Memorandum of Association under Companies Act
🔹 What is the Memorandum of Association (MOA)?
The Memorandum of Association (MOA) is the charter document of a company. It defines the company’s constitution, objectives, and the scope of its operations. It lays down the foundation upon which the company is built and governs its relationship with the outside world.
🔹 Legal Definition
Under Section 2(56) of the Companies Act, 2013:
"Memorandum" means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act.
🔹 Importance of MOA
It defines the powers of the company and the limitations on those powers.
Acts as a contract between the company and its members.
Anyone dealing with the company is presumed to know the contents of its MOA (doctrine of constructive notice).
If the company does something beyond the scope of the MOA, such acts are considered ultra vires (beyond powers) and are void.
🔹 Contents of Memorandum of Association
As per Section 4 of the Companies Act, 2013, the MOA must contain the following six clauses:
1. Name Clause
Must end with "Limited" or "Private Limited" as applicable.
Should not be identical or too similar to an existing company name.
2. Registered Office Clause
Must state the State in India where the registered office is situated.
Determines jurisdiction of the Registrar of Companies (RoC).
3. Object Clause
Most crucial part of the MOA.
Divided into:
Main Objects: The primary purpose of the company.
Ancillary/Incidental Objects: Objects necessary to achieve the main object.
Other Objects (optional under 2013 Act): Used under the old act for broader scope.
4. Liability Clause
States the liability of members:
Limited by shares,
Limited by guarantee,
Unlimited.
5. Capital Clause
Specifies the company’s authorized share capital and its division into shares.
6. Subscription Clause
Contains names, addresses, and signatures of subscribers.
Must be signed by at least:
2 persons for a private company,
7 persons for a public company.
🔹 Legal Doctrines Related to MOA
1. Doctrine of Ultra Vires
Any act beyond the object clause of the MOA is void and cannot be ratified.
2. Doctrine of Constructive Notice
Everyone dealing with the company is presumed to have knowledge of its MOA and AOA.
🔹 Key Case Law on MOA
1. Ashbury Railway Carriage and Iron Co. Ltd. v. Riche (1875)
Facts: Company entered into a contract not authorized by its object clause.
Held: The act was ultra vires the company and hence void.
Principle: The company cannot act beyond its object clause, even with unanimous shareholder consent.
2. Lakshmanaswami Mudaliar v. Life Insurance Corporation of India (1963) – SC
Facts: LIC donated funds to a charitable trust not linked to its objects.
Held: The donation was ultra vires the object clause and thus void.
Importance: Reinforced the strict interpretation of object clause.
3. In Re: Introductions Ltd. (1970)
Facts: The company engaged in activities beyond its object clause.
Held: Such actions were held to be unauthorized and void.
Principle: Reinforced the idea that object clauses limit company powers.
4. Bell Houses Ltd. v. City Wall Properties Ltd. (1966)
Facts: Broadly worded object clause challenged.
Held: A wide object clause is not invalid as long as it is clear and specific.
Significance: Gave some flexibility to companies in drafting object clauses.
🔹 Alteration of MOA
Under Section 13 of the Companies Act, 2013, a company can alter its MOA by:
Special Resolution (passed by 75% majority)
Approval from RoC or Central Government (depending on the nature of alteration)
Examples:
Change in name → Central Government approval
Change in registered office outside the state → Regional Director approval
Change in object clause → Shareholder and filing approval
🔹 Legal Effects of MOA
| Aspect | Legal Effect |
|---|---|
| Acts beyond MOA | Void under ultra vires doctrine |
| Binds company and members | Like a contract (Section 10 of Companies Act, 2013) |
| Alteration | Permitted but must follow legal procedure under Section 13 |
| Misuse of object clause | May lead to investigation or cancellation of license |
🔹 Difference Between MOA and AOA
| Memorandum of Association (MOA) | Articles of Association (AOA) |
|---|---|
| Defines external relationships | Governs internal management |
| Mandatory for incorporation | Not mandatory in all cases (if Table F adopted) |
| Cannot override law or go ultra vires | Can be changed by special resolution |
🔹 Conclusion
The Memorandum of Association is the constitutional backbone of a company. It sets legal boundaries within which a company must operate. Courts have strictly enforced the principles of ultra vires and constructive notice, ensuring that companies and those dealing with them respect the legal framework and intent as reflected in the MOA.
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