MEMORANDUM OF ASSOCIATION

CHARTER of the Co., fundamental condition on which Co.

is incorporated, regulates the external affairs of the Co .
It is a public document.
PURPOSE OF MOA: Prospective shareholders shall know
the purpose and the object of the Company. Printed,
divided into paragraphs, numbered, signed and attested.
CONTENTS:1. Name of the Co. with Ltd or P Ltd., 2. State
Regd. office, 3. Main objects and other objects, 4. Limited
liability for members, 5. Share capital - if guarantee undertaking of each member, and 6. Subscription
clause.
NAME CLAUSE: Undesirable, too similar, misleading
names: must be avoided, prohibition of use of certain
names and emblems, to end with: Pvt Ltd or Ltd.
PUBLICATION OF NAME: Affixed at the Regd. office, in all
business letters, bills etc..

MOA - ALTERATION

ALTERATION OF OBJECTS: 1) To carry its business

more economically
2) to attain main purpose by
improved means
3) to enlarge area of operations.
Special resolution to be passed. Copy of altered MOA
filed with ROC with in 1 month. ROC will register and
certify.
CAPITAL CLAUSE: Can be altered if permitted by AOA.
Ordinary resolution, Notice to ROC for modification.
LIABILITY CLAUSE: Limited liability of members CANNOT

be increased without the written consent from every member.

Unlimited liability to limited liability by Special Resolution &
fresh Registration.

DOCTRINE OF ULTRA VIRES.

Means beyond the powers. Co. can DO things permitted by

Companies Act, objects under MOA, and reasonably incidental.

Case Law: Ashbury Rly. Carriage & Iron Co Ltd Vs. Riche :
The object of the Co. is to carry on the business as mechanical
engineers and general contractors. Co. entered into a contract for
financing of construction of a railway line in Belgium which is
beyond the scope of general contractors held to be ultra vires and
void.
Property acquired under an UV contract is good and Co.
can hold them and protect it against damages by third party.
ULTRAVIRES MOA : VOID. CANNOT be ratified. Members can
get injection. Company & Directors will be liable.
ULTRAVIRES AOA: Void. But I.V. of MOA. Alter AOA by Sp. Res.
ULTRAVIRES DIRECTORS but within the powers of the company:
Shareholders can ratify in the General body meeting.
UV contracts: Void ab initto, cannot be enforced alter object
clause for future but past UV act cannot be validated.

ARTICLES OF ASSOCIATION

AOA are rules, regulations and bye-laws for the internal

management. Subordinate to MOA. If there is conflict, MOA
will prevail.
Printed, divided into paragraphs, numbered,
stamped, signed and witnessed.
CONTENTS OF AOA: Share capital, rights of shareholders,
calls on shares, transfer and transmission of shares, forfeiture
of shares, capitalization of profits, appointment of directors
etc..
MODEL AOA: The Act gives various models of AOA for various
types of companies.

COMPANIES WHICH MUST HAVE ITS OWN AOA: Unlimited

Cos., Guarantee Cos., & Pvt Ltd companies.

Public Ltd Co.s limited by shares need NOT have their own
AOA, but they may adopt model AOA.

DOCTRINE OF CONSTRUCTIVE NOTICE & INDOOR

MANAGEMENT
DOCTRINE OF CONSTRUCTIVE NOTICE: MOA and AOA are
public documents and any outsider dealing with the Co. is
presumed to have read and understood them properly.
It protects the company against outsiders. Invoked by
COMPANY.
DOCTRINE OF INDOOR MANAGEMENT : Outsiders are entitled to
assume that as far as the internal proceedings of the Company are
concerned, everything has been regularly done. It protects
outsiders against the company.
Invoked by OUTSIDERS.
CASE LAW: Royal British Bank V. Turquand . Directors issued
bonds to T. As per AOA it must be authorized by resolution. But NO
such resolution was passed. It was held that T could recover his
money since he was entitled to assume that resolution was passed.
EXCEPTIONS TO DOCTRINE of INDOOR MANAGEMENT :
1)
Knowledge of irregularity,
2) Forgery: when a person relies upon
a forged document made by the officers of the Co. - nothing can
validate forgery. 3) Negligence: If the person can discover the
irregularity if he had made proper inquiries. 4) Officer of the Co.
who acts outside the scope of apparent authority Co. is not
bound.

DISTINCTION BETWEEN MOA and AOA

MOA
AOA
CONTENTS
Charter of the Co.
Bye-laws.
NATURE
Fundamental
Subordinate to MOA
REQUIREMENT
Every Co. must have
Pvt. Co., Guarantee Co,

its own MOA

must have its own AOA.
RELATIONSHIP
Defines relationship
Defines relationship

with outsiders.
ALTERATION
ULTRA VIR.

Strict procedure
Cannot be ratified

with members.
Easily altered.
UV of AOA but intra vires

MOA can be ratified