Memorandum of Association

What Is Memorandum of Association ?
Memorandum : A note or record made for future use , a written message

 Memorandum of Association is the most important document of a company.
 It states the objects for which the company is formed.
 It contains the rights, privileges and powers of the company.
 Hence it is called a charter of the company.
 It is treated as the constitution of the company.
 It determines the relationship between the company and the outsiders.

It is mandatory for every company to have a Memorandum of Association which defines the
scope of its operations.
A company cannot undertake any business or activity not stated in the Memorandum.
If the company goes beyond the scope, then the action will be considered ultra vires and
hence will be void.
The whole business of the company is built up according to Memorandum of Association.
It can exercise only those powers which are clearly stated in the Memorandum.
Definition of Memorandum of Association
Lord Cairns:
“The memorandum of association of a company is the charter and defines

the limitation of the power of the company established under the Act”.
Memorandum of Association enables the shareholders, creditors and people

who has dealing with the company in one form or another to know the range
of activities.
Purpose of Memorandum of Association
1. The shareholders who are investing their money in the company have the right to know
the purpose for which they are investing their money and the company’s field of
operations. Therefore, this purpose is mentioned in the memorandum.
2. Any person, be it a vendor, partner, employee, etc., must know the corporate objects of
the company and whether his contract is according to the objects of the company.
Contents of Memorandum of Association
According to the Companies Act, the Memorandum of Association of a company must
contain the following clauses:
1. Name Clause of Memorandum of Association

A company can have any name of its choice, keeping in mind certain conditions.
A company must include “Private Limited” at the end if the company is a private company.
And in the case of a public company, it must include the word “Limited” at the end.
The company’s name mentioned in the memorandum must not contain the words which are:-
(i) Identical or resemble.
The company’s name should not be identical or must not have a resemblance with the name of any
other existing company registered under the companies act.
(ii) Already in use.
The name of the company shall not be something that is already in use by any other company.
(iii) Undesirable names.
A company shall not include any name which creates an impression that the company is associated
with central government, any state government, local bodies, etc., or with any such body created by
the central or state government. A company can include words that resemble its existence with any
government entities only after their prior approval.
Appearance of Name
The name of the company must appear or every office or place of business of company in a
conspicuous manner and on all cheque, bills, notices, advertisement, etc of the company.
Change of name of the company:
The name of the company can be changed at any time subject to the following
conditions:
(i)A special resolution is passed.
(ii)Approval in writing of the registrar is obtained.
(iii)Registrar notified the new name and issues a certificate.

2. Situation Clause of Memorandum of Association
It is also known as Registered Office Clause.
The memorandum must state the name of the place of business of the company.
The company must have a registered office and its place must be notified to the registrar.
Change of place of registered office:

(i) Form Province to Province:
Registered office of the company may be changed by passing a special resolution and
obtaining the confirmation of the commission.
(ii) From town to town in the same province:
The place of registered office of the company may be changed from one town to another
town with in the same province by special resolution and a notice to the registrar without
any confirmation of the commission.
3. Objects Clause of Memorandum of Association
This clause specifies the objects for which the company is formed.
It is difficult to alter the objects clause later on.
Hence, it is necessary that the promoters should draft this clause carefully.
This clause mentions all possible types of business in which a company may engage in
future.
The objects clause must contain the important objectives of the company and the other
objectives not included above.
Scope of objects
The company can have any object provided that it is not contrary to law.
Act done out side the objects
The company cannot do any thing outside the powers specified in the object clause.
4. Liability Clause of Memorandum of Association
Under this clause, a company has to mention whether the liability of its members is limited
by shares or guarantee or the liability is unlimited.
Limited by Shares: A member will be liable only for the number of shares purchased by him
in the company.
Limited by Guarantee: The person has to guarantee a certain amount he will be supposed
to pay if a company suffers losses and is winding up.
Unlimited Liability: In such cases, the company members are liable unlimitedly, even to the
extent of their personal property, if a company suffers losses.
5. Capital Clause of Memorandum of Association
This clause mentions the maximum amount of capital that can be raised by the
company. The division of capital into shares is also mentioned in this clause.
The company cannot secure more capital than mentioned in this clause.
If some special rights and privileges are conferred on any type of shareholders
mention may also be made in this clause.
6. Subscription Clause of Memorandum of Association
It contains the names and addresses of the first subscribers.
The subscribers to the Memorandum must take at least one share.
The minimum number of members is two in case of a private company and three in case
of a public company.
Time place for filing memorandum of association

Memorandum of association is to be filed with the registrar at the time of formation of a
company.
Requirement of MOA
• Memorandum must be printed
• It should be divided into paragraphs
• Each paragraph should be consecutively (serially) numbered
• It should be signed by the required number of subscribers
• Subscriber must sign in the presence of at least on witness
• Signature of each subscriber must be attested by witness
• Every subscriber must add his address, description and occupation
• Witness should write his address, description and occupation
• Memorandum must be stamped to Stamp Act.
Alteration In Memorandum of Association
• Memorandum of association is considered as unalterable document. but it can be
amended by passing special resolution and with sanction of court of central government.
• Under the law the alteration of MOA is not dependent in the pleasure and sweet will of the
members of the company.
• It can be altered only by adopting the alteration procedure laid down in the companies
Laws.
Preliminary Discussion
• Preliminary discussion at board meetings and with company’s advisers to determine the
best course to be adopted and the precise nature of the desired alteration.
Stock Exchange Requirements
Where company’s share are desired to be quoted on a stock exchange.
Settlement with Registrar
Can any matter be settled before hand with the registrar e.g. whether a new name
will meet to his approval.
Notice
Printing of notice of general meeting, explanatory circulars etc.

Routine of Meeting
Routine of holding necessary meeting arrangements with the press, filing of copies of
special resolution.
Share Certificate
Whether new share certificates are to be issued or old certificates are to be called in for
suitable alteration.
Resolution
The printing of resolution required to be attached to the memorandum and to be
registered with the registrar.

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What Is Memorandum of Association ?

Memorandum : A note or record made for future use , a written message

 It states the objects for which the company is formed.

 It contains the rights, privileges and powers of the company.

 Hence it is called a charter of the company.

 It is treated as the constitution of the company.

 It determines the relationship between the company and the outsiders.

The whole business of the company is built up according to Memorandum of Association.

“The memorandum of association of a company is the charter and defines

Memorandum of Association enables the shareholders, creditors and people

1. Name Clause of Memorandum of Association

(i) Identical or resemble.

(ii) Already in use.

(iii) Undesirable names.

(i)A special resolution is passed.

(ii)Approval in writing of the registrar is obtained.

(iii)Registrar notified the new name and issues a certificate.

Change of place of registered office:

The subscribers to the Memorandum must take at least one share.

Time place for filing memorandum of association

Where company’s share are desired to be quoted on a stock exchange.

Settlement with Registrar

Printing of notice of general meeting, explanatory circulars etc.

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