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Company Law Notes
Memorandum of Association (MOA) - Main Document of a Company
Definition
The Memorandum of Association (MOA) is a legal document required for the incorporation of a company
under Section 2(56) of the Companies Act, 2013. It defines the company's scope, objectives, and relationship
with its shareholders and the external world. It is also referred to as the 'charter of the company.'
Features
1. Mandatory Document: Required for all companies at the time of incorporation.
2. Defines Scope: Determines the extent of the company's powers and objectives.
3. Public Document: Accessible to the public for understanding the company's purpose.
4. Binding Nature: It binds the company to its objectives and the shareholders to the company.
5. Cannot be Contradicted: Any act outside its scope is ultra vires and void.
Contents (Clauses)
1. Name Clause (Section 4(1)(a)): Specifies the name of the company. Public companies must include
'Limited,' and private companies must include 'Private Limited' in their name. Example: XYZ Pvt. Ltd.
2. Registered Office Clause (Section 4(1)(b)): Indicates the state in which the company's registered office is
situated. Ensures communication and legal notices are correctly directed.
3. Objects Clause (Section 4(1)(c)): States the main objects the company is formed to pursue. Includes
ancillary objects to support the main objects. Any act beyond this clause is considered ultra vires.
4. Liability Clause (Section 4(1)(d)): Declares the liability of members. It may be limited by shares or by
guarantee, or it can be unlimited.
5. Capital Clause (Section 4(1)(e)): Specifies the authorized share capital of the company and its division into
shares. Example: 'Authorized Capital is Rs.10,00,000 divided into 1,00,000 equity shares of Rs.10 each.'
6. Association/Subscription Clause (Section 4(1)(f)): Contains the names, addresses, and signatures of the
subscribers who agree to take up shares in the company. At least seven subscribers are required for a public
company, two for a private company, and one for a one-person company.
Doctrine of Ultra Vires

Definition
The doctrine of ultra vires states that any act performed by a company beyond the scope of its Memorandum
of Association is void and unenforceable.
Types of Ultra Vires Acts
1. Acts Beyond the Objects Clause: When a company engages in activities not covered under its Objects
Clause, such actions are ultra vires. Example: A company formed for manufacturing machinery cannot
venture into real estate.
2. Acts Beyond Statutory Powers: These are acts that violate provisions of applicable laws, such as the
Companies Act, 2013. Example: Issuing shares without complying with statutory requirements.
3. Acts Beyond Articles of Association (AOA): If a company undertakes actions contrary to its Articles of
Association, these are ultra vires. Example: A director acts beyond the authority granted by the AOA.
4. Acts Beyond the Capacity of Directors: Actions taken by directors without proper approval from
shareholders or the board are ultra vires. Example: Directors entering into a high-value contract without
authorization.
5. Acts Beyond the Company's Legal Personality: These include acts such as committing illegal activities or
fraud that the company has no legal capacity to perform. Example: A company engaging in money
laundering.
Effects of Ultra Vires Acts
1. Void Nature: Such acts are void and cannot be ratified by the company or shareholders.
2. Protection of Creditors: Prevents misuse of company funds for unauthorized purposes.
3. Directors' Liability: Directors may be held personally liable for ultra vires acts.
4. Legal Action: Injunctions can be sought to restrain the company from performing ultra vires acts.
Articles of Association (AOA)
Definition
The Articles of Association (AOA) is a document that governs the internal management of a company. It
specifies the rules and regulations for running the company and the responsibilities of its members.
Features
1. Internal Document: Guides internal operations and decision-making.

2. Supplementary to MOA: It cannot override the provisions of the MOA.
3. Can be Altered: Changes can be made through a special resolution.
Contents
1. Shareholder Rights: Details about issuing shares, dividends, etc.
2. Director Roles: Appointment, removal, and duties of directors.
3. Meetings: Rules regarding general and board meetings.
4. Borrowing Powers: Specifies borrowing limits and procedures.
Doctrine of Constructive Notice
Definition
This doctrine assumes that third parties dealing with a company are aware of its MOA and AOA since these
are public documents.
Implications
Third parties cannot claim ignorance of the provisions in the MOA or AOA.
Protects the company from unauthorized dealings.
Case Study
Kotla Venkata Swamy v. Chinta Ramamurthy (1934): A contract signed without proper authority was held
invalid, as the third party was expected to know the company's internal procedures.
Doctrine of Indoor Management
Definition
The doctrine of indoor management protects third parties acting in good faith by assuming that the company's
internal procedures have been properly followed.
Implications
Relieves outsiders from verifying internal compliance.
Exceptions: Fraud, forgery, and knowledge of irregularities.
Case Study
Royal British Bank v. Turquand (1856): The court ruled that outsiders can assume that internal resolutions
were passed if required by the company's AOA.

Memorandum of Association (MOA) vs. Articles of Association (AOA)
This section compares and contrasts the two primary documents governing a company's operations.

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Company Law Notes

Memorandum of Association (MOA) - Main Document of a Company

1. Mandatory Document: Required for all companies at the time of incorporation.

situated. Ensures communication and legal notices are correctly directed.

guarantee, or it can be unlimited.

Doctrine of Ultra Vires

of Association is void and unenforceable.

Types of Ultra Vires Acts

venture into real estate.

Effects of Ultra Vires Acts

2. Protection of Creditors: Prevents misuse of company funds for unauthorized purposes.

Articles of Association (AOA)

1. Internal Document: Guides internal operations and decision-making.

3. Can be Altered: Changes can be made through a special resolution.

1. Shareholder Rights: Details about issuing shares, dividends, etc.

2. Director Roles: Appointment, removal, and duties of directors.

3. Meetings: Rules regarding general and board meetings.

4. Borrowing Powers: Specifies borrowing limits and procedures.

Doctrine of Constructive Notice

are public documents.

Protects the company from unauthorized dealings.

Doctrine of Indoor Management

internal procedures have been properly followed.

Relieves outsiders from verifying internal compliance.

Exceptions: Fraud, forgery, and knowledge of irregularities.

were passed if required by the company's AOA.

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