Question

Kamal, the promoter of Desire Ltd., has incurred 1 lakh for formation of the company. The

company refuses to pay all the expenses so incurred by Kamal since the company does not

have any provision in the Articles of Association for such payment. Advise Kamal

regarding the remedy available to him for his claim​

Answer 1

Answer:

let him take why you are worried about him

Answer 2

Answer:

company may refuse for payment of expenses.

Explanation:

why?

If the Articles of Association contains provisions regarding payment of preliminary expenses to promoters then promoters have right to receive all the expenses incurred by them in formation of company from Board of Directors. Company may pay these expenses to promoters even after formation but such payments should not be beyond the articles of company.  

But in the current situation, the fact is that the AOA of company doesn’t have any provision for payment of such expenses, company may refuses for the payment of expenses incurred by Kamal.