Any contract or arrangement entered by director or any other employee without consent of Board or approval by a resolution in the General Meeting and not ratified by Board/ Shareholders within _________ months shall be ____________ at the option of the Board/Shareholders.

Solution

Section 188 (3), where any contract or arrangement is entered into by a director or any other employee, without obtaining the consent of the Board or approval by a resolution in the general meeting under sub-section (1) and if it is not ratified by the Board or, as the case may be, by the shareholders at a meeting within three months from the date on which such contract or arrangement was entered into, such contract or arrangement shall be voidable at the option of the Board and if the contract or arrangement is with a related party to any director, or is authorised by any other director, the directors concerned shall indemnify the company against any loss incurred by it.