Memorandum of association companies act 1956

INTRODUCTION

The memorandum of association is a document of great importance in relation to the proposed company. It contains the fundamental conditions upon which alone the company is allowed to be incorporated. It is the charter of company and it defines the companies reason for existence.it laids down the area of operation of the company. It also regulates the external affairs of the company in relation to outsiders. Its purpose is to enable share holders and those who deal with the company to know what is permitted range.it not only shows the object of the formation of a company but also the utmost passible scope of it.

MEMORANDUM OF ASSOCIATION

PURPOSE OF MEMORANDUM

The purpose of the memorandum is two fold

The prospective share holders shall know the field in, or the purpose for, which there money is going to be used by the company and what risk they are undertaking in making investment.

The ouysiders dealing with the company shall no with certainity as to what the objects of the company are and as to whether the contractual relation into which the contemplate to enter with the company is within the objects of the company.

PRINTING AND SIGNING OF MEMORANDUM

The memorandum of association of a company shall be a printed be divided into paragraphs numbered consecutively and C signed by seven sub scribers.

FORM OF MEMORANDUM

Table B relates to memorandum of association of a company limited by shares.

Table C relates to memorandum and articles of association of a company limited by guarantee and not having a share capital.

Table D relates to memorandum and articles of association of a company limited by guarantee and having a share capital.

Table E relates to memorandum and articles of association of an unlimited company.

Contents of memorandum

The memorandum of every company shall contain the following process:

Name of the company

The state in which the registered office of the company is to be situated

The objects of the company which will be classified as the main objects of the company to be persued by the company on its corporation and objects incidental or ancillary to be attainment of the main objects and other objects of the company are not included

In the case of companies with objects not confined to one states to whose terristories the objects extend

Limited liability. The memorandum of a company limited by shares or by gurantee shall also state the that the liability of its members is limited

Share capital. In the case of a company having a share capital, the amount of share capital with which the company is to be registered and the division there of into shares of a fixed amount. In such a company each sub scriber shall take atleast one share and shall right oppaosite his name the number of shares he takes. The memorandum of a company limited by guarantee shall also state that each member undertakes to contributes a certain sum to the asset of the company.

ALTERATION OF MEMORANDUM

Alteration of conditions:

change of names. A company may change its nameby a special resolution and with the approval of the central government signified in writing but the change of name which nearly involves the deletion or addition of the word private on the conversion of a public company into a private company or vice versa doesnot require the approval of the central government.

Change of registerd office this main involves

change of registerd office from one place to another place in the same city or village.in this case a notice is to be given within the 30 daysafter the date of the change to the registerar who shall record the same.

change of registered office from one town to another town in the same state. In this case a special resolution is required to be passed and the general meeting of the share holders and a copy of it is to be filled with the registrar in 30 days then within 30 days of the removal of the office but notice has to be given to the registrar of the new location of the office.

Change of registerd office from one state to another state. A company may by special resolution change the place of its registerd office from one state to another state for certain purposes refer to in section 17. These purposes are the same as in case of alteration of objects and are discussed underthe heading alteration of objects.

PROCEDURE OF ALTERATION

Special resolution. A special resolution shall be passed at a general meeting so as to change the place of registered office from one state to another.

Confirmation by the company law board. The alteration shall not take effect ubtill it is confirmed by the company law board on petition

Notic to affected parties. Before confirming the alteration the company law board shall be satisfied that sufficient notice has been given to every person whose interest will be affected by the change and that the consent of the creditors of the company has been obtained or debts or claims have been discharged or secured

Notice to registrar. The company law board shall cause notice off the petition for confirmation of the change to be served on the registrar. The registrar shall also be given a reasonable opportunity to appear before the company law board and state his objections and suggestions if any with respect to the confirmation of the change

Power of the company law board to confirm change discretionary. The company law board may confirm the change on such terms and conditions as it thinks fit.

Rights and interests of the creditors to be taken care of. The company law board shall have regard to the rights and interests of every class of the members and the creditors of the company.

MEMORANDUM OF ASSOCIATION ( SECTIONS)

1)

SHORT TITLE, COMMENCEMENT AND EXTENT.

 

(1)

This Act may be called the Companies Act, 1956.

 

(2)

It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. It extends to the whole of India that it shall apply to the State of Nagaland subject to such modifications,as the Central Government may, by notification in the Official Gazette.

2)

DEFINITIONS.

 

 

In this Act, unless the context otherwise requires:

 

(1)

"alter" and "alteration" shall include the making of additions and omissions;

 

(2)

"articles" means the articles 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.

3)

DEFINITIONS OF "COMPANY", "EXISTING COMPANY", "PRIVATE COMPANY" AND "PUBLIC COMPANY"

 

(1)

In this Act, unless the context otherwise requires, the expressions "company", "existing company", "private company" and "public company" shall, subject to the provisions of subsection (2), have the meanings specified below –

 

 

(i)

"company" means a company formed and registered under this Act or an existing company as defined in clause;

 

 

(ii)

"existing company" means a company formed and registered under any of the previous companies laws specified below –

 

 

 

(a)

Any Act or Acts relating to companies in force before the Indian Companies Act, 1866 and repealed by that Act;

 

 

 

(b)

The Indian Companies Act, 1866

 

 

 

(c)

The Indian Companies Act, 1882

 

 

 

(d)

The Indian Companies Act, 1913

 

 

 

(e)

The Registration of Transferred Companies Ordinance, 1942

12) MODE OF FORMING INCORPORATED COMPANY

 

(1)

Any seven or more persons, or where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this Act in respect of registration, form an incorporated company, with or without limited liability.

 

2) Such a company may be

a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them in this Act termed a company limited by shares.

a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake by the memorandum to contribute to the assets of the company in the event of its being wound up in this Act termed "a company limited by guarantee.

a company not having any limit on the liability of its members in this Act termed an unlimited company.

13)REQUIRMENTS

WITH RESPECT TO MEMORANDUM

The memorandum of every company shall state

the name of the company with limited as the last word of the name in the case of a public limited company, and with private limited as the last word of the name in the case of a private limited company.

the State in which the registered office of the company is to be situate.

in the case of a company in existence immediately before the commencement of the companies amendment act,1965 the objects of the company.

in the case of a company formed after such commencement:

the main objects of the company to be pursued by the company on its incorporation and objects incidental or ancillary to the attainment of the main objects.

other objects of the company not included in sub-clause.

in the case of companies other than trading corporations, with objects not confined to one State, the States to whose territories the objects extend.

The memorandum of a company limited by shares or by guarantee shall also state that the liability of its members is limited.

The memorandum of a company limited by guarantee shall also state that each member undertakes to contribute to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company, or of such debts and liabilities of the company as may have been contracted before he ceases to be a member, as the case may be, and of the costs, charges and expenses of winding up, and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.

In the case of a company having a share capital:

unless the company is an unlimited company, the memorandum shall also state the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount.

no subscriber of the memorandum shall take less than one share; and

each subscriber of the memorandum shall write opposite to his name the number of shares he takes.

14) FORM OF MEMORANDUM

The memorandum of association of a company shall be in such one of the Forms in Tables B, C, D and E in Schedule I as may be applicable to the case of the company, or in a Form as near thereto as circumstances admit.

15) PRINTING AND SIGNATURE OF MEMORANDUM

(a) be printed

(b) be divided into paragraphs numbered consecutively

(c) be signed by each subscriber who shall add his address, description and occupation in the presence of at least one witness who shall attest the signature and shall likewise add his address, description and occupation.

15A. Special provision as to alternation of memorandum consequent on alteration of name of State of Madras. Special provision as to alternation of memorandum consequent on alteration.

15B. Special provision as to alternation of memorandum consequent on alteration of name of State of Mysore. Special provision as to alteration of memorandum consequent on alteration of name of State of Mysore. Where, in the memorandum of association of a company in existence immediately before the commencement of the Mysore State Alteration of Name Act, 1973 it is stated that Mysore is the State in which the registered office of that company is situate, then, notwithstanding anything contained in this Act, the said memorandum shall, as from such commencement, be deemed to have been altered by substitution of a reference to the State of Karnataka for the reference to the State of Mysore and the Registrar of the State of Karnataka shall make necessary alterations in the memorandum of association and the certificate of incorporation of the said company.

16) ALTERATION OF MEMORANDUM

1) A company shall not alter the conditions contained in its memorandum except in the cases, in the mode, and to the extent, for which express provision is made in this Act.

2) Only those provisions which are required by section 13 or by any other specific provision contained in this Act, to be stated in the memorandum of the company concerned shall be deemed to be conditions contained in its memorandum.

3) Other provisions contained in the memorandum, including those relating to the appointment of a managing director, managing agent, secretaries and treasurers or manager, may be altered in the same manner as the articles of the company, but if there is any express provision in this Act permitting of the alteration of such provisions in any other manner, they may also be altered in such other manner.

4) All references to the articles of a company in this Act shall be construed as including references to the other provisions aforesaid contained in its memorandum.

17) SPECIAL RESOLUTION AND CONFIRMATION BY COMPANY LAW BOARD REQUIRED FOR ALTERNATION OF MEMORANDUM.

A company may, by special resolution, alter the provisions of its memorandum so as to change the place of its registered office from one State to another, or with respect to the objects of the company so far as may be required to enable it ;

to carry on its business more economically or 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 of the whole, or any part, of the undertaking, or of any of the undertakings, of the company

to amalgamate with any other company or body of persons

The alteration shall not take effect until, and except in so far as, it is confirmed by the Company Law Board on petition.

Before confirming the alteration, the Company Law Board must be satisfied

that sufficient notice has been given to every holder of the debentures of the company, and to every other person or class of persons whose interests will, in the opinion of the Company Law Board, be affected by the alteration

with respect to every creditor who, in the opinion of the Company Law Board, is entitled to object to the alteration, and who signifies his objection in the manner directed by the Company Law Board, either his consent to the alteration has been obtained or his debt or claim has been discharged or has determined, or has been secured to the satisfaction of the Company Law Board.

The Company Law Board may make an order confirming the alteration either wholly or in part, and on such terms and conditions, if any, as it thinks fit, and may make such order as to costs as it thinks proper.

The Company Law Board shall, in exercising its powers under this section, have regard to the rights and interests of the members of the company and of every class of them, as well as to the rights and interests of the creditors of the company and of every class of them.

The Company Law Board may, if it thinks fit, adjourn the proceedings in order that an arrangement may be made to the satisfaction of the 2[Company Law Board] for the purchase of the interests of dissentient members; and may give such directions and make such orders as it thinks fit for facilitating, or carrying into effect, any such arrangement

33) REGISTRATION OF MEMORANDUM AND ARTICLES

 

(1)

There shall be presented for registration, to the Registrar of the State in which the registered office of the company is stated by the memorandum to be situate

 

 

(a)

the memorandum of the company;

 

 

(b)

its articles and

 

 

(c)

the agreement which the company proposes to enter into with any individual for appointment as its managing or whole-time director or manager.

 

(2)

A declaration by an advocate of the Supreme Court or of a High Court, an attorney or a pleader entitled to appear before a High Court a secretary or a chartered accountant, in whole-time practice in India who is engaged in the formation of a company, or by a person named in the articles as a director, manager or secretary of the company, that all the requirements of this Act and the rules there under have been complied with in respect of registration and matters precedent and incidental thereto, shall be filed with the Registrar; and the Registrar may accept such a declaration as sufficient evidence of such compliance.

 

 

For the purposes of this sub-section,chartered accountant in whole-time practice in India" means a chartered accountant within the meaning of clause of section 2 of the Chartered Accountants Act, 1949 who is practicing in India and who is not in fulltime employment.

 

(3)

If the Registrar is satisfied that all the requirements aforesaid have been complied with by the company and that it is authorised to be registered under this Act, he shall retain and register the memorandum, the articles, if any, and the agreement referred to in clause ;

36)

EFFECT OF MEMORANDUM AND ARTICLES.

 

(1)

Subject to the provisions of this Act, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the memorandum and of the articles.

 

(2)

All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.

38) EFFECTS OF ALTERATION IN MEMORANDUM OR ARTICLES

 

Notwithstanding anything in the memorandum or articles of a company, no member of the company shall be bound by an alteration made in the memorandum or articles after the date on which he became a 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 increases his liability as at that date, to contribute to the share capital of, or otherwise to pay money to, the company:

Provided that this section shall not apply;

 

 

(a)

in any case where the member agrees in writing either before or after a particular alteration is made, to be bound by the alteration; or

 

 

(b)

in any case where the company is a club or the company is any other association and the alteration requires the member to pay recurring or periodical subscriptions or charges at a higher rate although he does not agree in writing to be bound by the alteration.

39)

COPIES OF MEMORANDUM AND ARTICLES, ETC, TO BE GIVEN TO MEMBERS.

 

(1)

A company shall, on being so required by a member, send to him within seven days of the requirement and subject to the payment of a fee of one rupee, a copy each of the following documents as in force for the time being-

 

 

(a)

the memorandum;

 

 

(b)

the articles, if any;

 

 

(c)

the agreement, if any, entered into or proposed to be entered into, by the company with any person appointed or to be appointed as its managing agent or as its secretaries and treasurers; and

 

 

(d)

every other agreement and every resolution referred to in section 192, if and in so far as they have not been embodied in the memorandum or articles.

 

(2)

If a company makes default in complying with the requirements of this section, the company, and every officer of the company who is in default, shall be punishable, for each offence, with fine which may extend to fifty rupees.

40) ALTERATION OF MEMORANDUM OR ARTICLES, ETC., TO BE NOTED IN EVERY COPY.

 

(1)

Where an alteration is made in the memorandum or articles of a company, in the agreement referred to in clause of sub-section (1) of section 39 or in any other agreement, or any resolution, referred to in section 192, every copy of the memorandum, articles, agreement or resolution issued after the date of the alteration shall be in accordance with the alteration.

 

(2)

the company issues any copies of the memorandum, articles, resolution or agreement, which are not in accordance with the alteration or alterations made therein before that time, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to ten rupees for each copy so issued.