Memorandum of Association Notes.

      MEMORANDUM OF ASSOCIATION .

The memorandum of association of a company is its principal document. "It is a document of great importance in relation to the proposed company." No company can be registered without a memorandum of association and that is why it is sometimes called a life giving document.

                         Definition

 Under Section 2(56) of the Act, "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 laws or of this Act".

 This definition does not throw any light on the scope, use and importance of the memorandum in a company. We shall, therefore, examine some better definitions given by judges. 

Lord Cairns in the leading case of Ashbury Railway Carriage Co. vs. Riche? observed that "The memorandum of association of a company is its charter and defines the limitation of the powers of a company." "The memorandum contains the fundamental conditions upon which alone the company is allowed to be incorporated".

 Lord Macmillian : "The purpose of the memorandum is to enable the shareholders, creditors and those who deal with the company, to know what is its permitted range of enterprise."

                       Importance 

The definitions given above clearly indicate the scope and the importance of the document. In fact the memorandum of association is the foundation on which the structure of a company is based. It states the name of the company, the address of its registered office, whether the company has a share capital or not, whether it Is limited by shares or by guarantee or otherwise, and defines the scope of activities within which the company can function.  

It is this document which delimits the capacily to contract of the company. A company cannot undertake operations that are not mentioned in its memorandum. Any act of the company outside the scope of activities as laid down in the memorandum is said to be ultra vires and not binding on it.

 Further, the memorandum of association is the constitution of the company in its relation to the outside world. Every person who deals with the company is presumed to have sufficient knowledge of its contents (as it is open to public inspection) and anybody dealing with the company shall be bound by its provisions and cannot bind the company for ultra vires acts. 

          Formats of Memorandum.  

AS per Section 4(6) the memorandum of a company shall be in the respective forms specified in Tables A, B, C, D and E in Schedule I annexed to the Act as may be applicable to the company. 

Capital Subscription

Incorporation

Promotion