3.4 Doctrines of Constructive Notice and Indoor Management

The constructive notice doctrine: the public documents (the memorandum and articles — once registered, public at the registry) are constructively noticed to everyone dealing with the company — the outsider is DEEMED to know the company's stated objects and the internal rules (the powers' distribution: what needs the general meeting, what the board). The doctrine's harshness: the outsider charged with the documents' knowledge however unrealistic. The indoor management doctrine (the balance): Royal British Bank v. Turquand — the outsider dealing with the company may ASSUME that the company's internal proceedings (the meetings, the resolutions, the authorisations) were properly conducted: the internal irregularities (of which the outsider cannot know) do not bind the outsider. The two doctrines' division: the constructive notice charges you with the PUBLIC documents' contents; the indoor-management rule protects you about the INTERNAL management's regularity (the "Turquand rule"). The Turquand rule's exceptions (the protection's limits — the exam's list): (1) the outsider's actual knowledge of the irregularity (or the duty-to-know faces); (2) the suspicious circumstances (the constructive notice of the wrong — the duty to inquire); (3) forgery (the forged document binds no one — the assumption of regularity is not an assumption of genuineness); (4) the outsider's own negligence; (5) the acts outside the apparent authority altogether. The Nepali application: the Companies Act 2063's third-party-protection scheme (the…