Memorandum

Of
Association

Meaning

According to Section 2(56) of the Companies Act, 2013 memorandum

means the memorandum of association of a company as originally
framed and altered from time to time in pursuance of any previous
company law or this Act.

The memorandum of association of a company is its charter and defines

the limitations of the powers of the company.

THE MEMORANDUM OF ASSOCIATION, observed Palmer, is a

document of great importance in relation to the proposed company.

Importance

The Memorandum of Association is a document which sets out the

constitution of a company and is therefore the foundation on which the
structure of the company is built.

It contains the fundamental conditions upon which alone the company is

allowed to be incorporated.

A company may pursue only such objects as are expressed in MOA.

It defines the scope of the companys activities and its relations with the
outside world beyond which its actions cannot go.

MOA after registration becomes a public document . While the

memorandum must comply with the provisions of the Companies Act, all
other documents must comply with the memorandum.

Purpose

The MOA is a public document available for inspection which serves

two purpose:

1.

The intending shareholder can find out from the memorandum the
purpose for which his money is going to be used by the company and
what risk is involved in investment.

2.

Anyone who deals with the company will know whether the transaction
he intends to make with the company is within the objects of the
company and not ULTRA VIRES its objects.

Thus, MOA enables the shareholders, creditors and all those who deal with
the company to know what its power are and what the range of its activities
is.

Printing, signing and copies of moa

Atleast 7 persons in case of public company, 2 in case of private and one

in case of OPC must subscribe their names to memorandum. To
subscribe means to append ones signature or mark a document as an
approval or attestation of its contents.

The memorandum should be printed (computer printing). It shall be

divided into paragraphs and should be numbered consecutively.

Copies of MOA and AOA must be given to a member on token charge of

Re. 1. Further copies can also be given for Re. one. Failure to give copy
within 7 days will involve fine which may extend upto Rs. 1000 per day
of default but not exceeding 1 Lakh.

FORM

Section 4(6) of the Companies Act, 2013 provides that the memorandum
of association should be in any one of the Forms specified in Tables A, B,
C, D or E of Schedule I to the Act, as may be applicable in relation to the
type of company proposed to be incorporated :

(i) The Form in Table A is applicable in the case of companies limited by

shares;
(ii) the Form in Table B is applicable to companies limited by guarantee not
having a share capital;
(iii) the Form in Table C is applicable to the companies limited by guarantee
having a share capital;
(iv) the Form in Table D is applicable to unlimited companies not having a
share capital;
(v) the Form in Table E is applicable to unlimited companies having a share
capital.

Contents of memorandum
As per Section 4(1), the memorandum of a company must contain the
following clauses:
1.
2.
3.
4.
5.
6.
7.

Name Clause
Registered Office Clause
Objects Clause
Liability Clause
Capital Clause
Association/ Subscription Clause
Nomination/ Succession Clause

Name clause

A company being a legal entity must have a name of its own to

establish its separate identity.

The name stated in the memorandum shall not

1.
be identical with or resemble too nearly to the name of an existing
company registered.
2.
If it is identical with or too nearly resembles a registered trade mark
or trade mark which is subject of an application for registration
Under the Trade Marks Act, 1999.
3.
It includes any word or words which are offensive to any section of
the people.
4.
is undesirable in the opinion of the Central Government.
Case: Ewing ( Butter Cup dairy Co.) V. Butter cup Margarine
Company Ltd.

Name clause- declaration by the

applicant
Apply for name in prescribed e form 1 A, using Digital Signature
Certificate with following declaration:
1.
2.

3.
4.

5.

6.

Search facilities available on portal of MCA to check resemblance

Not infringing the registered trade marks or trademark subject for
registration under Trade Marks Act, 1999
Not in violation of the provisions of Emblems and Names
Not offensive to any section of the people- ethnic group, gender,
religion or heredity
The person concerned has gone through all prescribed guidelines ,
understood the meaning and proposed name in conformity thereof
He undertakes to be fully responsible for the consequences

Name clause
The following shall be rules for checking for identical names:
1.
Private (Pvt.), Limited (Ltd.), LLP etc.
2.
At the end Co., Corp, Corporation, Company etc.
3.
Plural version of any of the word appearing in the name
4.
Type, case of letters, spacing, punctuation marks
5.
Separated or Joint words
6.
Use of different tense or number of same word
7.
Spelling Variations/ Phonetic spellings (JK Industries Ltd.)
8.
Misspelled word
9.
The addition of internet related designation does not distinguish.
10. Addition of words like New, Modern, Shri, Om Shree etc.
11. Different to the extend of adding the name of the place
12. Different combination of the same word ( Contractors & Builders)
13. Exact Hindi translation of the name of a company in English

Name clause: Publication of name

1.

2.

3.

4.

The name of the company and the address of its registered office
must be painted or displayed outside every office or place at which
its business is carried on, in a conspicuous position and in legible
letters in English and in the language in general use in that locality.
The name must also be engraved on the companys common seal.
Further, the name of the company and the address of the registered
office and the Corporate Identity Number along with telephone
number, fax number, if any, e-mail and website addresses, if any
must be mentioned in legible characters in all business letters, in all
its bill heads, letter papers and in all its notices and other official
publications, as well as in all negotiable instruments and other
prescribed documents
Fine upto Rs. 1000 for each day of default, No compliance of seal
Fine upto Rs. 5000.

Registered office Clause

The name of the State in which the registered office of the company is
to be situated must be given in the memorandum. But the exact address
of the registered office is not required to be stated therein. WHY?

Registered office is the permanent address of the company.

Address of registered office must be specified in companys letter

heads, bill books and in all notices and official publications.

Name board and address of registered office should be painted on the

outside of every office/ place of business.

Default- The company and every office who is in default fine which
may extend to Rs. 1000 every day not exceeding 1 lakh.

Registered office Clause

The name of the State in which the registered office of the company is
to be situated must be given in the memorandum. But the exact address
of the registered office is not required to be stated therein. WHY?

Registered office is the permanent address of the company.

Address of registered office must be specified in companys letter

heads, bill books and in all notices and official publications.

Name board and address of registered office should be painted on the

outside of every office/ place of business.

Default- The company and every office who is in default fine which
may extend to Rs. 1000 every day not exceeding 1 lakh.

Registered office Clauseimportance

Ascertains the domicile and nationality of a company.

Jurisdiction of court.

Registrar of companies and regional director is decided on the basis of

it.

Place where various registers relating to the company must be kept and
to which all communications and notice must be sent.

Annual General Meetings of company must be held in town/ city in

location of registered office.

Objects clause

The third compulsory clause in the memorandum sets out the objects
for which the company has been formed.

It determines the purpose and the capacity of the company and to

enable the persons dealing with the company to know its permitted
range of activities.

It states the ambit and extent of powers of the company and, stated that
nothing should be done beyond that ambit. The acts beyond this ambit
are ultra vires and hence void. Even the entire body of shareholders
cannot ratify such acts.

Objects clause
Object Clause is divided into 2 parts:
1.
Objects to be pursued on incorporation
2.
Matters necessary for furtherance therefore.

The object clause must mention specifically the States to whose areas
the objects extend.
Objects stated in MAIN OBJECTS to be pursued by the company
immediately within reasonable time.
The subscribers to the MOA enjoy almost unrestricted freedom to
choose the objects but the objects should not be illegal and against the
provisions of the Companies Act, 2013.
Although express powers are necessary, a company may do anything
which is incidental to and consequential upon the powers specified,
and the act will not be ultra vires. Thus, a trading company has an
implied power to borrow money, draw and accept bills of exchange in
the ordinary form, but a railway company cannot issue bills although it
may borrow money. (Steel and Transport)

Liability Clause
Section 4 1(d) of the Companies Act, states that the liability of members
of the company, whether limited or unlimited, and also state:
(i)in the case of a company limited by shares, that liability of its members
is limited to the amount unpaid, if any, on the shares held by them; and
(ii) in the case of a company limited by guarantee, the members are liable
to the amount undertaken by them to be contributed to the assets of the
company in the event of its being wound-up.
(iii) This clause omitted from MOA of Unlimited Companies.

But Unlimited Liability ?????????

capital Clause

The MOA of company limited by shares must state the authorised share
capital, the different kinds of shares and the nominal value of each shares.
The usual way to state the capital is: The capital of the company is Rs.
10,00,000 divided into 1,00,000 equity shares of ` 10 each.
A company is not authorised to issue capital beyond its
authorised/nominal/registered capital. Out of the issued capital, the total
amount actually subscribed or agreed to be subscribed is known as
subscribed capital. The amount actually paid by the shareholders is called
the paid-up capital.
According to Section 60 of the Act, if the amount of the authorised capital
(nominal capital), of the company is stated in any notice, advertisement,
official publication, business letter, bill head or letter paper, it shall also
contain a statement in an equally prominent position the amount of capital
which has been subscribed and the amount paid-up.
Money borrowed from debentures do not form part of capital.
Minimum paid up capital requirements should be met.

Association/ Subscription Clause

The subscribers to the memorandum declare: We, the several persons

whose names and addresses are subscribed below, are desirous of being
formed into a company in pursuance of this memorandum of association,
and we respectively agree to take the number of shares in the capital of the
company set opposite our respective names.

Then follow the names, addresses, description, occupations of the

subscribers, and the number of shares each subscriber has agreed to take
and their signatures attested by a witness.

Each subscriber must take at least one share

One witness to all the signatures is sufficient but a subscriber cannot attest
the signature of another subscriber.

Nomination/succession Clause

In case of OPC, there is requirement to describe the nominee in the event

of death of the subscriber.

Prior written consent of nominee required to be obtained in Form No. INC

3 which shall be filed with ROC at the time of incorporation of OPC along
with its memorandum and articles.

Alteration of memorandum
Alteration of the memorandum only to the extent necessary for efficient
working of company is permitted:
1.
2.
3.
4.
5.

Change of name
Change of Registered Office
Change of Object Clause
Change of Liability Clause
Change of Capital Clause

Change of name
1)

2)

By Special Resolution: The name can be altered by a special resolution

and with the approval of the Central Government in writing. However,
no such approval is necessary if the change relates to the
addition/deletion of the word Private to the name of the company
consequent to the conversion of a private company into a public
company and vice versa
By Ordinary Resolution: Name which in opinion of Central
Government is identical to existing company, by passing an ordinary
resolution with the previous approval of Central Government in writing.

Central Government can direct the company to change its name within 12
months of registration and failure to do so within 3 months- Fine upto Rs.
1000 for every day of default and Rs. 5000 for every defaulting officer
which may extend to Rs. 1 Lakh.
Defaulted companies prohibited to change the name.

Change of name

When any change in the name of a company is made under section 13(2),
the Registrar shall enter the new name in the register of companies in place
of the old name and issue a fresh certificate of incorporation with the new
name and the change in the name shall be complete and effective only on
the issue of such a certificate.

The Registrar shall also make the necessary alteration in the MOA.

Rights and Obligations of the company will not be affected on the change
of its name. But a company is not authorised to commence a legal
proceeding in its former name at a time when it had acquired its new
name.

Case: Malhati Tea Syndicate Ltd. To Mahalati Tea Industries Limited

Change of registered office

1. Change of registered office from one place to another place in the
same city, town or village:
By merely passing a Board resolution.
A notice of the change is required to be given to the Registrar in Form no
INC 22, within 15 days of such change.
2. Change of registered office from one town to another town in the same
State:
A special resolution has to be passed in the general meeting of the
company under the jurisdiction of same ROC. A notice of the change is
required to be given to the Registrar in Form no INC 22, within 15 days of
such change along with Form no MGT 14.
Confirmation by the regional director (30 days). Thereafter, the company
concerned shall file a copy of the said order with the (ROC) within a
period of 60 days from the date of the confirmation order. ( Jurisdiction of
different ROC). Transfer all documents to new ROC. Application Form
INC 23

Change of registered office

2. Change of registered office from one town to another town in the same
State:
The company shall, not less than one month before filing any application
with the Regional Director for the change of registered office.(a) publish a notice, at least once in a daily newspaper published in English
and in the principal language of that district in which the registered
office of the company is situated
(b) serve individual notice on each debenture holder, depositor and creditor
of the company, clearly indicating that any person whose interest is
likely to be affected by the proposed alteration may intimate his nature of
interest and grounds of opposition to the Regional Director with a copy
to the company within 21 days of the date of publication of that notice:

Change of registered office

3. Change of Registered Office from one state to another:
It involves alteration of memorandum, and the change can be effected by a
special resolution of the company (MGT 14) which must be confirmed by
the Central Government on an application made to it ( INC 123).
The Central Government shall dispose of the application within a period of
60 days ( INC 28) and before passing its order may satisfy itself that the
alteration has the consent of the creditors, debentureholders and other
persons concerned with the company.
The company shall at least fourteen days before the date of hearing
advertise in newspaper, individual notice to creditor & Debenture holder.
A certified copy of the order of the Central Government approving the
alteration shall be filed by the company with the Registrar of each of the
States who shall register the same, and the Registrar of the State where the
registered office is being shifted to, shall issue a fresh certificate of
incorporation indicating the alteration.

Change of object clause

It is subject to two limits: Substantive Limits and Procedural Limits
1)
Substantive Limits:
Carry on business more economically and efficiently
Case: Re Scientific Poultry Breeders Association Limited
Attain main purpose by new or improved means
Enlarge or change the local area of its operations
Carry on some business which under existing circumstances may be
conveniently or advantageously combined with the business of the
company. (generating power & cold storage)
Case: Re Cyclists Touring Club
To restrain any of the objects specified in memorandum
Sell or dispose of whole or any part of undertaking of company
To amalgamate with any other company

Change of object clause

Procedural Limits:
a)
by passing a special resolution for purposes discussed above.
b)
when the company has raised money from public through prospectus and
has any unutilised amount out of the money so raised, it shall not change
the objects for which the money so raised is to be applied unless a
special resolution is passed.
c)
The advertisement giving details of each resolution to be passed for
change in objects which shall be published simultaneously with the
dispatch of postal ballot notices to shareholders.
d)
The notice shall also be placed on the website of the company, if any.
e)
The special resolution shall be filed with the Registrar within 30 days of
the passing together with a printed copy of the memorandum as altered ,
the Registrar shall register any alteration of the memorandum within a
period of thirty days from the date of filing of such documents.

Change of liability clause

The liability clause can be altered so as to make the liability of the

directors unlimited.

However, the liability of the shareholder cannot be made unlimited.

The liability clause can be altered by passing a special resolution. A copy

of the resolution must be filed with the Registrar within 30 days.

Unlimited companies can be converted to limited companies by special

resolution and getting fresh registration from ROC.

Change of capital clause

A limited company having a share capital may make the following types of
alterations in its memorandum by an ordinary resolution, if so authorised by
its articles, at its general meeting to (Section 61)
increase its share capital

consolidate and divide capital into shares of a larger amount

convert its fully paid-up shares into stock, and reconvert that stock into
fully paid-up shares of any denomination;

sub-divide its shares, or any of them, into shares of smaller amount than is
fixed by the memorandum, so, however, that the proportion between the
amount paid and unpaid shall remain the same.

To cancel its shares.

Change of capital clause

All the above alterations do not require the confirmation by the Tribunal
except that alteration results in changes in the voting percentage of
shareholders. Special resolution in that case.

These alterations are, however, required to be notified and a copy of the

resolution should be filed with the Registrar within 30 days of the passing
of the resolution along with an altered memorandum. [Section 64(1)]

The Registrar shall record the notice and make any alteration which may
be necessary in the companys memorandum or articles or both.

It must be noted that cancellation of shares in pursuance of section 61(1)

does not amount to reduction of share capital.

Doctrine of ultra vires

Ultra means beyond, Vires means powers.

An act which when is performed which though legal in itself, is not
authorised by the object clause in the memorandum of association will said
to be ultra vires.
As a result, an act which is ultra vires is void, and does not bind the
company.
The company cannot make it valid, even if every member assents to it.
The rule is meant to protect shareholders and the creditors of the company
so they are assured of their investment.

Case: Ashbury Railway Carriage and Iron Co. Ltd. V. Riche

Company is established are to make and sell, or lend or hire, railway
carriages and wagons, to carry on the business of mechanical engineers and
general contractors.- Construction of Railway Lines I Belgium.
Case: Re Jon. Beauforte London Ltd.- Veneer Panels

Doctrine of ultra vires

1.

2.

3.

4.

5.

6.

When an Act is performed which, though legal in itself, is not authorised

by the object clause of the memorandum- ultra vires
Transactions which are ultra vires do not bind the company and a third
party cannot sue the company to enforce the transaction.
Ultra vires transactions cannot be ratified subsequently even if all the
shareholders approves the transactions.
If a person lend money to the company for purposes which are ultra
vires, he cannot recover the money from the company but he may
recover the goods, if any, purchased out of his money, provided they can
be properly identified.
If an act is ultra vires the directors, but intra vires the company, it can be
ratified by all the members of the company.
If the act is ultra vires the articles, it can be ratified by altering the
articles by passing a special resolution in AGM.

Effects of ultra vires acts

1. Void ab Intio:
Ultra vires contracts are void ab initio and hence cannot become intra vires
by ratification.
The company is not bound by these acts; Even the company cannot sue or
be sued upon it.
A complaint alleging has to filed within 6 months of the date of
knowledge.
2. Injunction:
The members can get an injunction to restrain a company wherein ultra
vires act has been or is about to be undertaken.
Case: London Country Council V. Attorney General.- Run Tramways.
Later ran ominibuse to feed tramways.

Effects of ultra vires acts

3. Breach of warranty of authority:
Directors of the company are agents and as such it is their duty to act
within the limits of companys powers.
Action may lie against them for breach of duty which ultra vires the
company.
4. Personal Liability of Directors:
It is one of the duties of directors to ensure that the corporate capital is
used only for the legitimate business of the company and hence if such
capital is diverted to purposes alien to the companys memorandum, the
directors will be personally liable to replace it
The directors who refunded the money could get indemnity as against the
person who received the payment with the knowledge that it was ultra
vires.

Effects of ultra vires acts

5. Ultra Vires Contracts:
Persons dealing with company are deemed to have knowledge of the
memorandum. Accordingly if they make a contract which is to their
knowledge ultra vires the company, they cannot enforce it.
Case: Re port canning and land investment company. Rice Mills. Drafts
promising to pay for losses.
6. Ultra Vires Acquired property:
Where a companys money has been used ultra vires to acquire some
property, the companys right over such property is held secure and the
company will be the right party to protect the property.
This is because, though the property has been acquired for some ultra vires
object, it represents the money of the company.

Effects of ultra vires acts

7. Ultra Vires Borrowing:
Ultra vires borrowing does not create the relationship of creditor and
debtor.
When the person lend money to a company and company has no
borrowing powers or has already exceeded them or borrowing is for the
purpose which is ultra vires, then that contract of loan is void and no
action can be brought to recover money with the following exception
Trace his money into an asset or into the funds of the company.
If the borrowed money is applied in paying off lawful debts of the
company, the lender can claim a right of subrogation and consequently, he
will stand in the shoes of thecreditor who has paid off with his
8. Ultra Vires Torts/ Crimes:
A tort or crime committed in the course of activity which is ultra vires , the
company would not be liable in respect of it.

Exception to the doctrine of ultra

vires
1)

2)

3)

4)

5)

6)

An act which is intra vires the company but outside the authority of the
directors may be ratified by the shareholders in proper form.
An act which is intra vires the company but done in an irregular manner,
may be validated by the consent of the shareholders.
If the company has acquired any property through an investment, which
is ultra vires, the companys right over such a property shall be secured.
While applying doctrine of ultra vires, the effects which are incidental or
consequential to the act shall not be invalid unless they are expressly
prohibited by the Companys Act..
There are certain acts under the company law, which though not
expressly stated in the memorandum, are deemed impliedly within the
authority of the company and therefore they are not deemed ultra vires.
For example, a business company can raise its capital by borrowing.
If an act of the company is ultra vires the articles of association, the
company can alter its articles in order to validate the act.