4 Memorandum

8/9/2019 4 Memorandum

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Memorandum

Memorandum means tAssociation of a compa(i) originally framed; or(ii) altered from time t

any previous CompaniCompanies Act, 1956 [It is the fundamental do

which regulates the extcompany in relation toregistration with the ReMemorandum become

of Association

e Memorandum ofny as

time in pursuance of

s Acts or of theec. 2(28)].

cument of the company,

rnal affairs of theutsiders. Afteristrar, thea public document.


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Those who deal w

supposed to have nothe Memorandum. It aworld to know as to w

powers; objects; and scope of the activiti

th the company are

tice of the contents of lso enables the outsideat are the

s, of the company.


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Objects of M

(i) It sets out thecompany.(ii) It defines the relatwith the outside world.(iii) It defines the scopcompany.

(iv) It contains fundwhich the company is

m

orandum

constitution of the

ionship of the company

e of the activities of the

mental conditions onincorpo-rated.


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Memorandum to b

and witness

The Memorandumcompany shall

(i) be printed;(ii) be divided intoconsecutively;(iii) be signed by 7

company by 2) subscri(iv) include the namehis address, descripti

any.

e printed, signed

d (Sec. 15)

f Association of a

paragraphs numbered

(in case of a private

ers;of each such witness,n and occupation, if


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Alteration of

A company may, band with the appGovernment signi

its name (Sec. 21).

Note: For the purp

the powers of thehave been delegatCompanies.

n

ame clause

a special resolutionroval of the Centraled in writingchange

ses of this section,

Central Governmentd to the Registrar of


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But a change of involves the deleti

word Private on

public company in

or vice versa d

approval of the Ce

name which merelyn or addition of the

the conversion of a

o a private company

es not require the

tral Govern-ment.


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If, through inadve

a company is rewhich, in the opiGovernment, is i

closely resembleexisting company,

(a) may change it

resolution andapproval of the C

rtence or otherwise,

istered by a namenion of the Centralentical with or too

, the name of anit

name, by ordinary

with the previousntral Government;


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shall change itsGovernment so dir

its registration (Sprovisions for an emonths. However, tstay order wouldPandit ElectronicsAIR 1999 Cal. 289].

Note: The powersCentral Governmenname under Sec.to Regional Directo

Madras and Kanpu

name if the Centralcts within 12 months of

c. 22) There is notension of period of 12he period of any Courtbe excluded [Sen &Ltd. v. Union of India,

and functions of thet to direct ratification of2 has been delegateds at Calcutta, Bombay,

.


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The company shallthe prescribed form t

for confirmation unde(c) Such a con

communicated tofour weeks from theapplication for such c(d) The companyRegistrar a certifie

confirma-tion by thechange of its registesection, within twoconfirmation, togethe

the memorandum as

ake an application ino the Regional Director

r clause (a).irmation shall bethe company withinate of receipt of hange.shall file, with the

d copy of the

Regional Director forred office under thisonths from the date ofr with a printed copy of

altered.


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The Registrar shallcertify the registration

one month from thedocument.

(e) The certificateevidence that all the r which respect toconfirmation have bee

Note: The companycertified copy of theDirector with both thewithin the same state.

egister the same andunder his hand within

date of filing of such

shall be conclusivequirements of this Actthe alteration and

n complied with.

is required to file aorder of the Regionalegistrar of Companies


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Orient Paper Mills

A.I.R. (19

The Orissa High Court

change of registeredanother state on the g

has a right to protect

company could not shi

a place outside State o

Ltd. v. The State,

57) 232.

refused confirmation of

office from Orissa toround that every state

its revenue. Held, the

t its registered office to

Orissa.


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Mackinnon Macken

37 Comp. C

A company wanted tofrom the state of WestCalcutta High Court de

Orissa High Court as ptransfer.

The State Government

grounds that the chafrom one state to anotrevenue and also

opportunities to the stGuwahati Re, (2000) 4

ie & Co., Re (1967)

s. 516 (Cal.).

shift its registered officeBengal to Bombay, the

scribed the reasoning of

arochialand allowed the

could notobject on the

ge of registered officeer would involve loss ofloss of employment

ate [SPML India Ltd v.Comp. L.J. 177].


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A company which wits Articles of Assremuneration to itsalter its objects clapower to pay this reits business mor efficiently. The alterat

s earlier prohibited byciation from payingmanagers wanted tose so as to acquireuneration to carry on

e economically or ion was allowed.


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To attain its maiimproved means;

3. to enlarge or chanoperations;

4. to carry on someexisting circumstanor advantageouslybusiness of the com

Cyclists Touring269

purpose by new or

e the local area of its

business which underces may convenientlybe combined with thepany;

Club, Re (1907) 1 Ch.


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A company had bee

assist and protect th

other similar vehiclescompany wanted to alt

motorists. Held, the c

its objects clause ascombine the two bus

objects was to prot

motorists.

As approval of Cenlongerrequired for alteany shareholder can c

violation of Sec. 17

formed to promote,

use of bicycles and

on public roads. Ther its objects to include

mpany could not alter

it was impossible tonesses as one of its

ct the cyclists from

ral Government* is noation of objects clause,allenge that there is a

[Pondicherry Textiles


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A company was allonew or convenientpresently it was notbusinesses permitted(Geo Rubber Export

Comp. Cas. 713 CLB]

5. to restrict or aobjects specified in t

6. to sell or disposepart, of the underta

undertakings, of th

e

ed to undertake anybjects even though

arrying on any of theby its objects clauseLtd., Re, (1991) 72

andon any of thehe Memorandum;

of the whole, or anying, or of any of the

company; or


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7. to amalgamate witorbody of persons.

Confirmation from Ce1. The alteration of

Memorandum relatin

place of its registereto another shall notconfirmed by Competition. The meetin

resolution in respectoffice from one stateheld at the registereLtd., Re, (2000) 37 C

any other company

tral Governmentthe provisions of

g to the change of the

office from one Statetake effect unless it ispany Law Board on

for passing a special

of change of registeredto another need notbeoffice [Metal Box India

LA 15]


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Note the following cas

AKG Acoustics (InComp. LJ (CLB)

A company wanted

office from New DelhiCompany Law Boardon the condition thatholders, who were de

annual general meetinfree transport service.

:

ia) Ltd. Re (1996) 3

o shift its registered

o Gurgaon. Theonfirmed the alterationelhi based shareirous of attending

gs, must be provided


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2. Before confirminCompany Lawsatisfied

(a) that sufficient n

every person whaffected by the ch

(b) that the consentcompany has bedebts or claims hasecured.

the alteration, theBoard must be

tice has been given to

ose interest will benge; and

of the creditors of then obtained or their e been dischargedor


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Before the Companie

1996, a company coul

clause subject to appr

Law Board (now Cent

Company Law Board

interest of the creditoraccount. In Symphon

Ltd., Re, (1998) 91 Co

the Company Law Bohad no jurisdic-tion to

relating to creditors ob

of objects clause.

(Amendment) Act,

alterits objects

valby the Company

al Government). The

nsured that the

had been taken intoComfort Systems

mp. Cas. 404 (1997),

rd observed that itecide on matters

ec-tions on alteration


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3. The Central Govnotice of the petitiothe change to be seThe Registrar shalreasonable opportu

the Central Governobjections and sugrespect to the confir-

4. The Central Govthe change, on suchas it thinks fit.

rnment shall causefor confirma-tion of

ved on the Registrar.l also be given aity to appear before

-ment and state hisestions, if any, withation of the change.

rnment may confirmterms and conditions


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5.A certified copy of the

Government* confirmin

within 3 months of thealso file a printed copy

altered to the Registrar.

register the same and

within 1 month from thedocuments (Sec. 18). If

Government was filed

but it was notaccompa

Memorandum, it was h

substantial compliance

company [Shivalik Stee

(No. 2) (1992) 7 Comp.

rder of the Central

the change shall be filed

rder. The company shallf the Memorandum as

The Registrar shall

ertify the registration

date of filing of suchthe order of the Central

ithin the prescribed time

ied with the altered

ld that there was a

on the part of the

ls and Alloys Ltd., Re,

Cases 174 (CLB)]


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Note:The date of ordSec. 18 shall be the

CLB approves and si

and not the last date

[Departments clarific

26.2.1977]

er for the purpose ofate on which the

ns the formal order

of hearing.

ation, dated


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6. If the document

Registrarare notsuch alterationconnected therewiof such period,

inoperative (Sec. 1

However, the C

may on sufficientthe order made wof one month.

s to be filed with

iledwithin 3 months,nd all proceedingsh shall, at the expirybecome void and

9).

ntral Government*

cause shown, reviveithin a further period


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Doctrine o1. Ultra means beyopowers. The term ultmeans the doing of tlegal power and auth

It aims to protect:(a) investors in ththey may know the omoney is to be empl

(b) creditors, bycompanys funds areunauthorised activitie

fultra viresnd and vires meansa vires a companye act is beyond therity of the company.

e company so thatjects in which theiryed; and

nsuring that thenot wasted ins.


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The concept ofultra virefrom the facts of the foll

Simmons v. Heffer, Th A company limited by gwith the main object of tto animals. It donated

party, the election manifabolition of certain typeswere given uncondition30,000 for publicising th

commitment of animalw 50,000 by the companwas ultra vires, whereaswithin the powers of the

s can be understoodwing case:

Times, May 23, 1985.arantee was formede prevention of cruelty

80,000 to a political

sto of which committedof hunting; 50,000lly and the remaining

manifesto

elfare. Held, the gift ofy to the political partythe other 30,000 wascompany.


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2. The doctrine of demonstrated by th

Ashbury RailwayCav. Riche, (1875) L.R.

A company wafollowing objects:

(a) to make, sellcarriages and wagon

(b) to carry o

mechanical engincontrac-tors;(c) to purchase,

mine, minerals, land

ltra vires was firstHouse of Lords in

rriage & Iron Co. Ltd.7 H.L. 653.

formed with the

r lend on hire, railway;

the business of

ers and general

lease, work and sellnd buildings.


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The company entere

Riche for the financiof a railway line in Braised was whethecovered within thecontractors.

Held, the contract

company. Even thshareholders could n

into a contract with

g of the constructionlgium. The questionthat contract was

meaning of general

was ultra vires the

e whole body of t ratify it.


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Types. Ultra vires

company may be:(1) Ultra vires t

company;

(2) Ultra vires tcompany;(3) Ultra vires the

object clause).

transactions of a

e directors of the

he Articles of the

company (beyond the


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Exceptions(1) If an act is ultr

company but is intracompany may ratify it.

(2) If an act is ultr

company, the Articleinclude the act withcompany.

(3) If an act is int

powers of) a companythe shareholders may

vires the directors of avires the company, the

vires the Articles of a

s may be altered toin the powers of the

a vires (i.e., within the

, but is irregularly done,ratify it.


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(4) If a person borrowsunder a contract which i

the company can sue himoney.

(5) If an act is ultra viresarising independently of

(6) If a company has pfrom a third party underhas taken an ultra viresthe right to follow his pro

in specie. He may alsothe Court restraining thwith that property or mon

money from a companyultra vires the company,

for the recovery of the

the company, the rightshe act are not affected.

rchased some propertyan ultra vires contract orloan, the third party haserty or money if it exists

btain an injunction fromcompany from parting

ey.


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(7) If a company takesuses it to pay offintrwho has lent monecontract is substitucreditor who has behe can recover the m

(8) If a company hloan through somefact by the directors,to make the directo

the ground of warranty of authority.

(9) If a director of a co

ultra vires the compcompel him to refund

an ultra vires loan andvires debts, the lenderunder the ultra vires

ted in place of then paid off and as suchoney.

s taken an ultra viresmisrepresen-tation of

the lender has the rights personally liable on

breach of implied

mpany makes payment

any, the company canthe amount

4 Memorandum

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