PRESENTED BY GROUP A1 Nikita Bali (11004) Neethi Nair (11044) Ranjini Nair (11045) Chandan Pahelwani (11047) Himani Parihar (11049) Sonia Dadlani (10022)
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DEFINITION
A fundamental document. The Memorandum of Association is a document of 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.
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Each subscriber shall sign in the presence of at least 1 witness who shall attest the signature and shall likewise add his address, description and occupation, if any. The Memorandum of Association printed on computer laser printers should be accepted by the Registrar of a company provided it is neatly and legibly printed.
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ASSOCIATION CLAUSE
Name clause:The name of a company establishes its identity and is the symbol of its existence. Every company name must end with Limited (Ltd.). No name of the company should be the name of the existing company, king, queen, president, prime minister, Father of Nation or anything that signifies government sponsorship.
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Cont..
Reasonably and fairly incidental to its objects Everything else is ultra vires the company. Ultra means beyond and vires means powers. The term ultra vires a company means that the doing of the act is beyond the legal power and authority of the company.
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DEFINITION
The Articles of Association or just articles are the rules, regulations and bye-laws for the internal management of the affairs of the company. The articles are next in importance to the Memorandum of Association which contains the fundamental conditions upon which alone a company is allowed to be incorporated. They are as such subordinate to, and controlled by, the Memorandum.
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Contents of articles
Share capital, rights of shareholders, variation of these rights, payment of commissions, share certificates. Lien on shares. Calls on shares. Transfer of shares. Transmission of shares. Forfeiture of shares. Conversion of shares into stock. Share warrants.
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Alteration of capital General meetings and proceedings threat Voting rights of members, voting and poll, proxies Directors, their appointment, remuneration, qualifications, powers and proceedings of Board of directors. Manager Secretary Dividends and reserves Accounts, audit and borrowing powers Capitalisation of profits Winding up
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Distinction no.
Memorandum of Association
Article of Association
The MA of a company is its charter and defined the limitations of the powers of the company, established under the Company Act 1994
The AA of a company defines the rules and regulations concerning the internal affairs of the company.
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But in the case of an unlimited company or a company limited by guarantee, a member may not be a shareholder, for such a company may not have a share capital.
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Any person who is competent to contract (sec.11 of the Indian Contract Act, 1872) may become a member of a company. This is the subject to the provisions of the Memorandum and the Articles of the company. The Articles may provide that certain persons cannot become members of the company.
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A minor is not competent to become the member of a company because an agreement with a minor is absolutely void.
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Membership by application and registeration: Apart from the subscribers of Memorandum, every other person, who agrees in writing to become a member and whose name is entered in the register of members, is a member of the company. A written application for allotment of shares is, therefore, necessary before a person can be entered as a member in the register of members.
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Rights of members
Statutory rights These are the rights which are conferred on the members by the Companies Act. These rights cannot be taken away or modified by any provision in the Memorandum or the Articles. Some of the statutory rights are: Right to obtain copies of the Memorandum and Articles. Right to transfer shares.
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Documentary rights: These are the rights given to the members by the Memorandum and the Articles of Association.
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Legal rights: These are the rights which are given to the members by the general law. e.g.. In case of any misstatement or concealment of a material fact in a prospectus, a person who has applied for shares on the faith of such prospectus and has been alloted shares can avoid the contract and claim damages under the general law.
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DIRECTORS
The directors are the brain of a company. They occupy a pivotal position in the structure of the company. A director may be defined as a person having control over the direction, conduct, management or superintendence of the affairs of a company.
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Number of directors
Every public company (other than a deemed public company) shall have at least 3 directors and every other company (e.g. a private company, a deemed public company) at least 2 directors. A public company having : a) A paid-up capital of Rs.5 crore or more; b) One thousand or more small shareholders; shall have at least one director elected by such small shareholders in the manner as may be prescribed.
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Appointment of directors
First directors Appointment of directors by the company Appointment of directors by directors Appointment of directors by third parties Appointment by proportional representation Appointment of directors by the central government
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Position of directors
Directors as agents Directors as employees Directors as officers Directors as trustees
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