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CS Executive · Company Law and Practice · Memorandum and Articles of Association and its Alteration

Kaveri Foods Pvt Ltd altered its articles and then issued 40 copies of the articles to new members without noting the alteration in them. Under section 15 as given, what is the consequence?

The company and every officer in default are each liable to a penalty of one thousand rupees for every copy of the memorandum or articles issued without the alteration. The penalty is counted per copy, and the alteration itself remains valid.

  1. ACompany and every officer in default are liable to a penalty of one thousand rupees for every copy issued without the alterationCorrect
  2. BOnly the company is liable, to a fixed penalty of one thousand rupees in total
  3. CThe alteration becomes void from the date of issue
  4. DThe Registrar must cancel the registration of the alteration

Explanation

Section 15(1) requires every alteration to be noted in every copy. Under section 15(2), the company and every officer in default are liable to a penalty of one thousand rupees for each copy issued without the alteration. The penalty is per copy, not a lump sum, and the alteration itself is not rendered void.

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