The 'doctrine of constructive notice' provides that:
Adirectors cannot rely on the MoA for any defence against personal liability for any reason
Bthe public are presumed to know the contents of a company's MoA and AoA (registered public documents)
Ccompany secretaries must give actual notice to all members before any change in articles
Dthe auditor must give constructive notice to creditors of any irregularity in books of account
Answer & Solution
Correct answer: B. the public are presumed to know the contents of a company's MoA and AoA (registered public documents)
1. The doctrine of CONSTRUCTIVE NOTICE: every person dealing with a company is deemed to have notice of the contents of the company's MoA and AoA (registered public documents), and is bound by them.
2. The doctrine protects the COMPANY from outsiders pleading ignorance.
3. The doctrine of INDOOR MANAGEMENT (Royal British Bank v. Turquand) is the corresponding outsider-protection: third parties dealing with the company need not enquire into internal procedural compliance.
4. The two doctrines together balance protection of the company and protection of bona fide outsiders.
5. Hence option A is correct.
_Source: Companies Act 2013 (Act 18 of 2013), Govt. of India MCA — Companies Act 2013; Royal British Bank v. Turquand, (1856) 6 E&B 327_
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