CA Foundation · Business Laws · The Companies Act, 2013
Anil Agro Ltd was incorporated in 2022 and obtained its Certificate of Incorporation. Later it is discovered that the company was incorporated by furnishing false information and suppressing material facts. Which statement best reflects the legal position?
Where a company is incorporated through false information or suppression of material facts, the Tribunal can intervene on application and pass orders such as winding up or restructuring. Incorporation is not shielded by the certificate in cases of fraud, and nothing happens automatically without a Tribunal order.
- AThe Tribunal, on application, may order the company's incorporation to be dealt with, such as by declaring it a company whose members have unlimited liability or directing its removal, after hearing the partiesCorrect
- BThe Certificate of Incorporation is cancelled automatically by the Registrar
- CNothing can be done because the certificate is conclusive evidence in all cases
- DThe members become personally liable without any Tribunal order
Explanation
The Act provides that where a company has been incorporated by furnishing false or incorrect information or by suppression of material facts, the Tribunal on application may pass orders such as regulating the company's memorandum and articles, directing a change of status, or ordering winding up or removal. It is not automatic and the certificate does not shield fraud. Hence the Tribunal route is correct.
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