Scribd
Upload
72 views14 pages

Subject-Business Law Topic - Articles and Memorandum of Association

The memorandum of association is one of the key documents required to incorporate a company. It outlines certain important details about the company such as its name, registered office location, objectives, liability of members, and initial share capital. The memorandum establishes the relationship between the company and external parties. It serves as the constitutional document of a company and defines the scope of the company's activities. The memorandum of association must be properly drafted to accurately reflect the company's intended operations.

Uploaded by

AmanVashist
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
72 views14 pages

Subject-Business Law Topic - Articles and Memorandum of Association

The memorandum of association is one of the key documents required to incorporate a company. It outlines certain important details about the company such as its name, registered office location, objectives, liability of members, and initial share capital. The memorandum establishes the relationship between the company and external parties. It serves as the constitutional document of a company and defines the scope of the company's activities. The memorandum of association must be properly drafted to accurately reflect the company's intended operations.

Uploaded by

AmanVashist
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 14

Subject- Business Law

Topic- Articles and Memorandum of


association

Ayush Taparia

Memorandum of association
The memorandum of association of a company, often simply called
the memorandum (and then often capitalized as an abbreviation for
the official name, which is a proper noun and usually includes other
words), is the document that governs the relationship between the
company and the outside. It is one of the documents required to
incorporate a company in the United Kingdom, Ireland, India,
Bangladesh, Pakistan and Sri Lanka, and is also used in many of the
common law jurisdictions of the Commonwealth.

CONTENTS
ASSOCIATION

OF

MEMORANDUM

OF

1. Name
2. Object
3. Registered office clause
4. Liability Clause
5. Capital clause
6. Association or subscription
1. Name Clause[ section 13(1)(a)]:-The memorandum must state
the name of the company with limited as the word ,in case of a
public limited company and with private limited', in the case of a
private limited company .the company is free to choose any name but
it must not be undesirable or must not resemble the name of any
other registered company.
2. Registered office clause [section 13(1)(b)]:-The state in
which the registered office of a company will be situated is
mentioned in this clause .the registered office of the company is the
official address of the company where the statutory books and
records must normally be kept.

3. Object Clause section 13(1)(c)&(b)] :- This clause is quite


important and must be very carefully drafted as it determines the
activities of the company. In the object clause each and every detail
of activities of the business to be carried out must be laid down.
Main object:- this sub-clause contains the main objects of the
company to the pursued on its incorporation
Objects incidental or ancillary :- it covers the objects which
are incidental or ancillary to the attainment of the main object
Other objects: - this sub-clause will cover any objects which
are not included in the main objects .
4. Liability Clause[section 13(2)]:-This clause states the nature of
liability of the members of the company .in the case of a company
limited by share or by guarantee the fact that the liability of its
members is limited must be made absolutely clear . In case of a
company limited by shares the liability of a member is limited to the
nominal value of the share held by him .if the share are fully paid up
his liability is nil. But in case of partly paid-up shares the liability is
limited to the amount which is unpaid. In case of a company limited
by guarantee ,the liability clause must state the amount which every
member undertakes to contribute to the assets of the company in
the event of its winding up.
5. Capital Clause[section 13(4)(a)] :- This clause states that
amount of the capital with which the company is to be registered
.this clause should also state the number and face value of shares
into which the capital of the company is divided. The capital with
which the company is registered or nominal or authorized.
6. Association clause [section 13(4)(c)] :- The association clause
states in this cause , the subscribes declare that they desire to be
formed into a company and agree to take the shares stated against

their names .the names ,address and occupation of the subscribers


must be given each subscriber must sign in the presence of at least

Requirements
While it is still necessary to file a memorandum of association to
incorporate a new company, it no longer forms part of the companys
constitution and it contains limited information compared to the
memorandum that was required prior to 1 October 2010. The
Companies (Registration) Regulation 2008 in fact included pro-forma
Memoranda.
It is basically a statement that the subscribers wish to form a
company under the 2006 Act, have agreed to become members and,
in the case of a company that is to have a share capital, to take at
least one shares each. It is no longer required to state the name of
the company, the type of company (such as public limited company or
private company limited by shares), the location of its registered
office, the objects of the company, and its authorized share capital.
Companies incorporated prior to 1 October 2009 are not required to
amend their memorandum. Those details which are now required to
appear in the Articles, such as the objects clause and details of the
share capital are deemed to form a part of the Articles.

Capacities
The memorandum no longer restricts what a company is permitted to
do. Since 1 October 2009, if a company's constitution contains any
restrictions on the objects at all, those restrictions will form part
of the articles of association.
Historically, a company's memorandum of association contained an
objects clause, which limited its capacity to act. When the first
limited companies were incorporated, the objects clause had to be
widely drafted so as not to restrict the board of directors in their
day to day trading. In the Companies Act 1989 the term "General
Commercial Company" was introduced which meant that companies
could undertake "any lawful or legal trade or business."
This is prime document to form a Company

Purpose
The memorandum of association records the agreement of the first
subscribers to form a company under the 2006 Act, to become
members and, in the case of a company that is to have a share
capital, to take at least one share each.

Case: Company for Restaurant


Husband and wife, Niraj and Seema Mishra, based in Mumbai, are
forming a company. They want a short name for the company with
their surname in it. The company is being formed to run a
restaurant. They project they would need 20 lakhs as the capital of
the company. Immediately, the husband would contribute Rs.
2,00,000 to the share capital of the company and wife Rs. 10. Mr.
Mishra hopes to find others, after the company is formed, to take
the shares of the company. They also contemplate occasionally hiring
out the car they would buy for the company. Develop a Memorandum
of Association for the Company.

CASE: ASHBURY RAILWAY


COMPANY LTD. Y. RICHE

CARRIAGE

&

IRON

The company has been formed with the object:


To make and sell, or lend or hire railway carriage and wagons
and all kinds of railway plants, to carry on the business of
mechanical engineers and general contractors etc.
The company contracted with Riche to finance the construction
of Railway line in Belgium. The company repudiated the
agreement and was sued for breach of contract.
Rich Contended:
Firstly, that the contract in question came well within the
meaning of the words general contractors, and, was therefore,
within the powers of the company, secondly, that the contract
was ratified by the majority of the shareholders.

Memorandum of Association of the Mishra private


limited
I. The name of the company is Mishra Private Limited
II. The registered office of the company will be situated in the
state of Maharashtra.
III. The objective for which the company is begin established are as
follows:
a. Main object: running of restaurants
b. Ancillary object : opening bank accounts, hiring premises an
running of bakery
c. Other objects: Hiring out of vechicles
IV. The liability of the members is limited
v.The
authorized
share
capital
RS.20,00,000,divided into 2,00,000

of

the

company

is

company

is

IV. The liability of the members is limited


v. The authorized share capital
RS.20,00,000,divided into 2,00,000

of

the

DOCTRINE OF ULTRA VIRES


The words :
Ultra means beyond
Vires means the powers
Ultra Vires means beyond the powers
A company which owes its incorporation to statutory authority
cannot effectively do anything beyond the powers expressly or
impliedly conferred upon it by the statute or Memorandum of
Association.

Articles of Association
The articles proceed to define the duties, the right and the powers
of the governing body as between themselves and the company at
large and the mode and form in which the business of the company is
to be carried on and the mode and form in which changes in the
internal regulations of the company may from time to time be made.
- Lord Cairns

Items covered by the Articles of Association include: The important


Powers, duties, rights and liabilities of Directors
Powers, duties, rights and liabilities of members
Rules for Meetings of the Company
Dividends
Borrowing powers of the company
Calls on shares
Transfer & transmission of shares
Forfeiture of shares
Voting powers of members

Companies which must have Articles


Unlimited Companies:
The Articles of such a company must state:
Total number of members; and
Share capital.
Companies limited by Guarantee:
Articles of such company must state total number of
members.
Private Companies limited by shares:
Must include requirements of

Section 3(1)(iii).

No Article Company
A public limited company having share capital may be
registered without Articles.

ALTERATION OF ARTICLES (SEC 31)

Procedure:
Alteration by passing a special resolution.
Copy of resolution to be sent to registrar within 30 days.
Copy of altered articles to be registered within 3 months of
passing of resolution.

LIMITATIONS REGARDING ALTERATION OF ARTICLES


1. Alteration should not be inconsistent with
a. Provisions of Company Act or any other statute
b. Conditions contained in memorandum
2. Approval of govt. to be obtained in certain cases
3. Alteration must not deprive any person of his rights under a
contract
4. Alteration must not constitute a fraud on the minority
5. Alteration must be bonafide for the benefit of the company as
a whole

DOCTRINE OF CONSTRUCTIVE NOTICE


Documents are open & accessible to all.
Presumption that any outsider dealing with company has read &
understood the documents.
It is a negative doctrine, acting only against the outsiders &
not the company.

DOCTRINE OF INDOOR MANAGEMENT

Persons dealing with the company in good faith have a right to


assume that the internal requirements prescribed in public
documents have been observed
Persons are not bound to enquire into regularity of internal
proceedings
Exceptions :
Knowledge of irregularity
Negligence on part of the outsider
Forgery
Acts outside scope of apparent authority

You might also like