MEMORANDUM OF

ASSOCIATION
&
ARTICLES OF
ASSOCIATION

Presented by:Dinesh Nathani

7206
Aishwarya Pathkar 7216
Heman Sachde
7226
Sneha Shah 7236
Shruti Wagh 7256
Yash Karia 7266

MEMORANDUM OF ASSOCIATION

Memorandum means memorandum of association

of a company originally formed or as altered from
time to time of any previous companies law or of
this Act.
It serves two purposes
1. Helps the shareholder to know all about the
company.
2. Tells the stakeholder whether the objective that
each of them aims to accomplish with help of
company are within the realm of companys
objectives.

CONTENTS
NAME CLAUSE
The name and emblem of UNO, WHO, Indian National
Flag, the official seal and emblem of Central and State
Government or the name and pictorial representation
of political leaders have been prohibited.
In case of,
Public company with limited liability limited
Private company with limited liability private
limited
One person limited company OPC limited

KEY WORDS

Required
authorized
capital
(rupees)

Corporation

5 crores

International, Globe, Universal, Continental, Intercontinental, ASIA , ASIATIC

1 crores

If any of the words mentioned in (2) is used within

the name (with or without brackets)

50 lakhs

Hindustan, India, Bharat being the first word of the

name.

50 lakhs

If any of the words mentioned in (4) is used within

the name (with or without brackets)

5 lakhs

Industries

1 crore

Enterprises, products, business, manufacturing

10 lakhs

REGISTER OFFICE CLAUSE:

From the date on which it commences its
business or within thirty days of incorporation,
whichever is earlier, have a registered office.
The registrar shall be intimated within 30 days
of incorporation.
OBJECT CLAUSE :
1. Main objects of the company to be pursued
by the company on its incorporation.
2.Objects incidental to the attainment of the
main objects.
3. Other objects of the company not included in
(1) and (2)

LIABILITY CLAUSE :
In case of a company with limited liability , it
must state that the liability of the members is
limited whether it is by shares or by guarantee.

CAPITAL CLAUSE:
With the companies amendment act,2000, the
minimum paid up capital of a public company must be
rupees five lakhs or more and for a private company
rupees one lakh or more.
ASSOCIATION CLAUSE:

It is declaration made by the subscribers who

have signed the memorandum of their intention to
form a company.

ALTERATION OF MEMORANDUM OF
ASSOCIATION

Alteration of Name Clause:

--- where the name is an undesirable one in the opinion
of the central government, the name could be changed
by passing an ordinary resolution at the shareholders
meeting and with the approval of central government.
The central government can also direct the company to
change its name within 12mnths of registration.
--- Where the company on its own wants to change its
name, the same can be done by passing a special
resolution at the shareholders meeting and with the
approval of the central government. But no approval is
needed if the change only relates to the change only
relates to the dropping of word private

ALTERATION OF REGISTERED OFFICE

CHANGE WITHIN SAME CITY:

where the change is from one
place to another within the same city,
town or village , it can be made by
passing a resolution by Board of
directors. However, notice Of change
should be filed with the registrar within
30 days of change.

CHANGE FROM ONE STATE TO

ANOTHER
This requires change in the memorandum of association.
As the change is going to affect the interest of the
share holder , debenture holder and creditors the act
has imposed substantive and procedural limits on the
power of alteration as discussed below :
Substantive limits:
to carry on its bussiness more economically.
To enlarge or change local areas of companies operation.
To restrict or abandon any of the objects specified in the
memorandum.

Procedural limits

a special resolution of share holders , authorising the

alteration of the object clause must be passed.
Thereafter a petition must be made to the central govt.
For confirmation of alteration.
Alteration of object clause :
the procedure is same as the alteration of registered
office from one state to another.
Alteration of liability clause :
the liability of a member can not be increased without
the agreement in writing.

ARTICLES OF ASSOCIATION

SEC 2 (2) - DEFINES " AS ARTICALES OF ASSOCATION OF COMPONY AS

ORIGNALLY FRAMED OR AS ALTERED FROM TIME TO TIME IN PUR SUANCE
OF ANY PREVIOUS COMPONIES LAWS OR PRESENT ACT OF 1956 "
IN CASE OF PUBLIC COMPANY LIMITED BY SHARES ARTICALES OF ASSOCATION
MAY BE SUBMITTED WITH 4 MEMORANDUM OF ASSOCATION IN THE OTHER CASE S
OF PUBLIC LIMITED COMPANY , COMPONY LIMITED BY GURANTEE AND PRIVATE
COMPONY LIMITED BY SHARES ARTICALE MUST BE SUBMTTED WITH
MEMORANDUM OF ASSOCIATION
FORM AND SIGNATURE OF ARTICALE -TABLE 2 IN SCHEDULE 1 OF THE
COMPONIES ACT CONTAINS THE REGULATION FOR THE MANAGMENT OF A
COMPANY .A COMPANY MAY EITHER ACCEPT TABLE A OR CAN MAKE
CHANGE S IN CONTENTS OF TABLE A FOR ITS ARTICALES
THE ARTICALE S SHALL BE PRINTED, BE DIVIDED INTO
PARAGRAPH S AND MUST BE SINGNED BY ALL THE SUBSCRIBERS
CONTENTS OF TABLE A-THE ARTICALE OF THE COMPONY USUALLY DEAL
WITH THE FOLLOWING MATTERS
1 THE BUSNIESS OF THE COMPANY
2 THE AMOUNT OF CAPITAL ISSUED AND THE CLASS OF SHARES .
3 THE RIGHTS OF EACH CLASS OF SHAREHOLDER AND THE PROCEDURE
FOR VARIATION OF THE RIGHTS ;

4 THE EXECUTION OR ADOPATION OF A PRELIMINARY

AGREEMR=ENT IF ANY ;
5 THE ALLOTMENT OF SHARES;
6 TRANSFER AND TRANSMISSION OF SHARES
7 COMPONIES LIEN ON SHARES ;
8 EXERCISE OF BORROWING POWERS INCLUDING ISSUE OF
DEBENTURES
9 GENERAL MEETING, NOTICES , QUORUM , PROXY ,POLL , VOTING ,
RESOULATION , MINUTES
10 NUMBER, APPOINTMENT AND POWER OF DIRECTORS ;
11 DIVIDEND - INTERIM AND FINAL - AND GENERAL RESERVES
12 ACCOUNTS AND AUDIT
13 KEEPING OF BOOKS - BOTH STATUTORY AND OTHERS
14 REGULATION AS TO SEAL
15 REGULATION AS TO WINDING UP

ALTERATION OF ARTICLES OF ASSOCIATION

A company can at any time alter its article of association

subject the provisions of the companies act and also subject to
the following conditions:
Only a special resolution of the share holder of the company
can make alteration of the articles
No alteration of the articles will be allowed which will violate
the provisions of the companies act
Alterations must not contain anything illegal.
An alteration must not contain a fraud on the minority.
Alteration must be made bonafide in the interest of the
company as a whole.
Lastly articles of association may be altered with retrospective
effect.

DISTINCTION BETWEEN MEMORANDUM AND

ARTICLES OF ASSOCIATION:

MEMORANDUM OF
ASSOCIATION
It is a character of a
company determining
constitution and activities
of the company.
it is a fundamental
character.
every company must
have a memorandum.

ARTICLES OF
ASSOCIATION
It contains rules and
regulations regariding
internal management of
the company.
It is a subsidiary to
memorandum.
Public co.ltd.by shares
may or may not have
articles.

EFFECTS OF MEMORANDUM AND ARTICLES(SEC 36)

Members and company:

The memorandum and articles shall when registered bind the
company and the members thereof to the same extent a if
they had been respectively signed by the company and by
each member . members cannot violate the articles and the
company can enforce the article by suit against the members .
thus the articles bind the members to the company and the
company to its members.
Members inter se:
articles also bind the members between themselves. no
member can act in his individual capacity. Members as
between themselves are bound by the articles of the company
and have to comply with the rules and regulations framed for
the internal management of the company.

Company and outsiders:

All outsiders dealing with the company are
assumed to have read the articles of the company
and are bound by the same. the articles being a
public document is open for inspection . outsiders
shall be deemed to have constructive notice of the
contents of the memorandum and articles of the
company.

CONSTRUCTIVE NOTICE OF MEMORANDUM AND

ARTICLES OF ASSOCIATION:

Memorandum and articles of association of a

company are public documents . These documents
are pre requisite for registration of a company . they
are lodged with the registrar of the company . At the
office of the registrar these documents are open for
inspection . It is therefore the duty of every person
to inspect the document before dealing with the
company . He will be presumed to know the contents
of the document . Thus memorandum and articles of
a company are presumed to be noticed to the
public . Such a notice is called constructive notice.

DOCTRIE OF CONSTRUCTIVE NOTICE

The memorandum and articles of association of a company are public

documents. Any person who is dealing with a company, is presumed
to have read and understood the proper meaning of the documents.
In other words, no party can take the plea that he was ignorant of
what have been stated in the memorandum and articles of
association.
The doctrine of constructive notice comes to the aid of a company
vis- a- vis the outsiders.
However the doctrine has been described as an unreal doctrine, as it
fails to take notice of business realities. Hence, the doctrine has been
described as an unreal doctrine, as it fails to take note of business
realities. Hence, the rule has in reality been diluted. The courts have
held if a person deals deals with the company in good faith and the
person with whom he is dealing has ostensible authority to deal on
behalf of the company, the company will be held liable.

DOCTRINE OF INDOOR MANAGEMENT OR TURQUAND

RULE

As one is aware that the doctrine of constructive notice

protects the company in its dealings with outsiders, the
doctrine of indoor management comes to the aid of the
outsiders, while dealing with the company.
The doctrine of indoor management implies, anyone
dealing with the company has every right to presume
that, things are happening the way it ought to happen.
And any irregularity will not affect the right of outsiders.
The co. Will not allowed to escape liability.
In other words the doctrine of indoor management is an
exception to the doctrine of constructive notice.

THANK YOU