Memorandum of Association & Articles of Association

1. Memorandum of Association &
Articles of Association
Created by-
Priyansh Kesarwani
MBA-STEP HBTI

2. Memorandum of Association
The first step is the formation of a
company is to prepare memorandum of
association. This is also known as
constitution of the company.

3. What is Memorandum of Association
of a company?
• Is the constitution or charter of the company
and contains the powers of the company. No
company can be registered under the Companies
without
Under Section 2(56) of
the memorandum of
the
Act, 2013
association.
Companies Act, 2013 the “memorandum”
means the memorandum of association of a
company as originally framed or as altered from
time to time in pursuance of any previous
company law or of this Act;

4. Name Registered
office
Liability Capital
Association
or subscription
Objects
CONTENTS OF MEMORANDUM OF
ASSOCIATION
Six Clauses

5. 1. Name Clause
• The memorandum must state the name of the
company with ‘limited ‘ as the word ,in case of a
public limited company and with ‘private
limited', in the case of a private limited company
• the company is free to choose any name but it
must not be undesirable or must not resemble
the name of any other registered company.
• i.e. President, Prime Minister, Govt. etc

6. 2.Registered office clause [section
13(1)(b)]
• The state in which the registered office of
a company will be situated is mentioned
in this clause
• The registered office of the company is
the official address of the company
where the statutory books and records
must normally be kept

7. 3. Object Clause section 13(1)(c)&(b)]
This clause is quite important and must be very carefully
drafted as it determines the activities of the company. In
the object clause each and every detail of activities of the
business to be carried out must be laid down.
Main object:- this sub-clause contains the main objects
of the company to the pursued on its incorporation
objects which are incidental or ancillary to
Objects incidental or ancillary :- it covers the
the
attainment of the main object
Other objects :- this sub-clause will cover any objects
which are not included in the ‘main objects ‘

8. 4. Liability Clause[section 13(2)]
 This clause states the nature of liability of the members of
the company
In the case of a company limited by share or by guarantee the
fact that the liability of its members is limited must be made
absolutely clear . In case of a company limited by shares the
liability of a member is limited to the nominal value of the
share held by him
If the share are fully paid up his liability is nil. But in
case of partly paid-up shares the liability is limited to
the amount which is unpaid.
In case of a company limited by guarantee, the liability clause
must state the amount which every member undertakes to
contribute to the assets of the company in the event of its
winding up

9. 5. Capital Clause[section 13(4)(a)]
• This clause states that amount of the capital with
which the company is to be registered
• This clause should also state the number and
face value of shares into which the capital of the
company is divided
• The capital with which the company is
‘registered’ or ‘nominal’ or ‘authorized’

10. 6. Association clause [section
13(4)(c)]
• The association clause states – in this
cause , the subscribes declare that they
desire to be formed into a company and
agree to take the shares stated against
their names.
• The names, address and occupation of the
subscribers must be given each subscriber
must sign in the presence of at least

11. Case: Company for Restaurant
• Husband and wife, KAMAL and ASHA
RASTOGI, based in DELHI, are forming a
company. They want a short name for the
company with their surname in it. The company
is being formed to run a SHOPPING MALL.
They project they would need 2 Crore as the
capital of the company. Immediately, the
husband would contribute Rs. 2,00,00,000 to
the share capital of the company and wife Rs.
10. Mr. RASTOGI hopes to find others, after the
company is formed, to take the shares of the
company. They also contemplate occasionally
hiring out the car they would buy for the
company. Develop a Memorandum of
Association for the Company.

12. Memorandum of Association of
the RASTOGI private limited
I . The name of the company is RASTOGI Private
Limited
II.The registered office of the company will be
situated in the state of Delhi.
III.The objective for which the company is begin
established are as follows:
a.Main object: running of shopping mall
b.Ancillary object: opening bank accounts, hiring
premises an running of mall
c.Other objects: Hiring out of vechicles for
advertisement

13. IV. The liability of the members is limited
v. The authorized share capital of the company is
RS.2,00,00,000,divided into 20,00,000
S.NO Name & No . Of equity Signature Name
Addresses shares taken of /
description & by each subscribe addres
occupation of subscriber r s
subscribers descri
ption
and
occupa
tion of
witnes
s

14. DOCTRINE OF ‘ULTRA VIRES’
The words :
• Ultra means beyond
• Vires means the powers
• Ultra Vires means beyond the powers
A company which owes its incorporation to statutory
authority cannot effectively do anything beyond the
powers expressly or impliedly conferred upon it by the
statute or Memorandum ofAssociation.

15. Articles Of Association
• A document that specifies the regulations
for a company's operations. The articles of
association define the company's purpose
and lays out how tasks are to be
accomplished organization, including
the within the process for appointing
directors and how financialrecords will
be handled.

16. Items covered by the Articles
ofAssociation include :-
• Adoption of preliminary contracts.
• Number and value of shares
• Allotment of shares
• Calls on shares
• Transfer of shares
• Forfeiture, reissue, surrender of shares
• Alteration of share capital
• Share certificates
• Conversion of shares into stocks
• Meetings and proceedings
• Voting rights, proxies and polls
• Appointment , Remuneration, etc of Directors
• Borrowing powers
• Dividend and Reserves
• Accounts and audit
• Procedure of winding up
• Seal of the company

17. • Unlimited Companies:
▫ The Articles of such a company must
state:
 Total number of members; and
 Share capital.
• Companies limited by Guarantee:
▫ Articles of such company must state
total number of members.
Companies which must have Articles

18. Companies which must have Articles
…contd.
• Private Companies limited by
shares:
▫ must include requirements
of Section 3(1)(iii).
No Article Company
• A public limited company having
share capital may be registered
without Articles.

19. Doctrine Of Ultra Vires
• Ultra vires to the articles of association
• Ultra vires the memorandum of Association

20. Alteration of Articles
• Articles may be altered by a company by
passing special resolution at a general body
meeting of shareholders

21. Doctrine of Constructive Notice
 According to Section 610, every person dealing with the
company is deemed to have read M/A and A/A and
understood the contents thereof in the correct perspective.
Doctrine of Indoor
Management
 Rule of Indoor Management is an exception to the Doctrine
of Constructive notice.

22. Memorandum of Association Articles of Association
Charter of Company Regulations for internal management
Defines the scope of the activities Rules for carrying out the objects of
company.
Supreme document Subordinate to the memorandum.
Must for every company Company limited by shares need not
have it (Table ‘A’ applies)
Strict restrictions, alteration only with
sanction of central govt./ tribunal.
Can be altered by special resolution.
It define the relationship between the
company & the outsiders
It define the relationship between
company & its staff and between
members & members interests