/ Company Law of Bangladesh 51

is. It enables these parties to know the purpose, for which their
money is going to be used by the company and the nature and extent
•tELn.Lau't;%esu;-Ti:i;i;;oc-;-riiniounof|reiandfl2pase,tiwastyh€
of risk they are undertaking in making investment.

that, the memorandum contains fundamental conditions upon which

alone the company is allowed to be incorporated. They are
conditions introduced for the beneflt of the creditors and the outside
public as well of the shareholders. In Egxpfr.¢ro S¢/f a"d Soda Co.
£fd. y Pol.f S¢!.d SflJf 4ssocl.¢f}.on I,fd.73 case, it was held that, "the
purpose of memorandum of association of a company is to enable
sharebolders, creditors and those who deal with the company to
know what is its permitted range of enterprise".

4.2 Definition & nature of memorandum of association

The memorandum of association is a document which cc`ntains
the fundamental rules regarding the constitution and activities of a
company. The preparation of Memorandum of Association is the
first step in the formation of a company. It is the charter of the
company. It governs the relationship of tbe company with the
outside world and defines the scope of its activities',.
Section 2 (1) (n) of the Companies Act 1994 defil'.es
memorandum of association asl "memorandum" means the
memorandum of association of a company as originally framed or
-:::ifi-kifn;Lirtadft4Sca::e,at:d;as°hdea+d€h°:t,±Lttd::#e;isstaotdensba+its
as altered in pursuance of the provisions of this Act".

the share holders, creditors and those who deal with the company to
know what is its permitted range of enterprise".
i+-a;;;;ers;-ir; Land Eorporati;n Of Irelandfl5_ .c?se,. it wpe
held that, "it contains fundamental conditions upon which alone the
company is allowed to be incorporated. They are conditions
introduced for the benefit of the creditors and the outside public as
well of the share-holders".

;;{}§§i}'2%hh66j77::;
52
/ Company Low of Bangivdesh

h4sfobzfryR¢i.twdyC¢rrz.¢gc&Co.VsRz.cAc76case,thecout
held that,"thememorandumis,asitware,theareabeyondwhich
the action of_the1 company
lil, I++,,-`,.- camot go; for
---- 1 -amilatinns inside
theirthat
ownarea the share-
government as
holders may make such regulations tor uicii uvv,Lt 8v , ____
theythinkfit".
AccordingtoC¢i#,I.E.-"thememorandumofassociationis
theregisteredcompany'schateranddefinesitspower".
According to P¢J1%er- "the memorandum of association is a
documentofgreatimportanceinrelationtobeproposedcompany.
It contains the objects for which the company is formed and
therefore identifies the possible scope of its operations beyond
whichitsactioncannotgo.Itdefinesaswellasconflnesthepowers
ofthecompany.Ifanythingisdonebeyondthesepowers,thatwill
beultraviresofthecompanyandsovoid.
Fromtheabovediscussionitcanbesaidthat,thememorandum
ofassociationisthemaindocumentofthecompanywhichdefines
itsobjectsandlaysdounthefundamentalprinciplesuponwhichthe
companyisallowedtobeformed.

4.2Purposesofmemorandumofassociation
Thepurposesofmemorandumofassociationofacompanyistwo
fold; a) The prospective shareholder shall know the fleld

orthepurposeforwhichtheirmoneyisgoingto are
• 1 - .i^^ ^^mt`anv and what risk they
used ty the company aiiu yy+jLu. ..___ .
undertakinginmakinginvestment.77
b)Thememorandumgivesprotectionstopersonswho
dealwiththecompanyandwhocaninferfromitthe
extentofthecompany'spower.Theycanknowwith
certainty as to what the objects of the company are
andastowhetherthecontractualrelationtowhich

::(#|:.ci;i|BHjs:;:s5s3i::ts..secondedi.P.51
 Company Law of Bangladesh 53

they contemplate entering with the company is

Within the corporate objects of the company.78

Tn Egyptian Salt and Soda Co. Ltd. V Port Said Salt Association
ffd.79 case, it was held that, "the purpose of memorandum of
association of a company is to enat)le shareholders, creditors and
those who deal with the company to know what is its permitted
range of enterprise" .

4.3 Essentials of a memorandum of association

The essentials of memorandum of association of a company are
discussed below;
1. The name of the company with the word "limited" at the end of
the name of a public company and the words "private limited" at the
end of the name of a public company. The name of a company is
very important.
2. Memorandum of Association must state the name of the place in
which the registered office of the company is to be situated. It will
fix up the domicile of the company.
3. Memorandum shows the object or objects for which the company
is fomed and also determines the extent of the powers which the
company can exercise in order to achieve the object or objects.
4. The memorandum of a company limited by shares or by
guarantee shall also state that the liability of its members is limited.
5. In case of a company having a share capital unless the company
is an unlimited company, Memorandum shall also state the amount
of share capital with which the company is to be registered and
division thereof into shares of a fixed amount.

4.5 Rigid charter or fundamental documents or supremacy of

the memorandum
The memorandum of association is an unalterable charter of a
Company to some extent. It is the fundamental document of the
Company. Being the very basis of the company, it'is not allowed to

78 Cotman V Broughman. (1918). A.C. 514.

(1931). A.C. 677.

- 54 / CompanyLowofBangladesh
bealteredbythecompanyeverynowandthenintheinterestsofits
creditors, members and the outside public dealing with it. The
supremacyorunalterablecharterofthememorandumisrecognized
by section 12 of the Companies Act 1994. It lays down that, the
alteration shall not take effect until and except in so far as it is
confirmedbytheCoutonpetition.8°Thisiswhyitcanbesaidthat,
• ComF
J. Jot
is the
There

the memorandum of a company is the supreme or fundamental

`'¥n"se%%Ss°hta&Tce°xEIrJointstock_£CO_r93^nrtQensBA\n=Snei.t=sfo&cS\&b,%dn
documents of a company.

that, amendment of object clause of memorandum of association

can be confirmed, if proposed addition in object clause relate to
In Jfa"`
cany on its business more economically and more efficiently. In
that, "f
Ve#k¢f¢r¢I%¢#yrfteCol.%b¢foreMerc¢j.fj/eB¢I.fr82case,itwas
shall n(
held that, only those provisions are regarded as conditions that are
existen(
required by sections 6,7 & 8 to be stated in the memorandum of
be calcl
association. Any other thing stated in the memorandum can be
alteredbypassingspecialresolution.
Fromtheaboveitcanbesaidthat,itisnoteasytochangethe
memorandum whenever it is asked by its Tembers, creditors and
shareholders.Itcanbechangedonlybypassingaspecialresolution
tothateffect.Thusthesupremacyofthedocumentsareestablished.

4.6 Contents of Memorandum

Sections6,7,and8oftheCompaniesAct,1994providesthe
2. Situat
essentials or particular which are to be mentioned in the
The
memorandumofassociationofacompany.Byproperdissectionof
this claus
section 6, 7 and 8 of the Companies Act, we get the followlng
contentsofmemorandumofassociationofacompany.Suchas; place in \
It will fl}
Company
1. Name clause:
or addres!
The first section will determine the name of the company
of court o
proposed.Thenameofthecompanywiththeword"limited"atthe
end of the name of a public company and the words "private
limited"attheendofthenameofaprivatecompany.Thenameofa (1962) 9 w
Companies
(1987), 39
80 See.12(2), Companies Act,1994.
ompanies
8` (2o| 1) 16 BLC 173.
82 AIR. 1924. Mad.126.
 / Company Law of Bangladesh

company is very important. In Osbor# ys rfee 8¢#4 a/ ZJ583, case,

SS

J. Johnson observed that, "The name of the corporation or company

is the symbol of its personal existence".
There are some rules regarding the name of a company. Such as;
1. Undesirable names to be avoided: A company
cannot be registered by a name which is undesirable.
The name of a company becomes undesirable if it is
either-
(a) too similar to the name of another company;
[Sec.11(1)]84or
(b) misleading, i.e. suggesting that the company will
mislead by the name.
Tn Shafiqul Haider V M. Al-Amin and another85 cErse, it was hond
that, "Section 11 of the Companies Act provides that a company
shall not be registered by a name with that by which a company in
existence is already registered so nearly resembling that name as to
be calculated to deceive. "
2. Prohibited names by the Act: No company shall be
registered by a name or any abbreviation of the
name of the United Nations or of any subsidiary
body set up by the United Nations or of the World
Health Organization unless the company obtained

;hoedperse.¥:ig:c:##Zationinwritingoftheaforesaid

2. Situation clause:
The situation and address of a registered company is included in
this clause. Memorandum of Association must state the name of the
place in which the registered office of the company is to be situated.
It will fix up the domicile of the company. Registered Office of a
company is the place of its residence for the purpose of delivering
or addressing any communication, service of any notice or process
of court of law and for determining question of jurisdiction of courts

i:i::;£)i:3:;::i:j¢(:(#::170338
= 56
EI
Company Law of Bangladesh

in any action against the company. It is also the place for keeping
statutory books of the company.
Section 77 (1) of the Companies Act provides th:at, a
company shall as from the day on which it begins to carry on
business or as from the twenty-eight day after the date of its
incorporation, whichever is earlier, have a registered office to which
-I-a+;;;;-;;;;;;-Tyre
all communications andandnotices
Rubbe;may
Co.beLtd. Vs Daimer Co. LtT7
addressed.
Com
case, the Cout held that- "the situation clause of a company also Com
determines the nationality of the company". In S¢kfe¢w¢f ffoss¢I.# men
V Chittaranjan Cotton Mills Ltd.88 ca.se, it was observed I_hat, I_I_:hp ontl
removal of the registered office is from the jurisdiction of one High Inc€
Court to the jurisdiction of another, within the same country, the state
company has to obtain permission from the High Court within
8uan
whose jurisdiction the registered office was situate. Inc(
unlin
3. Object Clause T
This is the most important clause in the memorandum because thec
it not only shows the object or objects for which the i`ompany is share
fcrmed but also determines the extent of the powers which the they 1
company can exercise in order to achieve the object or objects.
Stating the objects of the company in the memorandum of 5.Ca
association is not a mere legal technicality but it is a necessity of T]
great practical importance. It is essential that the public who havin(
purchase its shares should know clearly what are the objects for Mem(
which they are paying. which
The necessity of objective clause is beyond description. For this shares
reason irL Cotmrin Vs Brougham89 case, Justice Parker sixid tpp:I, registc
''the objective clause of a memorandum of a company bears double
Aeon
purposes. First it protects the interest of the share-holders. Secondly time b,
the persons who are closely related with the company can know its Ac(
object." memo]
In Evfl!i®s yBrz¢##er, Mo"d & Co.90 case, it was observed that,
a company, engaged in manufacture of chemicals, proposed to
_I

::{:;:§}.ti¥LBLR8.9;67f.A. ::!?mpi
Comp!
89 See AIR 1944, Born.131.135. M.C.K
90 (|92|) 1 Ch. 359.
 / Company Lo[w of Bangladesh

devote a substantial sum of money to the encouragement of

S]

scientific education. It was proved that this act would ultimately

benefit the company, but a shareholder objected on the ground that
it was beyond the powers of the company. Held, the proposal was
fairly incidental to the company's objects.

4. Liability clause:
This clause contains the liability of the share owners of the
company. Section 5(a) of the Companies Act provides in case of
company limited by share a company having the liability of its
member limited by the memorandum to the amount, if any, unpaid
on the shares respectively held by them.
In case of a company limited by guarantee, the liability clause must
state that the liability of the members shall be limited by
guarantee.[Sec.5(b)]9]
In case of unlimited company, the liability of each member is
unlimited. [Sec.5(c.)]92
This means that the members can only be called upon to pay to
the company at any time the uncalled or unpaid amount on the
shares held by them, or up to the maximum of the amount which
they have guaranteed.93

5. Capital clause:
The capital clause is very important. In case of a company
having a share capital unless the company is an unlimited company,
Memorandum shall also state the amount of share capital with
which the company is to be registered and division thereof into
shares of a fixed amount. The capital with which a company is
registered is called "registered" or "authorized" or "nominal" capital.
A company cannot issue more shares than are authorized for the
time being by the memorandum.
ALccordirLg to section 6 Of the Companies Act, 1994- "the
memorandum shall state. The amount of share capital with which

:;8::3=i::A::;i;;::
M.C.Kuchal. Second Edi. Business Laws. P.56.
58
/
V Company Low of Bangladesh

the company proposes to be registered, and the divisions thereof

into shares of a fixed amount"

6. Subscription or consent clause:

This clause contains the assent of the members of the company
whoagreetobuytheshares.Thesingedmembersdeclaredbythis
clausethattheywillbuythatamountofshareincludedbesidetheir
name and they will form the company according to the
memorandum.
Secfr.o#6o/ffoeComp¢ftl.es4cf,providesthat-eachsubscriber
of the memorandum shall take at least one share. Each subscriber
shall write opposite to his name the number of shares he takes.94 `
The memorandum of every company shall be signed by each
subscriber,whoshalladdhisaddressanddescriptioninthepresence
of at least two witnesses who shall attest the signature.95However,
no subscriber can withdraw his name after registration on any
ground what so ever.96 But before registration he may do so as
"there is no contract at all"97.

4.8Formofmemorandumofassociation
Section 226 of the Companies Act lays down that the
memorandum shall be in accordance with the prescribed form in
Schedules VI to XII or as near to it as the circumstances admit.
Theseprescribedforms,asgiveninScheduleVItoXIIoftheAct,
are as follows;
a)Incaseofacompanylimitedbyshares,thememorandumof
association of a company will refer to Schedule VI and
Section 6 and 226.
b) In case of a company limited by guarantee not having a
sharecapital,thememorandumofassociationofacompany
willrefertoScheduleVIIandSection7and226.
c)Incaseofacompanylimitedbyguaranteewithhavingshare
capital,thememorandumofassociationofacompanywill
refertoScheduleVIIIandSection7and226.
94 Section 6(c), Companies Act, 1994.
95 Section 9(c), Companies Act,1994.
96 |n Re Lord Lurgan's Case (1902) 1 Ch.707.
97 Ibid.
 / Company Low of Bangladesh S9

d) In case of an unlimited company with having share capital,

the memorandum of association of a company will refer to
Schedule IX and Section 8 and 226.

4.9 Printing and signature of memorandum

Section 9 of the Companies Act provides the provision
regarding the printing and signature of memorandum of association
of a company. Here it is said that, the memorandum of every
company shall-
(a) be printed;
(b) be divided into paragraph numbered consecutively;
and
(c) be signed by each subscriber; who shall add his
address and description in the presence of at least
two witnesses who shall attest the signature.
Thus the signature of each subscriber must be attested as least in
presence of two witnesses98. But a subscriber himself can't sign as a

yet:eds:Cads.9%Pers°nwhoisapartytoadeedcan'tbeawithesstothat

4.10 Registration of memorandum of association

Section 23 of the Companies Act provides the provisions
regarding the registration of memorandum. Here it is said that, if the
memorand`im is filled with the Registrar after fulfilling all the
requirements under the Act and if the Registrar satisfied that all the

:eec:Sosr¥d£CuwTteh::St£:#;:frfuo[£]::::ha::ohfet£:1:`[r::e¥;::iroothf
the event of refusal he shall communicate the grounds thereof
Wfthft;.nKfaffyrs,.safrft„e;tpa#:¢d;°r;B%:°pTv:afr£:1°;2case,itwasheld

faavt;geeeF::££t;:Ire::Sftt£:gisker;h;ecg:.s¥rp¢arnrgrffctoh:;:::.:sfipoFc:[s£::e£:
98 See.|9(c). Companies Act,1994.
99 Seal V Calaridge. 50 L.J.Q.B. 316.
100rl ^^,1\ -
See.23(1), Companies Act,1994.
See.23(2), Companies Act,1994.
(1960), A.P. 123.
1°3 (|9|4), 3 K.B.1161.
 Company Law of Bangladesh 61

forthwith of exercising all the functions of an incorporated

company and having perpetual succession and a common
seal bet with such liability on the part of the members to
contribute to the assets of the company in the event of its
being wound up as is mentioned in this Act.

In ".„. Jsp¢fo¢ffl!. I,fd. ys.4. R¢fom¢#}°7 case, it was held that, as

soon as a company is incorporated under section 23 and certified
under section 24 conclusive evidence is that a new company has
been formed. In SoJo#co# yso/ol%o# & Co. £fd. `°8 case, it has been
decided that from the date of incorporation a company has pexpetual
-::ii:i;:I-.-+:-ii;e;;e=s.
existence until it is -diilna Co`pepa;n_y
dissolved Ltd. V 4orJab,b.ar:.°9
by liquidation struck-out c?3e`,_::.
of the

was held that, certificate granted by Registrar is ineffective in law

when it is obtained fraudulently.

4.11 Alteration of memorandum of association

The memorandum of association of a company can be altered by
following the procedure laid down in the Companies Act 1994. The
procedure is different for different clauses of the memorandum.

Purposes for alteration

Section 12 of the Companies Act provides that, a company may, Oy
a special resolution, alter the provision of its memorandum with
respect to the objects of the company. Such as;
(a) to carry on its business more economically or more
efficiently; or
(b) to attain its main puxpose by new or improved means; or
(c) to enlarge or change the local area of its operations; or
(d) to cany on some business which, under the existing
circumstances. may conveniently or advantageously be
combined with the business of the company; or
(e) to restrict or abandon any of the objects specifled in the
memorandum; or

!°7 2o DLR. (1968) S.C.173.

1897. A.C. 22.

`°9 (1968), 20 DLR. (SC) 335.
- 62 Company Law of Bangladesh

(i) to sell or dispose of the whole or any part of the

undertaking of the company; or
(g) to amalgamate with any other company or body of persons.

Ip 5hflsha T.extiles Y Joint Stock Companies"0 case, it was irene

that, "amendment of object clause of memorandum of association
can be confirmed, if proposed addition in object clause relate to
cany on its business more economically and more efficiently." In
ConsI
Ye:f tq.taraya? V. The Coimbatore Me;cantile BankJ" case,'it ;:s
held that, "only those provisions are regarded as conditions that are with
required by sections 6,7 & 8 to be stated in the memorandum of regis,
association. Any other thing stated in the memorandum can be of usl
thed
£[,t;.refteqy2P:::]e:gftsp£:I;a[breeesn°[udt::fa':d]nthRa?,":I"aru'.:esc°of:£:rig.;I: one h.
conditions may Oe altered generally by special resolutions, as if they
(3) If
are contained in the Articles. A clause in the memoranduni made
regarding the right of dividend of class of sbare holders may be flne o
altered by special resolution. contin
shall I
Procedure for alteration during
The procedure is different for different clauses of the memorandum. (4) Ex,
We will discuss one by one. no COII
Govern
1. Change of name: Provide
Section 11 of the Companies Act provides that, a company may register
alter its name at any time but the only one condition is that the (5) No
change must be done in accordance with the provisions of the form tl]
Corapanies Act 1994. A company may alter its name by adopting Nations
the following resolution. the Wor
(a) by
`(b) byaan
special resolution;
ordinary resolution; previous
case of t
Section I 1 contains the detailed provisions regarding the change of the Dire(
name of a company. Here the provisions are following- that Org€
(6) Any
approval
(7) Were
:::£2}°±.]}g[264P#7]32.6. new nam
`]2 (|959), 253. 63 C.W.N. I I. issued a i
 Company Law of Bangladesh 63

(1) A company shall not be registered by a name identical with that

by which a company in existence is already registered, or so nearly
resembling the name that there is likelihood of using the name to
deceive, except where the company in existence is in the course of
being dissolved and signifies its written consent in such manner as
the Registrar requires.
(2) If a company, through inadvertence or otherwise, is, without the
consent referred to in sub-section (1), registered by a name identical
with that by which a company in existence is previously is
registered, or so nearly resembling the name that there is likelihood
of using the name to deceive, the first mentioned company shall, on
the direction of the Registrar, change its name within a period of
one hundred and twenty days.
(3) If a company makes a default in complying with the direction
made under sub-section (2), the company shall be punishable with
fine of five hundred take for every day during which the default
continues and every officer who is in default
shall be punishable with fine of one hundred taka for every day
during which the default continues.
(4) Except with the previous consent in writing of the Goverrment,
no company shall be registered by a name which is declared by the
Government by notification in the official Gazette, as undesirable:
Provided that nothing in this sub-section sball apply to companies
registered before the commencement of this Act.
(5) No company shall be registered by a name containing in any
form the name or any abbreviation of the name of the United
Nations or of any subsidiary body set up by the United Nations or of
the World Health Organisation unless the company has obtained the
previous authorisation in writing of the Secretary General in the
case of the United Nations or the subsidiary body as aforesaid or of
the Director General of the World Health Organisation in the case of
that Organisation.
(6) Ariy company may, by special resolution and subject to the
approval of the Registrar signified in writing, change it name.
(7) Were a company changes its name, the Registrar shall enter the
new name on the register in place of the fomer name, and shall
issued a certificate of incorporation in its new name to meet the
 / Company Law of Bangladesh

4z+ £I.#cs Corpor¢fz.o#] ]7 case, it was held that, the change of name
can take place on compliance with the provisions of the Companies
65

Act provided it is not prohibited by any other statute.

2. Change of object clause:

Like the name clause the object clause can also be changed. But
the alteration of object clause is very complicated and difficult task.
The alteration of object clause requires the alteration of
memorandum itself. Section 12 of the Companies Act provides the
provisions regarding the alteration of object clause. The object

:i:UOS:j:cTs::tahL:e::din:¥npy:SsS:nf8araassp:Ca±;Lbree::iuut££r°end%]tehn:;SL:e£::I:g
(a) to carry on its business more economically or more
efficiently; or
ro) to attain its main purpose by new or improved means; or
(c) to enlarge or change the local area of its operations; or
(d) to carry on some business which, under the existing
circumstances. may conveniently or advantageously be
combined with the business of the company; or
(e) to restrict or abandon any of the objects specified in the
memorandum; or
(I) to sell or dispose of the whole or any part of the
undertaking of the company; or
(g) to amalgamate with any other company or body of persons.

Court's procedure:
Section 12 (2)(3),of the Companies Act provides the procedure for
alteration of object clatise of memorandum. Such as;
The alteration shall not take effect until and except in so far it is
confirmed by the Cout on petition.I ro However Before confirming
the alteration, the Court must be satisfied-
(a) that sufficient notice has be?n given to every holder
debentures of the company, and to any person or class

'!7 AIR. |966. Cal 272.

'[8 See.12(1), Companies Act,1994.
![9 See. |2(2), Companies Act,1994.
H 66
/
Con.pany Law of Bangladesh

person whose interest will, in the option of the Court, be

affected by the alteration; and
(b) that, with respect to every creditor who in the opinion of the
Court is entitled to object, and who signifies his objections
in mamer directed by the Court, either his consent to the
alteration has been obtained or his debt or claim has been
discharged or has been determined, or has been secured to
the satisfaction of the Court;

Submission of documents to the Registrar:

Section 15 of the Act provides the provisions regarding the
submission of documents to the Registrar. It provides that- A
certified copy of the order confirming the alternation, together with
a printed copy of the memorandum as altered, shall be filed by the
company with the Registrar within ninety days from the date of the
order or within such time as may be extended by the court, and he
Registrar shall register the same. and shall certify the registration
under his hand, and the certificate shall be conclusive evidence that
all the requirements of this Act, with respect to the alteration and the
confirmation thereof, have been complied with, and hence forth the
memorandum so altered shall be the memorandum of the company.
Im the matter of Union Bank Ltd.}2° case, it was held that,
altered memorandum of association granted by the High Court to be 4.CI
T]
filed with the Registered of Joint Stock Companies within the time
Comr
specified in section 15. Further time may be granted under the
Proc€
proviso to section 16. When all these not availed of. Held; the
in se(
alterati.on of memorandum becomes void.

5. CII
3. Change of liability clause:
No change can be made in liability clause so as to take make the
liability of members unlimited. Section 21 of the Companies Act
says that- no member of the company shall be bound by an
alteration made in the memorandum or articles after the due on
i', .: ;i
S(

which he becomes, member, if and so far as the alteration requires

him to take or subscribe for more shares than the number held by
him at the date on which the alteration is made, or in any way

12° (|969), 21 DLR.135.

 Company Law of Bangladesl. 6]

increases his liability is at that date to contribute to the share capital

of, or otherwise to pay money to the company.

|ns:#ra#caertsocc#eatyndLrtad.II\°8:se#s:¥egntndde%3:e#thca::#eenr?#evree
is valid alteration then all the members would be bound by it
whether they vote in favour or against it.

Registration of unlimited company as limited:

Section 72 of the Companies Act provides that- any company
registered as unlimited may register under this Act as limited and
any company registered before the commencement of this Act as a
limited company may re-register under this Act, but the registration
of an unlimited company as a limited company shall not affect any
debts, liabilities, obligations or contracts incurred or entered in :o by,
to, with or on behalf of, the company before the registration.

EocLteettyhibz2rtdc8aese:itAdhaa:SbeEexnpadtteec3dJen#rt£:tt:°#e:eifeernASusnu+]r#tceed
company is registered with limited liability then no contributory
would be liable to contribute more than the amount of shares in case
the company is woind up.

4. Change of situation and address clause:

The procedure for changing the situation and address clause of a
company is same as like as the change of object clause. The
procedure of alteration of situation and address clause is contained
in section 12(I) of the Companies Act.

5. Change in capital clause:

Sections 53, 59 and 65 of the Companies Act provides the
procedure for the alteration of capital clause of the memorandum of
a company. A company limited by shares, may alter its capital
clause only if so authorised by its articles of association. Section 53
of the Act says about the increase of share capital while section 65
and 59 says about the decrease of share capital.

AIR.1925. Cal.690.
122 (|872), LR.13 Esq 547.
68 Company Lowof Bangladesh `/
4.14 Doctrine of ultra-vires
Basic concept
The clause of the Memorandum of the contains
the ot An act of the Company
must it will be
ultrarv i,:fi:':==:-::::=::::i,:``::I::.::c:i:-`=-:`';:i-i:.``:`:;:i:I:.::-`i:`:n if all the

::::eRE:t:
Carria e and Iron Com
established
is called

Ltd v. RIche.12:3 Thus the expression

AS4frflELRailway

ultra vz.res means an act beyond the powers. Here the expression
#//rcz w.J~ef is used to indicate an act of the company which is beyond
the powers conferred on the company by the objects clause of its
memorandum.
Thus the terms ultra-vires derives from two words, `ultra' which
means beyond, and vires which means power. So the adjoining term
ultra-vires means to do any act which is beyond the power.
Memorandum of association is the fundamental document and
constitution of the company. The doctrine of ultra-vires is closely
related with the object clause of the memorandum. This ot
clause contains the power, function and purpose of the company.
The company can't do any act which is contrary !o the objec
clause of the company. But if the company violates the object claus
of the company and does an act which is beyond itsjurisdiction, it
called doctrine of ultra-vires.
In London Courty Council Vs Attorney GeneralL24 case,
Court held that, a contract made by the directors upon a matte
authorized by the memorandum of association of the compan
ultra-vires the company and therefore the directors.
in Ashbury Railway Carriage & Iron Vs RicheL25 in this
the company was made to make and sell, or lend or hire, ra
carriages and wagons and all kinds of railway plants, etc. to -ca
business of mechanical engineers and general contractor
company later entered into a contract with the railway
firm of Riche to finance the construction of railway line in

::;(:i;§}'£"CR:6;5::CLh6]5835
 Company Law of Bangladesh
/
Subsequently, the company repudiated the contract on the ground of
ultra-vires.
09

In Jahangir R. Modi Vs Shamji Ladha\26 ca[se, the Corlrt trend

that, the directors on behalf of the company make a contract of
shares of anotherjoint stock company. But it was not included in the
memorandum. So it was held that it is ultra-vires.
An ultra vires act is void and cannot be ratified even if all the
directors wish to ratify it. Sometimes the expression #/trcz vz.7'es is
used to describe the situation when the directors of a company have
exceeded the powers delegated to them. Where a company exceeds
its power as conferred on it by the objects clause of its
memorandum, it is not bound by it because it lacks legal capacity to
incur responsibility for the action, but when the directors of a
company have exceeded the powers delegated to them. This use
must be avoided for it is apt to cause confusion between two
entirely distinct legal principles. Consequently, here we restrict the
meaning of #/frcz vz.res objects clause of the company's
memorandum.

Basic principles included the following:

a) An z{/frcz 1;I.res transaction carmot be ratified by all the
shareholders, even if they wish it to be ratified.
b) The doctrine of estoppel usually precluded reliance on
the defense of ct//rcz vz.res where the transaction was
fully performed by one party
c) 4 /or/I.orz., a transaction which was fully performed by
both parties could not be attacked.
d) If the contract was fully executory, the defense of w/f7i¢
vz.res might be raised by either party.
e) If the contract was partially performed, and the
performance was held to be insufficient to bring the
doctrine of estoppel into play, a suit for quasi contract
for recovery of benefits conferred was available.
I) If an agent of the corporation committed a tort within
the scope of his or her employment, the corporation
could not defend on the ground the act was #/fr¢ vz.reLs.

]26(]866.67)4Bom.HCR185.