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Table of Contents
1. Memorandum of Association [Sec. 2(56)]
2. Contents of Memorandum of Association (Sec. 4)
3. Model Form of Memorandum of Association [Sec. 4(6)]
4. Alteration of Memorandum of Association
5. Difference Between Diminution of Capital & Reduction of Capital
MoA and AoA are the documents required for formation of company. While prospectus is drafted
for issue of securities as per the requirements of law. The blog discusses the meaning, contents
and provisions regarding alteration in Memorandum of Association.
Memorandum of Association – MoA Format
A group of people come together to form a company to achieve a specific purpose. A company is
usually established to earn profits and is commercial in nature. An application must be filed with
the Registrar of Companies (ROC) along with certain documents to register a company. One
crucial document required to be submitted to the ROC while applying for registration is the
company’s Memorandum of Association (MoA).
What is MoA?
A Memorandum of Association (MoA) represents the charter of the company. It is a legal
document prepared during a company's formation and registration process. It defines the
company's relationship with shareholders and specifies the objectives for which the company
has been formed. The company can undertake only those activities mentioned in the
Memorandum of Association.
As such, the MoA lays down the boundary beyond which the company’s actions cannot go.
When the company's actions are beyond the boundary of the MoA, such actions will be
considered ultra vires and thus void. The MoA is a foundation upon which the company is
established. The company's entire structure is written down in a detailed manner in the MoA.
The Memorandum of Association is a public document. Any person can get the MoA of the
company by paying the prescribed fees to the ROC. Thus, it helps the shareholders, creditors and
any other person dealing with the company to know the basic rights and powers of the company
before entering into a contract with it. Also, the contents of the MoA help by the prospective
shareholders make the right decision while considering investing in the company. MoA must be
signed by at least 2 subscribers in the case of a private limited company and 7 members in the
case of a public limited company.
Format of Memorandum of Association
Section 4(6) of the Companies Act, 2013 (‘Act’) states that the format of an MoA will be as
specified in Table A to Table E of Schedule 1 of the Act. Every company needs to select the
appropriate format provided in Table A to E depending on its business type. The different formats
provided in Act are as follows:
Table A – It is applicable to companies with a share capital.
Table B – It is applicable to a company limited by guarantee but does not have a share capital.
Table C – It is applicable to a company limited by guarantee having a share capital.
Table D – It is applicable to an unlimited company but does not have a share capital.
Table E – It is applicable to an unlimited company with a share capital.
The MoA should be numbered, printed and divided into paragraphs. The subscribers of the
company must sign the MoA.
Objectives in Registering MoA
The Memorandum of Association is a necessary document that includes the company’s crucial
information. Section 3 of the Act states that the company can be formed when the
following members subscribe to the memorandum:
 Seven or more members in the case of a public company.
 Two or more members in the case of a private company.
 Only one member in the case of a One Person Company (OPC).
A company can be registered only when the MoA is drafted and it is signed/subscribed by the
minimum numbers as provided above. Thus, the MoA of all companies is required for company
registration.
Section 7(1)(a) of the Act further provides that a company’s Memorandum of Association
and Articles of Association (AoA) must be duly signed by the subscribers for the company to be
registered with the ROC. The MoA copy should be given to the ROC while applying for
company registration. The ROC can provide the certified copy of the MoA to the public upon
payment of the prescribed fees. It helps shareholders in the following ways:
 Allowing shareholders to know about the company before buying its shares and
determine the capital they can invest in the company.
 Provide all company information to stakeholders willing to associate with it.
What are Main Clauses of the Memorandum of Association?

The following are the clauses in Memorandum of Association:

 Name Clause
  Registered Office Clause
 Object Clause
 Liability Clause
 Capital Clause
Contents of Memorandum of Association
The memorandum of association clauses/contents are as follows:
1. Name Clause:
This clause specifies the name of the company. The name of the company should not be identical
to any existing company. Also, if it is a private company, then it should have the word ‘Private
Limited’ at the end. In the case of a public company, then it should add the word “Limited” at the
end of its name. For example, ABC Private Limited in the case of the private, and ABC Ltd for a
public company. The name should be in compliance with the provisions laid down in the
Companies Act and Rules.
2. Registered Office Clause:
This clause specifies the name of the State in which the registered office of the company is
situated. It helps to determine the jurisdiction of the Registrar of Companies. The company must
inform the registered office location and address to the Registrar of Companies within 30 days
from the date of incorporation or commencement of the company. The registered office is the
official office of the company. All communications, legal notices and documents will be sent to
the registered office address.
3. Object Clause:
This clause states the objective with which the company is formed. The company must carry out
its business activities to fulfill the objectives mentioned in this clause. It helps to protect the
interests of the stakeholders since the company must operate within the scope of its object clause
and should not engage in any activities not specified in this clause. The objectives can be further
divided into the following 3 subcategories:
 Main Objective: It states the main business of the company
 Incidental Objective: These are the objects ancillary to the attainment of main objects of
the company
 Other objectives: Any other objects which the company may pursue and are not covered
in above (a) and (b)
4. Liability Clause:
It states the nature of liability of the members of the company in case of any loss or debts
incurred by it. In the case of an unlimited company, the liability of the members is unlimited.
Whereas, in the case of a company limited by shares, the liability of the members is restricted by
the amount unpaid on their share. For a company limited by guarantee, the liability of the
members is restricted by the amount each member has agreed to contribute.
5. Capital Clause:
This clause details the maximum capital a company can raise, also called the authorized/nominal
capital of the company. It provides the maximum amount of capital that can be issued to the
company shareholders. It also explains the division of such capital amount into the number of
shares of a fixed amount each. It should also specify the type of shares the company is authorised
to issue, i.e. equity shares, preference shares, or debentures.
Alteration of MoA
If there are any changes in the clauses of the MoA, the MoA must be altered or amended to
include the changes. The following changes will lead to the alteration of the MoA:
 Change in the company name
 Change in location of the registered office
 Change in company objects
 Change in the nature of liability of company members
 Change in the maximum limit of authorised capital of the company or division of
authorised capital
The process of alteration of the MoA is as follows:
 Hold board meeting: The company must hold a board meeting to approve the alterations
to the MOA.
 Hold a general meeting: A general meeting should be conducted to obtain the approval
of the shareholders for the alterations to the MOA.
 Filing of a special resolution: A special resolution to alter the MoA should be filed with
the ROC within 30 days of the passing of the resolution.
 Approval of ROC: The ROC will scrutinise the special resolution and approve the MoA
alteration.

1. Memorandum of Association
As per Sec. 2(56), “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 law or of
this Act. The definition given under the Act does not throw any light on the nature of M/A,
therefore, reference is made to following definitions:
According to Palmer,
“The Memorandum of Association contains the objects for which the company is formed. It
defines the boundary beyond which the company cannot go.”
According to Lord Cairns,
“The Memorandum defines the limitations of the powers of the company …….. it contains in it,
both that which is affirmative and that which is negative ………”.
M/A defines and confines (sets limits to) the powers of the company. It is clear from above
definitions that M/A is a document of prime importance. This document tells the permitted range
of activities of the company.
Memorandum is rightly called the ‘Charter’ of the Company as it specifies the objectives of the
Company. This document provides the foundation on which the company is built.

2. Contents of Memorandum of Association (Sec. 4)

The memorandum of association of a company shall state-
2.1 Name Clause:
The name of the company with the last word
(a) “Limited” in the case of a public limited company,
(b) “Private Limited” in the case of a private limited company.
(c) Sec. 8 company is exempt from the requirement of adding ‘Limited’ or ‘Private Limited’ to
its name.
(d) ‘OPC’ – in case of One person company.
(e) A specified IFSC private company and specified IFSC public company shall have the suffix
International Financial Service Company or IFSC as part of its name (notification dated 4-1-
2017).
(f) In case of Government company, it must end with ‘limited’ (whether it is a private company
or public company), (notification dated 5-6-2015).
2.2 Restrictions regarding Name of the Company
The name stated in the memorandum shall not-
1. be identical with or resemble too nearly to the name of an existing company registered under
this Act or any previous company law; or
Case Laws:
Ewing (Trading as Buttercup Dairy Company) vs. Buttercup Margarine Company Ltd.
(1917)
The plaintiff had been carrying on business under the name of Buttercup Dairy Company. He
filed a suit against a newly registered company Buttercup Margarine Company Ltd. restraining it
from carrying business with the said name on the ground that the name resembled their
company’s name. He alleged that public might think that the two businesses were connected. The
plaintiff succeeded in getting the injunction.
Society of Motor Manufacturing & Traders Ltd. v. Motor Manufacturers & Traders
Mutual Assurance. (1925)
It was held that the plaintiff was a trade protection society for motor manufacturers and traders
while defendant company was an insurance company for motor manufacturers and traders. So no
one could conclude that the two were connected, therefore both the companies could continue
with their respective names.
2. be such that its use by the company-
(a) will constitute an offence under any law for the time being in force; or
(b) is undesirable in the opinion of the Central Government.
3. A company shall not be registered with a name which contains-
(a) any word or expression which is likely to give the impression that the company is in any way
connected with, or having the patronage of, the Central Government, any State Government, or
any local authority, corporation or body constituted by the Central Government, any State
Government under any law for the time being in force, or
(b) such word or expression, as may be prescribed e.g., National, Authority, Republic, Bureau,
etc. unless the previous approval of the Central Government has been obtained for the use of any
such word or expression. The Companies (Incorporation) Fifth Amendment Rules w.e.f. 10-5-
2019 explain restrictions regarding name of the company. These amended rules provide ample
illustrations to avoid ambiguity in name reservation. As a result of it, name rejection rate has
fallen drastically.
Approval based words such as insurance, bank, stock exchange etc. cannot be used without the
approval of concerned authority. Word ‘Insurance’ can be used only with approval from
Insurance Regulatory and Development Authority (IRDA), word ‘Bank’ can be used only with
approval of Reserve Bank of India (RBI). Similarly word ‘Stock Exchange’ can be used only
with the approval of Securities and Exchange Board of India (SEBI).
The name shall be considered undesirable if it is prohibited under the provisions of the Emblems
and Names (Prevention of Improper Use) Act, 1950 unless a previous permission has been
obtained under that Act. The name shall also be considered undesirable if it includes a trade mark
registered under the Trade Mark Act, 1999 without the consent of the owner of the trade mark.
2. Domicile Clause or Registered Office Clause: It shall specify the State in which the
registered office of the company is to be situated;
3. Objects Clause: It states the objects for which the company is proposed to be incorporated
and any matter considered necessary for furtherance thereof;
4. Liability Clause: It states the liability of the members of the company, whether limited or
unlimited, and also state,-
(a) in the case of a company limited by shares, the liability of its members is limited to the
amount unpaid, if any, on the shares held by them; and
(b) in the case of a company limited by guarantee, the amount up to which each member
undertakes to contribute-
(i) to the assets of the company in the event of its being wound-up while he is a member or
within one year after he ceases to be a member, for payment of the debts and liabilities of the
company or of such debts and liabilities as may have been contracted before he ceases to be a
member, as the case may be; and
(ii) to the costs, charges and expenses of winding-up and for adjustment of the rights of the
contributories among themselves;
5. Capital Clause (only in case of company having share capital): The amount of share capital
with which the company is to be registered and the division thereof into shares of a fixed amount
and the number of shares which the subscribers to the memorandum agree to subscribe which
shall not be less than one share;
6. Nomination Clause (only in case of OPC): In the case of One Person company, the name of
the person who in event of death of the subscriber, shall become member of the company; and
7. Subscription or Association Clause: The number of shares each subscriber to the
memorandum intends to take is indicated opposite his name.
3. Model Form of Memorandum of Association [Sec. 4(6)]
The memorandum of a company shall be in respective forms specified in Tables A, B, C, D and
E in Schedule I as may be applicable to such company.
 Schedule I

Table A : Memorandum of Association of a company limited by shares.

Table B : Memorandum of Association of a company limited by Guarantee and not having a shar

Table C : Memorandum of Association of a company limited by Guarantee and having a share ca

Table D : Memorandum of Association of an unlimited company and not having share capital.

Table E : Memorandum of Association of an unlimited company and having share capital.

Doctrine of Ultra Vires: Term ‘Ultra Vires’ means ‘beyond power’. In the context of company
ultra vires acts may be of following types:
1. Acts ultra vires the M/A or objects clause of the memorandum or ultra vires the company
(used interchangeably).
2. Acts ultra vires the A/A but intra vires (within power) the company.
3. Acts ultra vires the directors but intra vires the company.
It needs to be noted that acts which are ultra vires the company can never be made intra vires
even by unanimous consent, while the acts in second and third points above can be made intra
vires if the consent is obtained later.
The concept of ‘ultra vires’ if nothing ‘additional stated’ is construed as to be ultra vires the
company. It was established in Ashbury Railway Carriage Co. Ltd v. Riche case that ultra vires
acts shall not be binding on the company. Directors shall be themselves liable for such contracts.
In the above case where the company was authorized to ‘construct the railway lines’ when
diverted from its objects and started ‘financing of construction of railway lines’ this act was held
to be ultra vires the company, therefore, the directors were held liable for such acts and not the
company.
In Lakshmanaswamy v. LIC of India (1963) the Apex Court held that the company cannot go
beyond the objects. Such an act is absolutely void and cannot be ratified even if all the
shareholders agree.
Ultra-vires acquired property – If company’s money has been spent ultra-vires in acquiring
some property, the right of the company on that property is held secure, as it represents the
corporate capital.
4. Alteration of Memorandum of Association
Clause Nature of Change Procedure of Change

1. Name 1. Any change in the  In conformity with provisions of Sec. 4 + Special Resolution
Clause name of the Meeting +
company.
 Approval of Central Government in writing. Approval of nam
form RUN (Reserve Unique Name).

 2. Change involving Special Resolution in General Meeting. Change of name using web
addition thereto or
deletion therefrom,
of the word ‘Private’
on conversion.

3. Rectification of (i) within a period of 3 months from the issue of such direction after
name of the an Ordinary Resolution. Within 15 days of change give notice to Re
company (Sec. 16): along with order of Central Government. Necessary changes in the C
Incorporation and Memorandum shall be made.
(a) if a name on first
registration or (ii) in case of non-compliance of direction within 3 months, new nam
registration by new company shall be the letters ORDNC (Order of Regional Director no
name in the opinion the year of passing of the direction, the serial number and the existin
of the Central company. The Registrar shall enter such name in Register of Compan
Government is Company will have to mention ‘ORDNC’ in brackets below the nam
identical with or too company wherever printed, affixed or engraved. This will continue u
nearly resembles the company subsequently changes its name in accordance with Sec. 13.
name of the inserted by Companies (Incorporation) Fifth Amendment Rules, 2021
previously registered 1/9/2021]
company, it may
direct the company
to change its name or
new name as the case
may be.

(b) on (i) within a period of 3 months from the issue of such direction after
application by a an Ordinary Resolution. Within 15 days of change give notice to Re
registered along with order of Central Government. Necessary changes in the C
proprietor of a Incorporation and Memorandum shall be made.
trade mark
(ii) in case of non-compliance of direction within 3 months, new nam
within 3 years
company shall be the letters ORDNC (Order of Regional Director no
of incorporation
 of a company, if the year of passing of the direction, the serial number and the existin
in the opinion of company. The Registrar shall enter such name in Register of Compan
the Central Company will have to mention ‘ORDNC’ in brackets below the nam
Government, company wherever printed, affixed or engraved. This will continue u
name on first company subsequently changes its name in accordance with Sec. 13.
registration or inserted by Companies (Incorporation) Fifth Amendment Rules, 2021
registration by a 1/9/2021]
new name is
identical with or
too nearly
resembles to an
existing trade
mark, it may
direct the
company to
change its name.

2. Domicile 1. From one place to Board Resolution

another within the
Clause
same city, town or
village*.

2. From one city,  Special Resolution in General Meeting + Approval of Regio

town or village to Director.
another city, town or
 Special Resolution in General Meeting.
village**.
 where it
involves
change in
jurisdiction
of RoC***
 where it does
not involve
change in
jurisdiction
of RoC

3. Change of  Form No. INC-23 to be filed with Special Resolution passed

Registered Office Meeting + Approval of Central Government (Central Govern
 from one state to give its approval only after having ‘No Objection’ from Credi
another. debenture holders and the persons concerned with the compan
ensuring that no employee shall be retrenched).

 Shifting not allowed during pendency of any

enquiry/inspection/investigation/prosecution against the company.
RoC of State where office is shifted shall issue fresh Certificate of In
indicating alteration.

3. Object 1. A company which Special Resolution General Meeting + details be published in two ne
Clause has raised money one English and one in Vernacular Language plus on website of the c
from public through indicating justification of change + the dissenting shareholders shall
prospectus and still opportunity to exit. RoC shall register alteration within 30 days of fil
has unutilized Special Resolution.
amount shall change
its objects for which
it raised the money.

2. In other cases Special Resolution in General Meeting . RoC shall register alteration
days of filing of Special Resolution.

4. Capital 1. Increase of Authorisation by Articles

Authorised Capital.
Clause +
Sec. 61(1)(a)
Ordinary Resolution
2. Conversion of
shares into stock or
vice versa. Sec.
61(1)(c)
3. Consolidation****
or splitting up of
shares. Sec. 61(1)(b)
and Sec. 61(1)(d)
4. Diminution of
Capital
(Cancellation) of
unsubscribed portion
of capital. Sec. 61(1)
 (e)

5. Reduction of Special Resolution in General Meeting + Approval of Tribunal on ‘N

capital (Sec. 66) Objection’ from:
 by extinction (i) Creditors
or reduction
(ii) Central Government
of liability on
any of its (iii) Registrar
shares in
respect of (iv) SEBI
share capital Tribunal shall not sanction any application for reduction unless accou
not paid up or treatment for reduction proposed is not in conformity with provisions
 either with or it.
without Officers knowingly concealing or misrepresenting the nature, amoun
extinction or any creditor (or being privy to such concealment or misrepresentatio
reduction of liable under Sec. 447.
liability on
any of its
shares:
(i) cancel any paid
up share capital
which is lost or
unrepresented by
available assets, or
(ii) payoff any paid-
up share capital
which is in excess of
the wants of the
company.

Note: Rule 33A w.e.f. 1-9-2021.

*&**Do not amend the M/A as it (M/A) mentions only the name of the State. These points are
covered here only for the sake of convenience.
***Change in jurisdiction of RoC: The State of Maharashtra has 2 RoCs (Mumbai and Pune)
and the State of Tamil Nadu has 2 RoCs (Chennai and Coimbatore). Therefore, change in
registered office from one place to another place within the same State in above mentioned States
may involve change in jurisdiction of RoC.
****Consolidation shall require approval of Tribunal if it results in changes in voting
percentage of shareholders (notified on 11-06-2016)
Note: Whenever an alteration is made it needs to be intimated to RoC along with relevant
resolutions and approvals. RoC shall certify the registration within particular time frame and
alteration shall become effective.
5. Difference Between Diminution of Capital & Reduction of Capital

Basis Diminution of Capital Reduction of Capital

1. Meaning Cancellation of unsubscribed portion of Reduction of subscribed or paid-up c

capital.

2. Kind of Resolution Ordinary Resolution is required to be passed. Special Resolution is required to be p

Required

3. Other required Only a few such as Authorization by Articles In addition to Special Resolution in g
Compliances and Ordinary Resolution as interest of meeting, approval of Tribunal (on rec
creditors is not affected by diminution. objection’ from different stakeholder
Creditors, Central Govt., Registrar, S
required.

Frequently Asked Questions

What is a Memorandum?

The Memorandum of Association (MoA) is the foundation for all companies. It

is a primary document for the incorporation of a company. It should be
prepared before applying for company registration and signed by the founder
members of the company.
What does the MoA begin with?

The MoA of all companies begins with the ‘Name Clause’ followed by the
‘Office Clause’ and the other clauses.

What is the liability of MoA?

The liability clause provides the extent of liability of the company's

shareholders. It protects the shareholders from being held personally liable for
the company's loss. The liability clause describes whether the company is
limited by shares or limited by guarantee. If a company is limited by shares,
the shareholders will only have to pay the unpaid share price they have
subscribed to in case of a loss. If the company is limited by guarantee, the
members give a guarantee of a fixed amount that they will be liable to pay in
case of a loss.

What is the name clause?

The first clause of the MoA is the name clause. It states the official name of
the company under which it transacts or conducts its business. A company
can choose any name, but certain conditions need to be complied with. The
name stated in the MoA should not be identical to the name of another
registered company or resemble the name of an existing company.

Who can subscribe?

The following persons can be members of a company and, thus, subscribe to
the MoA:

 Individuals

 Foreign citizens and Non-Resident Indians (NRIs)

 Minor through a natural guardian

 Any company, through a company representative

 Limited Liability Partnership through an authorised partner

 Body corporate incorporated under an Act of Parliament or State

Legislature

Is the MoA and Articles of Association (AoA) of a

company the same?

No. The Memorandum of Association (MoA) and Articles of Association (AoA)

are not the same. The MoA lays down the essential details about the
company, while the AoA includes the internal rules and regulations of the
company. The AoA is subordinate to the MoA.

Is MoA required for the registration of a

company?

Yes. The company owners must prepare the MoA of a company before
applying for the company registration. It is a mandatory document required to
be submitted to the Registrar of Companies while applying for company
registration. The MoA must be signed by all the directors and members of the
proposed company.

What is the purpose of MoA?

The main purpose of the MoA is to limit the scope of activities and powers of
the company. A company is authorised to do only the acts within the scope of
the powers provided to it by the MoA. Any act done by the company that is
outside the scope of the MoA is ultra virus. The ultra virus act of the company
means an act done by the company beyond its power. The members and
depositors of a company can apply to the company tribunal to restrain the
company from doing an act that can be considered as a breach of the
provisions of the company’s MoA.

Is the MoA required for a startup?

Yes. Every company, whether registered as a private company, public

company or one-person company, requires an MoA. Thus, if the startup plans
to register as a company under the Companies Act, 2013, the startup must
prepare MoA before applying for registration.

Does an LLP (Limited Liability Partnership) need

MoA?
No. The LLP is registered under the Limited Liability Partnership Act, 2008.
Under the LLP Act, 2008, an LLP is required to prepare the LLP deed. Thus,
LLPs do not have to prepare an MoA.

Do all the companies require MoA?

Yes, it is mandatory for every company to have an MoA as it defines the

scope of its operations. The entire structure of the company is detailed in the
MoA. It is to be submitted to the Registrar of Companies. It is a public
document, and any person can view the MoA of the company by paying the
required fees to the Ministry of Corporate Affairs (MCA).

What is the use of an MoA?

The MoA defines the scope and powers of a company beyond which the
company cannot operate. It regulates the company’s relationship with the
outside world. A company cannot be registered without having an MoA. It
helps anyone who wants to enter into a contractual relationship with the
company to gain knowledge about the company. It is also called the
company’s charter, as it contains all the company’s details, its members and
their liabilities.