Memorandum of

Association

Submitted By:-
Sangeeta
(141)
Vikas Malik (143)
Memorandum of Association
Definition:- According to section 2(28) of the
companies Act,
”Memorandum means the Memorandum of
association of the company as originally framed or
as altered from time to time in pursuance of any
previous companies law or of this act”

Memorandum of association is a document which

contains the rules regarding the constitution and
activities or objects of the company.

It is the fundamental charter of the company. Every

company must have a memorandum.
Features of Memorandum of
Association
Mandatory for a company..

Constitution of the company

Altered in specified situations

Defines the scope of the company

Public documents

Define company’s relations with others

 Importance of Memorandum
 It states various objects of the company for which the
company is to be established.
 It makes clear the area of operation of the company.
 The memorandum of association defines the extent
and powers of the company.
 The company is allowed to function within the
framework of memorandum of association.
 If it crosses the framework, its act would be considered
as ultra vires i.e. void.
 This document helps in determining the relations
towards the members and outsiders.
 It is designed to make the outside world know the state
of affairs of the company.
 It is a public document and can be inspected by
 Forms of memorandum

Acc.to sec.14:-
Limited company by shares

●
Table B

Limited company by guarantee without shares capital

●
Table C
Limited company by share capital
●
Table D

Non-limited company
●
Table E
 Memorandum shall be
According to section-15:-
 be printed,
 be divided into paragraphs numbered
consecutively,
 be signed by 7(2 in case of private company)
subscriber.
 be signed in the presence of at least one witness.

6
 Object

Liability
Name

Claus
es

Capital
Address

Subscriptio
n
 Name clause

 Not be undesired in the opinion of central

govt.
 Not be prohibited under Emblems and Name
Act,1950.
 Must have the last words- “Limited” for
Public company and “Private Limited” for
Private company.
 Name must be presented and published.
 Address clause

The Company should, from the day on which it

commences business or within 30 days after
date of incorporation, have a registered office
to which all communications and notices may
be addressed.
 Object clause
 In this clause, the memorandum must state the objects which the
company wants to carry out. It must state-
a) Main Object
b) Object ancillary or incidental
c) Other Objects
 Choice of objects lies with subscribers to the memorandum with
only restriction the object should not be against law.
 Use of object clause-
-The statement of object informs the investors of the purpose
for which their capital is proposed to be used by the company.
-It also helps creditors and shareholders-
a) to be aware of the objects for which their money is
being employed.
b) It ensures the creditors that the company’s fund are not
invested in unauthorized activities.
 Liability clause
The nature of liability of members whether it is by shares or
by guarantee or is unlimited is to be mentioned.

a) Company limited by shares-liability of members is

limited to extent of shares subscribed by the members, i.e. no
member can be called upon to pay more than the nominal
value of his shares or so much thereof as remain unpaid.

b) Company limited by guarantee-liability of members is

limited to amount which every member undertakes to
contribute to the assets of the company in the event of its
winding up.
 Capital clause
Memorandum should state the amount of share capital with which the
company is to be registered.

The Capital with which the company is registered is called as

AUTHORIZED OR NOMINAL share capital.
-The nominal amount is the amount which will be required for the
attainment of main objects of the company.

The minimum requirement of capital is

-Public Company- 5 lakh
-Private Company-1 lakh

Nominal amount is divided on basis of type of shares and its values are to
be mentioned in the clause.
 Subscription clause
 The Association clause states “We, the several persons
whose names and addresses are subscribed are desirous of
being formed into company in pursuance of this memorandum
of Association and we respectively agree to take the no of
shares in the capital of company set opposite our respective
names”
 Each subscriber to the memorandum of the company shall
take at least one share.
-In case of-
a) Pvt. company-at least 2 persons.
b) Public company at least 7 persons will subscribe
to the memorandum.
 The signatures of the each subscribers will be attested by at
least one witness who can’t be any of the other subscribers.
Example of Memorandum of
Association
 Alteration in Memorandum of
Association
Alteration in name clause
Alteration in situation clause
Alteration in object clause
Alteration in liability clause
Alteration in share capital clause
Alteration in subscription clause
 Alteration in name clause

By special resolution
and permission from
Govt. (sec 21)

By rectification of
omission in name
sec(22)
Alteration in address

Shifting from one

place to another in
the same
city .[sec.146(1)]

Shifting from
Shifting from
one town to
one state to
another in the
another.
same state.
[sec.17(1)]
[sec.146(2)]
Alteration in object clause

Procedure

Special resolution

Ratification by Central Govt.

Registration of alteration (sec18)

Effect of non-registration of alteration(sec19)

 Alteration in liability clause

Conversion of limited liability into Registration of unlimited liability into

unlimited liability. (sec 323) limited liability company. (Sec 323)
 Alteration in capital clause
 Increase in share capital (sec 97)
 Reduction in share capital (sec 100)
 Reorganization of share capital (sec 94)
 Memorandum of association
1.It is a charter of the company and
indicates various things like
name,objects,capital liability etc.
2.It defines and confines the areas of
operations of the company
3.As it is charter of the company, it is the
supreme document
4.Every company must have a
memorandum
5.Alterations of memorandum must be
according to the procedure laid down in
the act.
6.Any act done by the company going
beyond the memorandum is ultra vires
and cannot be ratified even by whole of
shareholders.
Articles of association
1.They are the regulations for internal management
of the company
2.They are the rules for carrying the objects of the
company as set out in memorandum.
3.They are subordinate to the memorandum. in case
of any conflict between the two memorandum shall
prevail.
4. A limited company by shares may accept table A
as its articles with or without modifications.
5.Alterations in articles are comparatively easy as
they can be altered by special resolutions, keeping
in mind certain resolutions
6. Any act of company which is ultra vires the
memorandum can be ratified by the shareholders.
Thank you