Go AD-Free with CAclubindia Pro and Daily Mobile Updates. Subscribe Now!

Preincorporation contrat

Co Act 2013 178 views 1 replies

Anu

Articleship

24 Points Joined January 2016

Hi,

As we know contracts made in behalf of the Company before its incorporation are called Pre-incorporation Contracts, Generally these contracts cannot bind the company subject to the exemption under section 15 and 19 f d Special Relief Act 1963,

One f our Client has entered into Pre- incorporation and is eligible for the exemption so provided, can anyone please help me about,

1. The Proedure for ratification by the Company,

2. How to communicate such acceptance with the other party. Please provide if there s any Specific Format for such acceptance.

Thanks for your Patience.

Replies (1)

Hemant K

36 Points Joined December 2015

Hi,

The CA 2013 does not contain any provision for pre incorporation contract. Such contracts cannot be ratified by the Company because the company was not existing when the contract was made. The company should enter into a new contract, after its incorporation, with the other party which is known as novation of promoter’s contracts and pass the necessary board resolution.

Regards