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CA Foundation · Business Laws · The Companies Act, 2013

Under the Companies Act, 2013, which statement about the effect of the memorandum and articles of association on members is correct?

The memorandum and articles bind the company and all its members as if each member had signed them, creating mutual obligations among members and with the company. The binding effect arises on registration of the documents, and does not depend on SEBI or limit itself to directors.

  1. AThey bind only the company and not the members
  2. BThey bind the company and its members as if signed by each, and also bind members to one anotherCorrect
  3. CThey bind only the directors and the promoters
  4. DThey bind members only if registered with SEBI

Explanation

The Act provides that the memorandum and articles bind the company and its members as if each member had signed them, with mutual covenants to observe their provisions. Option A is wrong because members are bound as well. The binding effect arises from registration, not SEBI action.

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