1.

MEMORANDUM OF ASSOCIATION

Definition

As per Section 2(56) of the Companies Act, 2013

“Memorandum” means the memorandum of association of a company as originally framed or as

altered from time to time in pursuance of any previous company law or of this Act.

Memorandum of Association (MOA) is the supreme public document which contains all those
information that are required for the company at the time of incorporation.

It can also be said that, a company cannot be incorporated without memorandum. At the time of
registration of the company, it needs to be registered with the ROC (Registrar of Companies).

It contains the objects, powers and scope of the company, beyond which a company is not allowed to
work, i.e. it limits the range of activities of the company.Any person who deals with the company like
shareholders, creditors, investors, etc. is presumed to have read the company, i.e. they must know
the company’s objects and its area of operations.

The Memorandum is also known as the charter of the company.

CONTENTS OF MEMORANDUM

There are six conditions of the Memorandum:

■ Name Clause – Any company cannot register with a name which CG may think unfit and also with a
name that too nearly resembles with the name of any other company.

■ Situation Clause – Every company must specify the name of the state in which the registered office
of the company is located.

■ Object Clause – Main objects and auxiliary objects of the company.

■ Liability Clause – Details regarding the liabilities of the members of the company.

■ Capital Clause – Total capital of the company.

■ Subscription Clause – Details of subscribers, shares taken by them, witness etc.

Alteration of memorandum

(1) Save as provided in section 61, a company may, by a special resolution and after complying with
the procedure specified in this section, alter the provisions of its memorandum.

(2) Any change in the name of a company shall be subject to the provisions of subsections and
Provided that no such approval shall be necessary where the only change in the name of the
company is the deletion therefrom

(3) When any change in the name of a company is made under sub-section (2), the Registrar shall
enter the new name in the register of companies in place of the old name and issue a fresh
certificate of incorporation with the new name and the change in the name shall be complete and
effective only on the issue of such a certificate.

(4) The alteration of the memorandum relating to the place of the registered office from one State to
another shall not have any effect unless it is approved by the Central Government on an application
in such form and manner as may be prescribed.
(5) Save as provided in section 64, a company shall, in relation to any alteration of its memorandum,

file with the Registrar—

a) The special resolution passed by the company under sub-section (1);

b) The approval of the Central Government under sub-section (2), if the alteration involves any
change in the name of the company.

(7) Where an alteration of the memorandum results in the transfer of the registered office of a
company from one State to another, a certified copy of the order of the Central Government

approving the alteration shall be filed by the company with the Registrar of each of the States within
such time and in such manner as may be prescribed

(8) A company, which has raised money from public through prospectus and still has any unutilised
amount out of the money so raised, shall not change its objects for which it raised the money
through prospectus unless a special resolution is passed by the company and—

a) The details, as may be prescribed, in respect of such resolution shall also be published in the
newspapers (one in English and one in vernacular language) which is in circulation at the place

where the registered office of the company is situated and shall also be placed on the website of the
company, if any, indicating therein the justification for such change;

b) The dissenting shareholders shall be given an opportunity to exit by the promoters and
shareholders having control in accordance with regulations to be specified by the Securities and

Exchange Board.

Doctrine of ultravires:

‘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. The doctrine of ultra vires
is important in defining the limits of the powers conferred on the company By its Memorandum of
Association.

According to this doctrine, the vires (power) of a company to enter into a contract or Transaction is
limited by the ambit of the Objects Clause of the Memorandum and the provisions of The Companies
Act.

Whatever is not permitted by the Objects Clause and the Act is prohibited by the Doctrine of ultra
Vires. If a company engages in any activity or enters into any contract which is ultra vires (outside the
Power conferred by) the Memorandum or Act, it will be null and void so far as the company is
Concerned and it cannot be subsequently ratified or validated even if all the shareholders give their
Consent. Thus under this doctrine, a company has powers to engage in only such activities or enter
Into such transactions:

■ Which are essential to the attainment of the objects specified in the Memorandum;

■ Which are reasonably and fairly incidental to the main objects; and

■ Which are permitted by the provisions of the Companies Act.Effects of Ultra Vires TransactionsIf a
company enters into transactions, which are ultra vires.

2. ARTICLES OF ASSOCIATION
Definition

As per Section 2(5) of the Companies Act, 2013 “articles” means the articles of association of a
Company as originally framed or as altered from time to time or applied in pursuance of any previous
Company law or of this Act.

An article of Association (AOA) is the secondary document, which defines the rules and Regulations
made by the company for its administration and day to day management. In addition to This the
articles contain the rights, responsibilities, powers and duties of members and directors of the
Company. It also includes the information about the accounts and audit of the company. Every
Company must have its own articles, However, a public company limited by shares can adopt Table A
instead of Articles of Association. It Comprises of all the necessary details regarding the internal
affairs and the management of the Company.It is prepared for the persons inside the company, i.e.
members, employees, directors, etc. The governance of the company is done according to the rules
prescribed in it. The companies can

Frame its articles of association as per their requirements .

Contents of Articles:

1. The execution or adoption of preliminary contracts; if any,

2. The share capital and its division into different classes of shares;

3. Rights of different classes of shareholders and the procedure for variation of their rights;

4. Payment of underwriting commission;

5. Lien on shares;

6. Calls on shares;

7. Transfer of shares;

8. Transmission of shares;

9. Forfeiture of shares;

10. Alteration of capital:

11. Conversion of shares into stock;

12. Capitalization of profits;

13. Buy-back of shares;

14. General meetings and proceeding at general meetings;

15. Adjournment of meeting;

16. Voting rights of members;

17. Proxy and their appointment;

18. Board of directors;

19. Proceedings of the Board;

20. Appointment, terms & remuneration of CEO, manager, company secretary or chief finanvial

officer.

21. Seal of the company;

22. Dividend and reserves;

23. Books of account and audit;

24. Winding up of the company;