According to section 2 (56) of the Companies Act 2013, a “memorandum” refers to the original articles of association registered by a company or an amended deed that complies with the rules set out in the Companies Act. Let us examine further the content of the memorandum of association. In K. Leela Kumar v. Government of India, the court held that the memorandum of association could not contain anything contrary to the Companies Act, 1956, but that the articles of association dealt with personal matters in many cases and could not be challenged for the above reason. In Sivashanmugam v. Butterfly Marketing (P.) Ltd. , the Court held that if the purpose clause provided that the company could enter into a partnership for any purpose that could benefit it, it was decided that this allowed the company to enter into a partnership for the production of clothing. In NEPC India Ltd. v. Registrar of Companies, the Court held that a complaint alleging that a company carries on activities not listed in the purpose clause of the articles must be filed within six months of the date of knowledge. Another important function of a social contract is to describe how the company will interact with other companies. Shareholders and outside companies that plan to work with a corporation can use the articles to determine the scope of the corporation`s operations.
If, to the knowledge of a shareholder, the number of shareholders has fallen below the legal minimum (seven for a joint-stock company and two for a limited liability company) and the company has been operating for more than 6 months, while the number is thus reduced, the partners who provisionally form the company are personally liable for the debts of the private company during this period. Hour. The ownership clause explained why the company was setting up. Companies are not permitted by law to engage in transactions other than those expressly set forth in this clause. An object clause must contain: Subscription clause: Declaration declaring the will to incorporate a company in accordance with the memorandum. There are certain legal requirements for the preparation of a memorandum. Capital clause: The amount of share capital with which the company is to be divided into shares must be indicated, indicating the number of shares and types of shares. A company may not issue share capital in excess of the maximum amount of share capital specified in this clause without amending the memorandum. Article 17 provides for an amendment to the provisions of the memorandum relating to the objects of the company.
The Companies Act provides for certain specific cases in which the company is entitled to change its purpose clause. In a capital company, the subscribers of the articles of association must acquire at least one share. Each subscriber must write their name next to the number of shares they wish to include in the company. If a corporation is limited by collateral, the articles of association must contain a statement that each member has pledged to contribute a certain amount of money to the corporation. The association clause states that any person who signs the floor of the MOA wishes to be part of the association formed by the memorandum. The MOU must be signed by at least seven or more people in the case of a public company. It must be signed by at least two or more people in the case of a private company. Signatures must also be confirmed by witnesses.
There may be a witness for all signatures, but none of the subscribers can see the signatures of the others. All participants and witnesses must provide their addresses and occupations in writing. If an instrument is ultra-vires the articles of association of the company, but intra-vires the memorandum of association, the articles may be amended to correct the error. A social contract has two main objectives. First, this document can play an important role in attracting potential shareholders. When searching for shareholders for a new company, the articles of association are used to inform shareholders of important facts about the company: Article 16 provides that a company may amend the provisions contained in the articles of association only in the cases and in accordance with the procedure provided for by law. These legal exceptions can be roughly divided into three categories. While articles of association act as articles of association that define the scope and limits of the company, a partnership agreement acts as a legal document that sets out the rules for the management of the company.
The memorandum helps define the relationship of the company with its members and the rights of these members. If you form a limited liability company, you must state in your articles of association that the liability of the members of your company is limited. For capital companies, this document must describe the total amount of share capital and also describe the fixed amount into which the shares will be divided. Modifying a partnership agreement requires the correct procedure for the specific change you want to make. For example, if you want to change the name of your business, you will need to make a special decision and get written permission from your government. Like any legal document used by a company, a partnership agreement should contain a wide range of information. The first information you need to include in your articles of association is the name of your company. Next, you need to indicate the state where your company`s headquarters are located. Change of registered office in the same city, city or municipality: A corporation may change its registered office in the same city by making a decision of the board of directors with the registrar. It is important to note that here the memorandum is not changed, because in a memorandum only the state is mentioned.
The legal implications of the Memorandum of Understanding are as follows: A memorandum of association constitutes the articles of association of the corporation. It is a legal document created during the process of incorporation and registration of a company to define its relationship with shareholders and define the purposes for which the company was incorporated. The company may only carry out the activities mentioned in the articles of association. As such, the MoU sets the limit beyond which the company`s actions cannot go. Regarding the difference between statutes and statutes, the following points are the most important. The regime prescribed by Indian company law requires that the memorandum be printed, divided into paragraphs, numbered and signed by at least 7 persons (in the case of the public) and 2 (in the case of individuals) in the presence of a witness. Transfer of headquarters from one state to another: A company may transfer its registered office from one state to another by making a special decision and being approved by the central government, which must inform all interested parties in good time before confirming the change. The memorandum must be amended in the event of such an amendment. A company`s articles of association, often referred to simply as memoranda, are the document that governs the relationship between the company and the outside world. A company may amend certain parts of its articles of association at any time by special resolution of its shareholders, provided that the amendment is compatible under company law. The objects of the enterprise indicate what a company is allowed to do and therefore limit its ability to act.
For example, if the corporation is to be a not-for-profit limited liability company, there will be a statement that profits cannot be distributed to members. The statutes are intended to convey to the public the state of affairs and their raison d`être and functioning. This helps the different stakeholders of the company (creditors, suppliers, shareholders, etc.) to assess the extent of their risk and the company`s ability to overcome it at a later stage.