Business Law 2018

Introduction to Organization History

In 1964 Esso Fertilizer was established in 1978 it was renamed a Exxon Chemical
Limited In 1991 it renamed again as Engro Chemical Pakistan Limited
21stCentury started the successful era for Engro In 2005 Engro decided to
diversify their business and established Engro Foods In 2010 becomes Engro
Corporation Limited.

Introduction to Engro Foods

• Engro Foods Ltd (EFL) started it’s officially operations in Pakistan in 2004
and launched its 1st product Olpers in 2006.
• About 5 million consumers nationwide use Engro Foods Products daily.
• Over 1300 employees maintaining consumer delight.
• Rs 40 billion Revenue for 2012

Mission Statement
They are committed to customer satisfaction through offering high quality with
excellent services and good value. They seek continuous improvement in all that
they do.

Mission Statement
They are committed to customer satisfaction through offering high quality with
excellent services and good value. They seek continuous improvement in all that
they do.

1
 Business Law 2018

Departments

LOGO
The new logo is in three layered pyramid that stands for growth, synergy and
perfection. The font chosen carefully as it represents simplicity, focus and
flexibility to depict the organization’s ethos. Color of their logo is also green.

Products

2
 Business Law 2018

What Is the Content for the Articles of

Association?

Writes about the content of article of

association and entrenchment:
Introduction
Articles of Association are a document which prescribes the rules and bye-laws for
the general management of the company and for the attainment of its object as
given in the memorandum of association of the company. It is a document of
paramount significance in the life of a company as it contains the regulations for
the internal administration of the company’s affairs.
The articles of association are a subsidiary to the memorandum of association of
the company. They define the rights, duties, powers of the management of a
company as between themselves and the company at large. Further, they also
prescribe the mode and form in which changes in the internal regulation of a
company may be made from time to time. The articles of association of a company
must always be in consonance with the memorandum of that company and being
subordinate to the memorandum; they cannot extend the objects of a company as
specified in the memorandum of the company.

3
 Business Law 2018

In the case of Naresh Chandra Sanyal v. Calcutta Stock Exchange Association

Ltd, the Supreme Court provided that the articles of association of a company also
establish a contract between the company and its members as well as between the
members. This contract governs the ordinary rights and obligations incidental to
the membership in the company.
Articles of association are like the partnership deed in a partnership. They
particularly provide for matters such as the making of calls, forfeiture of shares,
directors qualifications, and the procedure for transfer and transmission of shares
and debentures, powers, duties and appointment of auditors.

The following companies must have their own articles

of association:
1) Unlimited Companies
2) Companies limited by guarantee
3) Private companies limited by shares

Contents of Articles of Association

Section 5(1) and section 5(2) of the Companies Act, 2013 provide for the contents
of the articles of association. The articles must contain the regulations for the
management of the company along with the matters prescribed by the Central
Government. Further, the articles of association must also contain the following:
1. Share capital including sub-division, rights of various shareholders, the
relationship of these rights, payment of commission, share certificates.
2. Lien of shares: Lien of shares means to retain possession of shares in case
the member is unable to pay his debt to the company.
3. Calls on shares: Calls on shares include the whole or part remaining
unpaid on each share which has to be paid by the shareholders on the
company’s demand.
4. Transfer of shares: The articles of association include the procedure for the
transfer of shares by the shareholder to the transferee.
5. Transmission of shares: Transmission includes devolution of title by
death, succession, marriage, insolvency, etc. It is not voluntary but is in
fact brought about by operation of law.
6. Forfeiture of shares: The articles of association provide for the forfeiture
of shares if the purchase requirements such as paying any allotment or call
money are not met with.
7. Surrender of shares: Surrender of shares is when the shareholders
voluntary return the shares they own to the company.
8. Conversion of shares in stock: In consonance with the articles of
association, the company can convert the shares into stock by an ordinary
resolution in a general meeting.
4
 Business Law 2018

9. Share warrant: A share warrant is a bearer document relating to the title of

shares and cannot be issued by private companies; only public limited
companies can issue a share warrant.
10. Alteration of capital: Increase, decrease or rearrangement of capital must
be done as the articles of association provide.
11. General meetings and proceedings: All the provisions relating to the
general meetings and the manner in which they are to be conducted are to
be contained in the articles of association.
12. Voting rights of members, voting by poll, proxies: The members right to
vote on certain company matters and the manner in which voting can be
done is provided in the articles of association.
13. Directors, their appointment, remuneration, qualifications, powers and
proceedings of the boards of directors meetings.
14. Dividends and reserves: The articles of association of a company also
provide for the distribution of dividend to the shareholders.
15. Accounts and Audits: The auditing of a company shall be done subject to
the provisions of the articles of association of the company.
16. Borrowing powers: Every company has powers to However, this must be
done according to the articles of association of the company.
17. Winding up: Provisions relating to the winding up of the company finds
mention in articles of association of the company and must be done
accordingly.

Entrenchment
The articles of association may contain entrenchment provisions. However, this
concept of entrenchment was not present in the Companies Act, 1956. The word
entrench means to establish an attitude, habit, or belief so firmly that change is
very difficult or unlikely. Thus, an entrenchment clause is the one which makes
certain amendments either impossible or difficult.
The company has the discretion to include entrenchment provisions in its articles
of association. Such provision may relate to the effect that specified provisions of
the articles may be altered only if conditions or procedures as that are more
restrictive than those applicable in the case of a special resolution, are met or
complied with. An entrenchment provision can be made at the time of
incorporation of the company, or after the incorporation of the company by way of
an amendment to the articles of association of the company.
The format for the articles of association of a company must be in the manner
prescribed by the form provided in Schedule I of the Companies Act, 2013.

5
 Business Law 2018

Usually, the articles of association of a public limited company are prepared by

taking good professional advice and are very carefully prepared from the
beginning. It is only the private limited companies which have to keep
a check on the following while drafting the articles of association:
1. He Companies Act, 2013 provides for the model articles for a company
under section 5[9]. Thus, it is to be remembered that even though there is
the use of the words such as ‘preparation of articles’ while getting a
company incorporated, it only means an adoption of the model articles as
provided by the act with a few modifications as the promoters may insist.
2. As much as possible, the promoters must refrain from any additions,
changes, alterations or deletions in the model articles provided by the act.
This is mainly because, Schedule I of the Companies Act, 2013, from table
to the table, provides for the forms for articles of different type of
companies. Thus, more or less the model articles contain the required
contents for a particular company. Additions or alterations must only be
done if it is necessary to have a new regulation in the articles of
association, or if a new regulation is a must for promoting the company.
3. The additions, changes or alterations which are made to the model articles,
must be done with careful scrutiny of the provisions of the Companies
Act, 2013.

6
 Business Law 2018
THE COMPANIES ACT, 2017 (XIX of 2017)
(Private Company Limited by Shares)
ARTICLES OF ASSOCIATION
OF
Engro Foods (PRIVATE) LIMITED
[Engro Foods Pvt Ltd.]
1. The Regulations contained in Table ‘A’ to the First Schedule to the Companies
Act, 2017 (the “Act”) shall be the regulations of
Engro Foods(PRIVATE) LIMITED
(the “Company”) so far as these are applicable to a private company.

PRIVATE COMPANY
2. The Company is a “Private Company” within the meaning of Section 2(1)(49) of
the Act and accordingly:
(1) No invitation shall be made to the public to subscribe for the shares or
debentures of the Company.
(2) The number of the members of the Company (exclusive of persons in the
employment of the Company), shall be limited to fifty, provided that for
the purpose of this provision, where two or more persons hold one or more
shares in the company jointly, they shall be treated as single member; and
(3) The right to transfer shares of the Company is restricted in the manner and
to the extent herein appearing.

TRANSFER OF SHARES
3. A member desirous to transfer any of his shares shall first offer such shares for
sale or gift to the existing members and in case of their refusal to accept the offer, such
shares may be transferred to any other person, as proposed by the transferor member,
with the approval of the Board of Directors.
DIRECTORS
4. The number of directors shall not be less than two or a higher number as fixed
under the provisions of the Act. The following persons shall be the first directors
of the Company and shall hold the office upto the date of First Annual General Meeting:
1. ……………..……………
2. ……………………..……
3. …………………..............

7
 Business Law 2018

We, the several persons whose names and addresses are subscribed below, are desirous of beingf
ormed into a company, in pursuance of these articles of association, and we respectively agree
to take the number of shares in the capital of the company set opposite our respective names:
Name NIC No. Father's/ Nationality Usual residential address in f Number of
and (in Husband's (ies) ull or the registered/ shares
surname case of Name inful with any principal officeaddress for a su taken by
(present foreigner, l former bscriber each
& Passport Nationality other than natural person subscriber
former) No) (in
in figures and wo
full rds)

Occupation

Signatures
(in Block
Letters)

Total number of shares taken (in figures and words)

Dated the____________ day of_________________, 20

Witness to above signatures: (For the documents submitted in physical form)

Signature

Full Name (in Block Letters)

Father’s/ Husband’s name
Nationality
Occupation
NIC No.
Usual residential address

8
 Business Law 2018

What Is the Memorandum of

Association?
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.
The whole business of the company is built up according to Memorandum of
Association. A company cannot undertake any business or activity not stated in the
Memorandum. It can exercise only those powers which are clearly stated in the
Memorandum.

1. Definition of Memorandum of Association:

Thus, a Memorandum of Association is a document which sets out the constitution
of the company. It clearly displays the company’s relationship with outside world.
It also defines the scope of its activities. MoA enables the shareholders, creditors
and people who have dealing with the company in one form or another to know the
range of activities.

2. Contents of Memorandum of Association

According to the Companies Act, the Memorandum of Association of a company
must contain the following clauses:

3. Name Clause of Memorandum of Association

The name of the company should be stated in this clause. A company is free to
select any name it likes. But the name should not be identical or similar to that of a
company already registered. It should not also use words like King, Queen,
Emperor, Government Bodies and names of World Bodies like U.N.O., W.H.O.,
World Bank etc. If it is a Public Limited Company, the name of the company
should end with the word ‘Limited’ and if it is a Private Limited Company, the
name should end with the words ‘Private Limited’.
4. Situation Clause of Memorandum of Association
In this clause, the name of the State where the Company’s registered office is
located should be mentioned. Registered office means a place where the common
seal; statutory books etc., of the company are kept. The company should intimate
the location of registered office to the registrar within thirty days from the date of
incorporation or commencement of business.
9
 Business Law 2018

The registered office of a company can be shifted from one place to another within
the town with a simple intimation to the Registrar. But in some situation, the
company may want to shift its registered office to another town within the state.
Under such circumstance, a special resolution should be passed. Whereas, to shift
the registered office to other state, Memorandum should be altered accordingly.
5. 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.
6. Liability Clause of Memorandum of Association
This clause states the liability of the members of the company. The liability may be
limited by shares or by guarantee. This clause may be omitted in case of unlimited
liability.
7. 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.
8. 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 seven in case of a public company.
Thus the Memorandum of Association of the company is the most important
document. It is the foundation of the company.

1
0
 Business Law 2018

THE COMPANIES ACT, 2017 (XIX of 2017)

(COMPANY LIMITED BY SHARES)

MEMORANDUM OF ASSOCIATION
OF
“Master Textile Limited/(Private) Limited/(SMC-Private) Limited” (Delete
whichever is not applicable).
1. The name of the company is ____________ Limited/(Private)
Limited/(SMC-Private) Limited (Delete whichever is not applicable).
2. The registered office of the Company will be situated in Islamabad Capital
Territory / Gilgit-Baltistan / in the Province of Punjab / Baluchistan / Sindh /
Khyber Pakhtunkhwa. (Delete whichever is not applicable)
I. The principal line of business of the company shall be to establish an
industrial undertaking for manufacturing / stitching garments / made
ups, clothing, knit-wears, and weaving of apparels, hosieries and
other allied commodities of all kinds and buying, selling, importing,
exporting, and dealing in the products of the company in or outside
Pakistan and to do other business connected, linked or associated
therewith; and to carry on the business of manufacturing and stitching
of garments & made ups on job order or contract basis and to
purchase and import raw material and allied items required for
manufacturing & stitching of garments, made ups in any manner
which the company may think fit; and to sell or dispose of leftover
garments, made ups, garment waste, accessories and other surplus
commodities that can be produced, compounded or made available by
the company in any form as a result of any of its processes.
II. Except for the businesses mentioned in sub-clause (iii) hereunder, the
company may engage in all the lawful businesses and shall be authorized to
take all necessary steps and actions in connection therewith and ancillary
thereto.
III. Notwithstanding anything contained in the foregoing sub-clauses of this
clause nothing contained herein shall be construed as empowering the
Company to undertake or indulge, directly or indirectly in the business of a
Banking Company, Non-banking Finance Company (Mutual Fund, Leasing,
1
1
 Business Law 2018

Investment Company, Investment Advisor, Real Estate Investment Trust

management company, Housing Finance Company, Venture Capital
Company, Discounting Services, Microfinance or Microcredit business),
Insurance Business, Modaraba management company, Stock Brokerage
business, forex, managing agency, business of providing the services of
security guards or any other business restricted under any law for the time
being in force or as may be specified by the Commission.
It is hereby undertaken that the company shall not:
(a) Engage in any of the business mentioned in sub-clause (iii) above or
any unlawful operation;
(b) Launch multi-level marketing (MLM), Pyramid and Ponzi Schemes,
or other related activities/businesses or any lottery business;
(c) Engage in any of the permissible business unless the requisite
approval, permission, consent or license is obtained from competent
authority as may be required under any law for the time being in force.
4. The liability of the members is limited.
5. The authorized capital of the company is Rs___________ (Rupees ___________
only) divided into ____________ (__________ thousand) ordinary shares of
Rs.___/- (Rupees __ only) each.
We, the several persons whose names and addresses are subscribed below, are
desirous of being formed into a company, in pursuance of this memorandum of
association, and we respectively agree to take the number of shares in the capital of
the company as set opposite our respective names:

Name NIC No. Father's/ Nationality Usual Number of

and (in case of Husband's (ies) with residential shares taken
surname foreigner, Name in any former by each
address in full or
Occupation

(present Passport full Nationality subscriber (in Signatures

the registered/
& No) figures and
principal office
former) words)
address for a
in full (in
subscriber other
Block
than natural
Letters)
person

Total number of shares taken (in figures and words)

1
2
 Business Law 2018

Dated the____________ day of_________________, 20___

Witness to above signatures :( For the documents submitted in physical form)

Signature
Full Name (in Block Letters)
Father’s/ Husband’s name
Nationality
Occupation
NIC No.
Usual residential address

Applicable in case of single member company

I, whose name and address is subscribed below, am desirous of forming a company
in pursuance of this memorandum of association and agree to take the number of
shares in the capital of the company as set opposite my name:
Name and NIC No. (in Father's/ Nationality Usual Number of shares
surname case of Husband's (ies) with residential taken by the
(present foreigner, Name in full any former address in subscriber (in
& former) Passport Nationality full or the figures and words)
in full (in No) registered/
Occupation

Signature
Block principal
Letters) office
address for
a
subscriber
other than
natural
person

1
3
 Business Law 2018

Dated the____________ day of_________________, 20______

Witness to above signatures :( For the documents submitted in physical form)

Signature

Full Name (in Block Letters)

Father’s/ Husband’s name
Nationality
Occupation
NIC No.
Usual residential address

Difference between Memorandum

of Association and Articles of
Association

The memorandum of association and articles of association are the two charter
documents, for setting up of the company and its operations thereon.
‘Memorandum of Association ‘abbreviated as MOA, is the root document of the
company, which contains all the basic details about the company. On the other

1
4
 Business Law 2018

hand, ‘Articles of Association ‘shortly known as AOA, is a document containing

all the rules and regulations designed by the company.
While the MOA sets out the company’s constitution, and so it is the cornerstone on
which the company is built. Conversely, AOA comprises of bye-laws that govern
the company’s internal affairs, management, and conduct. Both, MOA and AOA,
requires registration, with the Registrar of companies (ROC), when the company
goes for incorporation.
To further comprehend the difference between memorandum of association and
articles of association, take a read of the given article.

Content: Memorandum of Association Vs

Articles of Association
1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart

1
5
 Business Law 2018

Definition of Memorandum of Association

Memorandum of Association (MOA) is the supreme public document which
contains all those information that are required for the company at the time of
incorporation. It can also be said that a company cannot be incorporated without
memorandum. At the time of registration of the company, it needs to be registered
with the ROC (Registrar of Companies). It contains the objects, powers, and scope
of the company, beyond which a company is not allowed to work, i.e. it limits the
range of activities of the company.

1
6
 Business Law 2018

Any person who deals with the company like shareholders, creditors, investors, etc.
is presumed to have read the company, i.e. they must know the company’s objects
and its area of operations. The Memorandum is also known as the charter of the
company. There are six conditions of the Memorandum:

Clauses of Memorandum of Association

 Name Clause – Any company cannot register with a name which CG may
think unfit and also with a name that too nearly resembles with the name of
any other company.
 Situation Clause – Every company must specify the name of the state in
which the registered office of the company is located.
 Objects Clause – Main objects and auxiliary objects of the company.
 Liability Clause – Details regarding the liabilities of the members of the
company.
 Capital Clause – The total capital of the company.
 Subscription Clause – Details of subscribers, shares taken by them,
witness, etc.

Definition of Articles of Association

Articles of Association (AOA) are the secondary document, which defines the
rules and regulations made by the company for its administration and day to day
management. In addition to this, the articles contain the rights, responsibilities,
powers and duties of members and directors of the company. It also includes the
information about the accounts and audit of the company.
Every company must have its own articles. However, a public company limited by
shares can adopt Table A instead of Articles of Association. It comprises of all the
1
7
 Business Law 2018

necessary details regarding the internal affairs and the management of the
company. It is prepared for the persons inside the company, i.e. members,
employees, directors, etc. The governance of the company is done according to the
rules prescribed in it. The companies can frame its articles of association as per
their requirement and choice.

Key Differences between Memorandum of Association and

Articles of Association
The major differences between memorandum of association and articles of
association are given as under:
1. Memorandum of Association is a document that contains all the condition
which is required for the registration of the company. Articles
of Association are a document that contains the rules and regulation for the
administration of the company.
2. Memorandum of Association is defined in section 2 (56) while the Articles
of Association is defined in section 2 (5) of the Indian Companies Act 1956.
3. Memorandum of Association is subsidiary to the Companies Act, whereas
Articles of Association is subsidiary to both Memorandum of Association as
well as the Act.
4. In any contradiction between the Memorandum and Articles regarding any
clause, Memorandum of Association will prevail over the Articles of
Association.
5. Memorandum of Association contains the information about the powers and
objects of the company. Conversely, Articles of Association contain the
information about the rules and regulations of the company.
6. Memorandum of Association must contain the six clauses. On the other
hand, Articles of Association is framed as per the discretion of the company.
7. Memorandum of Association is obligatory to be registered with the ROC at
the time of registration of Company. As opposed to Articles of Association,
is not required to be filed with the registrar, although the company may file
it voluntarily.
8. Memorandum of association defines the relationship between company and
external party. On the contrary, articles of association govern the
relationship between the company and its members and also between the
members themselves.
9. When it comes to scope, the acts performed beyond the scope of
memorandum are absolutely null and void. In contrast, the acts done beyond
the scope of articles can be ratified by unanimous voting of all shareholders.

1
8
 Business Law 2018

Conclusion
Memorandum and Articles are the two very important documents of the company,
which are to be maintained by them as they guide the company on various matters.
They also help in the proper management and functioning of the company
throughout its life. That is why every company is required to have its own
memorandum and articles.

1
9