Group 7

Shrish Agrawal Bhirud Gada

101 104 110 134 143 157

Poorva Sanket Jekin

Rambhia Vakil

Maulik Shah Aparna

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Memorandum of Association
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Memorandum of Association

MOA is a document which contains the rules regarding constitution and activities or objects of the company

It is the fundamental charter of the company Its relations towards the members and outsiders are determined by this document

The company is allowed to function within the frame work of MOA, or else its act is construed as ultra vires

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Contents of MOA
I. II. III. IV. V. VI.

Name of the company Registered office of the company Liability of the members Details of the share capital of the company Objects of the company Subscription or association clause

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Name of the Company

A company can adopt any name if :
I.

There is no other company registered under the same or identical name The name should not be considered undesirable and prohibited by Central Government There is no company in existence which was previously registered under a similar name

I.

I.

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Case : Name Clause

Asiatic Government Security Life Insurance Company VS New Asiatic Insurance Company

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Registered office of the Company

The company from the day it commences business or within 30 days have a registered office All communication and notices may be addressed to the registered office The company files a notice of registered office of the company with the Registrar of Companies The company may alter its registered clause by altering its registered office

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Capital Clause

The MOA shall also state the amount of share capital with which the company is to be registered and division thereof into shares of a fixed amount This capital is called the authorized or nominal share capital In case of companies limited by guarantee, the amount promised by each member to be contributed by them in case of the winding up of the company is to be mentioned

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Subscription clause
Each subscriber to

the MoA takes 1 share.

Pvt

co 2 persons; Public 7 persons shall be in the following

Subscription clause

form We the several persons whose names and addresses are subscribed are desirous of being formed into a company 4/17/12

Liability Clause

The liability of the members is limited to the extent of the shares subscribed by the members if the company is formed with share capital or to the extent of the guarantee given by the members if the company is formed with guarantee The MOA of a company shall state that the liability of its members is limited It means that no member can be called upon to pay anything more than the nominal value of the shares held by him.

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OBJECT CLAUSE

Defines the limits and extent of activities of the company. MOA should stateq Main object q Object incidental or ancillary to the

attainment of main object

q Other object

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Importance of MoA to shareholders and creditors

i.

To be fully aware of the objects to which their money can be employed To protect the creditors by ensuring that the companys funds are not dissipated in unauthorized activities.

i.

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Alteration of MoA
Involves compliance

with prescribed

procedure.
Alterations

necessary for simple and fair working of the company would be permitted.

Should

not be prejudicial to the members and creditors of the company and 4/17/12 should not increase their liability.

Change of name
Change

can be effected by passing a special resolution in a General Meeting and after obtaining the approval of Central govt. be made to the RoC.

Application to

Reasons

for change in name to be mentioned.

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Change in registered office

Change

from one place to another in the same city- ordinary Board Resolution. from one city to another city in the same state Special Resolution and confirmation by Regional Director from one state to another stateCannot be changed unless petition is filed with and confirmed by the CLB for altering

Change

Change

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Reasons for change in office

Enable company to carry on business more effectively of efficiently To attain its main purpose by new or improved means To enlarge or change its local area of operation To carry on some business which may be advantageously combined with the business of the company. To restrict or abandon any of its object. To sell or dispose of the whole or part of the undertaking of the company. To amalgamate with any other company or body of persons.

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Alterations of the objects clause

Section 17 provides that a company may change its objects only if alteration is necessary for any one of the following purposes:
o o o o

To enable the company to carry on its business more economically or more efficiently. To enable the company to attain its main purpose by new or improved means. To enlarge or change the local area of the companys operation. To carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company.

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o o o

To restrict or abandon any of the objects specified in the memorandum. To sell or dispose of the whole, or any part of the undertaking of the company. To amalgamate with any other company or body of persons.

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The alterations in the objects clause are to be confined within the above limits otherwise the alterations will be considered void. Company has to file with the registrar a special resolution within one month from the date of such resolution along with a printed copy of the altered MoA. If the alteration is not registered within one month the will have no effect.

o o

The alterations should not be radical. E.g.:- in Bhutoria Bros Ltd.

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Alteration of capital clause

o

Section 94 of the act provides that a limited company having a share capital can alter its capital clause. Alteration of share capital involves three things: Increase of share capital: the company can increase its capital as follows Increase its share capital by issuing new shares. Consolidate and divide all or any of its share capital into shares of larger amount.

o 1. . .

2. Reduction of share capital :

.

By sub-dividing shares or any of them into 4/17/12 shares of smaller amount.

Cancel the shares and diminish the amount of its share capital by the amount of shares so cancelled. Cancellation of uncalled capital. Repayment of paid up capital which is in excess of the needs of the company. Extinguish the liability of any unpaid or partly paid-up shares.

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Procedure to reduce share capital

a) Special resolution. b) Application to the court: the court may direct notice to be given to all creditors entitled to any debt or claim. c) Registration of the order: the court delivers the registrar a certified copy of the order and of a minute approved by it. The registrar certifies the registration of the order and minute.
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3. Conversion of shares into stock: sum total of fully paid up shares is stock.

The company recognizes the fact of complete payment of the shares. Effect of conversion is that the holders of stock are to have same rights and privileges according to the amount of stock held by them. Company has to notify the registrar about the conversion of shares within 30 days.

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Change in liability clause

The liability of the members cannot be altered so as to increase the liability of the members or prejudice their interests. No member shall be bound by such an alteration. The alteration can be effected only with the consent of the members in writing either before or after a particular alteration is made.

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Articles of Association

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Articles of Association (Sec 2)

Articles as originally framed or altered in time in pursuance of any previous companies law or of this act including so far as they apply to the company, the regulation contained in Table A to Schedule I.

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Form of contents of Articles

Regulations for internal management of the company. Unlimited Company No. of members with which company is to be registered The amount of share capital. Private Limited Company Right to transfer shares Limiting the members to 50

1. . . 2. . .

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Difference between MOA & AOA

Memorandum of Association Articles of Association

1. Charter determining constitution and activities of company. 2. Fundamental charter. 3. Every company must have a Memorandum. 4. Alteration of Memorandum is strictly regulated.
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1. Regulations regarding internal management of the company. 2. Subsidiary to MOA 3. Not necessary for Public company limited by shares. 4. Can be altered by a resolution.

Alteration Of AoA
Special

Resolution from central Govt.

Approval

Printed

copy of altered AoA shall be filled with the ROC

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Alteration Of AoA Cases:

Madhav

Ramchandra Kamath v/s Canara Banking Corporation Ltd Cox Brothers and Co. Cinemas Ltd.

Shuttleworth v/s

Greenhalgh v/s Ardence

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Doctrine of ultra vires

Beyond

Power

Ashbury

Railway Carriage and Iron co. Ltd v/s Riche

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Effects of Memorandum & Articles (Sec. 36)

1. 2. 3.

Members and Company Members inter-se Company and Outsiders

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Effects of Memorandum & Articles (Sec. 36) and Company 1. Members

Bind both to

the same extent

Articles

Contractual Obligation Alteration Valid

Bonafide

Articles

Bind members to the 4/17/12 Company and vice versa

Effects of Memorandum & Articles (Sec. 36) inter se 2. Members

Articles Comply

bind the member themselves with Rules & Regulations of the

Co. 3. Company and Outsiders

Outsiders Read

the Articles (public

doc) of the Co.

Co.
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liable to the outsiders and vice-versa

Constructive Notice of MoA & AoA

Public

documents

Open

for inspection before dealing

Duty of person inspect

Its
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a notice to the public

Doctrine of Indoor Management

Aal Izz Well

Doobara mat Puchna!

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Exceptions
Ultra

vires acts of irregularity

Knowledge

Act

outside apparent authority

Negligence
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Thank You !

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