MEMORANDUM OF

ASSOCIATION
UPES SoL
 Meaning
• S. 2 (56): Memorandum means memorandum of
association of a company as originally framed, or altered
from time to time in pursuance of any previous
companies law or of this Act.
• Lord Cairns: “the memorandum of association of a co.
defines the limitation on the powers of the co…it contains
in it both that which is affirmative and that which is
negative. It states affirmatively the ambit and extent of
vitality and power which by law are given to the
corporation ad it states, if its necessary to state,
negatively, that nothing shall be done beyond that
ambit…” Ashbury Railway Carriage & Iron Co. Ltd. v.
Riche [1875] L.R. 7 H.L. 653.
 Form and Contents (S. 4)

• In the format given in Tables A- E in Schedule I

• Memorandum must be printed, divided into paragraphs,
numbered consecutively, signed by the stipulated no. of
members in presence of at least one witness
• Each member must mention the no. of shares taken by
him/her, if any
 Form and contents
• MoA of ltd. co. to contain following details:
a. Name clause
b. Registered office clause
c. Objects clause- main objects, ancillary objects, other
objects
d. Liability clause
e. Capital clause
f. OPC- details of the person to substitute in case of death
or incapacity of the member
THE NAME CLAUSE
[S. 4(2)-(5)]
 Prerequisites for choosing name for co.

1. “Ltd.” or “Pvt. Ltd.”: must be used in the name

of a co. so incorporated; exception- Association
not for profit(S.8) [S. 4(1)(a)]
2. Names shouldn’t be identical- wrt a co. regd.
Under this Act or previous co. law [S. 4(2)(a)]
3. Undesirable name [S. 4(2)(b)(i) & (ii)] : usage of
name not to constitute offence under any law in
force or CG’s opinion that name is undesirable.
4. Usage of name shouldn’t patronize
government or violate any other law
 Contd.
• Proposed name does not infringe regd. Trademark/for
which appln made under Trade Marks Act, 1999
• Proposed name not in violation of Emblems and Names
(Prevention of Improper use) Act, 1950
• R. 8, the Companies (Incorporation) Rules, 2014
• Proposed name not offensive to any section of people
• All guidelines were followed
• Undertaking of responsibility for consequences
Following disregarded while determining similarity in
name
a.Ltd., pvt. ltd., LLP f. Difference in phonetic
b.Com., corp. spellings or spelling
c.Plural version of any of variations
the words appearing in g..NET, .COM, .EDU
name h.New, Nav, Modern,
d.Type and case of Shri, Om
letters, spacing between
i. Different combination
letters and punctuation
marks of same words
e.Joining names does not j. Hindi translation
make it distinguishable
 Guidelines for availability of name
• Proposed name need not be indicative of the main object; indicative of
any activity then it should be reflected in main object
• Not allowed to use co-operative, sehkari, trust, partnership, society,
partnership, etc
• Abbreviated names cannot be allowed by any one else; abbreviation of
own names allowed
• Insurance, bank, stock exchange, venture capital, mutual fund min
name- must abide by requirements laid down by respective regulators
MCA, IRDA, RBI, SEBI
• “State”- only if it is a govt. co.; name of continent, country, state, city
not allowed
• Foreign co.’s subsidiary in India- with India as an addition, or an Indian
state or city is allowed
• Venture Capital companies
 Example
• Society of Motor Manufacturers & Traders Ltd. v. Motor
Manufacturers & Traders Mutual Assurance Ltd. [1925] 1
Ch. 675
 Publication of Name (S. 12)
• Paint/affix name and address- regd. office, every place of
business; legible and at conspicuous place in English and
vernacular language
• Name engraved in legible characters on seal
• Name and address in legible characters in all business
letters, bill heads, NI, etc.
• Penalty: 1,000/- per day on company & every officer in
default; not to exceed 01 lakh.
THE REGISTERED OFFICE
CLAUSE [S. 4 (1) (B)]
 The Registered Office Clause
• Name of state where regd. office is situated
• Reflects the domicile, place where statutory books are
kept, notices & otr. communication are sent
• Verification of regd. Office to be sent to RoC within 30
days of date of incorporation [S. 12(2)]
• Publication of address of regd. office [S. 12 (3)]
THE OBJECTS CLAUSE
[S. 4 (1) (C)]
 The Objects Clause
• Defines objects of co.
• Indicates sphere of its activities
• Co. cannot act beyond the objects clause- ultra vires &
void- can’t be ratified by resln. of shareholders
• Co. may do anything incidental/consequential upon
objects specified in MoA
DOCTRINE OF ULTRA
VIRES
 Doctrine of Ultra Vires
• Ultra: beyond
• Vires: powers
• Ashbury Rly. Carriage & Iron Company v. Riche [1875]
LR 7 HL 653: Lord Cairnes explained objects of the co.
as follows
1. To protect investors of co. so that they may know the
objects in which their money is to be employed
2. To protect creditors by ensuring that the company
funds, to which they must look for payment are not
involved in unauthorized activities
• Lakshmanaswami Mudliar v. L.I.C. AIR 1963 SC 1185
Contd.
• Powers that are not implied:
1. Acquire any business similar to co.’s own business
2. Agreement with otr. persons/co.s for carrying on
business in partnership
3. Taking shares in otr. co.’s having similar objects
4. Promoting otr. co.’s or helping them financially
5. Use of funds for political purpose
6. Power to give gifts/make donations for charitable
purpose not relating to objects in MoA
7. Power to sell and dispose off whole of co.’s undertaking
8. Contract of guarantee/ surety
 Effects of Ultra Vires transaction
1. Void ab intito
2. Injunction
3. Personal liability of directors: acts ultra vires the
directors & co. respectively
4. Acquisition of property that is ultra vires
5. Directors personally liable to third parties
THE LIABILITY CLAUSE
[S.4 (1) (D) (I) & (II)]
 The Liability Clause
• Nature of liability of members
• Unltd. Co.- this clause need not be stated
THE CAPITAL CLAUSE [S.
4 (1) (E)]
 The Capital Clause
• States the amount of share capital with which co. is regd.
a. Authorised capital/nominal capital [S. 2(8)]
b.Issued capital [S. 2 (50)]
c.Subscribed capital [S. 2 (86)]
d.Paid up share capital [S. 2(64)]
e.Called up capital [S. 2(15)]
• Mode of division into shares of fixed value
• Lays down the limit beyond which the co. cannot issue
shares without altering the MoA u/S. 61
 Contd.
• Members sign and mention the no. of shares held by them
• Formalities observed by a member while subscribing to
MoA
ALTERATION OF MOA
(S. 13)
CHANGE OF NAME
 Change of Name
• S. 13 (2): spl resln, subject to section 4 (2) & (3); approval of
CG in writing
• Approval not required if mere addition/deletion of word “pvt.”
on conversion
• Change made by RoC in register of companies
• Fresh certificate of incorporation issued with the new name
• Name effective only on issue of certificate
 Contd.
• Change by ordinary resln (S. 16): co. regd. with name identical
/similar to antr. co. may change name by ordinary resln.
• Rectification of name
a.within 3 months of CG’s direction on ground of similarity; or
b.on an application from proprietor of a regd trademark within
03 yrs of incorp/regn/change of name- name to be changed
as per CG’s direction within 06 months
c. within 15 days from date of such RoC to be notified for
necessary changes in cert of incorp & memorandum
d.non compliance- 1,000/- rupees for everyday of default,
every officer to pay 5,000/- rupees extendable to one lakh
Contd.
• Reasonable opportunity to be given to a co. directed to change
name
 Effect of Change of Name?
• Doesn't affect any rights/obligations; legal proceedings
continue by/against the company in new name
• After change of name, if legal proceeding instituted in old
name- curable defect, plaint may be amended
• Constitution of co. not affected
CHANGE OF REGISTERED
OFFICE
Change of regd. office
From one From one
premise to city/town/
another village to From one
premise in another state to
same city/town/ another
city/town/ village in
village same State
 Cont.
• Spl resln- approval of CG
• CG to dispose appln within a period of 60 days and on
verification of consent of creditors, debenture holders and
otr persons concerned with the co. OR co. has made
sufficient provision or adequate security for discharge of
liabilities
• Approval of CG (certified copy) to be filed with Roc of each
state
• Registrar of the state shifted to shall issue new cert of
incorporation
 Contd.
• Loss of revenue or employment of State
- Affected state has a locus standi to object shifting of office for
protection of revenue (Orient Paper Mills Ltd. v. State AIR
1957Ori. 232)
- CLB (2002 onwards CG) cannot refuse confirmation on the
above mentioned ground; state doesn’t have statutory right to
oppose shifting from one state to another u/S. 17 [Minerva Mills
Ltd. v Govt. of Maharashtra [1975] 45 comp. Cas. 1 (Bom)]
• Restriction in AoA for shifting of regd. office from one state
to another: Such restriction- against the spirit of Companies
Act[Jindal Vijaynagar Steel Ltd., In re [2005] 63 SCL 7]
CHANGE OF OBJECTS
 Contd
• Alteration in company: company that has issued
prospectus and that which has not
• Money raised through public subscription- unutilized
money not to be used for objects not mentioned in MoA
• Spl resln reqd for change- to be pub in newspapers & on
website- justification for change
• Dissenting shareholders- exit opportunity
• Certification of regn within 30days of filing of spl resln
• Advertisement reg alteration, website
 Provisions under the 1956 Act

1. To carry on its business more economically and more

efficiently
2. To attain its main purpose by new or improved means
3. To enlarge or change the local area of its operation
4. To carry on some business which under the existing
circumstances may conveniently or advantageously be
combined with the business of the co.
 Contd
• It should not affect the harmony b/w the name and main
object
• Guidelines for alteration of main objects [Straw Products Ltd.
v. Registrar of Companies [1969] 39 Comp. Cas. 974 (Ori.)]
1. Additional business may be different from existing
business, but shouldn’t be destructive/inconsistent with &
detrimental to existing business
2. Whether additional business advantageously combines
with existing business- decision to be taken by persons
engaged in business
3. Court/CLB may confirm in whole/part subject to terms and
conditions within ambit of S. 17 (1)
 Contd.

5. To restrict or abandon any of the objects specified in the

memorandum
6. To sell or dispose of the whole or any part of the
undertaking
6. To amalgamate with any other co. or body of persons
CHANGE IN LIABILITY
 Contd.
• Liability of a member can’t be increased unless member
agrees in writing (Increase may be in terms of shareholding
or in any other manner)
• Consent may be procured either before or after alteration
• Unlimited liability co.- liability may be limited or reduced by
re- regn. of the co.; alteration doesn’t affect debts/liabilities/
obligations/contracts existing before re-regn. as a ltd. co.
CHANGE IN CAPITAL
 Sections 61& 64
• Ordinary resolution
1. Increase its authorized share capital:
- by such amt as it thinks expedient by issuing fresh shares
- Authorization of alteration by AoA mandatory
- Info to be filed with RoC within 30 days- resln. copy and
altered MoA
- Default: co. & offr. punishable with fine up to 1,000/- per day
during continuation of default or 05 lac, whichever is less
2. Consolidate and divide all or any of its share capital into
shares of larger amt than its existing shares: resln. copy
to be sent to RoC within 30 days
3. Convert all or any of its fully paid up share into stock,
and reconvert that stock into fully paid up shares of
any denomination: authorization by AoA; resln. copy to
be submitted to RoC within 30 days of resln.
4. Sub divide it shares into shares of smaller amt than fixed
by MoA, with proportion of paid and unpaid remaining the
same
5. Cancellation of shares which are not subscribed or
allotted- amounts to reduction of capital- Diminution of
share capital (to be authorised by AoA), to be
distinguished from reduction of capital