Page 167 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes Provisional contract: Those contracts which are entered into by a public company after obtaining

the certificate of incorporation but before getting the certificate to commence business are known

as provisional contracts.
8.7 Self Assessment

Fill in the blanks:

1. Promoters have been described to be in ................................. (relationship of trust and
confidence) with the company.

2. ............................. states that, on registration, memorandum and articles of the company
bind the company.
3. In the case of ................................ also, the promoters may not invite public to subscribe to
its share capital and may arrange the capital privately as in the case of a private company.
4. ................................. provides that a company can, in general, contract in the same form as
an individual.
5. A ..................... which would be valid if made between private persons although made
orally or by parol on behalf of the company by any person acting under express or implied
authority.
6. The ......................................... of a company is its charter which contains the fundamental
conditions upon which alone the company can be incorporated.
7. ............................ provides that the company cannot alter the conditions contained in
memorandum except in the cases and in the mode and to the extent express provision has
been made in the act.
8. The ......................................... of a company and its bye laws are regulations which govern
the management of its internal affairs and the conduct of its business.

8.8 Review Questions

1. Discuss the formation of company?
2. What do you mean by winding up of a company? Discuss it in detail

3. Who is a promoter? Also explain the duties and liabilities of promoters.
4. What do you mean by memorandum of association? What does it contain?
5. Discuss liability clause, association clause, article association and what does it contain?
6. Describe Provisional Contract and how are alterations made in a memorandum of
association?
7. State the relations of memorandum of association with article of association
8. Vikas has a company Graphics Zone. The liability clause is not given in memorandum.
Discuss why vikas not mentioned liability clause in his memorandum. Under which type
of company, the liability clause need not be given in the memorandum and discuss why it
is not required?

9. Mr. Ankush singh wants to open a company. Discuss what procedure he has to follow for
formation of company.
10. Arun the owner of XYZ Pvt. Ltd. Co. His company is solvent and able to pay its liability.
But company winds up. Discuss which type of winding up is related to arun’s company.

162 LOVELY PROFESSIONAL UNIVERSITY