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law case study

2420 views 1 replies

Varun Jain

CA B.com

392 Points Posted on 23 April 2010

solve this case.

The principal business of XYZ company ltd. was the acquisition of vacant plots of land and to erect the houses. In the course of transacting the business, the chairman of the company acquired the knowledge of arranging finance for the development of land. The XYZ company introduced a financier to another company ABC ltd. and received and agreed fee of Rs. 2 lakhs for arranging the finance. The MOA of the company authorises the company to carry on any other trade or business which can in the opinion of the board of Directors, be advantageously carried on by the company in connection with the company's general business. Referring to the provision of the companies act, 1956, examine the validity of the contract carried out by XYZ company ltd. with ABC ltd.

Replies (1)

CA Babit Khurana

learning is my passion

338 Points Posted on 23 April 2010

As per section 17(1) a company can change its object clause to do preset business more efficiently.

If comapny wants to do some new buisness which is not mention its memorandum than MOA will change accordinly.

Comapny Can change its objsect clause in this regards without approval of CG.

If a public comapny wants to change its object clause then it should be subject to section 149(2A).

Conclusion : company can do any new business which have no connection with present one by altering the object clause of MOA, in this case if it is assumed that comapny have followed section 17(1) then comapny and its officer is not in defult and viceversa.