Memorandum and Articles of Association

The Memorandum of Association (Memorandum or MoA) is the constitutional or founding document for every Company, and mandatory for registration/incorporation of Companies under the Companies Act 2013 (the Act). The Article of Association (Articles or AoA) also mandatory, contain the regulations for the management of the said Companies.

Together, these documents are the principal source* of rights, duties, limitations, obligations and liabilities for the Company, concerned Stakeholders (eg. Shareholders, Directors, Management, investors etc.) and various third parties dealing with the said Companies. Furthermore, the provisions of the MoA and AoA may determine the following key issues —

  • Variation of Shareholder Rights
  • Alteration of Share Capital
  • Powers of the Board (of Directors)
  • Payment of Dividend in proportion to amount paid-up
  • Issue and redemption of Preference Shares
  • Refusal of registration of transfer of Member interest or Securities
  • Further issue of Share Capital and renunciation rights
  • Issue of Bonus Shares
  • Share/Securities Buy-back
  • Quorum for Member meetings and Chairman thereof
  • Resolutions requiring ‘special notice’
  • Appointment/retirement of Directors
  • Duties of Directors etc.

* The provisions of the Act however have effect notwithstanding anything to the contrary contained in the MoA or AoA of a Company (or in any agreement executed by it, or in any resolution passed in a General Meeting or by its Board of Directors) and any provision contained in the MoA, AoA etc, to the extent to which it is repugnant to the provisions of the Act is void or becomes so.

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Essential Provisions – Memorandum

Section 4 of the Act requires the MoA of a Company (excludes section 8 Companies) to state certain essential details such as —

  • The name of the Company
  • Whether Public or Private Company
  • The State in which the registered office of the Company is to be situated
  • The ‘objects’ for which the Company is proposed to be incorporated and any matter considered necessary in furtherance thereof
  • The ‘liability’ of Members of the Company (limited by Shares or Guarantee or unlimited) and the nature thereof
  • For Company having Share Capital, details thereof (amount, nature of division, number agreed/intended to be subscribed, subscriber names etc.)
  • MoA of a Company to be in respective form as specified in Tables A, B, C, D or E in Schedule I (as may be applicable) to the Act


Essential Provisions – Articles

The Articles, in practical effect are more than mere ‘regulations for the management’ of a Company as stated by section 5 of the Companies Act 2013 (the Act), which in addition to matter as prescribed, may include such additional matters considered necessary for such management.

  • The said Articles may contain provisions for ‘entrenchment* to the effect that specified provisions therein may be altered only if conditions or procedures more restrictive than those applicable in the case of a ‘special resolution’ are met or complied with
  • AoA of a Company to be in respective form as specified in Tables F, G, H, I or J (collectively the ‘Model Articles‘) to Schedule I (as may be applicable) to the Act
  • A Company may adopt all or any of the regulations contained in the Model Articles (as applicable), and for any Company registered after the commencement of the Act, in so far as its registered Articles do not exclude or modify the said regulations, they would (so far as applicable) be the regulations of that Company

* Entrenchment provisions can only be made either on formation of a Company, or by an amendment in the Articles agreed to by all the Members of the relevant Company (for Private Companies) or by a ‘special resolution’ (for Public Companies), as the case may be.

 

Effect and Alteration of Memorandum and Articles

From the date of incorporation of a Company (as mentioned in the Certificate of Incorporation), MoA and AoA as registered bind (subject to the provisions of the Act) the concerned Company and its Members (to the same extent) and as a covenant on its/their part to observe all the provisions of thereof. Furthermore, all (if any) monies payable by any Member to the Company under the MoA and AoA shall be a debt due to the said Company.

A Memorandum (MoA) may be altered subject to the provisions of section 13 of the Companies Act 2013 (the Act) and other specific provisions (such for ‘Alteration of Share Capital’ etc) thereunder. To effect such alteration of the MoA, the following would be necessary —

  • ‘Special Resolution’ in favour of alteration
  • Change in ‘name’ (except where change is the deletion/addition of the word “Private” consequent to conversion of class of Company) or ‘place of the registered office’ from one State to another, will require prior approval of Central Government
  • Change in any provision of MoA of a Section 8 Company will require prior Central Government approval
    No alteration made would have any effect until it is registered in accordance with the provisions of the said section
  • Extra requirements to change the ‘objects’ of a Company which has raised money from public through a ‘Prospectus’ and still has any unutilised amount out of the money so raised


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Section 14 of the Companies Act 2013 (the Act) allows the alteration of Articles of a Company (subject to the other provisions of the Act and the conditions, if any, contained in its Memorandum) in the following manner —

  • Pass a ‘special resolution’ approving such alteration
  • Such alteration may effect the conversion* of a ‘class’ of Company into another

* Where a Private Company alters its Articles in such a manner that it no longer includes the restrictions and limitations otherwise imposed on a Private Company under the Act, such Company shall, as from the date of such alteration, cease to be a Private Company.

Any such alteration having the effect of conversion of a Public Company into a Private Company shall not take effect except with the approval of the National Company Law Tribunal (NCLT), which shall make such order as it may deem fit.


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Company Registration/Incorporation and SPICe Forms

The Ministry of Corporate Affairs (MCA) has recently introduced ‘Simplified Proforma for Incorporating Company Electronically’ (SPICe) to simplify and speed up the Company incorporation/registration (subject to some exceptions and conditions) process through an online application eForm INC – 32^ in addition to the Memorandum of Association (eForm INC – 33) and Article of Association (eForm INC – 34).

^Revised INC-7 Form for incorporating Part 1 Companies and Companies with more than 7 Subscribers has been made available on the MCA portal with effect from 15 January 2017 for filing purposes.

> Register/Incorporate a Private Limited Company or other entities

The Act defines the “Memorandum” of a Company as the Memorandum of Association (MoA) as originally framed or as altered from time to time in pursuance of any previous Company law or under the Act. The MoA is the constitutional document of every Company and a legal pre-necessity for the purpose of incorporation/registration of a Company.

The MoA along with the Articles of Association (AoA) of the Company concerned, is required to contain certain prescribed details and be executed in a prescribed manner, in order to be legally acceptable for incorporation/registration purposes and for the existence/operation of the Company thereafter under the Act.

> SPICe provides in electronic form a standard format of e-MoA (INC-33) as per the Act, and the eMoA along with the eAoA (INC-34) have to be uploaded as ‘Linked Forms’ to eForm INC-32 via the MCA portal.


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The Act defines the “Articles” of a Company to mean the ‘Articles of Association’ (the Articles) of a Company as originally framed or as altered from time to time or applied in pursuance of any previous Company law or of the Act.

> The Articles of a Company contain the regulations for management of the concerned Company and other such matters, as prescribed by the Act and Rules thereunder. Subject to the provisions of the Act and the Rules thereunder, a Company may also include additional matters in its Articles as it may be considered necessary for its management.

> SPICe provides in electronic form a standard format of e-AoA (INC-34) as per the Act, and the eAoA along with the eMoA (INC-33) have to be uploaded as ‘Linked Forms’ to eForm INC-32 via the MCA portal.


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