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CASES ON CORPORATE LAW GROUP MEMBERS

GAJANAN TANDALE ABHIJIT RAUT SUMEET PAWAR POOJA PARKAR

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CASE 1:PROBLEM ALTERATION OF OBJECT CLAUSE IN MOA

The object clause of Memorandum of a company empowers it to carry on distillery business and any other business that is allied to it. The company wants to alter its memorandum so as to include the cinema business in its objects clause.

SOLUTION

What Company Law says,


Section

17(1) of the companies Act, 1956 permits alteration of memorandum to carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company.
section 17(1) does not prohibit a company to diversify in areas other than those specified in the Memorandum.

Thus,

But,

the business sought to be added must be such which can conveniently or advantageously be combines with the business of the company. the facts of the given problem are based on this case held that the cinema business could not be either conveniently or advantageously combined with the distillery business and, therefore, disallowed change of objects. alteration shall not be allowed.

And

Accordingly,

Case 2

Advice Asiatic Government Security Life Insurance Co. Ltd, Whether it can seek an injunction against The New Asiatic Insurance Co. Ltd. Which was subsequently formed restraining it from having in its name the word Asiatic on the ground that it has caused confusion and can deceive the public

SOLUTION

The

companies Act, 1956 permits the promoters of the company provided the name chosen is not desirable. The Defendant company Same as the Plaintiffs company which is likely to mislead or deceive public.

The action of the defendants in choosing and coining for themselves a name substantially similar to that of the plaintiffs is deliberate and is not bona fide.

It is likely to create confusion & done to divert the business from the Plaintiffs to the Defendant company.

Therefore the court is likely to advise the Defendant to change its name and remove the word Asiatic there from.

CASE 3

The main object of a company is to manufacture cement. Seeing the potential for new business, the Board of Directors decided to go in for manufacture of steel and steel related products. These are included in the Other objects of the company. Can the company undertake the aforesaid new business?

SOLUTION:

Yes, the company can undertake the manufacture of steel and steel related products provided it obtains the approval of its shareholders by way of special resolution.[Sec.149(2A)]. Alternatively, where special resolution is not passed, the Central Government may, on an application made by the Board of Directors, allow a company to commence business in the Other Objects provided the votes cast in favour of the resolution exceed the votes cast against the resolution, if any.[Sec.149(2B)]

CASE 4

As a company secretary, how will you advise and act in the following situation:can the company by passing a single special resolution,after it has commenced the main business, obtain the requisite permission to commence business stated under the head other objects of the company which include diverse type of objects,as and when necessary?

SOLUTION

An object clause is a provision in a company constitution i.e. MOA stating the purpose and range of activities for which the company is carried on. A company cannot pass a blanket special resolution under the head other object of the company. However, there should be no objection to the passing of a special resolution for commencement of more than one business at one time.

(IF OBJECT IS NOT MENTION IN OTHER OBJECT CLAUSE)

As per Section 149 (2A) approve the commencement of other business by passing a special resolution in General Meeting. File with ROC duly verified declaration by one dirctor or company secretary. OR ( if special resolution is not passed). Central Government Permission must be obtain by the board of director, by making an application for the same to the Central Government.

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