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 Letters
b) Place of Business
c) Official publications
d) Negotiable Instruments
e) Receipts
f) Premises
➢ Liable only if deliberately not mentioned
a) Dermative Co. Ltd. Vs Ashworth
b) Nassao Steam Press. Vs. Tyler – Bastille Syndicate Ltd
as The Old Paris and Bastille Ltd.

B. Venture Capital Companies

➢ State to be
a) Venture Capital
 b) Venture Capital Company Approval of Department
c) Venture Capital Fund of Economic Affairs
d) 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
b) Apply money to objects and no payment of dividends
to its members
c) Such other conditions
d) Exempted from minimum capital requirement
➢ Revoked by Government if conditions are violated

Change of name
a) Special resolution and approval of Central Government
b) 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 altered
a) Special Resolution
b) 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 objects
2) Other objects
3) States to which objects extend – that is, non-trading
Companies
➢ Restrictions
1) Not against law
2) Not against provisions of Company Law
➢ Why objects
1) Protects interest of shareholders, that is, for what their
money is spent
2) Interest of creditors
3) Serves public interest

DOCTRINE OF ULTRA VIRES

Ultra – Beyond
Vires – 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 Act

1) Necessary for
2) Incidental
3) Authorized by the act
➢ Company now has to mention incidental objects
Eg. Research in the field of interest of Company

➢ Objects, Powers and Charitable Contributions

1) Company’s funds cannot be directed to any kind of charity
 2) Objects must be distinguished from powers, therefore,
funds can be used for charity
a) Transaction incidental to Company business
b) Bonafide
c) Benefit and to promote the prosperity of the Company

➢ Main Objects Rule of Construction

 Substantially state it

➢ Consequences of Ultra Vires Transactions

1) Injunction
2) Personal liability of Directors
3) Breach of Warranty of Authority
4) Ultra Vires acquired property
5) Ultra Vires contracts
6) 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 limits
1) 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