Presented By:

Md. Tabrez Sourav Srivastava Ashutosh Rastogi Pradeep Amit Rakesh Mitali Gupta Priti Poornima Sourav Sharma Nandini

Memorandum Of Association
The MOA is a document of a great importance in relation to the proposed company. It contains the fundamental conditions upon which alone the company is allowed to be incorporated. It is the charter of the company and defines its reason for existence. It lays down the area of operation of the company.

Purpose Of Memorandum
The prospective shareholders shall know the purpose
for which their money is going to be used by the company and what are the risk. outsiders dealing with the company shall know that the transaction he is going to make is within the object of the company and not beyond power of company.

The

Printing & Signing Of Memorandum ( Sec- 13 ) The Memorandum of Association of a company shall be Printed

Divided into paragraphs numbered consecutively Signed by 7 (2 in case of private company) subscriber.

Form Of Memorandum ( Sec 14 ) MOA of a company shall be such one of the forms in tables , A, B, C, D and E in schedule I of the Companys Act , 1956.

Contents of Memorandum
1.

The Name Clause (Sec-20) (A) Establishes its identity and symbol of its existence. (B) A company have to follow rules to select any suitable name
Undesirable name to be avoided. (A) Too similar to the name of other co. (B) Misleading i.e. suggesting that the co. is connected with a particular business.

 Injection if identical name adopted

Asiatic Govt. Security Life Insurance Co. Ltd vs. New Asiatic Insurance Co. Ltd (1939)

Limited or Pvt. Ltd. as the last word or words

of the name

Prohibition of use of certain name

Cont..

If a company uses any of the following key words in its name, it must have a minimum authorized capital mentioned against the key words.

Cont...
Key Words Corporation Req. Auth. Capital Rs. 5 Cr.

International, Global, Universal, Rs. 1 Cr. Continental, Inter-Continental, Asia being the 1st words of name. If any of the word above is used within the name (with or without bracket) Hindustan, India, Bharat If any of the word above is used within the name (with or without bracket) Industries, Udyog Rs. 50 Lakh. Rs. 50 Lakh. Rs. 5 Lakh. Rs. 1 Cr.

Enterprize, Products, Business, Manuf. Rs. 10 Lakh.

Publication Of Name(Sec.147)
Every Company shall : Paint or affix its name & the address of its registered

office on the outside of every office or place in which its business is carried on.
Have its name & address of its reg. office mentioned in

legible character in all business letters, bill heads, negotiable investments, invoices, receipts etc. of the company.

The Registered Office Clause ( Sec 146 )

Every company have a Reg. office from the day on

which it begins to carry on business

All communication and notice are to be addressed to

that Reg. office.

If default is made in complying with these

requirements, the company and every officer of company who is in default shall be punishable with fine.

The Objects Clause [Sec. 13(1)(d)]

The object of clause both defines and confines scope of

the companys powers. Its purpose enable subscribers to know where there money may be put and permitted range of enterprises. The object clause in the MOA of every co. has to state -- Main Objects. - Other Objects.

The Capital Clause [Sec -13(4)]

State the amount of share capital registered and the division into share of the fixed amount

The Liability Clause [Sec - 13(2)]

A memorandum of a company limited by shares or by guarantee shall also state that the liability of its members is limited.

The Association Clause [Sec-13(4)]

It states : we the several persons whose name and address are subscribed, and desirous of being formed into a company in pursuance of this Memorandum of Association & we respectively agree to take number of shares in the capital of company set opposite our respective name

Alteration Of Memorandum
Sec : 16 - Provides that the Co. cannot alter the

conditions contained in the memorandum except in the cases & in the mode & to the extend provisions has been made in the act. These provisions are :-1. Change in name [ Sec- 21 ] :-- By a resolution passed by a general meeting of a company & with the written approval of the central court.

Contd.
2. Change in Reg. Office :-

Change of Reg. office from one premises to other in the same city, town, or village. Change of Reg. office from one town, city, or village to other.

Contd..
3.

Alteration of Object Clauses. Sec : 17 , empowers a Co. to alter the objects or to change its Reg. office from one state to other if alteration is sought to any of the following grounds :-For more economic and efficiency. To attain its main purpose by new or improved means.

CONT.
4. Changes in Liability Clause {sec.38} :A company limited by shares or guarantee cannot change its memorandum Incase of unlimited liability company, the liability may be made limited or reduced by Re-Registration of the Co.

Doctrine of Ultra Vires

Ultra means beyond and vires means power. The term ultra vires a company means that the doing of the act is beyond the legal power and the authority of the company. The purpose of these restrictions is to protect 1. Investors in the company so that they may know the objects in which their money is to be employed ; and 2. Creditors by ensuring that the companys funds are not wasted in the unauthorized activities.

Article of Association
The Article of Association or just Articles are the rules,

regulations and buy-laws for the internal management of the affairs of a company . They are framed with the object of carrying out the aims and objects as set out in the Memorandum of Association. It is mandatory at the time of reg. of a company .

Article of Association
Meaning of Article : Articles are the rules and regulations framed by the company for its own governance. Definition of Article : Articles means the articles 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.

Companies which must have their own Article

Unlimited companies Companies limited by guarantee Private companies limited by share

The Article shall be signed by the subscribers of the Memorandum and registered along with the Memorandum. A public company may have its own AOA. If it does not have its own Articles, it may adopt Table A given in the Schedule I to the Act.

Registration Of Articles
There are three possible alternatives in which such company may adopt articles: It may adopt table A in full. It may wholey exclude table A and set out its own rules in full. It may set out its own articles and adopt part of table A.

Article Of Company must..

Printed Divided into paragraphs Signed in the presence of at least one witness.

Content Of Articles
Share Capital. Business of the company. Voting right of member . Board of Director. Procedure for transfer of shares. Transmission of shares.

Contd.
Forfeiture of shares Payments of dividends. Common seal . Capitalization of profit. Procedure for conduct of Board meetings

Alteration of Articles
Companies have been given very wide power to alter their

Articles. Any clause in the Articles that restricts or prohibits alteration of the Articles is invalid.

Procedure(sec.31) :
Pass a special resolution.

Altered copy of the Articles shall be filed

with the Registrar within 30 days of its passing

Limitations to alteration: Must not be inconsistent with the act. Must not conflict with the Memorandum. Must not sanction anything illegal. Must be for the benefit of the Company. Must not increase the liability of members. Alteration by special resolution only.

 Approval of Central Govt. when a Public Co. is converted

into Private Co. Must not result in expulsion of a member.

ARTICLE & MEMORANDUM, THEIR RELATION

The Article are subordinate to Memorandum. The memorandum must be read in conjunction with articles. The terms of the memorandum cannot be modified or controlled by the article.

ARTICLES & MEMORANDUM DIFFERENCES

MOA AOA
1. Indicates nature, 1. Regulation for internal mgt. nationality, capital of bus & its of the co. & are subsidiary to relationship with outside memorandum. world. 2. Defines scope and activities2. Rules to carry out the of business. objects of the company. 3. It is the supreme document 3. Subordinate to the of the company. memorandum.

Contd.
4. Every co. must have its own 4. A co. limited by share need memorandum. not have article of its own. 5. Strict restriction on alteration. 5. They can be altered by a special resolution.

Constructive Notice Of Memorandum AND ARTICLE

Every outsider dealing with a company is deemed to have notice of the contents of the Memorandum and the Article of Association . These documents ,on registration with the Registrar , assume the character of public document . This is known as constructive notice of Memorandum and Article. The Memorandum of Association and the Article of Association are required to be registered with the registrar of the companies as pre-requisite to the formation of a company. The office of the registrar is a public office and consequently the memorandum and articles become Public Documents.

Sec 610, the Act provides that on registration these documents becomes public documents. According to Palmer, Every person dealing with a company has a right to inspect these documents & see that it is within the power of the company to enter into the proposal contract. company which is not permitted by the memorandum or the article i.e. it is ultra Virus of the company. The company cannot be made liable for the claim.

Constructive notice of memorandum and articles.

Law of Estoppels: If a person enters into a contract with a

DOCTRINE OF INDOOR MANAGEMENT

The Doctrine of Indoor Management allows all those who deal wish the

company to assume that the provisions of the articles have been observed by the officers of the company. In other words, they are not bound to enquire into the regularity of internal proceeding. An outsider is not expected to see that the company carries out it regulation. Ex. The Director of a company was authorized by the article to borrow on bond such sums of money as should from time to time, by a resolution of the company in general meeting, be authorized to borrow. The directors gave a bond to T without the authority of any such resolution. The question arose whether the company was liable on the bond. Held : The Company was liable on the bond as T was entitled to assume that the resolution of the company in general meeting had been passed.