Toll Gate 3

Unit 3: Legal Aspects of Business Organizations

Business Law

XYZ Corporation, a software development company, is in the process of expanding its operations by
acquiring a smaller competitor, Tech Innovations Pvt. Ltd. The board of directors of XYZ Corporation
has approved the acquisition, and negotiations with Tech Innovations Pvt. Ltd. are underway. During
the due diligence process, several irregularities are uncovered in the financial records of Tech
Innovations Pvt. Ltd. The CFO of XYZ Corporation, Ms. Sarita, is tasked with evaluating the potential
risks and ensuring compliance with legal requirements throughout the acquisition process.

1. What steps should Ms. Sarita take to ensure that the acquisition of Tech Innovations Pvt. Ltd.
does not involve any ultra vires actions by XYZ Corporation?
2. How might the doctrine of constructive notice affect the negotiation process between XYZ
Corporation and Tech Innovations Pvt. Ltd.?
3. What internal controls and procedures should XYZ Corporation implement to ensure
compliance with indoor management principles throughout the acquisition process?