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Business Environment and Law-Memorandum And Articles Of Association

Constructive Notice Of Articles And Memorandum: - Memorandum And Articles Of Association-

   Posted On :  08.05.2018 07:53 am

The Memorandum and articles when registered become public documents and then they can be inspected by anyone on payment of a nominal fee.

Constructive Notice Of Articles And Memorandum:
 
 
The Memorandum and articles when registered become public documents and then they can be inspected by anyone on payment of a nominal fee. Every person dealing with the company is presumed to have read these documents and understood them in their true perspective. This is known as ‘Doctrine of Constructive Notice’.

Doctrine Of Indoor Management:

  
The doctrine of indoor management allows all those who deal with the company to assume that the provisions of the articles have been observed by the officers of the company. In other words, they are not bound to enquire into the regularity of internal proceedings. An outsider is not expected to see that the company carries out its internal regulations.
 
Exceptions : The doctrine of indoor management is subject to the following exceptions:

1. Knowledge of irregularity.
2. No knowledge of Articles: The rule cannot be invoked in favour of a person who did not consult the Memorandum and articles and, thus did not rely on them.
3. Void or illegal transaction. The rule does not apply to transactions which are void or illegal ab initio, eg., forgery.
4. Negligence: If an officer of a company does something which would not ordinarily be within his powers, the person dealing with him must make proper enquiries and satisfy himself as to the officer’s authority. If he fails to make inquiry he cannot rely on the rule.
5. Doctrine does not apply where question is in regard to very existence of agency.
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