Memorandum of Association

&
Articles of Association

Presented by:
Rahul C-66
Saudamini C-67
Abhishek C-68
Anujkumar C-69
Swapnil C-70
Amitayu C-47
 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.

Company is governed by the memorandum of association.

 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 anybody.
 Contents of Memorandum of
 Name Clause-
Association
 The name of a corporation is the symbol of its personal
existence. Any suitable name may be selected provided that-
a)there is no other company registered under the same or
under a identical name.
b)the name is not considered undesirable and prohibited by
Central Govt.
 Whatever is the name of the company, it must have the last
words- “Limited” for Public company and “Private Limited”
for Private company.
 Such name, including address of the office must be
mentioned on all the business letters, notices and
advertisements
 Registered Office Of The Company-
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.
 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.
 Each subscriber has to write against his name the no of
shares he takes.
 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.
 The Association And 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.
 After incorporation no subscriber can withdraw his name on any
ground
 ARTICLES OF ASSOCIATION
 Section 2(2) of companies act defines articles as “Articles
means Articles of Association of a company as originally
framed or as altered from time to time in pursuance of any
previous Companies law or of this Act, including so far as
they apply to the company, the regulations contained, as the
case may be.
 The Articles are next in importance to the memorandum of
association which contains the fundamental conditions upon
which alone a company is allowed to be incorporated.
 Articles w.r.t Company and members, among members and
outsiders.
 Contents of Articles
Articles Usually Contain Provisions Relating To Following Matters-
1)share Capital, Rights Of Shareholders, Variation Of These Rights,
Payment Of Commission, Share Certificates
2)lien On Shares
3)calls On Shares
4)transfer Of Shares
5)transmission Of Shares
6)forfeiture Of Shares
7)conversion Of Shares Into Stocks
8)share Warrants
9) Alteration Of Capital
10)general Meetings And Proceedings Threat.
11)voting Rights Of Members, Voting Poll, Proxies
12)directors ,Their Appointments,remuneration,powers
13)manager
14)secretary
15)dividends And Reserves
16)accounts, Audits And Borrowing Powers
17)capitalization Of Profits
18)winding Up
DIFFERENCE BETWEEN MEMORANDUM & ARTICLES
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 cat.
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…