Memorandum of Association' is the charter of the Company, it is the mirror in which features of the company can be seen' Comment. Also, give the procedure of change of the objects and Registered office of a Company.

Question: Memorandum of Association' is the charter of the Company, it is the mirror in which features of the company can be seen' Comment. Also, give the procedure of change of the objects and Registered office of a Company. [BJS 1979]

Find the question and answer of Company Law only on Legal Bites. [Memorandum of Association' is the charter of the Company, it is the mirror in which features of the company can be seen' Comment. Also, give the procedure of change of the objects and Registered office of a Company.]

Answer

As per Section 2 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.

The Memorandum of Association (MOA) is considered to be the charter of the company, it is the primary constitutional document that defines the company's existence, its name, its objects, its capital and the liability of its members. It acts as a mirror that reflects the fundamental features of the company, such as its purpose, operations, and legal status.

The MOA is a public document that is filed with the Registrar of Companies when the company is incorporated. It sets out the basic framework within which the company can operate, and it defines the company's powers and the limits of its objects.

Case laws that illustrate the significance of the Memorandum of Association include:

In the case of "Ashbury Railway Carriage and Iron Co Ltd v Riche", (1875) LR 7 HL 653, the House of Lords held that the Memorandum of Association defines the scope of the company's powers and that the company can only act within the limits set out in the Memorandum.

In the case of "Lee v Lee’s Air Farming Ltd", [1961] AC 12, the Privy Council held that the Memorandum of Association defines the company's objects and that the company can only carry on business within the objects set out in the Memorandum.

In the case of "Routledge v Grant", (1828) 4 Bing 653, the court held that the Memorandum of Association defines the company's capital and that the company can only raise capital up to the authorized capital set out in the Memorandum.

The Memorandum of Association is a critical document that defines the fundamental features of a company, such as its purpose, operations, and legal status. It acts as a charter that outlines the company's powers and limits its objects. Any act of the company outside the limits of the Memorandum of Association is ultra vires (beyond the powers) of the company and considered void.

Procedure of Change of the Objects and Registered office of a Company:

The term “alter” or “alteration” is defined in Section 2(3) of the Act, as any additions, omissions or substitutions. A company can alter the memorandum only to the extent permitted by the Act. According to Section 13, the company can alter the clauses in the memorandum by passing a special resolution.

A resolution is a formal decision taken in a meeting. There are two kinds of resolutions, ordinary and special. A special resolution is one which requires at least a 2/3rd majority to be effective. The alteration to the clauses also requires the approval of the Central Government in writing.

The alteration of the memorandum can happen for a variety of reasons. The alteration can be made if,

(a) Enables the company to carry its business more effectively;

(b) Helps to achieve the objectives;

(c) Helps the company to amalgamate with another company;

(d) Helps the company dispose off any undertaking.

The alteration of various clauses of the memorandum has different procedures:

Alteration to the Registered Office Clause: The application for changing the place for the Registered Office of the company shall be filed with the Central Government in Form INC- 23 with the prescribed fees.

If the company is changing its Registered Office from one to another, then the approval of the Central Government is required. The Central Government is required to dispose off the matter within 60 days and should ensure that the change of place has the consent of all the stakeholders of the company.

Alteration to the Object Clause: To alter the object clause, a special resolution is required to be passed. The changes must be confirmed by the authority. The document which confirms the changes by an authority with a printed copy of the altered memorandum should be filed with the Registrar.

If the company is a public company, then the alteration should be published in the newspaper where the Registered Office of the company is located. The changes to the object clause must also be mentioned on the company’s website.

The altered Memorandum of Association should be submitted to the Registrar within 30 days of passing the resolution.

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