CS Executive · Company Law and Practice

Memorandum and Articles of Association and its Alteration: formula sheet

Full chapter guide

Key formulas

Name clause (Section 4(1)(a)): Public company: last word "Limited". Private company: last words "Private Limited".; This does not apply to a company registered under Section 8.
Registered office clause (Section 4(1)(b)): State in which the registered office is to be situated; Only the State is stated in the memorandum, not the full address.
Objects clause (Section 4(1)(c)): Objects for which the company is proposed to be incorporated + any matter considered necessary in furtherance thereof; This decides what the company may lawfully do.
Liability clause (Section 4(1)(d)): Shares: liability limited to the amount unpaid, if any, on shares held. Guarantee: the amount each member undertakes to contribute.; A guarantee company's amount applies in winding up, while he is a member or within one year after he ceases to be one. It also covers winding-up costs and adjustment among contributories.
Capital clause (Section 4(1)(e)): Share capital amount + division into shares of fixed amount + number of shares each subscriber takes (at least one share); Applies only to a company having a share capital.
OPC clause (Section 4(1)(f)): Name of the person who becomes member on the death of the subscriber; Applies only to a One Person Company.
Name restrictions (Section 4(2) and (3)): No name identical with or too nearly resembling an existing company's name; no name implying Government connection or patronage, unless prescribed approval is obtained; Also barred: a name whose use is an offence under any law or is undesirable in the Central Government's opinion.
Name reservation (Section 4(4) and (5)): Reserved for 20 days, or 60 days for an existing company applying or changing its name, or such other prescribed period; The 60-day period is stated in the proviso to Section 4(5)(i).
Ultra vires act: Act beyond objects in the memorandum → void, cannot be ratified, not enforceable; Not even a unanimous vote of members can validate it.
Intra vires but irregular act: Within objects but beyond directors' authority or procedure → can be ratified by members; Ratify through the procedure the articles or the Act require.
Constructive notice: Outsider is deemed to know the memorandum and articles, which are public documents; It covers the content of public documents, not the internal working of the company.
Doctrine of indoor management: Outsider dealing in good faith may presume internal formalities were complied with; It protects the outsider and acts as a limit on constructive notice.
Exceptions to indoor management: No protection where: (1) outsider had actual knowledge of the irregularity; (2) outsider was put on inquiry by suspicious circumstances; (3) the document is forged; (4) the act is beyond the public documents themselves; A forged document is void, so there is nothing to presume. Dealing as an insider, such as a director, also weakens the protection.
Link between the two doctrines: Constructive notice: check the public documents. Indoor management: do not check internal procedure.; Use this one-line contrast in the difference questions.
General power to alter: Alteration of memorandum = special resolution + compliance with section 13 procedure (section 13(1)); Subject to section 61, which governs alteration of share capital.
Change of name: Name change = special resolution + written Central Government approval; effective only on fresh certificate of incorporation (section 13(2), (3)); No approval is needed if the only change is deleting or adding the word "Private" on conversion of one class of company to another.
Shifting registered office to another State: Shift between States = special resolution + Central Government approval; application disposed of within 60 days (section 13(4), (5)); The Central Government may check consent of creditors, debenture-holders and others, or that debts are provided for or secured.
Filing with Registrar: File special resolution (and Central Government approval if name changes) with the Registrar (section 13(6)); Opens with "Save as provided in section 64", which deals with notice of alteration of share capital.
Effect of shifting office: Certified copy of Central Government order filed with the Registrar of each State; the new State's Registrar issues a fresh certificate (section 13(7)); The time and manner are as prescribed.
Change of objects after prospectus money: Special resolution + newspaper publication (English and vernacular) + website + exit opportunity for dissenters (section 13(8)); Applies only while some money raised by prospectus is unutilised.
Registration of objects alteration: Registrar registers and certifies within 30 days of filing the special resolution (section 13(9)); Applies to alteration of objects.
Effectiveness: No alteration has effect until registered (section 13(10)); Use this as the closing line in conclusions.
Guarantee company bar: In a company limited by guarantee without share capital, an alteration giving anyone a right to share divisible profits otherwise than as a member is void (section 13(11)); A short fact often asked in one-line questions.
Meaning of articles: Articles = regulations for management of the company (Section 5(1)); They also contain prescribed matters. A company may add extra matters it considers necessary (Section 5(2) proviso).
Prescribed forms: Articles must follow Tables F, G, H, I and J of Schedule I, as applicable (Section 5(6)); Table F is the model for a company limited by shares. A company may adopt all or any of the model regulations (Section 5(7)).
Default model articles: Model regulations apply if registered articles do not exclude or modify them (Section 5(8)); Applies to companies registered after the commencement of the Act, so far as applicable.
Binding effect: Registered articles bind company and members as if signed by each and containing covenants (Section 10(1)); Subject to the provisions of the Act.
Money due from member: Sum payable by a member under the articles = debt due to the company (Section 10(2)); Useful for calls on shares and similar dues.
Entrenchment: Stricter than special resolution to alter specified articles (Section 5(3)); adopted by unanimity of members (private) or special resolution (public) (Section 5(4)); Notice to the Registrar is required (Section 5(5)).
Producer Company articles: Producer Company articles contain mutual assistance principles (Section 378G(2)); Examples: voluntary membership, one member one vote, limited return on share capital, equitable distribution of surplus.
Power to alter articles: Special resolution + subject to the Act and the memorandum; Section 14(1). The articles cannot be altered to contradict the Act or the memorandum.
Private to public: Alteration removing the private-company restrictions → company ceases to be private from the date of alteration; First proviso to Section 14(1). The special resolution is the step that does this.
Public to private: Special resolution + order of the Central Government approving the alteration; Second proviso to Section 14(1). Without the order, the alteration is not valid.
Filing with the Registrar: Within 15 days: the alteration, the copy of the Central Government order (where required) and a printed copy of the altered articles; Section 14(2). The Registrar registers the alteration.
Effect of registration: Registered alteration is valid as if originally in the articles; Section 14(3), subject to the provisions of the Act.
Baseline power to alter articles: Alteration of articles = special resolution (Section 14(1)), subject to the Act and the memorandum; Entrenchment sets a stricter standard for named articles only.
Entrenchment provision: Specified articles can be altered only on conditions or procedures more restrictive than a special resolution; It is optional. The articles may contain it.
Time limit for filing altered articles: Every alteration of articles is filed with the Registrar within 15 days, in the prescribed manner (Section 14(2)); Learn the separate entrenchment adoption steps from the study material. Do not mix them with this 15-day filing rule.
Filing of altered articles (Section 14(2)): Filing with Registrar within 15 days, with a printed copy of the altered articles (and the Central Government order where public is converted to private); The Registrar registers it. After registration it is valid as if originally in the articles (Section 14(3)).
Public to private conversion (Section 14(1), second proviso): Alteration is not valid unless approved by an order of the Central Government; A special resolution alone is not enough.
Noting alterations (Section 15(1)): Every alteration is noted in every copy of the memorandum or articles; Applies to both documents.
Penalty (Section 15(2)): ₹1,000 × number of copies issued without the alteration; Company and every officer in default are liable.
Memorandum alteration filings (Section 13): File the special resolution with the Registrar; the alteration has no effect until registered (Section 13(10)); A name change also needs the Central Government's written approval and a fresh certificate of incorporation.

Quick revision

Articles contain the regulations for management of the company (section 5(1)).
A company may adopt all or any of the model articles; where registered articles do not exclude them, model article regulations apply so far as applicable.
Memorandum is altered by special resolution and the procedure in section 13, save as provided in section 61.
A change of name needs written Central Government approval, except where only the word 'Private' is added or deleted on conversion.
Name change takes effect only when the Registrar issues a fresh certificate of incorporation.
Shifting the registered office from one State to another needs Central Government approval, which is to be disposed of within sixty days.
If money raised through prospectus is unutilised, a change of objects needs a special resolution, newspaper publication and an exit opportunity for dissenting shareholders.
The Registrar registers an alteration of objects and certifies it within thirty days of filing the special resolution; no alteration has effect until registered.
Articles are altered by special resolution, subject to the Act and the memorandum conditions.
Converting a public company into a private company is not valid without Central Government approval.
Alteration of articles must be filed with the Registrar within fifteen days with a printed copy of the altered articles.
Entrenchment: on formation, or by amendment agreed by all members in a private company and by special resolution in a public company; notice goes to the Registrar.
Section 15 penalty: ₹1,000 for every copy issued without the alteration noted; share capital alteration notice under section 64 is due within thirty days.

Common mistakes

Saying the memorandum must state the full address of the registered office. Fix: Section 4(1)(b) requires only the State to be stated. Write 'the State in which the registered office is to be situated'.
Stating that every company must have the word 'Limited' or 'Private Limited' in its name. Fix: Add that the requirement does not apply to a company registered under Section 8.
Saying members can ratify an ultra vires act by a special resolution. Fix: Remember that ultra vires the memorandum means no capacity, so the act is void. Only an alteration of the objects, done properly beforehand, can change the position going forward.
Treating constructive notice and indoor management as the same thing. Fix: Constructive notice binds the outsider to public documents. Indoor management lets the outsider ignore internal irregularities. They work in opposite directions.
Saying the Central Government must approve every alteration of the memorandum. Fix: Approval is needed for a name change and for shifting the registered office between States. Other changes need a special resolution and filing, with extra steps only in the cases section 13 names.
Treating a change of name as effective on passing the resolution. Fix: Under section 13(3) the change is complete only when the Registrar issues a fresh certificate of incorporation with the new name.
Saying articles are optional and a company can function without them. Fix: Every company has articles, either its own or the model regulations that apply under Section 5(8) when its registered articles do not exclude them.
Saying the articles override the Act. Fix: Section 10(1) begins with 'Subject to the provisions of this Act'. Articles cannot contradict the Act.
Saying an ordinary resolution is enough to alter the articles. Fix: Remember that Section 14(1) requires a special resolution.
Writing that the Tribunal approves conversion of a public company into a private company. Fix: Under the present text of the second proviso, the order of the Central Government is needed. Without it the alteration is not valid.

Exam tips

Learn the clause list as Name, State, Objects, Liability, Capital, plus OPC. Examiners often ask you to 'state the contents of the memorandum' in two or three marks.
Always cite Section 4(1) and, where you are sure, the sub-clause letter. Marks go to the provision first.
For name problems, test the name against Section 4(2) and 4(3) in turn, then give a clear yes or no conclusion.
Write the differences for each company type. Section 8, guarantee and OPC variations are favourite short-note points.
If a question mentions a prospectus advertisement, bring in Section 30.
Start every answer with the rule in one line, then apply it to the facts, then conclude. This is the ICSI answer style.
In a case question, first decide whether the act is beyond the memorandum or only beyond the articles or authority. Marks depend on this split.
Always list the exceptions to indoor management. Examiners usually reward each exception you name and apply.