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CSEET · Business Laws and Management · Elements of Company Law

Sunrise Textiles Ltd. alters its articles but issues 40 printed copies of the articles without noting the alteration. Under the Act, what is the consequence?

The company and every officer in default are liable to a penalty of one thousand rupees for each copy issued without the alteration noted. Failure to note an alteration does not make the alteration void; it only attracts the per-copy penalty.

  1. AThe alteration becomes void
  2. BThe company and every officer in default are liable to a penalty of Rs 1,000 for every copy issued without the alterationCorrect
  3. COnly the Managing Director is liable to imprisonment
  4. DThe Registrar must strike off the company

Explanation

Section 15 requires every alteration to be noted in every copy of the memorandum or articles. On default, the company and each officer in default are liable to a penalty of Rs 1,000 for every copy issued without the alteration. Here that is 40 copies, so Rs 40,000 for the company. The alteration itself stays valid.

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