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 company’s 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)

1 Corporation 5 crores

2 International, Globe, Universal, Continental, Inter-continental, ASIA , ASIATIC

1 crores

3 If any of the words mentioned in (2) is used within the name (with or without brackets)

50 lakhs

4 Hindustan, India, Bharat being the first word of the name.

50 lakhs

5 If any of the words mentioned in (4) is used within the name (with or without brackets)

5 lakhs

6 Industries 1 crore

7 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 ANOTHERThis 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, NOTICE’S , 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