MOA AND AOA
MEMORANDUM OF ASSOCIATION
It sets-out the constitution of company. It is so to speak, the charter of the company and provides the foundation on which the structure of the company is built
CLAUSES OF MOA
Name Clause Undesirable name to be avoided Ltd or private ltd is last word Prohibition of certain name Use of key word according to authorized capital Registered Clause Objects clause Liability Clause Capital Clause Association Clause
SIGNIFICANCE
Basis of incorporation Doctrine of ultra virus To provide information to investors Defines the objective of company
ALTERATION OF MEMORANDUM
Change of name By special resolution By ordinary resolution Change of Registered office Alteration of objects Change in liability clause
ARTICLES OF ASSOCIATION
The Articles are a requirement for the establishment of accompany under the law of India, the United Kingdom and many other countries. Together with the memorandum of association, they constitute the constitution of a company articles of association enumerate the internal rules of the company under which it will be governed.
the issuing of shares (also called stock), different voting rights attached to different classes of shares valuation of intellectual rights, say, the valuations of the IPR of one partner and, in a similar way as how we value real estate of another partner the appointments of directors - which shows whether a shareholder dominates or shares equality with all contributors directors meetings - the quorum and percentage of vote management decisions - whether the board manages or a founder transferability of shares - assignment rights of the founders or other members of the company do
special voting rights of a Chairman,and his/her mode of election the dividend policy - a percentage of profits to be declared when there is profit or otherwise winding up - the conditions, notice to members confidentiality of know-how and the founders' agreement and penalties for disclosure first right of refusal - purchase rights and counter-bid by a founder.
Companies which must have AOA
Unlimited company Companies limited by guarantee Private companies limited by shares
Registration of AOA
As per sec 26, public company limited by shares may register AOA signed by the subscribers to the memorandum Three alternative company to adopt articles: Adopt Table A Part of Table A Exclude Table A and set out own regulation in full
Case : Royal British Bank v. Turquant
Doctrine of Indoor Management
RULE OF CONSTUCTIVE NOTICE: Every person dealing with the company is deemed to have a constructive notice of the contents of the memorandum and articles of the company. An outsider dealing with the company is presumed to have read the contents of the registered documents of the company. The further presumption is that he has not only read and perused the documents but has also understood them fully in the proper sense. This is known as the rule of constructive notice
The doctrine of indoor management is an exception to the rule of constructive notice. It imposes an important limitation on the doctrine of constructive notice. According to this doctrine persons dealing with the company are entitled to presume that internal requirements prescribed in memorandum and articles have been properly observed
Case facts
The directors of a coal mining and Railway company borrowed money from the Royal British Bank, on a bond of $2000 The bond was given under the seal of the company and was signed by the two directors and a secretary Company claimed that under its clauses of incorporation, the directors had power to borrow only such sums as had been authorised by a general resolution of the company
Judgement???
BASIS Purpose
MOA Lays down the charter of the company States the objects and powers of the company basic document of the company
AOA Provides the rules and regulations for the internal administration of the company States the way to achieve the objectives stated in the Memorandum of Association supplementary document or secondary document of the company. the company and its shareholders can opt for the model set of Articles given as Table A rectifiable relatively easier
Scope
Status
Relationship Whether Compulsory or not Legal effect Alteration
company with outside world compulsory
void lengthy process
Case: The Ashbury Railway Carriage & Iron Company v. Riche
Case Facts
Company contracted to provide finance to Riche for the construction of a railway in Belgium Later dispute arose between parties It was evident that financing was not an object of the party. Thus, the contract was outside the scope of the objects of the company Some objects of the company in its MOA 1. To make and sell or lend on hire, railways carriages and wagons and all kinds of railway plants, fitting, machinery and rolling stock 2. To carry on the business of mechanical engineers and general contractors 3. To purchase, lease, work and sell mines, minerals, land and building 4. To purchase and sell, as merchants, timber, coal, metals or other material, and to buy and sell any such material on commission, as agent
Judgement ???
THANK YOU
Prepared By :
Bhavana Advani(03) Puja Ranpariya(76)
