MEMORANDUM OF ASSOCIATION

INTRODUCTION CONTENTS ALTERATIONS

Case :
A company which was formally forbidden by its Articles of Association from paying remuneration to its managers wanted to alter its objects clause so as to acquire power to pay this remuneration to carry on its business more economically or efficiently. Was this alteration allowed???

FACTS
In this case a company was incorporated for the purpose of introducing scientific methods in feeding, housing and breeding poultry. Memorandum of the company prohibited payment of any remuneration to the directors. The company's business increased and the governing body found that they were not able to give the necessary time to the management of its affairs unless they were paid for their services.

 Alterations in the objects of the company were proposed to remove the prohibition against payment of remuneration to them. The judge initially refused to sanction alterations as it involved a fundamental change in the constitution of the company.

Verdict of the case :

Legal Answer : Yes , the alteration of objects clause of the Memorandum of Association is allowed. Legal Justification : The power of alteration of objects is subject to two limits , namely (1) Substantive or physical limit (2) Procedural limit

Substantive limit : By Section 17(1) , the objects of a company may be altered by a special resolution so as to enable the company (a) To carry on its business more economically or more efficiently : The alteration must , however , leave the business of the company substantially what it was before the alteration. This clause contemplates only those changes in the mode of conducting business as will enable it to be carried on more economically or more efficiently.

Reference Case :

Scientific Poultry Breeders Association

MEMORANDUM OF ASSOCIATION
Memorandum of Association of a company is its charter & defines the limitations of the powers of a company. It contains the fundamental condition upon which alone the company is allowed to be incorporated - Lord Cairns

DEFINITION
Memorandum of Association of a company as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act Sec.2 (28)

PURPOSE
The purpose of Memorandum of Association is to enable the share holders, creditors and those who deal with the company to know what its permitted range of enterprise is. - Lord Macmillan

FORM OF MEMORANDUM OF ASSOCIATION

Form as given in table B, C, D, & E in schedule I
Table b relates to MOA of a company limited by shares. Table c relates to MOA n AOA of a company limited by guarantee and not having a share capital Table d relates to MOA n AOA of a company limited guarantee and having a share capital

 table e relates to MOA and AOA of unlimited companies. PRINTING AND SIGNING OF MOA: Printed Divided into paragraphs Numbered consecutively Signed by at least 7 persons for public & 2 for private company. Signatures attested by one witness. Subscribers shall at least take one share

CONTENTS OF MEMORANDUM OF ASSOCIATION

CONTENTS

Name

Objects

Registered office

Liability

Capital

Association

NAME CLAUSE
Rules Undesirable name to be avoided Injunction if identical name adopted Limited or Private Limited as the last word or words of the name Prohibition of use of certain names Use of some keywords according to authorised capital -Publication of name

ALTERATION OF NAME CLAUSE

-By special resolution

-By ordinary resolution Fresh certificate of incorporation Rights and obligations remain unaffected

REGISTERED OFFICE CLAUSE: Every company must have a registered office Every change shall be given to the registrar If default is made ,its punishable

ALTERATION OF REGISTERED OFFICE CLAUSE

Change in Registered office involves the following 2 steps: Change of registered office within a state Change of registered office from one state to another

PROCEDURE OF ALTERATION
1. Special resolution 2. Confirmation by the central government 3. Notice to affected parties 4. Notice to registrar 5. Power of the central government to confirm change discretionary 6. Rights and interest of members & creditors to be taken care of

7. Purchase of shares of dissentient members 8. Copy of special resolution & the order of the central government to be filed with the registrar Extension of time Effect of failure to register Loss of revenue of state, if relevant consideration. Members of the company and not state to decide-interference by state not warranted.

OBJECT CLAUSE
The objects clause both defines and confines the scope of companys powers, and once registered, it can only be altered as provided by act. The narrower the objects expressed in memorandum the less is the subscribers risk but the wider such objects the greater is the security of those who transact business with the company

PURPOSE

 Objects clause in memorandum has to state: a) Main objects b) Other objects

Subsidiary objects Incidental acts: Forrest v Manchester London county council v attorney general

ALTERATION OF OBJECT CLAUSE

Amendment act 1996. The power of alteration of objects is subjected to two limits: a) Substantive or physical limit b) Procedural limit

SUBSTANTIVE LIMIT
To carry on its business more economically or more efficiently. Scientific poultry breeders assn. To attain its main purpose by new or improved means. To enlarge or change the local area of its operations. Egyptian delta land & investment co. To carry on some business which may conveniently or advantageously be combined with business of the company.

 To restrict or abandon any of the objects specified in the memorandum. To sell or dispose of the whole, or any part ,of the undertaking , or of any of the undertaking, of the company. To amalgamate with any other company or body or person.

PROCEDURE OF ALTERATION
1. Special resolution 2. Copy of special resolution to be filed
3. Certification of registration.

SHARE CAPITAL CLAUSE:

Registerd, Nominal or Authorized

Alteration:
Increase nominal share capital Divide any part of its share capital Convert fully paid up shares Sub-divide its shares Cancel shares

Ordinary Resolution Required

THE LIABILITY CLAUSE:

Limited by Shares or By Guarantee. Alteration: Consent of all required.

ASSOCIATION CLAUSE
The association clause states : We , the several persons whose names and addresses are subscribed , 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 set opposite our respective names.

THANK YOU
By: kajal Niharika Shruthi.A Shivangi Vishwani Zharna