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CSEET · Business Laws and Management · Elements of Company Law

The articles of Kaveri Textiles Ltd. contain a clause that conflicts with an express provision of the Companies Act, 2013. Which statement is correct?

The clause is void to the extent it is repugnant to the Act. The provisions of the Companies Act, 2013 override anything contrary in the memorandum, articles, agreements or resolutions, unless the Act expressly provides otherwise, so member consent cannot save the clause.

  1. AThe clause prevails because members agreed to it when the company was registered
  2. BThe clause prevails if it was passed by a special resolution
  3. CThe clause is valid only for matters that concern the internal management of the company
  4. DThe clause is void to the extent it is repugnant to the ActCorrect

Explanation

The Act overrides the memorandum, articles, agreements and resolutions, unless the Act expressly provides otherwise. Any provision repugnant to the Act becomes void to that extent. Member consent or a special resolution does not change this.

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