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CSEET · Business Laws and Management · Elements of Company Law

The articles of Kaveri Agro Ltd. give the Board power to refuse any transfer, but a provision of the Companies Act, 2013 expressly requires a contrary result, and nothing in the Act allows otherwise. What is the position?

The Act prevails and the repugnant article is void to the extent of the conflict. Unless the Act expressly provides otherwise, its provisions override the memorandum, articles, agreements and resolutions, so neither members' signatures nor a special resolution can save the clause.

  1. AThe articles prevail since members have signed them
  2. BThe Act prevails and the repugnant article is void to that extentCorrect
  3. CBoth are valid and the company may choose one
  4. DThe article prevails if passed by special resolution

Explanation

Section 6 says that, save as the Act expressly provides otherwise, the Act has effect notwithstanding anything contrary in the memorandum, articles, any agreement or resolution. Any provision repugnant to the Act becomes void to that extent. A special resolution does not change this, and the company has no choice between the two.

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