Explain four differences between the corporate …

Basis

Doctrine of Indoor Management

Doctrine of Outdoor Management

(a) Meaning

 It protects outsider against the company. The doctrine of indoor management follows from the doctrine of ‘constructive notice’ laid down in various judicial decisions. The hardships caused to outsiders dealing with a company by the rule of‘constructive notice’ have been sought to be softened under the principle of ‘indoor management’. It affords some protection to the outsiders against the company.

 It protects the company against the outsider. Doctrine of constructive notice is a doctrine where all persons dealing with a company are deemed (or "construed") to have knowledge of the company's articles of association and memorandum of association.

(b) Scope

 It is confined to the internal position and affairs of the company.

It is confined to the external position and affairs of the company.

(c) Contents

The internal affairs need not be registered. They are not open to public and third parties.

The memorandum and articles of association of the company are public documents. They must be registered with the Registrar of Companies. These are open to public and third parties to access.

(d)Compulsion

Third persons, who have no notice to any irregularity or want of authority, will be protected on the principle called the ‘Turquand Rule’.

Third persons, who have no notice of an irregularity or want of authority, if they try they could know about that irregularity or want of authority, will not be protected on the principle of ‘constructive notice’