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Contracts ratified by BOD of Pvt. Company

Aishwarya Sitharam (CA Final, 1st year LLB) (45 Points)

22 September 2010

What type of contracts need to be ratified by the BOD of a Private Company? Please provide references of legal provisions.

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3 Replies

Shraddha Shukla (Corporate law Consultant) (346 Points)
Replied 23 September 2010

Any of the preincorporation contracts entered into by the promoters can be ratified by the company else they are non binding to the company so formed, or contracts outside AOA but within MOA may be ratified as well.

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vivek (CS) (751 Points)
Replied 23 September 2010

Agree with Shraddha,

Upto my understanding; Board is utmost powerful to enter into any kind of contract (except ultra-virus). Now, pre incorporation contract definitely it needs to be ratified. But in day to day business requirement some times officials of the company gets enter into the contract without having an authority, in that case it is required that board ratify and adopt that contract.

Regards;