Page 246 - DMGT407Corporate and Business Laws

Unit 10: Articles of Association

The doctrine of indoor management allows all those who deal with the company to Notes
assume that the provisions of the articles have been observed by the officers of the company.

10.7 Keywords

Articles of Association: These are a company’s bye laws and regulations, which govern the
management of its internal affairs and the conduct of its business.
Doctrine of Constructive Notice: This doctrine enunciates that any person dealing with the
company is presumed to have read its memorandum and articles.
Doctrine of Indoor Management: This doctrine enunciates that any person dealing with the
company is entitled to assume that he provisions of the article have been observed by the
company.
Inter se: The provision of articles which bind the members one to another so far as rights and
duties arising from the articles are concerned.
Public Company: It means a company which is not a private; has a minimum paid-up capital of
` 5 lakhs.
10.8 Review Questions

1. What are the articles of association? Enumerate some of the items included therein.
2. Discuss whether it is legally compulsory for a company to have its own articles of
association.
3. What restrictions should the articles provide to give a company the status of a private
company?

4. Distinguish between articles and memorandum.
5. Explain the procedure laid down in the Companies Act, 1956 to alter the articles of a
company.

6. Discuss the limits upon the powers of a company to alter its articles.
7. Discuss the binding effect of memorandum and articles, when registered, on the members
and outsiders.

8. Explain the doctrine of constructive notice. Are there any exceptions to the said doctrine?
9. Explain and illustrate the Doctrine of Indoor Management. What are the exceptions to this
rule?

10. Explain the rule laid down in the Royal British Bank vs. Turquand and state the exceptions
to the rule.
11. Comment on the following:

(i) The power of altering the articles is wide, yet it is subject to a number of limitations.
(ii) The Doctrine of Indoor Management is a silver lining to strangers dealing with the
company.

(iii) Every person dealing with the company is deemed to have notice of the contents of
its memorandum and articles.
(iv) Explain the significance of Table A. Should a company have a special set of articles?

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