PPB3233 COMPANY LAW

THE COMPANY CONSTITUTION:

MEMORANDUM & ARTICLES OF
ASSOCIATION
Prepared For: DR Saslina Binti Kamaruddin

Presented By:

Ganesan A/L Velautham

Jayamathy A/P Govindharajoo
Logesh A/L Navitharan
Ramakrishna Rao A/L Kaledahs
Sunesha A/P Mohan
 1.0 2.0 MOA
2.1 Contents of MOA
INTRODUCTION 2.2 Registration of MOA
2.3 Object Clause and
Doctrine of Ultra vires
TABLE OF
CONTENTS
3.0 AOA 4.0

3.1 Contents of AOA

CONCLUSION
3.2 Table A
3.3 Binding Effects
 INTRODUCTION
CONSTITUTION
The constitution of a company consists of:
Memorandum of Association (MOA)
Articles of Association (AOA)

These both are the primary legal document for a company.

 CA 1965
MOA and AOA are considered
as the constitution of a
company.
AOA is a set of regulations for
the management of the
company.
MOA and AOA are public
documents that can be
accessed by any member of
the public.
EVOLUTION OF MOA
CA 2016
Removes the mandatory
requirement for a company,
other than a company limited
by guarantee to have a
constitution.
Section 619 (3) for existing
companies already registered
under the CA 1965, their MỌA
& AOA remains valid and
enforceable under the CA
2016.
MEMORANDUM
OF
ASSOCIATION
(MOA)
 The memorandum of
W
1 2
association (MOA) of a It's a contract between H
company is the document the company and its
that governs the members.
A
relationship between the T
company and the outside.

MOA I
According to the Companies The memorandum of S
3 4
Act 2016, a company is no association must be lodged
longer required to have the with the Registrar of
Memorandum of Association Companies (“ROC”) before M
and Articles of Association the ROC would issue the
(M&A) for registration company with its Certificate
O
purposes. of Incorporation. A
Companies
Act 1965 ?
 CONTENTS OF MOA
Section 34,32,38 CA 2016
S34 of the CA 2016 - In the case of a Company Limited by Shares incorporated
under this Act, is a document adopted as its constitution.

S32 - In the case of a Company Limited by Guarantee incorporated under this

Act, is a document lodged for registration of the company.

S38 - In the case of a company registered under the corresponding previous

written law, is the Memorandum and Articles of Association as originally
registered or as altered in accordance with the corresponding previous written
law, and includes any alteration or amendment made under section 36 or 37, if
any, as the case may be.
 CONTENTS OF MOA
Section 35 (1) CA 2016 has listed the contents of a company’s
constitution.
35. (1) Subject to the provisions of this Act, the constitution of a company may
contain provisions relating to:
a) the objects of the company;
b) the capacity, rights, powers, or privileges of the company if the provision restricts
such capacity, rights, powers, or privileges;
c) matters contemplated by this Act to be included in the constitution; and
d) any other matters as the company wishes to include in its constitution.
 CONTENTS OF MOA
Section 35 (3) CA 2016
(3) If a company has no constitution, the company, each director, and each member
of the company shall have the rights, powers, duties, and obligations as set out in
this Act.

Under the new CA 2016, companies are no longer restricted with the object clause
in the Memorandum of Association (MOA).
 MANDATORY OF MOA -[CONSTITUTION]

Is it constitution is mandatory?
Under the Companies Act 1965, any companies limited by
shares were statutorily required to have an Articles and
Memorandum of Association.

However, under the current Companies Act 2016 (“CA 2016”),

it is no longer mandatory for a company to have a
Constitution.
 REGISTRATION OF MOA
Registration of Constitution under Company Act 2016
under section 32(4) of CA 2016, it stated that a company shall
lodge the constitution with the Registrar within thirty (30) days
from the adoption of constitution.

Registrar is the person usually who are the Chief Executive Officer of
the Commission.
 PROCESS OF THE
REGISTRATION OF MOA
The memorandum of association need to be lodge with the
registrar before a company been registered.

The subscribers to the memorandum must sign on the

memorandum.

The signatures of the subscribers must be witnessed by a person

who is not himself a subscriber.
 ALTERATION OF CONSTITUTION

Conversion Conversion
Name
unlimited - limited private - public

Conversion
Object Clause Share Capital
public - private
 ALTERATION OF CONSTITUTION

S36(1) CA 2016 allows a company that have a constitution to

alter or amend its constitution by a special resolution.
(alteration of a Constitution is done by way of a passing of a special resolution which
requires a majority vote of 75% by the shareholders who are entitled to vote.)

S36(2) CA 2016 provides that constitution shall bind the company

and the members accordingly from the date of passing the
special resolution or a later date as specified in the constitution.
 ALTERATION OF CONSTITUTION

Under S36(3) CA 2016, Registrar shall be notified regarding

amendment and the company shall lodge a copy of amended
constitution within thirty days from the date the special
resolution was passed.

S37(1) CA 2016 provides that the court may alter or amend the
constitution of the company using the procedures set out in the
Act or in the constitution itself.
 OBJECT CLAUSE OF MEMORANDUM

A provision in a company's
constitution
illustrate the purpose and range of
activities for which the company is
carried on
Do business activities that Any act beyond the objects
are within its objects clause is wholly void
This clause is quite important and must be The act is ultra vires the company. The
very carefully drafted. activities it performs should not be
prohibited by law

The company shall be restricted from carrying

Section 35(1)(a) on any business or activity that is not within
those objects

Section 35(2)(b) The company shall have full capacity and

powers to achieve such objects
 LEGALITY OF OBJECT CLAUSE
An object in the memorandum is lawful when it is not :
1 Forbidden by any law

2 Defeat any law

3 Fraudulent

4 Immoral

5 Opposed to public policy

The Registrar may refuse to receive a memorandum if it

contains a matter which is contrary to law.
 ALTERATION OF OBJECT CLAUSE
A company may alter or amend the object clause by
passing a special resolution such as
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.
To sell or dispose of the whole, or any part of the
4 undertaking of the company.
To restrict or abandon any of the objects specified in
5 the memorandum
6 To amalgamate with any other company or body of
persons.
Straw Products Ltd V. Registrar of
Companies
"It was decided by the court that where
the company, Straw Products Ltd has the
intention to change the mode of its
operation for improving the efficiency to
the advantage of the company, there
should be no reason why it should not be
allowed."
 ULTRA VIRES A COMPANY
Ultra means beyond and vires mean the powers. Thus, ultra vires a company means beyond the
powers of a company.
Any act which is beyond the objects clause is ultra vires the company and it is wholly void
Doctrine of Ultra Vires - The purpose of the doctrine of ultra vires is to protect the interests of
members, outsiders, and creditors.

Public Bank Bhd v Metro Construction Sdn Bhd

Metro Construction's objects as stated in its memorandum cannot be departed from. An
attempted departure is as invalid as if the memorandum were a statute of incorporation; it is ultra
vires the company and cannot be validated by the assent of a general meeting of the members or
by taking judgment against the company by consent.
Ashbury Railway Carriage and Iron Company V. Riche
1 A company contracted to build a railway line. The objects clause stated
that the company had been established; “to make, sell, or lend, railway
carriages, wagons and all kinds of railway plant, fittings, machinery, and
rolling stock".

2 The objects of the company permitted it to manufacture train stock and

parts for railways; not to actually construct railway lines themselves.

Court held:
The contract was void, and the directors of Ashbury were
entitled to reject the contract.
 ARTICLES OF
ASSOCIATION
(Aoa)
 DEFINITION OF ARTICLES OF ASSOCIATION

- is a document that specifies the regulations for a company's

operations and defines the company's purpose.
 Internal regulations
NATURE OF Must be lawful
ARTICLES OF
Cannot override and overrule any provisions
ASSOCIATION
in Memorandum of Association (MoA)

Public documents and open for inspection

 OBLIGATION TO
REGISTER ARTICLES
1
Public company
limited by shares - 2
Company limited by
may register
guarantee/unlimited
articles(in case company/private
does not, TABLE company limited by
"A" shall apply) shares - must register
articles along with the
memorandum at the
time of registration.
 FORMALITIES

1 2 3

1ST DIRECTOR 1ST SECRETARY FORM OF AOA

Must be named in Must be named in the Must be printed and

the MoA or AoA MoA or AoA divided in numbered
paragraph
 Preliminary Classes
Office Table A contracts of shares

Lien of Calls on Transfer Transmission

of shares of shares
shares shares
CONTENTS OF
ARTICLES OF
ASSOCIATION Alteration Reduction General
Directors
of share of share meetings

Account Winding
Dividends Notices
and audit Up
 TABLE A

For public
companies with Not required Case Law:
to register its
share capital limited
by shares AoA
SOLAIAPPAN & ORS V. LIM YOKE
FAN & ORS(1968)
Particulars in Table A were only
"specimens" / sample and it was open
Model to any company to adopt all or any of
articles them, and even to add some of their
own
Right to alter or add to articles-expressly conferred by
SECTION 31 CA 2016
Statutory power & cannot be negatived in any way
Done by passing a Special Resolution
Copy must be filed with Registrar within 30 days of
passing the said resolution
Copy of altered articles also be filed with Registrar within
3 months of passing the resolution.
 Section 33(1) CA 2016
When registered, it constitutes a statutory contract
Binding as if signed and sealed by every members.

The Essential Effect

Company is bound to its members
Each member is bound to the company
Each member is bound to other members in exceptional case
Neither the company nor the members are bound to
outsiders

Statutory Contract
Not defeasible and is furthermore
incapable of being rectified by the
court
C HICKMAN V KENT OR ROMNEY MARSH
SHEEPBREEDERS' ASSOCIATION(1915)
A FACTS : The AoA provided that if there are any
S
disputes between the company and its members,
the dispute must be referred for arbitration. The
plaintiff, a member in the company claimed that
E there were certain irregularities in the company.
Hence, he brought the matter to the court
HELD :The matter cannot be taken to the court. it
must be arbitrated. The AoA binds its members.
L The company can enforce its rights by ensuring
that the member observes the provisions of the
A AoA.
W
S
WONG KIM FATT V LEONG & CO SDN
BHD & ANOR(1976)
FACTS : Holders of 7/10 of the issued share capital
of the company may require the company to
transfer the shares of the holders of 3/10. The
issued share capital of the company was 300,000.
The second defendant held 250,000 ordinary
shares and the plaintiff held 50,000 ordinary
shares. The second defendant wanted the 50,000
shares to be transferred to him. The plaintiff
claimed that the clause was unfair.
HELD :The clause is not in conflict with CA 1965
and therefore it is binding on the plaintiff.
 DIFFERENCES
BETWEEN MoA & AoA
MoA
Defines the limits and objects
Subordinate to the act only
Must be filed with the
registrar
Cannot be easily altered
AoA
Internal regulations of the
company; subsidiary to the
memorandum
Subordinate to the Act and
to the Memorandum
A public company limited by
shares need not file a
separate set of articles
Easily alterable by passing
a special resolution only