MEMORANDUM OF

ASSOCIATION
DEFINITION OF MEMORANDUM
 According to Section 2(56), “ Memorandum
means the memorandum of association of
company as originally framed or as altered
from time to time in pursuance of any
previous law or of this Act.”
 According to Palmer, “ Memorandum of Association
contains the object for which the company is
formed and therefore, identifies the possible scope
of its operations beyond which its action cannot go.
It defines as well as confines the power of the
company. If anything is done beyond these powers
that will be ultra vires the company and therefore
void.”
PURPOSE 0F MEMORANDUM
 Knowledge of field of activity of company
 Knowledge of Intra vires transaction
PUBLIC DOCUMENT
 Section 17, a company shall, on being so
requested by a member, send to him within
seven days of request and subject to payment
of prescribed fee, a copy of the memorandum and
the articles.

 Penalty: If any default is made in the above

section, then company and every officer of the
company who is in default shall be liable for
each default, to a penalty of Rs. 1000 each day
during which such default continues or Rs.
100000, whichever is less.
CONTENTS OF MOA
As per Section 4(1):
 Name Clause

 Situation or Registered Office Clause

 Objects Clause

 Liability Clause

 Capital Clause

 Association or Subscription Clause

 Nomination Clause, in case of OPC.

 1. NAME CLAUSE
Name of the company: Private Limited or Limited

Following things should be kept in mind:

 Identical Name

 Offence under any law

 Patronage

 Undesirable by CG

- It includes the name of a registered trade mark,

without consent of the owner.
- offensive words for any section of the society

- It is not in consonance with the principal objects as

laid down in MOA
EWING V. BUTTERCUP MARGARINE
COMPANY LTD. (1917)
The plaintiff was carrying out business as
Buttercup Diary Company. A anew company
Buttercup Margarine Co. Ltd., was incorporated.
The plaintiff filed a suit against the new
company for restraining it from carrying on the
business under the aforesaid name on the ground
that the name of the newly formed company was
similar o Buttercup Diary Company and
therefore, customers might think that the two
companies are related to each other. The court in
its judgment restrained the newly formed
company to use the said name.
 Printing, affixing and engraving of name etc.,
Section 12,
-Writing Private ltd/ Public Ltd./OPC/Producer Ltd.
- Every company should mention their names legibly

- Name shall have its name printed on every

promissory note, B/E etc.
- Name and address of the registered office shall be
mentioned outside of every office and business place.

-Punishment of Default:
The company and every officer who are in default shall
be punishable with the fine of Rs. 1000 for ever day
but not exceeding Rs. 1 lac.
Reservation of Name:
The registrar may deserve the name for a period of
twenty days from the date of approval or such
other period as may be prescribed.
However, when an existing company wants to change
a name, the Registrar may reserve the name for
sixty days.
2. DOMICILE OR SITUATION OR REGISTERED
OFFICE CLAUSE
Section 4(1)
IMPRTANT:
 For fixing the domicile of company.
 For deciding the place where books of account and
other relevant books and papers are to be kept
(Section 126).
PROVISIONS
 Section 12(1) A company has to communicate the
registered office with in 30 days of its incorporation in
Form INC-22 to the registrar.
 Section 12(9) If due to any reason, Registrar believes
that company is not carrying on business, then the
Registrar may cause physical verification of the
registered office.
 3. OBJECT CLAUSE
 Section 4(1) states that the memorandum of a
company shall state the objects for which the
company is proposed to be incorporated and any
matter considered necessary in furtherance thereof.
- The objects must not be illegal.

- Not against the provisions of the Companies Act,

2013.
- The objects must be clearly stated.

PURPOSE
- Protection of investors.

- Protection of creditors

- Serving Public Interest.

 4. LIABILITY CLAUSE
 Section 4(1) states that the memorandum of a company
shall state that the liability of the members of a company,
whether limited or unlimited.
5. CAPITAL CLAUSE
Sec. 4(1) in the case of a company limited by shares
capital;
 The memorandum of a company shall state the amount
of share capital with which the co. is to be registered and
the division thereof into shares of a fixed amount and
the number of shares which the subscribers to the
memorandum agree to subscribe which shall not be less
than one share; and
 The number of shares each subscriber to the
memorandum intends to take, indicated opposite his
name.
 NOMINATION CLAUSE
 The memorandum of a company shall state that in
the case of OPC, the name of the person who, in the
event of death of the subscriber shall become of the
company (Sec. 4(1)).

SUBSCRIPTION OR ASSOCIATION
CLAUSE
Which states that the desire of the subscribers to be
formed into a company. The memorandum shall
conclude with the association clause. Every
subscriber to the Memorandum shall take atleast
one share, and shall write against his name, the
number of shares taken by him/her.
ALTERATION OF
MEMORANDUM
 ALTERATION OF THE NAME CLAUSE
Change of Name by passing special resolution
(1)

The name of the co. can be changed any time by

passing SR in GM and getting the approval of CG.
The approval of CG is not required in case the co.
adds “Private” after conversion.

(2) Change of Name not allowed in case of certain

defaults by the company.
Defaulted in filing Annual Returns or Financial
statements or any document with the Registrar.
(3)Change of Name by Ordinary Resolution.
 Company registered with identical name in the
opinion of the Central Government. Name has to be
changed within 3 months of that direction.
 Company registered with a name which is identical
with the registered trademark of another. (6
months)
 Default: Rs. 1000 per person each day till Rs. 1 lac.

(4) Rights and Obligations to remain unaffected.

(5) New name has to comply with the conditions
of choosing the name.
ALTERATION OF REGISTERED OFFICE
CLAUSE
(1) Change of Registered Office outside the
local limits of the same city, town or
village within the jurisdiction of the same
ROC.
(2) Change of Registered Office from the
jurisdiction of one Registrar to another
Registrar in the same state.

(3) Change of Registered Office from one state

to another state.
(1) Change of Registered Office outside the local
limits of the same city, town or village within
the jurisdiction of the same ROC.

 It can be changed by passing a special resolution by

the company.
 The notice of the same has to filed with the Registrar
within 30 days of resolution.
(2) Change of Registered Office from the
jurisdiction of one Registrar to another
Registrar in the same state. (Only Tamil Nadu
and Maharashtra)
 Special Resolution

 Confirmation by the Regional Director

 Confirmation by Regional Director to be filed by the

company with ROC (within 60 days).
 Certification by the Registrar (within 30 days)

Penalty: Rs 1000 per person per day to Rs. 1 lac.)

 Notice of New Location to the Registrar within 30
days
 CHANGE OF REGISTERED OFFICE FROM
ONE STATE TO ANOTHER STATE.

 Special Resolution by the company.

 Approval by the Central Government

MAJOR PROVISIONS
1) Application to the Central Government: An
application has to be made with prescribed fee
in Form INC 23 with following documents:
 A copy of MOA with alterations

 A copy of minutes of passing Special Resolution

2) An attachment of list of Creditors and debenture
holders with application.
 The names and addresses of every creditor and
debenture holder.
 The nature of the amounts due.

 A declaration signed by either CS or two directors that

the names and other info about creditors and
debenture holders is correct and no other debt arises
against company.
 This application is also to be filed with the Chief
Secretary of the SG or UT where the registered office
is situated before filing.
4) Copy of the creditors to be kept at registered office.

5) Advertisement of application:
The applicant shall at least 30 days before the filing the
application in INC 23-
 Advertise the application in a vernacular newspaper
and an English newspaper circulating in that district;
 Serve, by registered post with acknowledgement due,
individual notice to each debenture-holder and creditor
of the company; and
6) Attachment of a copy of the advertisement.
7) Where no objection is recieved: Where no
objection has been recieved from any of the parties the
application may be put up for orders without hearing.
the order either approving or rejecting the application
shall be passed within 15 days of the reciept of the
application.
8) Where an objection is recieved: After hearing the
objections, government shall pass the ordr within 60
days
9) Order may be subject to conditons
10) Shifting of the registered office may not be allowed
in case of pending prosecution.
11) Filing with the Registrar. (Within 30 days of getting
order from the date of certified copy of the order.)
12) Fresh Certificate of incorporation.
 ALTERATION OF OBJECTS CLAUSE
 Alteration of objects clause of a comapny which has not
raised money through prospectus
Passing a special Resolution and filing a copy of the same with the
Registrar within 30 days.
 Alteration of objects clause of a company which has
raised money through prospectus
Passing a special Resolution and filing a copy of the same with the
Registrar within 30 days with following particulars:
1) the total money raised;
2) the total money utilised for the objects stated in the prospectus;
3) the unutilised amount out of money so raised through
prospectus;
4) the particulars of the proposed alteration or change in the
objects.
5) the amounts proposed to be utilised for the new
objects;
6) the estimated financial impact of the proposed
alteration.
7) Opportunity to exit to dissenting shareholders;
8) Registration of alteration by the Registrar (within 30
days of special Resolution)
 ALTERATION OF CAPITAL CLAUSE

 Alteration of share capital (Section 61)

 Reduction of Share capital (Section 66)

 Variation of the rights of the shareholders (Section 48)

1. ALTERATION OF SHARE CAPITAL

 Can be alteredby passing an ordinary

resolution.
(a) Increase its authorised capital;
(b) Sub-division of the shares into shares of lower
denomination.
(c) Conversion of fully paid shares into stock and
reconversion.
(d) Cancellation of unissued shares;
(e) Issue of new shares.
Penalty: Ranging from Rs. 1000 to Rs. 5 lac
whichever is lower
2. REDUCTION OF SHARE CAPITAL

 Extinguishing or reducing the liability of the shareholders

in respect of the shares held by them; or
 Paying off any paid-up share capital which is in excess of its
requirements.
 Cancelling any paid-up share capital which is lost.
PROVISIONS
(1) Shall be authorised by Articles, if not then articles must be
altered.
(2) Special Resolution.
(3) Confirmation by the Tribunal; An application shall be
made to Tribunal with the list of creditors, verification of loss
of creditors by the auditors.
(4) Notice by the Tribunal; the tribunal shall give
noice of every application made to it to the CG, Registrar
and in case of listed co. to the SEBI witin 15 days of
submission of the application.
(5) Notice by company to the Creditors: within
7days of the directions given by the Tribunal.
(6) Confirmation by the Tribunal.
(7) Publication of Tribunal's Confirmation.
(8) Filing and Registration of the Tribunal's Order.
The co. shall deliver within 30 days of the reciept of the
order to the Registrar a certified copy of the Tribunal's
order and the minute approved by the Tribunal
showing following details of the shares for registration:
 the amount of share capital;

 The no. of shares into which it is divided.

 the amount of each share; and

 the amount, if any, at the date of registration deemed

to be paid up on each share.
The registrar, within 30 days of the reciept of the copy of
the order shall register the same an dissue a certificate
to that effect in Form No. RSC-7
 Penalty (A)If any officer of the company-
(a) knowingly conceals the name of any creditor entitled
to object to the reduction.
(b) Knowingly misrepresents the nature of the amount of
the debt or claim of any creditor.
He shall be liable to Section 447.

(B) If a co.fails to comply with the provision relating to

publication of order of confirmationof the reduction of
capital shall be liable which shall not be less than Rs.
5,00,000 but which may extend upto Rs. 25 lac.
RIGHTS OF SHAREHOLDERS
Voting rights, Dividend and Repayment of Capital

Voting Rights by Equity Share holders?

Voting Rights by Preference shareholders?
- when dividend not paid for last 2 years
- Only on resolution affecting their rights
- At the winding up
VARIATION OF THE RIGHTS OF
SHAREHOLDERS
 Special Resolution passed at a separate meeting of
he holders of the issued shares of that class.
 Provided: Authorised by MOA.
 However, if variation by one class of shareholders
affect the rights of any other class of Shareholders,
the consent of three fourth of such shares shall also
be obtained
Rights of dissenting Shareholders
- If more than 10% shareholders does not agree.
- Can make application to NCLT in 21 days.
- Tribunal will make the final decision and till then no
variation will be done.
- Co. to ROC within 30 days of getting order by the
Tribunal.
Doctrine of Ultra Vires
EFFECT OF ULTRA VIRES
 Injunction
 Personal Liability of directors

- Unlimited liability of Directors

-Incase of deliberalty doing default- Criminal
Action
- Can be ratified if ultra vires the powers of
director but intra vires MOA.
 Ultra Vires LENDING

 Ultra Vires Contracts