The requirements are as follows

Application for availability of name Preparation of MOA and AOA Selection and finalization of MOA and AOA- Its printing, stamping and signing Preparation of other necessary documents Filling of the required documents for Registration to obtain certificate of incorporation and Certificate of commencement of business

Memorandum of Association
It is the charter of the company It contains the fundamental conditions upon which the company can be incorporated It contains the objects of the companys formation

Cont.
The company has to act within objects specified in the MOA It defines as well as confines the powers of the company Any thing done beyond the objects specified in the MOA will be ultra vires. Their transactions will be null and void The outsider have to transact looking into the MOA

Conditions of the MOA

It should be printed Divided into paragraph and numbers consecutively Signed by at least seven persons or two in case of public and private company respectively. The signature should be in the presence of a witness, who will have to attest the signature Members have to take shares and write the number of shares taken with full address

The MOA of the Limited Company

The name of the company with limited as the last word The name of the state where the registered office of the company is to be situated The objects of the company stating the Main objects and the other objects The declaration about the liability of the members is limited ( limited by shares or guarantee) The amount of the authorized share capital, divided into shares of fixed amounts.

The Compulsory Clauses in MOA

The Name Clause The Registered Office Clause The Object Clause The Liability ClauseThe Capital Clause The Association or Subscription clause

Doctrine of Ultra Vires

Ultra- beyond vires- powers MOA is the area beyond which a company cannot travel. Any activities not authorised by the memorandum are ultra vires the company.

Purpose
It protects the share holders- by it they are assured that their investment is not spent on activities which they did not have in mind when they invested in the company. It safeguards the interests of the creditors as the property of the company cannot be diverted to unauthorized objects.

Effects of ultra-vires transactions

Injunction- restrain the company from doing ultra vires acts Personal liability of directors Contracts void Ultra-vires trots

Exceptions
If the company acquires some property by ultra vires expenditure, the companys right over the property will be protected. If the company acquires some property by ultra vires contract, the same can be recovered from the company if it exists and is traceable in the hands of the company.

 If the company takes an ultra vires loan and uses it to pay of its own debts, can be recovered If any person borrows money from the company under an ultra-vires contract, the company has the right to sue and recover the money from him

 If a director of a company makes payment of certain money, which is ultra vires the company, he can compelled by company to refund it.

 The company may be held liable for the ultravires torts (civil wrongs) of its employees. If The tort was committed in the course of an activity which falls within the scope of companys memorandum and The employee committed the tort within the course of his employment.

The Compulsory Clauses in MOA

The Name Clause it decides on the name of the company based on the capital involved The Registered Office Clause- where it has registered its head office and other branch office ( The registered office can be changed with the permission of the ROC) The Object Clause- Main object, ancillary object and the other objects of the company are clearly specified ( Ashbury Railway Carriage Co V. Riche). The applicable doctrine here is the Doctrine of Ultra Vires beyond the powers of the company (opposed to Intra Vires)

Ultra vires
Ashbury Railway Carriage and Iron Co. Ltd V Riche 1875 Point decided are If an act is ultravires the memo, it is not binging upon the company A contract ultravires a company is void and incapable of ratification, even if every member wishes to ratify it

Facts of the case are

The MOA gave the company power to make and sell, or lend on hire railway carriages and wagons and to carry on the business of mechanical engineers and general contractors. The company entered into a contract with Riche for the financing of the construction of the railway line in Belgium The company repudiated the contract

Cont.
The other party brought an action for damages for breach of contract Decision -void

A Lakshmanaswami Madaliar v LIC

Company was engaged in the business of life insurance. Directors denoted two lakhs (by special resolution) to a trust Held void

 The Liability Clause- What is the liability of its members.. limited by shares or guarantee or unlimited, there can be alteration in the liability clause The Capital Clause - The amount of the nominal capital of the company, number of shares in which it is to be divided alteration of the capital clause etc The Association or Subscription clause- Where the subscribers to the MOA declare that they respectively agree to take the number of the shares in the capital. It has to have the following: a) They have to sign in the presence of two witnesses, who attest the signatures, b) The subscriber to take at least one share. c) After the name the subscriber has to write the number of shares taken

Effects/ consequences of UVC

a. Void ab initio even if all the shareholders agree b. Injunction c. Directors personal liability. d. If a property has been purchased and it is an ultra vires act, the company can have a right over that property. e. The doctrine to be used exclusively for the companies interest. f. But the others cannot use this doctrine as a tool to attack the company

Doctrine of Ultra Vires

The powers exercisable by the company are to be confined to the objects specified in the MOA. So it is better to define and include the provisions regarding the acquiring of business, sharing of profits, promoting company and other financial, gifts , political party funds etc If the company acts beyond the powers or the objects of the company that is specified in the MOA, the acts are considered to be of ultra vires. Even if it is ratified by the all the members, the action is considered to be ineffective. Even the charitable contributions have to be based on the object clause. ( A Lakshmanaswami Mudaliar V. LIC of India)

The consequences of the ultra vires transactions are as follows:

a) Injunction b) Directors personal liability. c) If a property has been purchased and it is an ultra vires act, the company can have a right over that property. d) The doctrine to be used exclusively for the companies interest. e) But the others cannot use this doctrine as a tool to attack the company

Articles of Association
It is the companies bye- laws or rules to govern the management of the company for its internal affairs and the conduct of its business. AOA defines the powers of its officers and also establishes a contract between the company and the members and between the members inter se It can be originally framed and altered by the company under previous or existing provisions of law.

AOA
AOA plays a subsidiary part to the MOA Any thing done beyond the AOA will be considered to be irregular and may be ratified by the shareholders. The content of the AOA may differ from company to company as the Act has not specified any specific provisions Flexibility is allowed to the persons who form the company to adopt the AOA within the requirements of the company law The AOA will have to be conversant with the MOA, as they are contemporaneous documents to be read together. Any ambiguity and uncertainty in one of them may be removed by reference to the other.

Contents of the AOA may be as follows:

Share capital Lien on shares Calls on shares Transfer and transmission of shares Forfeiture of the shares Surrender of the shares General meetings Alteration of the capital Directors etc.. Dividends and reserves Account and audit Borrowing powers Winding up Adoption of the preliminary contracts etc.

Doctrine of Constructive notice

MOA and AOA are public documents once they are registered with ROC. Available for public inspection Every person dealing with the company is expected to have the knowledge of the contents of the MOA and AOA and also to have understood them according to their proper meaning. This presumed knowledge --------------------------

Doctrine of Indoor Management

Persons dealing with the company have to satisfy themselves. But need not know the internal irregularity. Constitution of board, quorum, voting, internal resolutions and regulations To investigate into compliance of all the rules of internal management.

Royal British Bank V. Turquand

Turquand Rule Directors had issued a bond to T. they had power under the Articles to issue such bonds provided they were authorized by a resolution of the company. No such resolution however passed by the company.

Decision
T could recover the amount of the bond from the company on the ground that he was entitled to assume that the resolution had been passed

 The doctrine of Constructive notice can be invoked by the company to operate against the persons dealing with the company.

Exceptions to the Doctrine of Where the outsider cannot claim the relief on the grounds of Indoor management

Knowledge of irregularity No knowledge of articles Negligence Forgery Non- Existent authority of the company

Exceptions to rule in Solomon's case

Non-statutory exceptions- where c is used for tax evasion or to avoid tax obligation, for some fraudulent purposes (defeating the creditors or circumventing the law), mere cloak or sham, to determine whether the character, acting as an agent Statutory exceptions-reduction of membership, misdescription of name, fraudulent conduct of business

Can an object clause in MoAs be altered, if so, how?

Legal personality of a company exists only for the particular purposes Interest of shareholders and creditors Two limits i) substantive or physical limit and ii) procedural limit

substantive or physical limit

Sec.17- special resolution and with sanction of the court of petition after due notice to all concerned, alter its objects if such alteration is necessary To carry on its business more economically or more efficiently(In Re Scientific Poultry Breeders Associations- A company forbidden from paying remuneration to its managers---)

Cont.
To obtain its main purpose by new or improved means To enlarge or change the location of its operation To carry on some business which under existing circumstances may conveniently or advantageously be combined with the objects in the MoAs.(general insurance- life insurance)

 To respect or abandon any objects specified in the MoAs To sell or dispose of the whole ,or any part of the undertaking, of the company To amalgamate with any other company or body of persons

Procedure of Alteration

Diff. b/w MOA & AOAs

MoA
Charter of the company Defines the scope of the company Supreme document Must for every company Strict restrictions, some alterations may require sanction of CG Act ultra-vires is wholly void and cannot be ratified.

AoA
Regulations for internal Mgt. Rules fro carrying out the objects of the company. subordinate to the memorandum company limited by shares need not have it. (table A of Sch. 1 may be taken) Can be altered by special resolution. Act ultra-vires but intra-vires the memorandum can be ratified.

Constructive Notice
Constructive notice of memorandum and articles Every outsider dealing with a company is deemed to have notice of the contents of the M & A as these documents assume the character of public documents. Duty of every person dealing with the company to inspect its public documents and make sure that his contract is in conformity with their provisions.

DCN
Whether a person actually reads them or not, he is to be in the same position as if he had read them and will be presumed to know the contents of these documents. This kind of presumed notice is known as Ook Bank Oil Co. v Crum (1882)- not only have read the memorandum and the articles but to have understood them properly.

DIM
The rule CN proved too incontinent for business transactions, particularly where the directors or other officers of the company were empowered under the articles to exercise certain powers subject only to certain prior approvals or sanctions of the shareholders. Whether those sanctions and approvals had actually been obtained or not could not be ascertained. This is DIM

DIM
Persons dealings with the company in good faith have a right to assume that the internal requirements prescribed in public documents (memorandum and articles) have been observed. IOW. Persons are not bound to enquire into regularity of internal proceedings.

Royal British Bank Vs Turquand

In this case the directors of a company were authorized by the articles to borrow on bonds, as authorized by the shareholders. The directors gave a bound without the authority of any resolution. It was held that the company was liable on the bond, as T was entitled to assume that the resolution of the company in general meeting had been passed.

Doctrine of Indoor Mgt

The DCN, however has one limitation, that is, so far as the internal proceedings of the company are concerned, the stranger dealing with the company are entitled to assume that everything has been done regularly and was laid down in the Tarquand case. Not to enquire into the regularity of the internal proceedings He is entitled to assume that they have been properly complied with although, in fact, they have not been compiled with at all.

Cont.
DIM is based on public convenience and justice M&A are public documents, open to public inspection, but the details of internal procedure are not open to public inspection. Hence the outsider is presumed to know the constitution of a company, but not what may or may not have taken place within the doors that are closed to him

DIM/RIM
Secondly, the lot of creditors of a Limited company are not happy one, it would be unhappier still if the company could escape liability by denying the authority of the officials to act on its behalf. DIM is of great practical utility. It has been applied to secure justice.

Doctrine of Constructive notice and Indoor Management

Persons dealing with the company have to satisfy themselves. But need not know the internal irregularity. Royal British Bank V. Turquand (Turquand Rule) Directors issuing a bond. The doctrine of Constructive notice can be invoked by the company to operate against the persons dealing with the company.

Exceptions to the Doctrine of Where the outsider cannot claim the relief on the grounds of Indoor management

Knowledge of irregularity No knowledge of articles Negligence Forgery Non- Existent authority of the company (act outside the apparent authority)