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acharya
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A question had arisen as to whether a public limited company has powers to insert a clause in its articles of
association relating to expulsion of a member by the Board of directors of the company where the directors are
of the view that the activities or conduct of such a member is detrimental to the interests of the company.
The then Department of Company Affairs (Now Ministry of Corporate Affairs) clarified that an article for expulsion
of a member is opposed to the fundamental principles of the Company Jurisprudence and is ultra vires the
company, the reason being that such a provision militates against the provisions of the Companies Act relating
to the rights of a member in a company, the powers of the Central Government as an appeallate authority under
Section 111 of the Act and the powers of the Court under Sections 107, 395 and 397 of the Companies Act,
1956.
