CS Executive · Company Law and Practice · Directors
Later it was found that the appointment of Mr. Bose as a director of Kiran Ltd was invalid due to a disqualification. Between his appointment and the discovery, he signed contracts on behalf of the company. What is the effect on those acts?
Acts done by Mr. Bose as director before the company noticed the defect are not deemed invalid. However, the protection does not extend to acts done after the company has noticed that his appointment is invalid or has terminated.
- AAll such acts are invalid from the start
- BActs done before the invalidity was noticed by the company are not deemed invalid, but acts after the company notices the invalidity are not validatedCorrect
- COnly acts approved by the shareholders remain valid
- DAll acts remain valid, including those done after the company noticed the invalidity
Explanation
Section 176 protects acts done by a person as director even if his appointment was later found invalid. The proviso says it gives no validity to acts done after the company has noticed the appointment to be invalid or terminated.
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