Moa clauses & alterations

1. Memorandum Of
Association
A. Pooja Narayan

2.  According to Section 2(56) of the Companies Act 2013,
the “Memorandum” refers to the memorandum of the
company as drawn up initially during the formation of
the company or as changed periodically to carry out any
action as per any other law of the Act.
 Memorandum of Association is a document of prime
importance for a company. It depicts the objectives,
extent of authority, competency, liabilities and legal
rights of the company. The memorandum acts as a legal
code or constitution for a company and regulates the
relationships between the company and its
shareholders, investors, beneficiaries and other
members.

3.  The Memorandum of Association or MOA of a company
defines the constitution and the scope of powers of the
company. In simple words, the MOA is the foundation on
which the company is built

4. Object of registering a
Memorandum of Association or
MOA
 The MOA of a company contains the object for which
the company is formed. It identifies the scope of its
operations and determines the boundaries it cannot
cross.
 It is a public document according to Section 399 of
the Companies Act, 2013. Hence, any person who enters
into a contract with the company is expected to have
knowledge of the MOA.
 It contains details about the powers and rights of the
company.

5. Format of Memorandum of
Association (MOA)
 Table A: Form for the memorandum of association of a
company limited by shares.
 Table B: Form for the memorandum of association of a
company limited by guarantee and not having a share
capital.
 Table C: Form for the memorandum of association of a
company limited by guarantee and having a share
capital.
 Table D: Form for the memorandum of association of an
unlimited company.
 Table E: Form for the memorandum of association of an
unlimited company and having share capital.

6.  Schedule I
 (See sections 4 and 5)
 TABLE -A
 MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED
BY SHARES
 1st The name of the company is
‘‘..................................Limited / Private
Limited’’.
 2nd The registered office of the company will be
situated in the State of...................................
 3rd (a) The objects to be pursued by the company
on its incorporation are:—
 (b) Matters which are necessary for furtherance of the

7. Content of memorandum
 Name Clause
 Registered office
 Object clause
 liability clause
 Capital clause
 The Association clause
 Nomination clause (OPC)

8. Name Clause
 A company being a legal entity must have a name of its
own to establish its separate identity. The name of the
company is a symbol of its independent corporate
existence. The first clause in the memorandum of
association of the company states the name by which

9. According to section 4(2), the name stated in
the memorandum shall not—
 (a) Identical with or resemble too nearly to the name of
an existing company registered under this Act or any
previous company law; or
 (b) be such that its use by the company—
 (i) will constitute an offence under any law for the time
being in force; or
 (ii) is undesirable in the opinion of the Central
Government.

10. 
Undesirable names are those names which in the opinion of the
Central Government are:
Prohibited under the Provisions of Section 3 of Emblems and Names
(Prevention and Improper Use) Act, 1950.
Names which resemble each other, which are chosen to deceive.
The name includes a registered trademark.
The name includes any word or words which are offensive to a
section of people.
Name which is identical to or too nearly resembles the name of an
existing Limited Liability Partnership.

11.  Illustration:Precious Technology Limited is same as Precious Technology
Company.
 If plural or singular forms are added to differentiate between names.
Illustrations: Greentech Solution is same as GreenTech Solutions.
 Colors Technology is same as Color Technology.
 If type, and case of letters, or punctuation marks are added.
 Illustration: Wework is same as We.work.
 Different tenses are used in names.
 Illustration: Ascend Solution is same as Ascended Solutions.
 If there is an intentional spelling mistake in the name or phonetic
changes in the name.
 Illustrations: Greentech is same as Greentek.
 DQ is same as DeeQew.
 Internet related designations are used like .org, .com, etc.
 Illustration: Greentech Solution Ltd. is same as Greentech Solutions.com

12. Registered Office Clause
 The Registered Office of a company determines its
nationality and jurisdiction of courts. It is a place of
residence and is used for the purpose of all
communications with the company. It is mandatory for
the company to have the registered office
within 15 working days. It is mandatory for every
company to fix its name and address of its registered
office on the outside of every office in which the
business of the company takes place. If the company is
a one-person company, then “One-person Company”
should be written in brackets below the affixed name of
the company.

13. Object Clause
 Section 4(c) of the Act, details the object clause.The Object Clause
is the most important clause of Memorandum of Association. It
states the purpose for which the company is formed. The object
clause contains both, the main objects and matters which are
necessary for achieving the stated objects also known as incidental
or ancillary objects. The stated objects must be well defined and
lawful according to Section 6(b) of the Companies Act, 2013.
 By limiting the scope of powers of the company. The object clause
provides protection to:
 Shareholders – The object clause clearly states what operations will
the company perform. This helps the shareholders know their
investment in the company will be used for what purpose.
 Creditors – It ensures the creditors that capital is not at risk and
the company is working within the limits as stated in the clause.
 Public Interest – The object clause limits the number of matters
the company can deal with thus, prohibiting diversification of
activities of the company.

14.  The objects are classified as ‘Main Objects’, ‘Ancillary
Objects’ and ‘Other Objects’. The objects must be
stated articulately and must not be ambiguous in
nature. The objects must not also be illegal or against
the prohibition of the Act or the public policy of the
country.

15. Doctrine of Ultra Vires
 If the company operates beyond the scope of the
powers stated in the object clause, then the action of
the company will be ultra vires and thus void.

16. Consequences of Ultra Vires
 Liability of Directors: The directors of the company have a duty to
ensure that company’s capital is used for the right purpose only. If
the capital is diverted for another purpose not stated in the
memorandum, then the directors will be held personally liable.
 Ultra Vires Borrowing by the Company: If a bank lends to the
company for the purpose not stated in the object clause, then the
borrowing would be Ultra Vires and the bank will not be able to
recover the amount.
 Ultra Vires Lending by the Company: If the company lends money
for an ultra vires purpose, then the lending would be ultra vires.
 Void ab initio – Ultra Vires acts of the company are considered void
from the beginning.
 Injunction – Any member of the company can use the remedy of
injunction to prevent the company from doing ultra vires acts.

17. Liability Clause
The liabilities of the members of the company must be clearly
stated in the Memorandum of Association.
 For a company limited by shares – it should specify if the
liability of its members is limited to any unpaid amount on
the shares that they hold.
 For a company limited by guarantee – it should specify the
amount undertaken by each member to contribute to:
 The assets of the company when it winds-up. This is provided
that he is a member of the company when it winds-up or the
winding-up happens within one year of him ceasing to be a
member. In the latter case, the debts and liabilities considered
would be those contracted before he ceases to be a member.
 The costs, charges, and expenses of winding up and the
adjustment of the rights of the contributors among
themselves.

18. Capital Clause
 The maximum amount of authorised capital that can be
generated by the members of the company is ought to
be specified in the Memorandum of Association. Stamp
duty is applicable on this amount. Although there is no
legal limit to the maximum amount of capital that can
be raised by a company, it cannot increase
the authorised share capital once it has been
incorporated

19.  It states the total amount of share capital in the
company and how it is divided into shares. The way the
amount of capital is divided into what kind of shares.
The shares can be equity shares or preference shares.
 Illustration: The share capital of the company is
80,00,000 rupees, divided into 3000 shares of 4000
rupees each.

20. Association or Subscription
Clause
 The amount of authorised capital and the number of
shares owned by each member of the company should
be mentioned in the Memorandum of Association of the
company. The subscribers to the memorandum must
own a minimum of one share each. Each subscriber
must write the number of shares owned by him and sign
the memorandum in the presence of at least one
witness who is required to attest the signature.

21. Nomination clause
 Only for OPC

22. Alteration of Memorandum
 Various clauses of memorandum of
association can be altered by following
the procedure laid down in the Act.
Different requirements are prescribed
for different clauses:
1. Name Clause: can be altered by:
(a) Passing a special resolution; and
(b) Obtaining the approval of the Central
Govt.

23. Alteration of Memorandum
2. Registered Office Clause: may be
shifted:
(a) within the same city by passing
Directors’ Resolution;
(b) From one city to another city within the
same State:
 by passing special resolution only, if no
change in jurisdiction of Regional
Director
 by passing special resolution, and
 Obtaining the approval of Regional
Director.

24. Alteration of Memorandum
3. Objects Clause
 Special Resolution
 Only on Grounds stated in Sec.17(1).
4. Liability Clause
 Cannot be increased without written
consent of each and every member.
 Can be reduced:
 by passing special resolution
 Confirmation of court

25. Alteration of Memorandum
5. Capital Clause
 Authorised capital may be
increased by passing an ordinary
resolution at a meeting of the
shareholders.

26. Articles of Association
 The articles of association of a company are its
bye-laws or rules and regulations that govern the
management of its internal affairs and the conduct
of its business.
 The articles regulate the internal management of
the company. They define the powers of its
officers. They also establish a contract between
the company and the members and between the
members inter se. This contract governs the
ordinary rights and obligations incidental to
membership in the company [Naresh Chandra
Sanyal v. Calcutta Stock Exchange Association Ltd.
(1971)].

27. Companies which must have Articles
Unlimited Companies:
The Articles of such a company must
state:
Total number of members; and
Share capital.
Companies limited by Guarantee:
Articles of such company must state
total number of members.

28. Companies which must have Articles
…contd.
Private Companies limited by shares:
must include requirements of
Section 3(1)(iii).
No Article Company
A public limited company having share
capital may be registered without
Articles.

29. Contents of Articles of
Association
 The articles generally deal with the following
 1. Classes of shares, their values and the rights attached
to each of them.
 2. Calls on shares, transfer of shares, forfeiture,
conversion of shares and alteration of capital.
 3. Directors, their appointment, powers, duties etc.
 4. Meetings and minutes, notices etc.
 5. Accounts and Audit

30.  6. Appointment of and remuneration to Auditors.
 7. Voting, poll, proxy etc.
 8. Dividends and Reserves
 9. Procedure for winding up.
 10. Borrowing powers of Board of Directors and
managers etc.
 11. Minimum subscription.

31.  12. Rules regarding use and custody of common seal.
 13. Rules and regulations regarding conversion of fully
paid shares into stock.
 14. Lien on shares.

32. Alteration of Articles
 Articles may be altered by a company
by passing special resolution at a
general body meeting of shareholders.
 However, where alteration has the
effect of converting a public company
into a private company (i.e.,
introduction of restrictive clauses of
Section 3(1)(iii), approval of Central
Government must be obtained.

33.  The alteration of the Articles should not sanction
anything illegal. They should be for the benefit of the
company. They should not lead to breach of contract
with the third parties. The following are the regulations
regarding alteration of articles:

34.  A company may alter its Articles with a special
resolution. Due importance and care should be given to
ensure that the alteration of AoA does not conflict with
the provisions of the Memorandum of Association or the
Companies Act. A copy of every special resolution
altering the Articles must be filed with the Registrar
within 30 days of its passing.

35.  1. The proposed alteration should not contravene the
provisions of the Companies Act.
 2. The proposed alteration should not contravene the
provisions of the Memorandum of Association.
 3. The alteration should not propose anything that is
illegal.
 4. The alteration should be bonafide for the benefit of
the company.
 5. The proposed alteration should in no way increase
the liability of existing members.

36.  6. Alteration can be made only by a special resolution.
 7. Alteration can be done with retrospective effect.
 8. The Court does not have any power to order
alteration of the Articles of Association.