Articles of Association & Memorandum of Association

Q. No. 01:

Contents of Articles of Association ?

Ans. to the Q.No.01:

Apart from many others, the following are the Common articles generally available in any articles of association.

1. Schedule -1: Whether it is excluded and if so to what extent.
2. Definitions : (i.e. Interpretation of terms used )
3. Share capital: Its divisions, Rights, Calls, Certificates increase, Decrease and other matters.
4. Transfer, Transmission and verification of shares.
5. Borrowing power and how to exercise them.
6. General meetings and allied i.e. Notices, quorum, voting, polling, proxies etc.
7. Constitution, Management and power of the Board or Directors.
8. Constitution ,Management and power of the Board of directors
9. Inspection of Documents’
10. Common Seal
11. Dividend
12. Accounts and Audit
13. Winding up, etc.
    
    
    Q. No. 02 :
    Memorandum of Association Define and its purpose and contents describe?

Ans. to the Q.No.02:

Memorandum of Association is the chapter of a company that regulates external affairs of a company whilst articles of association internal matters.

The purpose of a memorandum is to …

1. Ascertain its Name
2. Ascertain its domicile (Nationality )
3. Define its Nature e.i. Public or Private Liability and
4. Define its Objective is
   It also entails about the registered office, Association clause etc. Section 6 to 16 provides for contents Name, Alteration or modification procedures of the memorandum.
   
   
   
   
   Q. No. 03 :
   Particulars of Articles ?
   Ans. to the Q.No.03:
   The Act lays down that the memorandum of association of every company shall contain the following particulars:

1. Name Clause
2. Situation Clause
3. Domicile Clause
4. Objects Clause
5. Area of Operation Clause
6. Liability Clause
7. Share Capital Clause
8. Association Clause
9. Contribution Clause etc.
   
   
   Q. No. 04 :
   Whats is the procedure altering the various clauses in the memorandum ?
   
   
   Ans. to the Q.No.04:
   There are certain statutory provisions as to alteration / Amendment of the memorandum and articles of association of the company.
   
   
   The following table will show the course of changes in the memorandum or articles :
   
   

Changes	Regulation Required	Statutory Obligations	Whether returns to be filed with sec. and return from No.
Name	Special Resolution	Permission from registrar and BOI	Required Sec.11 (6) & 88 return from -111
Registered office	Ordinary Resolution	Premission from BOI	Needed by sec 77 (2) and return from –vi
Objective	Special Resolution	Permission from BOI and high court confirmation	Amended MA with HC Confirmation Must be filed Sec-12 ,15 & 88 Form-viii
Capital Clause	Ordinary Resulation	None	Required for authorized capital required fee to be deposited section 53 & 56 Form-iv
Articles	Special Resulation	None	Required under sec.20 & 88 From-viii

Every alteration or amendment needs to be incorporated in all copies of the memorandum and articles of association of the company.

Q. No. 05 :

Distinguish between the memorandum of association and articles of association.

Ans. to the Q.No.05:

S.L.	Memorandum association	Articles of Association
01	It is the principle decument of a company .It includes object .Power and right of a company.	It is the internal documents of a company .It includes internal operation rules.
02	It maintains the relation between company and third party	Its maintains internal relations
03	It is the guidance and law of articles	It is controlled by memorandum of association.
04	It is made by company law	0It is made by company law and memorandum
05	It maintains all general contents of company	It states and explains the contents of memorandum.
06	It must be registered	It is not obligated for registration
07	Every company must have the memorandum	Joint stock company may not have this.
08	It cannot be altered without the permission of court.	It can be altered without the permission of court.

Q. No. 06 :

Can the object of the company be altered? If so how ?

Ans. to the Q.No.06:

The object clause of memorandum of association of the company can be altered according to the company law for any of the following reason:

1. To carry on its business more economically or more effeciciently.
2. To attain its main purpose by new or improved means.
3. To enlarge or change the local of its operations.
4. To restrict or abandon any of the objects specified in the memorandum
5. To sell or dispose of the whole or any past of the undertaking of the company,
6. To amalgamate with any other company or body or persons.
   
   
   Q. No. 07 :
   What are articles of association? What are the contracts of the articles of association?
   
   
   Ans. to the Q.No.07:
   Articles of Association:
   According to company act 1994, Section 2 (1) a ,”Articles “ means the Articles of Association of a company as originally framed or as altered by the special resolution including so far as they apply to the company. The regulation contained in the first schedule to this Act.
   
   
   Actually it is the domestic regulation of a company. The regulation contained in the first schedule to this Act.
   Actually it is the domestic resignation of a company and governs its internal administration.
   It includes and controls ,share distribution , share transfer, capital changing ,directors appointment ,dividend distribution ,voting power, conduct of board meetings and general meeting ,books of accounts and audit and writing up of company etc. the person who signature on the memorandum are also signature in the articles. It explains the clauses of memorandum.
   
   
   The Contents of the Articles of Association:
   
   
   The Contents of Articles of association are as follows:

1. Full Name of the company
2. Daily functions and rules of management
3. Name address and other description of directors and managing directors
4. Responsibilities duties right and power of directors and managing directors
5. Number of directors
6. Appointment rules of manager and secretary
7. Remunerations of director
8. Number and value of qualification share of directors
9. Total amount of authorized capital and number and classification  of shares
10. Par value and payment system of shares
11. Terms and conditions of share for  forfeiture
12. Procedure of share issue and transfer
13. Commission of share underwriting
14. Borrowing power and procedure of company
15. Calling and operating system of meeting
16. Voting system of the meeting
17. Voting power of the meeting
18. Rule of dividend declared and dividend transfer to the capital
19. Accounting and auditing procedure
20. Name and address of auditors, Banker solicitors broker and managing agent
21. Winding up procedure of company
22. 
    
    
    
    
    
    Q. No.08:
    What are the legal effects of Articles of Association ?
    Ans. to the Q.No.08:
    Following are the legal effects of articles of association :

1. Contractual Obligation :
   A registered Articles of Association makes a contractual obligation among the members and the company. So that the members are obligated to follows the articles.
2. Case File :
   Company can file case against any members due to avoid articles. Any member can also file case against other member or the company.
3. Due Debts :
   All money payable by any member to the company under the articles shall be considered as debts due to him.
4. Open Document :
   Since the articles of association is an open document to the company, Assume that all parties are aware from the contents of articles. So if any parties make any transaction avoiding the rules of articles, the company will not be liable.
5. Contract between the company & Third party :
   The company or its member does not make any contract with the third party according to articles of association.
6. Directors Obligation :
   The power and responsibilities of directors are limited by the rules of articles, if any directors are limited by the rules of articles, if any director violet any rule of articles is to be liable personally.
   Q. No.09:
   Can articles be altered? If altered how?
   Ans. to the Q.No.09:
   Articles of association can be altered, extended and amended according to rules of company law, without permission of court but taking decision in the members meeting.
   
   
   The following rules and restriction are to be followed to alter the articles –

1. The articles of association can be altered by taking special resolution but not any other types of resolution.
2. Alteration of articles never violet the rules of memorandum and company.
3. The alteration in the articles should be fair and for the benefit of the company as a whole and not for a class or group of members only.
4. Alteration of articles is not to be contradiction with the order of the court.
5. The right of the minority members cannot be taken by alteration of articles.
6. Alteration of articles is not for increasing the liability of all member or a few of member.
7. Alteration of article is not for breaking the contract with the third party.
   Every special resolution amending the articles of association must be supported by a return to the registrar within fifteen days of passing of the resolution as required under section 88 of the Act.
   
   
   Q. No.10:
   Memorandum defines and confirms the power of a company –Explain the statement,
   
   
   Ans. to the Q.No.10:
   Memorandum of association is the principal document of a company which regulates the external affairs.
   The limit of scope and power the company is said in this document, nothing can be done outside the scope of the object clause of memorandum.
   So it is called the constitution of the company .Anything done outside the scope of the object clause of memorandum is ultra virus.
   The all possible function of a company is mention in this clause.
   So, it can be said that the memorandum defines and confirms the power of a company.
   
   
   Q. No.11:
   What are the legal effects of memorandum of association?
   
   
   Ans. to the Q.No.11:
   As a man document of the company the legal effects of memorandum of association are as follows:

1. Contractual Condition :
   Memorandum of association of a register company make contractual obligation between the company and members.
   As a result the members and their legal agent are legally obligated to follow  the memorandum.
2. Constitution and power :
   Constitution and power of the company are made on the basis of memorandum of association so the company cannot do anything outside the rules of memorandum.
3. Expressed document :
   Memorandum of association is an expressed document of a company .All related parties are award about by this documents.
4. Liabilities of company :
   Company is not liable for doing anything outside the memorandum to the directors and shareholders.
5. Effect on shareholder and director :
   The directors cannot make the company liable to third party by doing anything outside their power described in memorandum.
   Shareholders also cannot approve anything outside the memorandum.
   
   
   
   
   Articles of Association:
   “Articles “ means the articles of association of a company including so far as they apply to the company , the regulations contained in schedule l to this Act.----Sec. 2 (1-a)