MEMORANDUM OF ASSOCIATION SUBMITED TO : Dr. RENUKA MEHRA SUBMITED BY:ARJUN FUTELA ROLL NO.340/13

INTRODUCTION Memorandum of association is one of the documents which has to be filed with the Registrar of companies at the time of incorporation of a company. The memorandum of association of a company contains the fundamental conditions upon which alone the company has been incorporated.

DEFINITIONS Sec.2(56) of companies Act, 2013: 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.” Cairns: Memorandum of Association of a company is its charter & defines the limitations of the powers of a Company. {Ashbury Railway Carriage Co. Vs. Riche] Hence, MOA contains the objects for which the company is formed & therefore identifies the possible scope of its operations beyond which its action cannot go. It defines as well as confines the powers of the company. If anything is done beyond these powers, that will be ultra vires (beyond powers of) the company & so void.

IMPORTANCE The memorandum of association is an extremely important document in relations to the affairs of the company & is really the foundation on which the structure of the company is based. It contains the fundamental conditions upon which alone the company is allowed to be incorporated. Its five clauses provide the basic features of the company’s constitution. A company may pursue only such objects & exercise only such powers as are conferred expressly in the memorandum or by implication therefrom i.e., such powers as are incidental to the attainment of the objects.

PURPOSE OF MEMORANDUM The memorandum of association is a public document available for inspection. It serves two purposes: The intending shareholder who contemplates the investment of his capital shall know within what field it is to be put at risk. Thus he can find out from the memorandum the purpose for which his money is going to be used by the company & what risk he is taking in making the investment. Anyone who deals with the company shall know without reasonable doubt whether the contractual relation into which he contemplates entering with the companies one relating to a matter within its corporate objects. Thus a supplier of goods or money will know whether the transaction he intends to make with the companies within the objects of the company & not Ultra vires its objects.

CONTENTS OF MEMORANDUM According to Section 4 the memorandum of association of every company must contain the following clauses: The name of the company with ‘Limited’ as the last word of the name in the case of a public limited company & with ‘Private Limited’ as the last word in the case of a private limited company. One person company shall also describe as “One Person Company” in brackets. The name of the state in which the registered office of the company is to be situated. The objects of the company to be classified as- Objects for which the company is proposed to be incorporated; & Any matter considered necessary in furtherance thereof. In the case of companies ( other than trading corporations) with objects not confined to one State, the States to whose territories the objects extended. The liability of members is limited if the company is limited by shares or by guarantee. In the case of a company having a share capital, the amount of share capital with which the company proposes to be registered & its division into shares of a fixed amount.

DECLARATION BY THE APPLICANT As per Companies (Incorporation) Rules, 2014, while applying for a name in the prescribed e-form-1A, using Digital Signature Certificate (DSC), the applicant shall be required to furnish a declaration to the effect that: He has used the search facilities available on the portal of the Ministry of Corporate Affairs (MCA) i.e., www.mca.gov.in/MCA21 for checking the resemblance of the proposed name(s) with the companies & Limited Liability Partnership (LLPs) already registered or the names already approved. The proposed name(s) is/are not infringing the registered trademark which is subject of an application for registration, of any other person under the Trade Marks Act,1999; The proposed name(s) is/are not in violation of the provisions of Emblems & Names(prevention of improper use) Act, 1950 as amended from time to time; The proposed name is not offensive to any section of people, e.g., proposed name does not contain profanity or words or phrases that are generally considered a slur against an ethnic group, religion gender or heredity; He has gone through all the prescribed guidelines, given in these Rules, understood the meaning thereof & the proposed names is/are in conformity thereof; He undertakes to be fully responsible for the consequences, in case the name is subsequently found to be in contravention of the prescribed guidelines.

ALTERATION OF MEMORANDUM The clauses in the memorandum as regards name, situation, objects, capital, liability of members & the undertaking of subscribers to take at least one share each are conditions. Since ‘Memorandum of Association’ is the constitution of the company, there are more restrictions on change of any of the clause in the memorandum. Alteration of the memorandum only to the extent necessary for efficient & fair working of the company would be permitted. The procedure for the alteration of compulsory clauses or conditions of the memorandum is discussed below. Change Of Name [Sec.13(2)] By Special Resolution. By Ordinary Resolution. Change of registered office. (Change within the city.) (Change within the state.) (Change of registered office from one state or union territory to another state)

LIMITS OF POWER OF ALTERATION OF OBJECTS CLAUSE Substantive Limits Procedural Limits

SUBSTANTIVE LIMITS To carry on its business more economically or more efficiently To attain its main purpose by new or improved means. To enlarge or change the local area of its operations. To carry on some business which under some existing circumstances may be conveniently or advantageously combined with the business of the company. To restrict or abandon any of the objects specified in the memorandum. To sell or dispose of the whole or any part of the undertaking of the company. To amalgamate with any other company or body of persons.

PROCEDURAL LIMITS Special resolution. Change of liability clause. Change of Capital clause u/s 61(1).

DOCTRINE OF ULTRA VIRES The companies act requires that the memorandum of every company must state the object of the company. The objects clause must ‘delimit & identify the objects in such plain & unambiguous manner as that the reader can identify the field of industry within which corporate activities are to be confined.’ A company has power to carry out the objects set out in the memorandum & also everything which is reasonably necessary to enable it to carry out those objects. The objects clause requires that the company should devote itself only to the objects set out in the memorandum & to no others. The memorandum is thus the area beyond which a company cannot travel. Any activities not expressly or impliedly authorised by the memorandum are ultra vires the company.

EFFECTS/CONSEQUENCES OF ULTRA VIRES ACTS Void ab initio. Injunction. Breach of warranty of authority. Personal liability of directors. Ultra vires contracts. Ultra vires acquired property. Ultra vires borrowing. Ultra vires torts