The Memorandum of Association of a company is its charter which contains the fundamental conditions upon which alone the company can be incorporated.
Memorandum And Articles Of Association
The Memorandum of Association of
a company is its charter which contains the fundamental conditions upon which
alone the company can be incorporated. It tells us the objects of the company’s
formation and the utmost possible scope of its operations beyond which its
actions cannot go. If anything is done beyond the powers, that will be ultra
vires (beyond powers of) of the company and so void. It enables shareholders,
creditors and all those who deal with the company to know what its powers are
and what is the range of its activities.
Form and Contents:
Shall be in such one of the Forms
in Tables B,C,D and E in Schedule I to the Companies Act, 1956 as may be
applicable in the case of the company, or in Forms as near thereto as
circumstances admit. Section 13 requires the Memorandum of a limited company to
contain: (i) the name of the company, with “limited” and “private limited” the
name of the State, the objects of the company, the declaration that the
liability of the members is limited; and the amount of the authorized share
capital, divided into shares of fixed amounts.
The Name Clause (Sec. 13(1(a)]:
The last word in the name of the
company, if limited by shares or guarantee is ‘limited’, unless the company is
registered under Sec.25 as an ‘association not for profit’ (Sec. 13(1)(a) and
25)].
The Registered Office Clause (Sec. 13(1)(b)]:
This clause states the name of
the State in which the registered office of the company will be situated. Every
company must have registered office which establishes its domicile, and it is
also the address at which company’s statutory books must normally be kept and
to which notices, and all other communication can be sent.
The Objects Clause (Sec.
13(1)(d)]:
The objects clause defines the
objects of the company and indicates the sphere of its activities. A company
cannot do anything beyond or outside its objects and any act done beyond them
will be ultra vires and void, and cannot be ratified even by the assent of the
whole body of shareholders.
Section
13, read along with Tables “B’, ‘C’, ‘D’ and E’, requires the company to divide
its objects clause into two parts:
1. Main objects of the company to be pursued by the
company on its incorporation and object incidental or ancillary to the
attainment of the main objects; and
2. Other objects of the company not included in (a)
above.
Liability Clause [Sec.
13(2)]:
This clause states the nature of
liability of the members. In case of a company with limited liability, it must
state that liability of members is limited, whether it is made by shares or by
guarantee. In case of companies limited by guarantee, this clause will state
the amount which every member undertakes to contribute to the assets of the
company in the event of its winding-up. In fact, the absence of this clause in
the Memorandum means that the liability of its members is unlimited. The Capital Clause [Sec.
13(4)(c)]:
This clause states the amount of
share capital with which the company is registered and the mode of its division
into shares of fixed value, i.e., the number of shares into which the capital
is divided and the amount of each share.The Association Clause [Sec.
13(4)(c)]:
The names, addresses,
descriptions, occupations of the subscribers, and the number of shares each
subscriber has taken and his signature attested by a witness.
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