memorandum of association and article of association lec: 03 Flashcards
details about rules of corporations
Memorandum of association is also called?
Constitution of the company.
What is the first step of the formation of a company?
Preparation of a memorandum of association.
What is the memorandum of association?
It is a charter that describes the company’s objectives, scope, and powers. Must for registration.
Contents/clauses of MOA?
- Name
- Objectives
- Registered office
- Liability
- Capital
- Association or subscription
Name Clause
Specifies the name of the company.
Must end with “Limited” in the case of a public company or “Private Limited” for a private company.
The name must be unique and not deceptively similar to any existing company.
Registered Office Clause (Situation Clause)
States the location of the company’s registered office.
Determines the jurisdiction of the Registrar of Companies (RoC).
Must include the state or province where the office is situated.
Object Clause
Describes the main objectives for which the company is formed.
May be divided into:
Main objects: Core activities the company intends to undertake.
Ancillary objects: Supporting activities that help in achieving the main objectives.
The company cannot engage in activities not mentioned in this clause.
Liability Clause
States the extent of liability of the company’s members.
In a limited liability company, members’ liability is limited to the amount unpaid on their shares.
In an unlimited company, members’ liability is not limited.
Capital Clause
Mentions the company’s authorized share capital (total capital the company is authorized to raise through shares).
Specifies the division of capital into shares (e.g., 100,000 shares of Rs. 10 each).
Can also mention types of shares (e.g., equity, preference).
Association (or Subscription) Clause
Contains a declaration by the subscribers (founders) of the MoA.
States their intention to form a company and take a specified number of shares.
Must be signed by at least two persons (for a private company) or seven persons (for a public company), along with witness signatures.
What is an article of association?
Articles of Association are a legal document that defines the internal rules, regulations, and governance structure of a company.
Companies that must have an article?
- Unlimited companies
- Companies limited by guarantee
- No article company
What is the doctrine of ultra vires?
“Ultra Vires” = “Beyond Authority”
Means an entity (company/government) acted outside its legal power.
What is an unlimited company?
A company where shareholders have no financial liability limit—they are personally responsible for all debts if the business fails.
What is a company limited by guarantee?
A structure where members pledge a fixed sum (e.g.,
£
10
£10) if the company dissolves, commonly used by non-profits.
What is a no-article company?
Companies that use default governance rules (called Model Articles) provided by law instead of writing custom Articles of Association.
What is the doctrine of constructive notice?
A legal principle in corporate law stating that anyone dealing with a company is deemed to know its public documents (e.g., Memorandum of Association, Articles of Association).
What is the doctrine of indoor management?
A legal principle protecting outsiders dealing with a company by assuming that internal procedures (e.g., approvals, signatures) are properly followed, even if they weren’t. Outsiders aren’t required to investigate the company’s internal workings.
