Memorandum of Association — Clauses and Alteration — Company Law Notes

Memorandum of Association — Clauses and Alteration

If a company were a country, the Memorandum would be its constitution: it fixes the company’s name, its home State, and — most importantly — the outer boundary of what it is allowed to do. Step outside that boundary and the act is void, no matter how profitable.

What the Memorandum is

The Memorandum of Association (MOA) is the company’s charter — its most fundamental document, defining its relationship with the outside world and the scope of its powers. Every outsider dealing with the company is deemed to know it (topic 5, constructive notice). It contains, under s.4, these clauses:

A. Name clause. States the company’s name, ending in “Limited” (public) or “Private Limited” (private). The name must not be identical to an existing name or undesirable.

B. Registered office (situation) clause. States the State in which the registered office is situated — the company’s official address for all communications and legal service.

C. Object clause. The most important clause — it states the objects for which the company is formed. It sets the limit of the company’s capacity; anything outside it is ultra vires [beyond the powers] and void (topic 5).

D. Liability clause. States that the members’ liability is limited (by shares or by guarantee) or unlimited.

E. Capital clause. States the amount of authorised (nominal) share capital and its division into shares of a fixed value.

F. Subscription (association) clause. The subscribers declare their desire to form the company and take at least one share each; signed by the subscribers (min 2 private / 7 public).

Alteration of the Memorandum (s.13)

Because it is fundamental, the MOA can be altered only in the manner the Act allows — usually a special resolution [passed by ≥ 3/4 of members voting], and for some clauses an added approval:

Name — special resolution + Central Government (Registrar) approval (s.13(2)).
Registered office — shifting within the same city by Board resolution; to another town in the same State by special resolution; to another State by special resolution and confirmation by the Central Government (Regional Director) (s.13(4)–(7)).
Object clause — special resolution (and, where public money was raised, extra safeguards).
Capital — altered under s.61 (increase, consolidate, sub-divide, cancel) by ordinary resolution if the articles allow.
Liability — generally cannot be increased without the member’s written consent.

Section 4(1): the memorandum shall state the name, the State of the registered office, the objects, the liability of members, and the amount of share capital.

In Simple Terms: The Memorandum is the company’s constitution — six clauses fixing who it is, where it lives, what it may do, how far members are liable, and how much capital it has. It can be changed only by the special procedure the Act lays down, and the object and registered-office-to-another-State changes need outside approval.

flowchart TD
    ROOT["Memorandum (s.4)"]:::root
    ROOT --> A["Name clause"]:::leaf
    ROOT --> B["Registered office clause"]:::leaf
    ROOT --> C["Object clause (limit of capacity)"]:::mid
    ROOT --> D["Liability clause"]:::leaf
    ROOT --> E["Capital clause"]:::leaf
    ROOT --> F["Subscription clause"]:::leaf
    classDef root fill:#FFF8DC,stroke:#000,color:#000;
    classDef mid fill:#FDE8D0,stroke:#92400E,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

🧩 WORKED EXAMPLE — shifting the registered office to another State

Facts. A company’s registered office is at Mumbai (Maharashtra). It wants to shift it to Karnataka.

Rule. Shifting the registered office to another State alters the situation clause and requires a special resolution + confirmation by the Central Government (Regional Director) under s.13(4).

Apply. A mere Board decision is not enough; an inter-State shift touches jurisdiction of the ROC and creditors.

Conclusion. The company must pass a special resolution and obtain RD confirmation, then file with both Registrars. Advise accordingly.

Case Laws

[C-6] Ashbury Railway Carriage Co. v Riche (1875) — acts outside the object clause are ultra vires and void.
Rajahmundry Electric Supply Corp. v Nageswara Rao (1956) — MOA is the charter defining the company’s powers.

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