MEMORANDUM OF ASSOCIATION

MOA
Memorandum of association is the

charter of the company. It sets out the constitution of the company and provides the foundation on which company is built. It lays down the objects and scope of activities of the company and also defines the relationship of the


Memorandum not only defines the

powers of the company but also confines them. It is the area beyond which the actions of the company cant go. Anything beyond memorandum will be ultra vires the company.

FORM OF MEMORANDUM OF ASSOCIATION

Form as given in table B, C, D, & E in Schedule I Printed Divided into paragraphs Numbered consecutively Signed by at least 7 persons for public & 2 for private company. Signatures attested by one witness. Subscribers shall at least take one share

Purpose of Memorandum
The prospective shareholders shall

know for what purpose their money is going to be used. The outsiders can come to know about the objects of the company.

Printing & Signing of MOA

The MOA shall be:(i) Printed (ii) Divided into paragraphs numbered consecutively (iii) Signed by 7 (public) & 2 (private) subscribers (iv) 1 witness should attest the signature

CONTENTS OF MEMORANDUM U/S13

NAME CLAUSE

REGISTERED OFFICE CLAUSE

OBJECTS CLAUSE

CAPITAL CLAUSE
LIABILITY CLAUSE

Name Clause (sec 20)

A company being a legal person , must have a name to establish its identity. The company may be registered with any name it likes. 1. Undesirable name to be avoided (i) Not similar (ii) Not misleading


2. Injunction if identical name adopted. Exception: Asiatic Govt. Security Life Insurance Co. Ltd. V/S New Asiatic Insurance co. Ltd 3. Use of Ltd. Or Pvt. Ltd 4. Prohibition of use of certain names:- name United nations and health organization , Indian National Flag, name of Central & State govt., name of President of India etc 5. Use of some key words according to authorized capital

Use of some key words according to authorized capital

Key words Required authorized capital

Corporation
International, global Hindustan, India Bharat Industries, Udyog

5 cores
1 crore 50 Lakhs 1 Crore

Enterprises, Business

10 Lakhs


Publication of the name outside its registered office, and

outside every place where it carries on business, on its seal, all business letters, bill heads, notices and other official publication of the company.
In case of default fine of Rs500 is

Registered office clause u/s 146

It ascertains the domicile and

nationality of the company. 30 th day of the incorporation It is the place where various registers relating to the company must be kept and to which all communication and notices must be sent.

CONTD..
Within 30 days of Incorporation of

the company, a notice of the situation of the registered office of the company shall be given to the registrar, who would record the same. (Sec 146)
If default is made, Rs. 50 is to be

paid for each day extend to Rs500

OBJECTS CLAUSE u/s 13(1) (c) & (d)

Determines the extent of powers which the

company can exercise in order to achieve the objects. It is essential that the public who purchases its shares should know clearly what are the objects for which they are paying. Main objects Other objects A company cannot continue to pursue the subsidiary objects after the main object has come to an end.

Crown Bank Re(1890)

A company object clause enabled it to act as a

bank and further to invest in securities and land and to underwrite issue of securities. The company abandoned its banking business and confined itself to investment and financial speculation. Held the company was not entitled to do so.

Restrictions on the object clause

The object shall not be against the

policy of the constitution The object should not include anything which is illegal or against public policy. Must not against the companies act.
Any act of the company outside its stated objects is ultra vires and therefore void

Evans v Brunner, Mond and company(1921)

A company engaged in manufacture of

chemicals, proposed to devote a substantial sum of money to the encouragement of scientific education. It was proved that this act would ultimately benefit the company but a shareholder objected on the ground that it was beyond the power of the company. Held, the proposal was fairly incidental to companys objective.

Forrest v. Manchester Rly Co. (1861)

A railway company had the authority to keep

boats to be supplied for a ferry. It employed the boats for trips to the sea when these were not wanted for the ferry. Held the use of the boats was incidental to the main purpose and was within the powers of the company.

Liability clause u/s 13 (2)

Nature of the liability of its

members. State whether liability is limited by shares or guarantee.

Capital clause sec 13(4)

Capital clause :- the capital with

which a company is registered is called as the authorized capital. Nature of shares, amount of shares, nominal value of shares.

Association clause u/s 13 (4)

Where the subscribers to the MOA

declare that they respectively agree to take the number of the shares in the capital.
It has to have the following:

a) They have to sign in the presence of two witnesses, who attest the signatures, b) The subscriber to take at least one share. c) After the name the subscriber has to write the number of shares taken

Alteration of Memorandum

Ordinary resolution
A written resolution is passed by a simple majority

if it is passed by members representing a simple majority of the total voting rights of eligible members.

Special resolutions
(1) A special resolution of the members (or of a class of members) of a company means a resolution passed by a majority of not less than 75%.
(2)The resolution is not a special resolution unless it stated that it was proposed as a special resolution

Alteration of Memorandum u/s 16

Change of Name By a special resolution(Sec 21) Central govt. signified in writing.
No Approval of Central Government is necessary

if the change of name involves only the addition or deletion of the word Private.

By ordinary resolution(Sec 22)

A company registered by name which, in the

opinion of the central Government, is identical with, or too nearly resembles, the name of an existing company.
Company can change their name with the

approval from central govt. and ordinary resolution

Have to change their name with in 3 months from

the date of direction.

 the registrar shall enter the new name on the

register & issue a fresh certificate of incorporation.(Sec 23)

Registrar shall make alteration in MOA
Alteration is only in name not in the identity of

the company.

Change of registered office:(i) Within a state

No company shall change its place within the state unless confirmed by Regional Director. The company shall file with the Registrar a certified copy of the confirmation by the Regional Director for change of its registered office within 2 months from the date of confirmation, together with copy of altered MOA & registrar shall register the same within 1 month.

Change with in city The board of directors will pass a

resolution and the registrar must be informed of the change with in 30 days.

From 1 state to another Procedure of alteration : A special resolution shall be passed at a general meeting Confirmation by Central govt. (acc to terms & conditions it think fit) Notice to affected parties ( creditors ) Notice to Registrar(state his objection) A certified copy of order of Central govt. has to be given within 3 months to registrar


Changes outside IndiaA company cannot change its registered office from India to another country The central Govt. has no power to sanction such alteration of the MOA.

ALTERATION OF OBJECTS CLAUSE(SEC17)

A. Special Resolution B. Alteration is sought on any of these grounds: To carry on its business more economically & more efficiently. Example A company which was formally forbidden by its AOA from paying managerial remuneration to its managers wanted alter its objects clause so as to acquire power to pay remuneration to carry business more economically and efficiently. The alteration was allowed. To attain its main purpose by new or improved means(technology)

 To enlarge or change the local area of its operations

Example A company which was formed to acquire land in Egypt wanted to alter its MOA to take power to acquire land in Sudan. Held the alteration could be made provided the company inserted the words and Sudan after the word Delta in its name.

 To carry on some business which under existing

circumstances may conveniently or advantageously be combined with the business of the company
Example

A company which had the power to carry on any kind

of insurance business except life insurance, wanted to add life insurance to its object Held the company could do so provided it included the words and life in its name.

 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

Procedure
Special resolution Copy of S.R. is to be filed with central

government within 1 month with printed copy of MOA as altered

Certificate of registration

Change in the Liability clause:A company cant change its memorandum so as to impose additional liability or buy additional shares unless all members agree in writing to such change.

Unless all the members agree in writing to such change either before or after the change

ALTERATION OF CAPITAL CLAUSE

Increase of authorized share capital.

Consolidation and subdivision of shares. Conversion of shares into stock & vice versa.

Diminution (reduction) of share capital by passing special resolution

Cases
Windsons Chemical company Ltd has described

in bill of exchange as Windsons company Ltd .

Is the company liable on this bill?

If not who will be liable?

?

Answer
No

The directors

Case
A company was started with the object of building

a Hall with shops. The building was destroyed by fire and the company wanted to alter the object clause in the memorandum by substituting the words a Hall with shops with the words shops, dwellimg houses and warehouses for letting purpose. Is the alteration covered under object clause?

 Yes

Case
A company altered the object clause of its MOA

according to the procedure laid down by law i.e. by passing a special resolution. A copy of the resolution was filed with the registrar 4 months after passing of the resolution. Can the registrar register the alteration?

 No 3 months

Case
Company carry on business in jute is empowered

by the object clause of its MOA to do any other business connected with jute. By a resolution passed unanimously the company resolved to alter the object clause to include power to carry on additional business in rubber. Is this alteration covered under sec 17?

 No

 Thank you