Memorandum

of
Association
MOA
SS 4, 12 – 18 - CA 2013
(SS 26 – 31, CA 1956)
(6) The MOA of a co. shall be in respective forms
specified in Tables A, B, C, D & E in Sch. I as may
be applicable to such Co.
 MOA CLAUSES

Association
&
Subscription
Clause
 Lawful purpose (12) v Object of the Co. (13)
 Business v Trade
 Main object – to conduct lottery & some were
philanthropic ?
 S. 294-A, IPC
 Will not save the Co. from being unlawful - Purpose
would still be illegal even where the illegal business is
merely annexed to the real one which is philanthropic
 Universal Mutual Aid & Poor Houses Assn Ltd. v Thoppa Naidu (A
D) (1932) 2 Comp Cas 515 (Mad)
 If the purpose of the Co. is not lawful
 ROC may refuse to register – COI - if issued, cannot legitimize the
unlawful part of the business.
 Performing Rights Society Ltd. v London Theatre of Varieties (1922)
1 KB 539;
 R v ROC’s, ex parte Attorney General (1991) BCLC 476 (QBD)
 Memorandum 2(56))- 2013
1956 - 2 (28)
Means - MOA of a Co.
 As originally framed / as altered from
time to time
 In pursuance of any previous Co. law /
of T/ Act;
 Mode of Forming Incorporated Co.
Sec. 3 (1) & (2) – CA -13 (Sec. 12 -1956)

OPC
(Pvt. Co.)
3 (1) (c)
 Who can be a subscriber?
 Natural / Artificial persons having independent
existence & competent to contract
Body corporate - Whether registered as a Co.
U/T/CA or
A statutory corporation,
Co-operative society /
Any body being an incorporated body
 Minor
 Cannot subscribe his name to MOA
 No bar to a minor becoming a member of a Co.
through the guardian, in respect of fully paid shares
 Circular No. 312(43) CL-III/63, dated 30 September
1963).
 Who can be a subscriber?
 A Firm
 Not a legal person - Individual partners must
subscribe
 A Hindu undivided family
 Cannot be a subscriber - Not a juristic person for all
purposes - but the karta can be a subscriber
 State & Central Govt.
 Cannot be subscribers
 Governor & / or President of India can be a subscriber,
through the Secretary to the respective Govt’s
 Foreigner / a PROI
 Provisions of the FEMA, 1999 must be complied
 Subscriber & liability?
 Subscribing – Is it an agreement between the
persons concerned to associate into a body
corporate?
 Is he bound to take shares – put against his
name?
 (Implies?) Person - Puts his signature to MOA -
in order to attract other subscribers - Duty to
Take Shares
 Subscriber’s name is not entered in - Share
Register - Is subscriber still liable
 Liable as a contributory in WU
 J H Chandler & Co. Ltd. v H I Phillips, AIR 1926 All 550
 Subscriber & liability?
Subscribers to MOA – who are 1st
directors - to pay for the shares - have
agreed to subscribe?
Pleading their own default in not allotting
shares to themselves?
No - They are still liable.
 Naraindas Lahoredas, re (1934) 4 Comp Cas 127 (Sind);
Universal Transport Co. Ltd. v Jagjit Singh (1956) 26
Comp Cas 36 (Punj)
 2(55), 2013
Member in relation to a Co., means -
 Co Ltd. By Share / Guarantee?
 Co. – “having no authorised capital” - cannot
be said – “Co. having a share capital” – it will be
only a Co. Ltd. by guarantee.
 ‘Capital;’ & ‘Share Capital’ – synonymous ?
 Re, Yogam (S N D P) (1970) 40 Comp Cas 60 (Ker)
COMPANY LIMITED BY SHARES
 Liability of each SH is limited by the No. of shares
taken
 Cannot be called on to contribute beyond the amount
unpaid on his shares
 In a Ltd. Co. - Liability of all / any of the directors /
manager may - if so provided by MOA - Be unlimited
(vide SS 322 & 323)
 Obligation of Directors - Managers
New Law - Sec. 286 – CA 2013
 In the case of a Ltd. Co. - Any person who is / has been a
director / manager - Whose liability is unlimited U/T/P/O/T/A –
 Shall, in addition to his liability - if any - To contribute as an
ordinary member –
 Be liable to make a further contribution as if he were at the
commencement of WU - a member of an unlimited Co.
 P… A person who has been a director / manager shall not be
liable to make such further contribution –
A) If he has ceased to hold office for a year / upwards before the
commencement of WU.
B) In respect of any debt / liability of the Co. contracted after he
ceased to hold office;
C) Subject to AOA - unless NCLT deems it necessary to require the
contribution in order to satisfy the debts & liabilities, & the costs,
charges & expenses of the WU.
Purpose, Nature & Advantages of a Guarantee Co. -
Palmer’s Co. Precedents
 Greater Elasticity - Utmost freedom
 Holding of shares is in no sense an essential
feature of membership.
 Large proportion of the Co’s Ltd. by guarantee -
are registered under a licence from the BOT –
(S.19)
See Sec. 8, CA, 2013 - Not for Profit Co -
 Assn. formed for Promoting Commerce, Art,
Science, Religion, Charity / other useful object.
 Palmer’s Co. Precedents
 Other concerns adopt this mode of incorporation
as being better suited to their circumstances
 In particular, Co’s for -
 MOA – 4 - 2013
 S. 4 (1)(a) - The MOA a Co. shall state -
 (A) Name of the Co. - Public Limited Co. - Last word as
 “Limited” (PLC) (INC – US)
 Private Limited Company – Last word as
 Private Limited (Pvt. Ltd.)
 P… nothing in this clause shall apply to a Co. registered U/S 8
 4(1)(d) - Liability of Members of the Co. -
Whether limited / unlimited
• (i) in the case of a Co. Ltd. by shares, that
liability of its members is limited to the
amount unpaid, if any, on the shares held
by them; &
S. 4(1)(d)(ii) - In the Case of a Co. Ltd. by Guarantee - Amount up
to which each Member Undertakes to Contribute
 S. 4(1)(e)
In the case of a Co. having a Share Capital
 (i) Amount of share capital with which the Co. is
to be registered &
Division thereof into shares of a fixed amount
&
No. of shares which the subscribers to MOA
agree to subscribe (shall not be less than one
share) &
 (ii) No. of shares each subscriber to MOA
intends to take, indicated opposite his name.

 See Sec. 13 (4) CA, 1956 - Similar

 Sec 4 - 2013
S. 4(1) (f) In the case of OPC
Name of the person who, in the
event of death of the subscriber,
shall become the member of the Co.
 Requirements with Respect to MOA
Sec 13 Co. A, 1956- S.4(1)(c) - Objects
2013
 Name of the Co. – NO CHANGE for which the Co. is proposed
 Registered office – NO CHANGE to be incorporated & any
 Objects of the Co. matter considered necessary
 (c) In the case of a Co. in existence immediately before thethereof;
in furtherance commencement of
the Co. (Amendment) Act, 1965 - Objects of the Co.
 (d) in the case of a Co. formed after such commencement,-

(i) Main objects of the Co. to be pursued by the Co. on its

incorporation &
Objects incidental / ancillary to the attainment of the main
objects; (Re, Bhutoria Bros, ILR 1957 Cal 593)
(ii) Other objects of the Co. not included in S/Cl. (i);

 (e) In the case of Co’s (other than trading corp’s) with objects
not confined to one State, the States to whose territories the
objects extend.
 Co. Act, 1956
(2) MOA – Ltd. by shares / by
guarantee – NO CHANGE
(3) MOA – Ltd. Guarantee – NO
CHANGE
(4) In the case of a Co. having a share
capital – NO CHANGE
Members severally liable in certain cases - Sec. 3A
 If at any time the No. of members of a Co. is reduced, in
the case of a PLC, below seven,
 In the case of a Pvt. Co., below two, & the Co. carries
on business for more than 6 months
 While the No. of members is so reduced, every person
who is a member of the Co. during the time that it so
carries on business after those 6 months &
 Is cognisant of the fact that it is carrying on business
with less than 7 / 2 members, as the case may be,
 Shall be severally liable for the payment of the whole
debts of the Co. contracted during that time, & may be
severally sued therefor.
 Incorporation of Co. – S. 7
 (1) There shall be filed with ROC within whose
Jurisdiction RO of a Co. is proposed to be situated, the
following documents & information for registration,
namely:-
 (a) MOA & AOA… duly signed by all the subscribers
to MOA in such manner as may be prescribed;
 (b) Declaration in the prescribed form by
 An advocate, a CA, Cost Accountant / CS in practice,
 Who is engaged in the formation of the Co., &
 By a person named in AOA as a director, manager / secretary
of the Co.,
 That all the requirements of T/Act & the rules made
thereunder in respect of registration & matters precedent /
incidental thereto have been complied with;
 (c) A Declaration (‘affidavit’ replaced in 2017) from
each of the subscribers to MOA & from persons named
as 1st directors, if any, in AOA that
 He is not convicted of any offence in connection with
the promotion, formation / management of any Co., /
 He has not been found guilty of any fraud / misfeasance
/ of any breach of duty to any Co. U/T/A / any previous
Co. law during the preceding 5 years
 That all the documents filed with ROC for registration
of the Co. contain information that is correct &
complete & true to the best of his knowledge & belief;
 (d) Address for correspondence till its RO is
established;
 (e) Particulars of name - including
Surname / family name - residential address -
nationality & such other particulars of every
subscriber to MOA along with proof of identity, as
may be prescribed, &
In the case of a subscriber being a body corporate,
such particulars as may be prescribed;
 (f) Particulars of the persons mentioned in AOA
as 1st directors of the Co., -
Their names - including surnames / family names -
DIN - residential address - nationality & such other
particulars including proof of identity as may be
prescribed; &
 (g) Particulars of the interests of the persons
mentioned in AOA as 1st directors of the Co. in
other firms / bodies corporate
Along with their consent to act as directors of
the Co. in such form & manner as may be
prescribed
 7(2) ROC on the basis of documents &
information filed U/Ss (1)
Shall register all the documents & information
referred to in that Ss in the register &
Issue a COI in the prescribed form to the effect that
the proposed Co. is incorporated U/T/A.
 Sec. 7 - (3) (4) & (5)
 (3) On & from the date mentioned in COI issued U/Ss
(2) - ROC shall allot to the Co. a CIN, which
Shall be a distinct identity for the Co. &
Shall also be included in the certificate.
 (4) Co. shall maintain & preserve at its RO copies of all
documents & information as originally filed U/Ss (1) till
its dissolution U/T/A
 (5) If any person furnishes
Any false / incorrect particulars of any information /
Suppresses any material information,
 of which he is aware in any of the documents filed with
ROC in relation to the registration of a Co.,
 He shall be liable for action U/S. 447.
 (6)
 Without prejudice to T/P/O/Ss (5)
 Where, at any time after the incorporation of a Co.,
 It is proved that Co. has been got incorporated by
Furnishing any false /
Incorrect information / Representation /
By suppressing any material fact /
Information in any of the documents /
Declaration filed / Made for incorporating such Co. /
By any fraudulent action
 Promoters
 Persons named as 1st directors of the Co. &
 Persons making declaration U/Ss (1)(b)
 Shall each be liable for action U/S 447.
 (7) Without prejudice to T/P/O/Ss (6),
 Where a Co. has been got incorporated by
furnishing
Any false / incorrect information /
Representation / by suppressing any material
fact / information in any of the documents /
Declaration filed / made for incorporating
such Co. /
By any fraudulent action
 NCLT may, on an application made to it, on
being satisfied that the situation so warrants
 (a) pass such orders, as it may think fit, for
regulation of the management of - Co. including
changes, if any, in its MOA & AOA, in public
interest / in the interest of the Co. & its
members & creditors; /
 (b) direct that liability of the members shall be
unlimited;
 (c) direct removal of the name of the Co. from ROC; /
 (d) pass an order for WU of the Co.; /
 (e) pass such other orders as it may deem fit:
P… before making any order U/T/Ss –
(i) Co. shall be given a reasonable
opportunity of being heard in the
matter; &
(ii) NCLT shall take into consideration
the transactions entered into by the Co.,
including the obligations, if any,
contracted / payment of any liability.