company' has no strict or technical or legal meaning. A company in the normal sense means an association of
persons united for a common object. Accordingly the term is used to represent associations formed to carry on some business for profit or to
promote art, science, education or some charitable purpose.
An incorporated company or a 'corporation' is a person distinct from the individuals constituting it, whereas an unincorporated company,
such as a partnership, is a mere collection or aggregation of individuals. Therefore, unlike a partnership, a company is a corporate body and a legal
person having status and personality distinct and separate from that of the members constituting it.

Q1(b) Write Definition of Company as per Companies act 2013.

DEFINITION : According to Section 2(20) of the Companies Act, 2013 a Company means, "A co company formed and registered under this Act or
any previous law." An existing company means. «A company formed and registered under any of the previous Company Law".

Q1(c) What does “previous laws” means as per definition of company as per section 2(20)?
“Previous Company Law" means any of the law specified below :
• Acts relating to companies in force before the Indian Companies Act, 1866:
• The Indian Companies Act, 1866;
• The Indian Companies Act, 1882;
• The Indian Companies Act, 1913;
• The Registration of Transferred Companies Ordinance, 1942;
• The Companies Act, 1956;
• or any other law

Q1(d) write down the definition of Company by Lord Justice Lindley

Definition by Lord Justice Lindley "A company is an association of many persons who contribute money or money's worth, to a common stock
and, employed for a common purpose .the common stock so contributed is denoted in money and is capital of the company. the persons who
contribute it or to whom it belongs are members. the proportion of capital to which each member is entitled is his share .shares are always
transferable although the right to transfer is often more 0r les restricted,"

Q1(e) What are the nature of a Company?

NATURE/CHARACTERISTICS/FEATURES OF A COMPANY
1. Incorporated association : A company comes into existence on incorporation or registration under the Companies Act. A joint stock
company may be incorporated under the Act either as a private or a public company. Minimum number of persons required for the purpose of
incorporation is seven in the case of a public company and two in the case of a private company and one in case of One Person Company.
2. Separate legal entity : The main feature of a company is its independent corporate existence. A company formed and registered under
the Companies Act is a distinct legal entity.
3. Limited liability : "Limited Liability" means "you have to pay as much as you have agreed to pay. "Unlimited Liability" means "you have
to pay as much as you owe".
4. Separate property : company is capable of owning, enjoying and disposing of property in its own name. It is a consequence of the fact
that the company is a legal person. The property of the company will not be considered as the joint property of the members constituting the
company, although the capital and assets of the company are contributed by members. A member does not even have an insurable interest in the
property of the company.
5. Perpetual succession : Unlike a natural person a company never dies. It is an entity with a perpetual succession. This means that the
company being an entity separate and distinct from its shareholders, the life of a company is not measured by the life of any member; it is
independent of the lives of its members
6. Transferability of shares : under Section 56 of the Companies Act, 2013, the shares of a company are freely transferable and can be
sold or purchased in the share market. This is one of the reasons why people prefer to form companies than partnerships. A shareholder is
therefore not permanent wedded to a company.
Q1(f) what are the types of company?
ON THE BASIS OF INCORPORATION ON THE BASIS OF LIABILITY ON THE BASIS OF CONTROL
• Royal or chartered companies • With Limited Liability • Government Companies (sec - 2(45))
• Statutory companies o Company Limited By Shares (sec - • Holding Company (sec - 2(46))
• Registered companies 2(22)) o Subsidiary Company (sec -
• One person company (sec - 2(62)) o Company Limited By Guarantee (sec - 2(87))
• Private company (sec - 2(68)) 2(21))
• Public company (sec - 2(71)) • With Unlimited Liability (sec - 2(92))

ON THE BASIS OF PLACE OF REGISTRATION ON THE BASIS OF LEGALITY OTHER COMPANIES

• Indian Company • Legal Association • Association For Non Profit Organization (sec – 8)
• Foreign Company • Illegal Association Of Person (sec – 464) • Small Company (sec - 2(85))
• Associate Company (sec - 2(6))
• Dormant Company (sec - 455(1))
QUESTION NO. 01 / WORKSHEET

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

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Q1(a) What do you mean by Company?

Q1(b) Write Definition of Company as per Companies act 2013.

Q1(c) What does “previous laws” means as per definition of company as per section 2(20)?
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Q1(d) write down the definition of Company by Lord Justice Lindley

Q1(e) What are the nature of a Company?

Q1(f) what are the types of company?

Q3(b) Define Promotion stage of a company.

PROMOTION OF A COMPANY:Promotion is the first stage in the formation of the company. Before a company can be formed, there must be some persons who
intend to form a company and who take the necessary steps to carry that intention into operation. Such persons are called promoters. It is they who conceive the
idea of forming the company and it is they who take the necessary steps to incorporate it by registration.

Q3(c) What is incorporation stage in formation of a company?

Section 3 of the Companies Act, 2013 states that any seven or more persons in case of public company or where the company to be formed is private company, any
two or more persons or one person in case of One Person Company, associated for any lawful purpose may, by subscribing their name to Memorandum of
association and complying with the requirement of this Act in a Procedure of Incorporation of a Company name
(Step-1) : Name Reservation
(Step-2) : Obtaining Director identification Number
(Step-3) : Filing of Required Documents

Q3(d) What is capital subscription stage of formation of a company?

After the registration of company, the company can go ahead to seek the necessary capital to carry on its operations. This raising of capital is called floatation .Section
70 requires that every public company, may take any of the following steps :
1. Issue a Prospectus, if public is to be invited to subscribe to its share
2. File a Statement in Lieu of Prospectus, if the capital is to be arranged privately.

Q3(e)Define commencement stage of formation of a company.

PROMOTER : Section 2(69) of the Companies Act, 2013 defines the term 'promoter' as under : Promoter means a person :
(a) Who has been named as such in a prospectus or is identified by the company in the annual return referred to in Section 92; or
(b) Who has the control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or
(c) In accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act,

Q3(f) Who is a promoter of a company? Define its characteristics and roles or functions of promoters.
PROMOTER : Section 2(69) of the Companies Act, 2013 defines the term 'promoter' as under : Promoter means a person :
(a) Who has been named as such in a prospectus or is identified by the company in the annual return referred to in Section 92; or
(b) Who has the control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or
(c) In accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act,
CHARACTERISTICS OF PROMOTER
• The promoter of a company is a person who does the necessary preliminary work incidental to the formation of a company.
• He brings together various persons who agree to form a company.
• He prepares the necessary documents and gets the company incorporated from the Registrar.
• A person may be a promoter even if the undertakes a lesser active role in the formation of a company..

Q3(g) what are the functions , duties and liabilities of promoter?

FUNCTIONS/ROLE OF A PROMOTER DUTIES OF PROMOTER LIABILITY OF A PROMOTER
1. To originate the scheme for formation of 1. Duty not to make any secret profit A promoter is subject to the following liabilities under
the company the various provisions of the Companies Act :
2. To secure the cooperation of the required 2. Duty to make full disclosure to the company of all 1. Liability for Misstatement in Prospectus :
number of persons willing to associate relevant facts (a) Civil Liability: compensation for any loss or damage
themselves with the project sustained by person.
3. Nomenclature (b) Criminal Liability
4. To get the documents of the proposed 2. Punishment for fraudulently including persons to
company prepared invest money u/s 36 : shall be liable for punishment for
5. To appoint bankers, legal advisors of the fraud under Section 447.
company 3. Contravention of provision relating to private
6. Arrangement of capital placement : company & its promoters and directors shall
be liable for a penalty which may extend to the amount
REMUNERATION TO PROMOTER: The promoters cannot claim as a matter of right any raised in the private placement or 2 Crores, whichever is
remuneration from the company e. the services rendered for a company that is not yet in existence. higher.
Even where the articles of a company specifically provide that specified sum may be paid to the 4. Failure to cooperate with company liquidator during
promoters for their services, it does not give the promoters a right to claim remuneration or to sue winding up : shall be punishable with imprisonment
the company for the same. which may extend t 6 months or with fine which may
Right of the Promoter to Receive the Remuneration: extend to 50,000 or with both.
• The promoters shall have the right to receive the remuneration only if company after 5. Public examination : A promoter may be liable to
incorporation contracts for the remuneration. If company does not contract for the public examination like any of the. director or officer of
remuneration, later on provision contained in the AOA can not the bind the company. the company if the Tribunal so directs on a Company
• Right to subscribe the shares of the company at a fixed price in future. Liquidator's repo alleging fraud in the promotion or
• Purchase of the property of the promoter at a higher price. formation of business or conduct of affairs of the
company.
QUESTION NO. 02 / WORKSHEET

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

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Q3(a)What is the process of formation of a company?
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Q3(b) Define Promotion stage of a company.
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Q3(c) What is incorporation stage in formation of a company?
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Q3(d) What is capital subscription stage of formation of a company?
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Q3(e)Define commencement stage of formation of a company.
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Q3(f) Who is a promoter of a company? Define its characteristics and roles or functions of promoters.

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Q3(g) what are the functions , duties and liabilities of promoter?
Q3(g) FUNCTIONS OF PROMOTERS
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Q3(g) DUTIES OF PROMOTERS
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Q3(g) LIABILITIES OF PROMOTERS
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Q3(g) INCENTIVES TO PROMOTERS
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Q3.) What Are The Different Type Of Companies? Differentiate Among Private Public And One Person Companies.(2023)

Q3(a) what do you means by company ?

A company in the normal sense means an association of persons united for a common object.

Q3(b) What are the types of company?

TYPES OF COMPANIES
ON THE BASIS OF INCORPORATION ON THE BASIS OF LIABILITY ON THE BASIS OF CONTROL
• Royal or chartered companies • With Limited Liability • Government Companies (sec - 2(45))
• Statutory companies o Company Limited By Shares (sec - 2(22)) • Holding Company (sec - 2(46))
• Registered companies o Company Limited By Guarantee (sec - 2(21)) o Subsidiary Company (sec - 2(87))
o One person company (sec - 2(62)) • With Unlimited Liability (sec - 2(92))
o Private company (sec - 2(68))
o Public company (sec - 2(71))
ON THE BASIS OF PLACE OF REGISTRATION ON THE BASIS OF LEGALITY OTHER COMPANIES
• Indian Company • Legal Association • Association For Non Profit Organization (sec – 8)
• Foreign Company • Illegal Association Of Person (sec – 464) • Small Company (sec - 2(85))
• Associate Company (sec - 2(6))
• Dormant Company (sec - 455(1))
• Nidhi Companies (sec – 406)

Q3(c) What do you mean by registered companies?

REGISTERED COMPANIES : A registered company is one which is formed and registered under the Indian Companies Act, 2013 or under the any earlier Companies
Act in force in India.

Q3(d)Define one person company.

ONE PERSON COMPANY [Sec. 2(62)] - One Person Company is a new concept in India which has been introduced by the Companies Act, 2013. in case of a One Person
Company, only 1 person is required who can be a shareholder as well as the director.
Section 2(62) of the Companies Act, 2013 defines "One Person Company" that means a Company which has only one person as a member .The One Person
Company has following characteristics:
• OPC is run by an individual but still have a separate legal entity.
• A One Person Company is incorporated as a private limited company.
• It must have only one member at any point of time and may have only one director.
• An individual cannot incorporate more than one OPC or become nominee in more than one OPC.
PROCESS OF INCORPORATION OF 0NE PERSON COMPANY
STEP 1 :- First the sole shareholder shall get a Director Identification Number (DIN) as well as a Digital Signature Certificate.
STEP 2:- First the sole shareholder shall get a Director Identification Number (DIN) as well as Digital Signature Certificate.
STEP 2:- apply for the name of the company.
STEP 4:- get the consent of the nominee in the prescribed form.
STEP 5:- file the consent along with the final incorporation forms along with the Memorandum and Articles and other Required Documents.
STEP 6:- receive the final incorporation certificate from the Registrar of companies. Now he can commence business under the name.
(The words “One Person Company" shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.)

Q3(e) What do you understand by private company?

PRIVATE COMPANY [Sec. 2(68)] :
Private company is defined under Section 2(68) as : "A company which has a minimum paid-up capital as may be prescribed, and by its articles :
(i) restricts the right to transfer its shares;
(1) except in case of One Person Company, limits the number of its members to two hundred not including:
(a) Persons who are in the employment of the company; and (6) Persons who, having been formerly in the employment of the company, were the members of the
company while in that employment and have continued to be members after the employment ceased; and (11) prohibits any invitation to the public to subscribe for
any shares or debenture of L. company."
FEATURES OF PRIVATE COMPANY
• Limitation on Number of Membership : min - 02 ; max -200.
• Right of Transfer of Shares must be Restricted : articles of association place absolute restrictions on transfer of shares.
• Name : A private limited company is required to add the words “Private Limited” at the end of its name.
• Number of Directors : A private company needs to have only 2 directors. It can start its business with only 2 directors.
• Minimum Subscription : In case of private company, shares can be allotted without receiving the amount of such minimum subscription.
• Number Of Members : A private company is not required to keep an index of its members if the number of members is less than 50..

Q3(f) what do you understand by Public Company?

PUBLIC COMPANY [Sec. 2(71)]
As per Sec. 2(71) “a public company means a company which (a) is not a private company; (b) has a minimum paid-up capital as may be prescribed; (c) is a private
company which is a subsidiary of a public company.”
Features of Public Companies are :
(i) Number of Members : There must be at least seven persons to form a Public Company and there is no maximum limit.
(ii) Transferability of shares : The shares of the public company are freely traded at secondary markets and hence are freely transferable.
(iii) Prospectus : Public Companies are compulsorily required to file a prospectus or a statement in lieu of prospectus with the Registrar.
(iv) Number of directors : Public company is required to have at least 3 directors and maximum of 15 directors.
(v) Further issue of Shares : Public Company has to offer the further issue of shares to its existing shareholders as right shares.
QUESTION NO. 03 / WORKSHEET

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………………………………………
Q3(a) what do you means by company ?
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Q3(b) What are the types of company?

Q3(d)Define one person company.

Q3(e) What do you understand by private company?

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Q3(f) what do you understand by Public Company?
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Q4.) What Is Meant By ‘Lifting Of Corporate Veil’ In Case Of A Public Limited Company? Under What Conditions The
Corporate Veil Can Be Lifted In Such Organizations? Elaborate.(2023)

Q4(a) what do you understand by corporate veil

CORPORATE VEIL
A company is composed of its members and is managed by its Board of Directors and its employees. When the company
is incorporated, it is accorded the status of being a separate legal entity which demarcates the status of the company
and the members or shareholders that it is composed of. This concept of differentiation is called a Corporate Veil which
is also referred to as the ‘Veil of Incorporation’.

Q4(b) what do you mean by lifting of corporate veil?

LIFTING OF A CORPORATE VEIL (Piercing the Corporate Veil)
By a fiction of law, a company is seen as a distinct entity separated from its members, but in reality, itis an association
of persons who in fact the beneficial owners of the company and its corporate property. This fiction is created by a veil
and is called the Corporate veil. Lifting or piercing of corporate veil means ignoring the fact that a company is a separate
legal entity and has a separate identity (Corporate personality). This concept disregards the separate identity of the
company and looks behind the true owners or real persons who are in control of the company.

The separate personality of a company is a statutory privilege and it must be used for a legitimate purpose only.
Whenever and wherever a fraudulent or dishonest use is made of the legal entity, the individuals will not be allowed to
hide behind the curtain of corporate personality. The appropriate authority will break this shell of the company and sue
the individuals who have done or committed such a crime or offence. This lifting of the curtain is called a Lifting of the Corporate
veil.

Q4(c) What are the conditions for lifting of corporate veil?

There are few conditions when a corporate veil can be lifted in a public company that are-

• Public interest : If a company is set up against the public interest, the court can allow the lifting of the
corporate veil.
• Fraud : The corporate veil can be lifted if a company or its stakeholders commit prima facie fraud.
• Tax evasion :The corporate veil can be lifted if a company uses it to evade taxes or shield itself from
liability. For example, the Supreme Court held that the Income Tax authorities can lift the corporate veil if a
company is formed to evade tax.
• Diversion of funds :The corporate veil can be lifted if a company sells property to the wives of its directors in a
sham or collusive transaction.
• Gross misconduct or impropriety : The corporate veil can be lifted if there is an element of gross misconduct,
impropriety, or evasion of tax.

Q4(d) what is the need for lifting of corporate veil?

The lifting of the corporate veil means ignoring the fact that a company is a separate legal entity. It allows the court to look
behind the true owners or real persons who are in control of the company.
QUESTION NO. 04 / WORKSHEET

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………………………………………

Q4(a) what do you understand by corporate veil

Q4(b) what do you mean by lifting of corporate veil?

Q4(c) What are the conditions for lifting of corporate veil?

Q4(d) what is the need for lifting of corporate veil?

Q5(a) what do you understand by memorandum of association? Give definition by lord macmillon.
MEMORANDUM OF ASSOCIATION : Under Section 2(56) of the Companies Act, "Memorandum means the memorandum t 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."
Definition : by Lord Macmillan opines, “The purpose of the memorandum is to enable the shareholders creditors and those who deal with the company, to
know what is its permitted range of enterprise."

Q5(b) what is the importance of Memorandum of association?

IMPORTANCE OF MEMORANDUM : A memorandum in fact lays down the constitution of a company and as such is the foundation on which the super
structure of the company is built. It lays down the area within which a company may operate and defines the relationship of the company with the outside
world.
• The Memorandum enables the shareholders, creditors to know what its powers are and what the range of its activities is.
• It lays down the powers and objects of a company and the scope of the operations of the company beyond which its action cannot go.
• The company is bound to act according to the objects and powers a contained in its Memorandum.

Q5(c) What are the Features of Memorandum of association?

FEATURES 0F MEMORANDUM OF ASSOCIATION
1. It is the supreme document of the company.
2. It defines the relationship of the company with the outsiders.
3. It is known as charter of the company.
4. It should be in written form.
5. It is a public document which is open for public inspection.

CONTENT OF MEMORANDUM OF ASSOCIATION
1.) Name Clause [Sec. 4(1)(a)] : "The name of the corporation is the symbol of its personal existence."
The Memorandum of every company must state the name of the company with the word "Limited' as the last word of the name in the case of a
public limited company and with Private Limited as the last words of the name in the case of a Private limited company.
2.) REGISTERED OFFICE OR DOMICILE CLAUSE [Sec. 4(1)(b)] : The second clause of the memorandum must specify the State in which the registered
office of the company is to be situated.
3.) OBJECTS CLAUSE[Sec. 4(1)(c)] : In the third clause, the memorandum must state the objects for which the proposed company is to be
established. This clause is to be drafted after a very careful consideration keeping in view the shape a company may take in the years to come
.Sec. 4(1)(c) requires a company to divide its objects clause into two parts :
• Objects to be pursued on incorporation; and
• Matters necessary for furtherance therefore.
4.) LIABILITY CLAUSE [Sec. 4(1(d)] : Liability clause in the memorandum defines the limitations on the liability of members. The liability may be
limited liability in either of the two ways :
(i) Company limited by Shares : No member will be liable to contribute more than the amount unpaid on his shares in the case the company is
wound up. Thus, if members' shares are fully paid-up, his liability is nil.
(ii) Company limited by Guarantee: In case a company is limited by guarantee, this clause must mention the maximum amount which every
member undertakes to contribute
4.) CAPITAL CLAUSE : Capital clause must indicate the amount of capital with which the company is registered [Sec. 4(1)le)l and is known as
Registered or Authorized or Nominal Capital .Authorized Capital sets the limit beyond which the issued capital should not exceed.
5.) ASSOCIATION OR SUBSCRIPTION CLAUSE : The Memorandum of association must be signed by at least seven persons in case of a public
company and two in case of a private company, who are desirous of forming themselves into a company. Such persons are termed as subscribers.
The MOA must be signed in the presence of at least one witness .The association clause generally runs as follows :
Q5(d) what do you mean by Articles of Association? Write definition as per section 2(5).
ARTICLE OF ASSOCIATION: An Article of Association is one of the important documents to be filed with the Registrar Aha time of
incorporation/registration of the company. It sets out the rules and regulations for the internal management of the company. Articles of Association
• Specifies the bye-laws of the company
• Subordinate document to Memorandum of Association
• Defines the rules and regulations for the Internal Management
DEFINITION : According to Section 2(5) of the Companies Act, 2013 "Articles mean the Articles of Association of a company as originally framed, or as
altered from time to time in pursuance of the previous Companies Act or this Act".

Q5(e) what are the content of Articles of Association?

CONTENTS OF ARTICLES OF ASSOCIATION : Usually, the Articles may contain the following matters :
1. Exclusion in part or full of Table F'; (i.e., the extent to which Table F is applicable)
2. Share Capital and rights attaching to different classes of shares.
3. Rules relating to :
• Allotment of shares • Forfeiture of shares; • Accounts and audit;
• Share certificates; • Alteration of share capital; • Common seal of the company;
• Calls on shares; • General meetings; • Borrowing power;
• Company's lien over unpaid or • Appointment and remuneration of • Voting rights and proxies;
partly paid shares; managerial personnel; • Winding up of the company;
• Transfer and transmission of • Dividends, reserves and • Adoption or execution of
shares; capitalization of profits; preliminary contracts;
QUESTION NO. 05 / WORKSHEET

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………………………………………
Q5(a) what do you understand by memorandum of association? Give definition by lord macmillon.
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Q5(b) what is the importance of Memorandum of association?

Q5(c) What are the Features of Memorandum of association?

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Q5(d) what do you mean by Articles of Association? Write definition as per section 2(5).
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Q5(e) what are the content of Articles of Association?
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Q6.) Differentiate Between Doctrine Of Indoor Management And Doctrine Of Constructive Notice Along With Exception Of Each.(2023)

Q6(a) what do you understand by doctrine of indoor management ?

DOCTRINE OF INDOOR MANAGEMENT
The doctrine of constructive notice has one very important limitation, namely, that a person dealing with the company shall be
deemed to have the notice of the contents of the memorandum and the articles only, and he is not supposed to know about any
irregularity in the internal management of the company. On the other hand, an outsider is entitled to assume that everything has
been done properly. Therefore, where the lack of authority is not evident from the articles, a person dealing with the company shall
not be deemed to have constructive notice of such lack of power. This limitation on the doctrine of constructive notice is known as
the doctrine of Indoor Management.

Q6(b) Where is the origin Of Doctrine of Indoor Management?

ORIGIN OF DOCTRINE OF INDOOR MANAGEMENT
This rule has been described by Lord Hatherley as the Doctrine of Indoor Management. According to this doctrine, while persons
dealing with the company are bound to read the registered document, and to see that the proposed dealing is not inconsistent
therewith; they are not bound to do more, they need not inquire into the regularity of the internal proceeding and may assume that
all is being done regularly.
This doctrine was first laid down in the Royal British Bank V. Turquand (1856 6E and B. 327).
Point decided is: The outsiders dealing with the company are entitled to presume that as far as the internal management of the
company is concerned, everything has been regularly done.

Q6(c) What are the exceptions to Doctrine of Indoor Management?

EXCEPTIONS TO THE DOCTRINE OF INDOOR MANAGEMENT
The doctrine of indoor management is subject to the following limitations :
1.) Knowledge of irregularity : A person who has knowledge of an irregularity regarding the internal management of the company
cannot claim protection provided by this doctrine. The knowledge of irregularity may be actual or constructive

2.) Negligence : This also does not apply in case where the circumstances are such that if a person had made enquiries he would
have known the irregularity.

3.)Forgery : The rule has no application if the document is forged so as to purport to be the company's document.

4.) Act beyond apparent authority : The rule also has no application where act done by the officer of the company is outside his
apparent authority.

5.) No knowledge of contents of articles : A person who has not actually read the Articles, can't seek to rely on the statement
contained therein.

Q6(d) what is Doctrine of Constructive Notice?

The doctrine of constructive notice is a corporate law doctrine that assumes all people dealing with a company are aware of its
articles of association and memorandum of association. The doctrine of indoor management is an exception to this rule.

The doctrine of constructive notice protects a company's insiders from transactions with outsiders. The doctrine of indoor
management, also known as the Turquand Rule, protects outsiders from a company's internal affairs. It allows outsiders to assume
that a company's internal guidelines have been followed.

Q6(e) What are the exceptions to Doctrine of constructive Notice?

Here are some exceptions to the doctrine of constructive notice:

• Suspicion of irregularity: This is an exception to the doctrine of constructive notice.

• Circumstances that invite inquiry: The doctrine of constructive notice does not apply in circumstances that invite inquiry.

• Internal irregularities: The doctrine of indoor management does not apply if there are internal irregularities that need to be
addressed.
QUESTION NO. 06 / WORKSHEET

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………………………………………
Q6(a) what do you understand by doctrine of indoor management ?
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Q6(b) Where is the origin Of Doctrine of Indoor Management?

Q6(c) What are the exceptions to Doctrine of Indoor Management?

Q6(d) what is Doctrine of Constructive Notice?

Q6(e) What are the exceptions to Doctrine of constructive Notice?

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CITY ACADEMY DEGREE COLLEGE

Definition and nature of company , types of companies , formation of companies , liability of

Q10.) Write short notes on any three of the following: (2023)

a) Annual general meeting

Q1(a) What do you mean by Company?

Q1(b) Write Definition of Company as per Companies act 2013.

Q1(d) write down the definition of Company by Lord Justice Lindley

Q1(e) What are the nature of a Company?

ON THE BASIS OF PLACE OF REGISTRATION ON THE BASIS OF LEGALITY OTHER COMPANIES

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

Q1(a) What do you mean by Company?

Q1(b) Write Definition of Company as per Companies act 2013.

Q1(d) write down the definition of Company by Lord Justice Lindley

Q1(e) What are the nature of a Company?

Q1(f) what are the types of company?

Q3(b) Define Promotion stage of a company.

Q3(c) What is incorporation stage in formation of a company?

Q3(d) What is capital subscription stage of formation of a company?

Q3(e)Define commencement stage of formation of a company.

Q3(g) what are the functions , duties and liabilities of promoter?

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

Q3(a) what do you means by company ?

Q3(b) What are the types of company?

Q3(c) What do you mean by registered companies?

Q3(d)Define one person company.

Q3(e) What do you understand by private company?

Q3(f) what do you understand by Public Company?

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

Q3(b) What are the types of company?

Q3(d)Define one person company.

Q3(e) What do you understand by private company?

Q4(a) what do you understand by corporate veil

Q4(b) what do you mean by lifting of corporate veil?

Q4(c) What are the conditions for lifting of corporate veil?

Q4(d) what is the need for lifting of corporate veil?

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

Q4(a) what do you understand by corporate veil

Q4(b) what do you mean by lifting of corporate veil?

Q4(c) What are the conditions for lifting of corporate veil?

Q4(d) what is the need for lifting of corporate veil?

Q5(b) what is the importance of Memorandum of association?

Q5(c) What are the Features of Memorandum of association?

Q5© what are the content of memorandum of association/

Q5(e) what are the content of Articles of Association?

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

Q5(b) what is the importance of Memorandum of association?

Q5(c) What are the Features of Memorandum of association?

Q5© what are the content of memorandum of association?

Q6(a) what do you understand by doctrine of indoor management ?

Q6(b) Where is the origin Of Doctrine of Indoor Management?

Q6(c) What are the exceptions to Doctrine of Indoor Management?

Q6(d) what is Doctrine of Constructive Notice?

Q6(e) What are the exceptions to Doctrine of constructive Notice?

• Suspicion of irregularity: This is an exception to the doctrine of constructive notice.

DETAILS OF STUDENTS: ………………………………………………………………………………………………………………………………………………..

Q6(b) Where is the origin Of Doctrine of Indoor Management?

Q6(c) What are the exceptions to Doctrine of Indoor Management?

Q6(d) what is Doctrine of Constructive Notice?

Q6(e) What are the exceptions to Doctrine of constructive Notice?

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