DIRECTORS OF A COMPANY. — SPCC STD 12 Commerce — Question
Gujarat BoardEnglish MediumSTD 12 CommerceSPCCDIRECTORS OF A COMPANY.4 Marks
Question
Explain the liability towards third party.
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Answer
The following are the liability towards the third party of directors are as follows:
Liability towards third party :-
When directors give misleading information or false information in the prospectus or conceal some important information, as a result of which some share applicant has to suffer financial loss.
When directors enter into any transaction in their own name without mentioning the name of the company.
When they enter into fraudulent transactions with third parties.
When directors liability is unlimited as per Memorandum of Association (Table D & E).
When director borrows money in excess of permitted limits.
When the court holds directors liable to a third party, at the time of winding up of the company.
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