Question

    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.
    A 13 months and Voidable Correct Answer Incorrect Answer
    B 3 months and void Correct Answer Incorrect Answer
    C 30 months and void Correct Answer Incorrect Answer
    D 3 months and voidable Correct Answer Incorrect Answer

    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.

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