What is the doctrine of Indoor Management
The doctrine of Indoor Management states that any outsider who has entered into a transaction with a company can presume that there are no internal regularities and that all procedural requirements have been complied with by the company. It is also known as Turquand’s Rule.
What are the instances wherein the doctrine of Indoor Management can be applied
Some of the instances where the doctrine of Indoor Management can be applied are:
- Misappropriation of company property and funds
- Engagement in activities which give a rise to conflict of interest
- Activities leading to violation of confidentiality of the shareholders or board of directors
- Failure to disclose material information to the shareholders or board of directors
- Breach of fiduciary duties
What are the exemptions to the doctrine of Indoor Management
- Outsider entering into the transaction has constructive or actual notice of the irregularity in relation to that of the Company
- Outsider relies on a document which is a forged in the name of the Company
- Outsider entering the transaction could discover the irregularities in the management of the Company if they would have made proper enquiries
- Acts done by a company representative are beyond the scope of their apparent authority
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