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CS Executive · Company Law and Practice · Board Composition and Powers of the Board

Tara Realty Ltd, whose ordinary business includes selling and leasing properties, proposes to sell a commercial building forming a large part of its stock-in-trade. Is a special resolution under the restriction on disposal of an undertaking required?

No special resolution is required. The restriction on disposing of an undertaking does not apply to the sale or lease of property where the company's ordinary business consists of or includes selling or leasing such property, as with Tara Realty.

  1. ANo, because the restriction does not affect sale or lease of property where the company's ordinary business consists of such selling or leasingCorrect
  2. BYes, because any sale above twenty per cent of net worth needs a special resolution
  3. CYes, but only an ordinary resolution
  4. DYes, and the buyer's title is void without it

Explanation

The restriction on disposing of an undertaking does not affect the sale or lease of any property where the company's ordinary business consists of or comprises such selling or leasing. Tara Realty's sale is in its ordinary business, so no special resolution is required under that clause.

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