MEMORANDUM OF ASSOCIATION

SUBMITTED BY:

Divya Gulati Megha Sharma Ritika Takkar

SUBMITTED TO: MISS. SHOHIMA

COMPANY
Company is a voluntary association of persons formed for the purpose of doing:  business having a distinct name


limited liability & have a separate legal entity from the members who constitute it.

Two main documents of company

MEMORANDUM OF ASSOCIATION

ARTICLE OF ASSOCIATION

Memorandum of association
The memorandum of association of a company, company, is the document that governs the relationship between the company and the outside. It is one of the document which has to be filed with the registrar of companies at the time of incorporation of a company. Memorandum of Association of a company as originally framed or altered from time to time in pursuance of any previous Companies Law or of this Act. -SECTION2(28),Companies Act,1956 Memorandum of Association of a company is its charter & defines the limitations of the powers of a company. -LORD CAIRNS

Purpose of memorandum
The prospective shareholders shall know the field in, which their money is going to be used by the company and what risk they are undertaking in making investment. The outsiders dealing with the company shall know the objects of the company.

Printing and signing of Memorandum

    

The Memorandum of Association of a company shall bebePrinted Divided into paragraphs numbered consecutively, and Signed by 7 (2 in case of a private company) subscribers Each subscriber shall sign (and add his address, description and occupation, if any) in the presence of at least 1 witness who shall attest the signature and shall likewise add his address, description and occupation.

Contents of Memorandum
According to section 13,every company must contain the following clauses:


name of the company, with Limited as the last word of the name in the case of a public limited company and with private Limited as the last words of the name in the case of a private limited company.

The state in which the registered office of the company is to be situated. situated. The objects of the company which shall be classified as:
main objects of the company to be pursued by the company on its incorporation and objects incidental or ancillary to the attainment of the main objects, and

Other objects not included above.

In the case of companies (other than trading corporations) with objects not confined to one state, state to whose territories the objects extend.

The liability of members is limited if the company is limited by shares or guarantee.

In the case of a company having a share capital, each subscriber shall take at least 1 share and shall write opposite his name the number of shares he takes.

Clauses under Memorandum of association

NAME REGISTERED OFFICE Clauses Of MOA
LIABILITY

OBJECT

CAPITAL

SUBSCIPTION

Name clause [section 13(1)(a)]:the name of a company 13(1)(a)]:the establishes its identity. This clause contains the name of the company.
Restrictions
The name must not be identical with the name of another company Which in the opinion of central government is undesirable Should have the words Limited or Private Limited at the end.

Registered Office clause [section 13(1)(b)]:it contains the name 13(1)(b)]:it of the state in which the registered office is to be situate. Notice of situation of registered office & every change therein must be given to registrar when it starts or within 30 days of incorporation as the case may be. If default is made in complying with the requirements, the company or officer who is in default shall be punishable with fine which may extend to rs.500 for every day during which the default continues.

Object clause [section 13(1)(c)&(d):it determines the rights and 13(1)(c)&(d):it powers of the company and also defines its sphere of activities. Section13(1)(d) requires a company to divide its object clause into two parts
Main objects: the main objects to be pursued by the company on objects:

its incorporation and objects incidental to the attainment of the main objects.
Other objects: other objects which are not included in the above objects:

clause. Liability clause [section13(2)]:this clause states that[section13(2)]:this thatliability of the members is limited by the value of shares held by them. In case of a company limited by guarantee the members are liable to the amount undertaken to be contributed by them to the assets of the company in the event of its being wounded up.

Capital clause [section13(4)(a)]:the clause states[section13(4)(a)]:the statesthe total capital of the proposed company, the division of the capital into equity share capital & preference share capital should also be mentioned. the memorandum of the company limited by shares must state the authorised & the nominal share capital. Example:the capital of the company is Rs.10,00,000 divided Example:the into 1,00,000 equity shares of Rs.10 each. This amount lays down the upper limit beyond which the company cannot issue shares. Association or subscription clause [section 13(4)(c): this clause contains thethename of the signatories to the memorandum of association. The memorandum must be signed by at least 7 persons in case of public company & 2 in case of private company in the presence of at least one witness who must attest the signatures.

Alteration of memorandum
Alteration can be done regarding:  change of the Name Clause


change of the Registered Office change of the Object Clause change of the Liability Clause Change of the Capital Clause

Doctrine of ultra vires



The object clause of the Memorandum of the company contains the object for which the company is formed. An act of the company must not be beyond the objects clause, otherwise it will be ultra vires and, therefore, void and cannot be ratified even if all the members wish to ratify it. This is called the doctrine of ultra vires. Ultra means beyond & Vires means powers. An action outside the memorandum is ultra vires. An act is said to be ultra vires when it is performed which, though legal in itself, is not authorised by the objects clause in memorandum of association or statue.

Asbury Railway Carriage & Iron Company Ltd. V. Riche(1875)

Doctrine of ultra vires has been firmly established in the following case:  The company was formed with the objects to make and sell, or lend or hire railway carriage and wagons & all kinds of railway plant to carry on the business of mechanical engineers & general contractors etc.  The company contracted with Riche to finance the construction of railway line in Belgium. The company repudiated the agreement & was sued for breach of contract.  Riche contentions were: The contract in question came well within the meaning of the words general contractors & therefore within the powers of the company. The contract was ratified by the majority of shareholders

Points decided in the case are:



If an act is ultravires the memorandum, it is not binding upon the company. A contract ultravires a company is void & incapable of ratified even if every member wishes to ratify it.

Effects of doctrine of ultra vires

Void ab initio  Injunction  Personal liability of directors  Acquisition of property that is Ultra Vires  Directors personally liable to third party


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