MEMORANDUM OF ASSOCIATIOND

DEFINITION
According to Sec. 2(56) of the Companies Act, 2013,
"The Memorandum means, the Memorandum of
Association of a companyas originally framed or as
altered from time to time in pursuance of any previous
companies law or of this Act".
CONTENTS OF THE MEMORANDUM
The Memorandum of Association of every company should containthe
following six clauses [Sec. 4(1)]:
1. Name Clause,
2. Situation Clause,
3. 3. Objects Clause,
4. Liability Clause,
5. Capital Clause, and
6. Subscription Clause.
PURPOSE OF THE MEMORANDUM
The judicial pronouncement cited above also brings out the purpose of
the Memorandum. Its purpose is two-fold such as-
1.Firstly, the shareholders are in a position to know how their savings
are to be used and the field in which or the purpose for which their
funds are to be utilized and risk involved in making the investment.
2. Secondly, anyone who is dealing with the company can understand
the permitted range of the company, its powers and object.
SIGN OF MEMORANDUM –RULE OF THE COMPANIES (INCORPORATION) RULES
2014

The Memorandum and Articles of Association of the company shall be signed

by each subscriber to the Memorandum, who shall add his name, address,
description and occupation, if any, in the presence of at least one witness who
shall attest the signature and shall likewise sign and add his name, address,
description and occupation, if any.

If the subscriber is illiterate, he shall affix his thumb impression or Mark in

particular document that contains name, how many share that the subscriber
hold like that.
ALTERATION OF MEMORANDUM OF ASSOCIATION
NAME CHANGE
• Pass Special Resolution
Approval of Central Government
To delete the word “private” approval from Central
Government is not required in case of conversion ofprivate company
to public company.
Change In Registered Office
a) Change within local limits
Pass Board Resolution and Special Resolution. Notice of change to
registrar in INC 22 within 15 days of such change
b) Change of state
Approval of Central Govt. In INC 23. The Approval should be registered
with Registrar for Incorporation Certificate
c)Change in jurisdiction of Registrar
Get confirmation by Regional Director. Communication of confirmation
by Regional Director to the company within 30 days
Change in Object
-Pass Special Resolution
-From the date of filing Special Resolution the Registrar
-Should certify the same within 30 days.

Change in Liability
-Special Resolution to be passed.
-File the same with Registrar in form MGT 14
Change in Capital
-alteration of capital clause to be authorised by the Articles of
Association [section 61]; Ordinary Resolution
- If by division or consolidation in capital the voting % gets affected then
a confirmation from Tribunal is mandatory.
-Notify the alterations made and a copy of Resolutions passed shall be
filed with Registrar within 30 days.
- Registrar shall record the notice and make alterations required.
DOCTRINE OF ULTRA VIRES

The term "Ultra" means beyond and "Vires" means powers. The term,
therefore, means the doing of an act, which is beyond the legal power
and authority of the company. It is considered as an act outside the
scope of the object of the company.
Why the Doctrine?

The object of the Doctrine of "Ultra Vires" is to ensure the shareholders

and the creditors that the fund and assets of the company will not be
used for any purpose other than those specified in the Memorandum.
Especially the creditors, while dealing with the company can make
themselves aware of the fact whether his transaction with the company
is ultra vires or not. If it is found ultra vires, he can avoid such
transaction and thereby safeguard his interest.
TYPES OF ULTRA VIRES ACTS

1. Ultra Vires the Memorandum or the company

2. Ultra Vires the Article but Intra Vires the Company
3. Ultra Vires the Director but Intra Vires the Company
INTRODUCTION

The Articles of Association is another important document, which is

required to be filed with the Registrar of Companies) This document
contains the rules and regulations regarding the internal management
of the company. The main provisions regarding the Articles of
Association are found in Secs. 5, 10 & 14 of the Act.) The Articles
enable the management to achieve the objects given' in the
Memorandum. It also includes the regulations contained in Table A in
Schedule I of the Act.
DEFINITION OF ARTICLES

According to Sec. 2(5) of the Companies Act, 2013, "Articles means the
Articles of Association of a company originally framed or as altered
from time to time or applied in pursuance of any previous Companies
Law or of this Act".
CONTENTS OF THE ARTICLES OF ASSOCIATION

The Articles contain rules and regulations regarding:

1. Share capital and variation of rights.
2. Lien on shares.
3. Calls on shares.
4. Transfer of shares.
5. Transmission of shares.
6. Forfeiture of shares.
7. Alteration of capital.
8. Capitalization of profit.
9. Buy back of shares.
10. General meetings, voting rights of the members and proxies.
11. Proceedings at general meeting.
12. Adjournment of meeting.
13. Voting rights.
14. Proxy.
15. Board of Directors.
16. Proceedings of the board.
17. Chief executive officer, manager, company secretary or chief financial officer.
18. The seal.
19. Accounts.
20. Winding up.
21. Indemnity.
22. Nomination.
23. Share certificate.
24. Dematerialization.
25. Conversion of shares into stock.
26. Nominee debentures.
27. Issue of debentures and stock.
28. Audit committee.
29. Additional debentures.
30. Remuneration to debentures.
31. Borrowing powers.
32. Dividends and reserves.
33. Capitalization of reserves.
ALTERATION OF THE ARTICLES OF ASSOCIATION
1.A special resolution must be passed [Sec. 14(1)]. The Articles can
never be altered by a general resolution [Navanietal V. Scindia Steam
Navigation Company Limited].
2. A certified copy of the resolution must be filed with the Registrar
within the time specified u/s 403 and with such fees as may be
prescribed.
3. If the alteration is for converting a public company into a private
company, the approval of the Tribunal is also necessary
[Sec. 14(1)]. If the alteration is approved by the Tribunal, a printed copy
of the altered Articles must be filed with the Registrar within a period
of 15 days of the receipt of the order of the Tribunal (Sec. 14(2)].
4. The alteration should be made in all the Articles issued thereafter
5. The alteration must not be against the provisions of the Companies
Act or any other statue.
6. The alteration should not be against the provisions of the
Memorandum. If it happens, the act is ultra vires the Memorandum
and so void.
7. The alteration must not be illegal or against the public policy.
8. The alteration should not affect the rights of an outsider.
9. The alteration should not cause a breach of contract [Nelson V.
James].
10. The alteration should not oppress or constitute a fraud on the
minority [Brown V. British Abrasive Wheel Company]
S.No MEMORANDUM
1. Charter of the company, and
defines and also confines the
fundamental conditions and
objects for which company is
granted incorporation.
2. Subordinate to the Companies
Act.
3. Principal document.
4. Specifies the scope of authority
and the objectives
5. Defines the relationship
between company and
outsiders.
ARTICLES
Bye law or internal regulation of the
company to govern the internal
management of the company
Subordinate to the Memorandum.
Secondary document.
Specifies the procedures to be
followed to carry out the objectives
stated in the Memorandum.
Defines the relationship between the
company and its members and
between the members inter se.
1. Alteration is difficult. Alteration is comparatively easy.

1. Memorandum is compulsory The company need not have its

for all own Articles. Instead, it can adopt
companies. Table – F as its Articles.
1. Act ultra vires to Acts ultra vires to Articles can be
Memorandum cannot be ratified by suitable legal
ratified and outsiders have no
formalities. Outsiders have a
remedy against the company. remedy even if the act is ultra
vires the Articles.
1. It is not easy to alter the The Articles can be altered easily
Memorandum. In some cases, by a special resolution provided
the alteration requires a the changes are lawful and within
permission of the Central the limits of the company.
Government or the Court.