MOA, AOA and Their Alteration – Exam Notes

Lesson 3: Memorandum of Association (MOA), Articles of Association (AOA) and Their Alteration – Exam Notes

1. Memorandum of Association (MOA)

Meaning

MOA is the charter of a company.
It defines the scope of powers and activities of the company.
It contains the fundamental conditions upon which a company is incorporated.
Any act beyond the MOA is Ultra Vires and void.

Importance

Governs the relationship between the company and outsiders.
Informs shareholders, creditors, and investors about the company’s objectives and powers.

2. Contents of MOA [Section 4]

(A) Name Clause

Contains the name of the company.

Rules

Public Company → Ends with “Limited”
Private Company → Ends with “Private Limited”
Not applicable to Section 8 Companies.

Restrictions

Name should not:

Be identical or closely resemble an existing company.
Be undesirable.
Suggest Government patronage without approval.

(B) Situation Clause (Registered Office Clause)

States the State in which the registered office is situated.

Importance

Determines jurisdiction of ROC.
Company must inform ROC of registered office within 30 days of incorporation.

(C) Object Clause

States:

Main objects of the company.
Matters necessary for achieving those objects.

Importance

Defines the company’s sphere of activities.
Protects investors and creditors.
Acts beyond the objects are Ultra Vires and void.

Ultra Vires Doctrine

Any act beyond MOA is invalid.
Cannot be ratified even by unanimous shareholders.

Landmark Case

Ashbury Railway Carriage & Iron Co. v. Riche (1875) – Ultra vires acts are void.

(D) Liability Clause

Specifies liability of members.

Types

Company Limited by Shares
- Liability limited to unpaid amount on shares.
Company Limited by Guarantee
- Liability limited to guaranteed amount.
Unlimited Company
- Liability is unlimited.

(E) Capital Clause

States:

Authorized/Nominal Capital.
Division into shares of fixed amount.

Example

₹10,00,000 divided into 1,00,000 equity shares of ₹10 each.

Important Terms

Authorized Capital
Issued Capital
Subscribed Capital
Paid-up Capital

(F) Subscription Clause

Contains:

Names of subscribers.
Number of shares subscribed.

Requirements

Each subscriber must subscribe to at least one share.
Signatures must be witnessed.

3. Articles of Association (AOA)

Meaning

AOA contains rules and regulations for internal management of the company.
It governs the relationship:
- Between company and members.
- Among members themselves.

Contents of AOA

Share capital and shares.
Calls on shares.
Transfer and transmission.
Voting rights.
Dividend.
Directors.
Meetings.
Accounts and audit.
Winding up.

Difference between MOA and AOA

Basis	MOA	AOA
Nature	Charter of company	Internal regulations
Scope	Defines powers	Governs management
Position	Superior document	Subordinate to MOA
Relationship	Company & outsiders	Company & members
Ultra Vires	Void if beyond MOA	Can be altered if within MOA

4. Alteration of MOA [Section 13]

MOA can be altered by passing a Special Resolution and complying with prescribed procedures.

Alteration Possible In:

Name Clause
Registered Office Clause
Object Clause
Capital Clause
Liability Clause

5. Alteration of Name Clause

Requirements

Special Resolution.
Central Government approval.

Exception

No Central Government approval needed for:

Conversion of Public Company into Private Company.
Conversion of Private Company into Public Company involving addition/deletion of “Private”.

Procedure

Board Meeting.
Apply for name availability (RUN).
Obtain approval.
Hold EGM.
Pass Special Resolution.
File MGT-14.
File INC-24.
ROC issues fresh Certificate of Incorporation (INC-25).

Effect

Company continues to exist.
Only name changes; legal identity remains same.

6. Alteration of Registered Office Clause

A. Within Same City/Town

Board Resolution generally sufficient.

B. Outside Local Limits of City/Town

Special Resolution required.

C. Within Same State but Different ROC Jurisdiction

Special Resolution.
Approval of Regional Director.
File INC-23 and INC-28.

D. From One State to Another State

Requirements

Special Resolution.
Approval of Central Government.
Filing of INC-28.
Fresh Certificate of Incorporation issued.

Important Conditions

Consent of creditors/debenture holders.
No pending inquiry/investigation.

7. Alteration of Object Clause

General Rule

Special Resolution required.

Additional Requirement

If company raised money through prospectus and still has unutilized funds:

Publish details in newspapers.
Place details on website.
Give exit opportunity to dissenting shareholders.

Postal Ballot Mandatory For:

Companies having more than 200 members.
Companies with unutilized public issue proceeds.

Filing

File MGT-14 within 30 days.

8. Alteration of Capital Clause

Governed mainly by Section 61.

Company may:

Increase authorized capital.
Consolidate shares.
Sub-divide shares.
Convert shares into stock.
Cancel unissued shares.

9. Alteration of Liability Clause

Increase Liability

Requires consent of affected members.

Reduction of Liability

Permitted according to provisions of Companies Act.

Quick Revision (Exam-Oriented)

MOA Clauses (Mnemonic: NSOLCS)

N – Name Clause
S – Situation Clause
O – Object Clause
L – Liability Clause
C – Capital Clause
S – Subscription Clause

Important Sections

Section	Topic
4	Contents of MOA
6	Act overrides MOA/AOA
12	Registered Office
13	Alteration of MOA
16	Rectification of Name
61	Alteration of Share Capital
110	Postal Ballot

Important Cases

Ashbury Railway Carriage & Iron Co. v. Riche – Ultra Vires Doctrine.
Atlas Cycles v. Atlas Products – Use of trade name.
Satyashree Balaji Wires & Cables – Shifting registered office.
Bharat Commerce & Industries Ltd. – Employees’ right to object to shifting.

These notes cover the most important concepts, sections, procedures, and case laws for CS Executive examination preparation.