Memorandum of Association Palmer -> It is the most important document Contains the Fundamental Clauses

Name Clause Registered Office Clause Objects Clause Liability Clause Capital Clause

NAME First clause – state name Central Government says the name should not be undesirable “Calculated to deceive” -> Society of Motor Manufacturers and

Traders Ltd. vs. Motor Manufactures and Traders Mutual Insurance Co. Ltd. 1902 – Protection of trade interest 1924 – Insurance

A. Use of the word ‘Ltd.” and Publication of Name ‘Private Ltd.’ Name to be mentioned

a) Business Lettersb) Place of Businessc) Official publicationsd) Negotiable Instrumentse) Receiptsf) Premises

Liable only if deliberately not mentioneda) Dermative Co. Ltd. Vs Ashworthb) Nassao Steam Press. Vs. Tyler – Bastille Syndicate Ltd

as The Old Paris and Bastille Ltd.

B. Venture Capital Companies State to be

a) Venture Capitalb) Venture Capital Companyc) Venture Capital Fundd) Venture Capital Finance Co.

C. License to drop Ltd. Granted by Central Government subject to conditions:

a) Company formed for promotion of commerce, art, religion and charity

Approval of Department of Economic Affairs

b) Apply money to objects and no payment of dividends to its members

c) Such other conditionsd) Exempted from minimum capital requirement

Revoked by Government if conditions are violated

Change of namea) Special resolution and approval of Central Governmentb) Ordinary resolution and approval of Central Government

Undesirable or resembling Within 3 months must change the name New certificate of Incorporation

REGISTERED OFFICE Specify the State in which Company is situated Within 30 days of Incorporation or commencement of business

Change of Registered Office Situation Special Resolution

Change of one city to another within the same state Notice to Registrar within 30 days Permission of Regional Director -> In case of shift from

the Jurisdiction of one Registrar to another and then with Registrar

One State to another more complicated as Memorandum has to be altereda) Special Resolutionb) Permission of Company Law Board -> Section 17(1)

– State cannot interfere

LIABILITY Limited Liability – “The liability of Members shall be limited by

shares” Limited Guarantee – Contribution of member in case of winding

up

CAPITAL Public Company -> 5 lakhs paid up capital Private Company -> 1 lakh paid up capital

SUBSCRIPTION Subscriber’s Declaration -> minimum one share Public -> 2

Private -> 7

OBJECTS AND POWERS Object Clause

1) Main objects2) Other objects3) States to which objects extend – that is, non-trading

Companies Restrictions

1) Not against law2) Not against provisions of Company Law

Why objects1) Protects interest of shareholders, that is, for what their

money is spent2) Interest of creditors3) Serves public interest

DOCTRINE OF ULTRA VIRESUltra – BeyondVires – Powers An action outside the Memorandum of Association is Ultra Vires

the Company Case Law -> Ashbury Railway Carriage & Iron Company Ltd. vs.

Riche,Attorney General Vs. Great Eastern Railway Company

Therefore, Company to an Act1) Necessary for2) Incidental3) Authorized by the act

Company now has to mention incidental objectsEg. Research in the field of interest of Company

Objects, Powers and Charitable Contributions1) Company’s funds cannot be directed to any kind of charity2) Objects must be distinguished from powers, therefore,

funds can be used for charitya) Transaction incidental to Company businessb) Bonafidec) Benefit and to promote the prosperity of the Company

Main Objects Rule of Construction Substantially state it

Consequences of Ultra Vires Transactions1) Injunction2) Personal liability of Directors

3) Breach of Warranty of Authority4) Ultra Vires acquired property5) Ultra Vires contracts6) Ultra Vires torts

Activity in course of commission fall within the scope of Memorandum of Association

Servant committed the tort within the course of his employment

Alteration of Objects (Section 17)Yes, with certain limits1) Substantive Limits

a) To enable the Company to carry on its business more economically or more efficiently

b) To enable the Company to attain its main purpose by new or improved means

c) To enlarge or change the local area of the Company’s operation

d) To carry on some business which under existing circumstances may conveniently or advantageously be combined with business of the Company

e) To restrict or abandon any of the objects specified in the Memorandum of Association

f) To sell or dispose of the whole, or any part of the undertaking of the Company

g) To amalgamate with any other Company or body of persons

2) Procedure for Alteration Special resolution and file it with registrar

Registration of alteration File the resolution with Registrar of Cos. Within one

month In case of change of state within 3 months -> otherwise

resolution lapses