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  2. 2.  Under Section 2(28) of the Companies Act, 1956 the “Memorandum means the memorandum of association of the company as originally framed or as altered from time to time in pursuance with any of the previous companies law or the Companies Act, 1956.” CH Compulsory Compulsory Forr Fo Registration Registration A RT ER o Co n r stitu of th tion e co . 2
  4. 4. 1. Name Clause[ section 13(1) (a)] PUBLIC CO. LIMITED PRIVATE CO. PVT LIMITED The company is free to choose any name but it must not be undesirable or must not resemble the name of any other registered company 4
  6. 6.  An important clause  Must be very drafted carefully;  Determines the activities of the company.  In it each and every detail of activities of the business to be carried out must be laid down. 6
  7. 7. Ancillary or incidental to attainment of main objective Main Object To Be Pursued For Incorporation Covers those objectives not covered under ‘main objects’ 7
  8. 8.   This clause states the nature of liability of the members of the company .in the case of a company limited by share or by guarantee the fact that the liability of its members is limited must be made absolutely clear . In case of a company limited by shares the liability of a member is limited to the nominal value of the share held by him .if the share are fully paid up his liability is nil. But in case of partly paid-up shares the liability is limited to the amount which is unpaid. In case of a company limited by guarantee ,the liability clause must state the amount which every member undertakes to contribute to the assets of the company in the event of its winding up 8
  9. 9.   This clause states that amount of the capital with which the company is to be registered .this clause should also state the number and face value of shares into which the capital of the company is divided The capital with which the company is ‘registered’ or ‘nominal’ or ‘authorized’ 9
  10. 10.  The association clause states – in this cause , the subscribes declare that they desire to be formed into a company and agree to take the shares stated against their names .the names ,address and occupation of the subscribers must be given each subscriber must sign in the presence of at least 10
  11. 11. • 11 Husband and wife, Niraj and Seema Mishra, based in Mumbai, are forming a company. They want a short name for the company with their surname in it. The company is being formed to run a restaurant. They project they would need 20 lakhs as the capital of the company. Immediately, the husband would contribute Rs. 2,00,000 to the share capital of the company and wife Rs. 10. Mr. Mishra hopes to find others, after the company is formed, to take the shares of the company. They also contemplate occasionally hiring out the car they would buy for the company. Develop a Memorandum of Association for the Company.
  12. 12. I . The name of the company is Mishra Private Limited II. The registered office of the company will be situated in the state of Maharashtra. III. The objective for which the company is begin established are as follows: a. Main object: running of restaurants b.Ancillary object : opening bank accounts, hiring premises an running of bakery c. Other objects: Hiring out of vechicles 12
  13. 13. IV. The liability of the members is limited v. The authorized share capital of the company is RS.20,00,000,divided into 2,00,000 S.NO Name & Addresses description & occupation of subscribers No . Of equity Signature shares taken by of each subscriber subscriber Name / addres s descrip tion and occupa tion of witness 13
  14. 14. ALTERATION OF NAME CLAUSE • Special Resolution. • Written Approval of Central Government. • No Approval of Central Government is necessary if the change of name involves only the addition or deletion of the word “Private”. • Change by ordinary resolution and approval of Central Government when name is identical or too closely resembles the name of an existing company. 14
  15. 15. CHANGE OF REGISTERED OFFICE From one premises to another premises in the same city, town or village • By passing a resolution of Board of Directors 15
  16. 16. CHANGE OF REGISTERED OFFICE From one town or city or village to another town or city or village in the same state 1. Special Resolution. 2. Confirmation of Regional Director — when jurisdiction of Registrar of companies is changed. 3. Copy of (i) & (ii) to be filed with ROC. 4. Notice of new location to ROC within 30 days. 16
  17. 17. CHANGE OF REGISTERED OFFICE From one state to another state 1. Special Resolution 2. Confirmation of Central Govt. 3. For certain Purposes only (As given in section 17) 17
  18. 18. ALTERATION OF OBJECTS CLAUSE A. Special Resolution B. Alteration is sought on any of these grounds: • To carry on its business more economically & more efficiently • To attain its main purpose by new or improved means • To enlarge or change the local area of its operations • To carry on some business which under existing circumstances may conveniently or advantageously be combined with the business of the company • To restrict or abandon any of the objects specified in the memorandum • To sell or dispose off the whole or any part of the undertaking • To amalgamate with any other company C. Copy of (A) is filed with ROC within 30 days 18
  19. 19. ALTERATION OF LIABILITY CLAUSE • The liability of a member of a company cannot be increased unless the member agrees in writing. • From unlimited liability, it can be made limited by re-registration of the company. 19
  20. 20. ALTERATION OF CAPITAL CLAUSE • A company can reduce share capital by first passing a special resolution for reduction of capital .but powers to reduce share capital must be guaranteed in the articles of the company ,otherwise the share capital can be altered by special resolution giving such powers • The company can apply to the court by petition for getting confirmation from the court for reducing the share capital . The main duty of the court is to look after the interest of the creditors and different classes of shareholders , and then decide whether the company should be allowed to reduce share capital . 20
  21. 21. DOCTRINE OF ‘ULTRA VIRES’ The words : • Ultra means beyond • Vires means the powers • Ultra Vires means beyond the powers A company which owes its incorporation to statutory authority cannot effectively do anything beyond the powers expressly or impliedly conferred upon it by the statute or Memorandum of Association. 21
  22. 22.  A document that specifies the regulations for a company's operations. The articles of association define the company's purpose and lays out how tasks are to be accomplished within the organization, including the process for appointing directors and how financial records will be handled. 22
  23. 23.           The important Powers, duties, rights and liabilities of Directors Powers, duties, rights and liabilities of members Rules for Meetings of the Company Dividends Borrowing powers of the company Calls on shares Transfer & transmission of shares Forfeiture of shares Voting powers of members 23
  24. 24.  Unlimited Companies: • The Articles of such a company must state:  Total number of members; and  Share capital.  Companies limited by Guarantee: • Articles of such company must state total number of members.
  25. 25.  Private Companies limited by shares: • must include requirements of Section 3(1)(iii). No Article Company  A public limited company having share capital may be registered without Articles.
  26. 26. Ultra Vires = = Beyond Power Beyond the Power Objective-To protect the investor’s interests 26
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  28. 28.    Ultra vires the directors Ultra vires the articles Ultra vires torts committed by employees of the company 28
  29. 29.  Articles may be altered by a company by passing special resolution at a general body meeting of shareholders
  30. 30.  According to Section 610, every person dealing with the company is deemed to have read M/A and A/A and understood the contents thereof in the correct perspective.  Doctrine of Indoor Management  Rule of Indoor Management is an exception to the Doctrine of Constructive notice.
  31. 31. Memorandum of Association Articles of Association Charter of Company Regulations for internal management Defines the scope of the activities Rules for carrying out the objects of company. Supreme document Subordinate to the memorandum. Must for every company Company limited by shares need not have it (Table ‘A’ applies) Strict restrictions, alteration only with sanction of central govt./ tribunal. Can be altered by special resolution. It define the relationship between the company & the outsiders It define the relationship between company & its staff and between members & members interests
  32. 32. THANKS 32