MEMORANDOM OF ASSOCIATION

BUSINESS LAW

Presented By :
Bhavani Singh Rathore
Hemam Johnson Singh
Shivaranjini
Shudhakar
Ravi Shankar

INTRODUCTION

DEFINITION
MEMORANDUM OF ASSOCIATION Definitions
Memorandum of Association of a company as originally
framed or as altered from time to time in pursuance of
any previous companies law or of this Act Sec.2 (28)

TWO MAIN DOCUMENTS OF COMPANY

Memorandum Of Association
Article Of Association

MEMORANDUM OF ASSOCIATION
Thememorandum of associationof acompany, 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 must
be:
Printed, 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

FORMS OF MEMORANDUM OF ASSOCIATION

Table B: relates to the company limited by shares
Table C: relates to the company limited by guarantee and not

having a share capitals

Table D: relates to the company limited by guarantee and

having a share capital.

Table E: relates to unlimited company.

CONTENTS OF MEMORANDUM: SECTION 13

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.

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
REGIST
E-RED
OFFICE

OBJECT

CLAUS
ES OF
MOA
CAPITAL

LIABILITY
LIABILITY

SUBSCR
I-TION

Name clause [section 13(1)(a)]:

the name of a company 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 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

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 its

incorporation and objects incidental to the attainment of the main

objects.

Other objects: other objects which are not included in the above

clause.

Liability clause [section13(2)]:this clause states that liability 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 the 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

authorized & the nominal share capital.

Example:
the capital of the company is Rs.10,00,000 divided 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 the name 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 MOA:
Alteration can be done regarding:
Alteration of the Name Clause
Alteration of the Registered Office
Alteration of the Object Clause
Alternation of the Liability Clause
Alteration of the Capital Clause

ALTERATION OF NAME CLAUSE:

A company can change its name in the following ways:
By a special resolution at a general meeting with

written approval of the Government.

the

No Approval of Central Government is needed if the

change of name involves only the addition or deletion

of the word Private.

If the name registered by a certain company is

identical to the name of an existing company, the

registered name can be changed by passing an
ordinary resolution and by obtaining a written
consent of the Central Government.

ALTERATION OF REGISTERED OFFICE

From One Place to another within the same city:
a.

By passing a resolution of Board of Directors .

b.

Notice to Registrar of companies.

From one city to another within jurisdiction of the same ROC

within the same state:
c. Special resolution
d. Confirmation of Regional Director when jurisdiction of Registrar of

companies is changed.
e. Copy of (i) & (ii) to be filed with ROC.
f.

Notice of new location to ROC within 30 days.

FROM THE JURISDICTION OF ONE ROC TO THE JURISDICTION OF

ANOTHER ROC WITHIN THE SAME STATE [SECTION 17(A)]

a. An application shall be made in the prescribed form to the

Regional Director to shift its registered office from one ROC to

another ROC within the same state.
b. On confirmation, Regional Director shall communicated to the

company within 4-weeks from the date of receipt of the

application for such change.
c. A certified copy confirmation by Regional Director and a copy

of memorandum to be filed with ROC within 2-months and

ROC will issue the certificate of registration within 1-month.

FROM ONE STATE TO ANOTHER

Special Resolution
Confirmation of Central Govt.
For certain Purposes only

ALTERATION OF OBJECTS CLAUSE SEC

17(1)
Special Resolution
Alteration is sought on any of these grounds:
To carry on its business more economically & more efficiently
To attain its main purpose by new or improved means
To enlarge or change the local area of its operations
To carry on some business which under existing circumstances may
conveniently or advantageously be combined with the business of the company
To restrict or abandon any of the objects specified in the memorandum
To sell or dispose off the whole or any part of the undertaking
To amalgamate with any other company

Copy of (A) is filed with ROC within 30 days

ALTERATION OF LIABILITY CLAUSE

The liability of a member of a company cannot be

increased unless the member agrees in writing.

From unlimited liability, it can be made limited by re-

registration of the company.

ALTERATION OF CAPITAL CLAUSE

Increase of authorized share capital.
Consolidation and subdivision of shares.
Conversion of shares into stock & vice versa.
Diminution of share capital

DOCTRINE OF ULTRA VIRES

The object clause of the Memorandum of thecompany contains the

object for which the company isformed.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:

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

MEMORANDOM OF ASSOCIATION OF

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