Memorandum of Association in Indian Companies Act, 2013

INTRODUCTION:-
Memorandum of Association is the charter or the constitution of the company. The memorandum of association of company is in fact its charter. It defines the objects and powers of the company. It is the fundamental document of the company. It defines the scope and powers of the company with which it has been established under this act. It defines the relationship of the company from the outside world. If the company do any act beyond the scope of the document so the doctrine of ultra vires (beyond the power) applied. The preparation and filing of memorandum of association is compulsory for all the companies. It contains all the powers and objectives of a company. It also describes the scope of operations of the company. The memorandum of association is a principal document of a company. A memorandum is a public document under section 399 of ‘The Companies Act, 2013’.

DEFINITION OF MOA:-
Under Section – 2(56) in ‘The Companies Act’ 2013 MOA defines:-
Memorandum of association is either originally framed or altered from time to time, in pursuance of this act or any other previous company law.


This section also describe the alterations which is made in pursuance of any previous company law or the present act.

PURPOSE OF MOA:-
1.) Shareholders must know the purpose of which investment going to be used.
2.) It able the shareholder, creditor and other person to determine the power and range of the activities.
3.) Person dealing with company with if they know that contract in which he is entering his within its scope.
4.) Section 4(6) of ‘The Companies Act’ deals with forms of MOA:-
Company limited : Limited By share capital Limited by guarantee not have share capital Limited by guarantee have share capital Unlimited company without share capital Unlimited company having share capital
Table Forms A B C D E

CONTENTS OF MEMORANDUM OF ASSOCIATION:-
Section 4 of ‘The Companies Act’ 2013 defines the contents of MOA. It gives all the information which memorandum should contain.
1.) NAME CLAUSE- This clause contains the complete name of the company. The company can choose any name. but,
There are some restrictions and conditions follows:-
a.) The name of the company must end with the word ‘limited’ in case of public limited company and with the word ‘private limited’ in case of private limited company.
b.) The name should not contain the word ‘co-operative’.
c.) The name should not convey any connection or link of the company with a government department.
d.) The name should not be anything opposed to public policy.
e.) The name should not be similar or identical to the name of the other company.
Suppose:- P and Q is a one company and the other company give name ‘Pee’ and ‘Que’ to ROC . So, ROC say that this name company is already registered and the accent or sound of both the company name are similar.
f.) They can’t use certain key words like Corporation, International, Global, Universal, Industries, Udhyog, Indian, Bharat.

2.) SITUATION/DOMICILE/REGISTERED CLAUSE – Section 4 (1) (b) This clause contains the name of the state in which the registered office of the company is to be situated. It is necessary because a company gets the registration from the states only. The registered office is a place where all the important documents of the company are kept. A company must have a registered office when it start business activities or within the 15 days of its registration, whichever is earlier.

3.) OBJECT CLAUSE – Section 4 (1) (c) It is the most important clause of MOA. It contains the main objectives of the company and other secondary objective which the company may pursue. This clause defines the scope and limitation of the activities of the company. The object of the company must be defined and stated keep in mind the following conditions:-
a.) The object of the company must be legal.
b.) The object of the company should not be contrary to any provisions of law.
c.) The object must not be immoral.
In Case Bank v. re, in this case the bank is dealing with the bank transactions which is written in MOA, but they also dealt with negotiable instrument, which is not written in MOA. So the court held that, the bank deal with negotiable instrument which is not the object of the company, they doing this work beyond the power so doctrine of ultra vires is applied. The company was not entitled to do so.

4.) LIABILITY CLAUSE- Section 4 (1) (d) This clause defines the liability of the members of the company. In case of companies limited by shares, the liability of the members is limited to the extent of unpaid amount of their share capital. FOR EXAMPLE- if a person is having 1000 shares of the face value of rupees 10 each and he has paid rupees 7 per share than at the time of winding up his liability will be rupees 3000 (unpaid amount * no. of shares).
a.) In case of a company limited by guarantee the liability is limited to the amount of guarantee by each member.
b.) In case of unlimited company, the liability of the members is unlimited.(personal assets also affected)

5.) CAPITAL CLAUSE- Section 4 (1) (e) This clause specifies the amount of share capital with which company is to be registered. The capital with which company is registered is called registered / authorized or nominal capital. A company can issue only that number of shares which are authorized by its memorandum.

6.) ASSOCIATION / SUBSCRIPTION CLAUSE- Section 4 (1) (f) This clause contains the declaration by the director stating that, “We, the several persons whose names and addresses are submitted, are desirous of being formed into a company in accordance with memorandum of association and we undertake to take the qualification shares”. This declaration was signed by the directors of the company. Minor can’t become subscriber to MOA.
a.) In case of company with share capital, the subscription clause states about number of in shares held by the subscribers, and subscribers are bound to call or pay whenever raised by the company.
b.) In case of company with guarantee, subscriber are bound to pay the amount which is guaranteed in MOA, only at time of winding up , in that too if the assets are less than liability.

If a company have in share form, so the shares are write in front of the subscriber’s name.

A 5000 SHARES {SHARES}
B 4000 SHARES

If a company have in limited guarantee form, so the amount or rupees write in front of the subscriber’s name.

A 5 LACS {GUARANTEE}
B 4 LACS

CONCLUSION:-
“The memorandum of association is a document which contains a fundamental provision, essential conditions upon which the company is incorporated. It is a company chartered which defined the company constitution, existence, operation and determine powers of the company. Memorandum of association cannot include any clause contrary to the provisions of the companies act. Alteration of moa is a difficult and lengthy process. The approval of the government is necessary and special or ordinary resolution must be passed from law tribunal.”

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