Professional Documents
Culture Documents
CONTENTS OF ARTICLES
➢ All regulations
Eg. Relations of members inter se
➢ Freedom to put any stipulation but according to Companies Act
but otherwise void
MEMORANDUM OF ARTICLES OF
ASSOCIATION ASSOCIATION
Nature States the purposes The manner in
of the Company which the Company
is to be carried on
Alteration Altered with Altered by Special
sanction of the Resolution
Company Law Board
Ultra Vires Beyond its scope is Beyond its scope is
Ultra Vires merely irregular
➢ Articles of Association can be used to explain Memorandum of
Association
BINDING FORCE OR ARTICLES OF ASSOCIATION AND
MEMORANDUM OF ASSOCIATION(Section 36)
➢ Once Company is registered Memorandum of Association and
Articles of Association have the binding force of Contracts
a) Binding on members in their relation to Company
Members bound to Company by Articles of Association
b) Binding on Company in relation to members
Company is bound to its members by Articles of
Association
c) Not binding in relation to outsiders
Articles of Association constitute contract between
Company and a third person
Browne vs. La Trinidad – director not removable till
1888
Who is an outsider?
Outsider means who is not a member
Member as well as outsider in individual capacity
d) How far binding between members
Moot point
ALTERNATION OF ARTICLES
➢ Section 31 -> by special resolution
➢ No clause saying Articles of Association cannot be changed
➢ Alteration subject to
a) Memorandum of Association
b) Companies Act
➢ No retrospective effect
➢ Exceptions
1. Knowledge of Irregularity
Knowledge may arise from the fact that the person was
a party to inside procedure
2. Suspicion of Irregularity
Suspicious circumstances would invite enquiry
3. Forgery
4. Representation through Articles
When Articles confer Power of Delegation it can be
assumed delegation has taken place
Duties consistent with that of a Director
Ostensible authorities
Within scope of authority
5. Acts outside Apparent Authority
Not binding