INTRODUCTION-

We shall begin by comprehending the idea behind the memorandum of association before moving on to the
function it serves. Over the course of our journey, we will learn about the components of a memorandum of
association and the modifications brought about by the The Companies Act of 2013 law. A company's
transactions would be void and it would not be possible to seek redress in court if it disobeyed its constitution.
Ultra-vires acts are those that are carried out in violation of the company's charter. There have been inquiries
over the doctrine's existence as a result of recent legislative changes in numerous countries. One example of a
statutory development is the addition of provisions to the Companies Acts of the various Australian states and
territories, which aim to give companies virtually unlimited powers and to abolish the doctrine except for specific
purposes. Another example is the interpretation of an objects clause in a memorandum of association that gives
the directors the authority to conduct any business that "they deem would be beneficial to the
company."
1. However, there has been no such change and the idea is still in place in India. We shall examine the
doctrine's history in India as well as the consequences of the ultra vires act. However, prior to comprehending
the supra vires doctrine, Understanding the idea of a memorandum of affiliation and the connection between the
two is essential. Thus, let us begin our voyage by reviewing the memo.

THE MEMORANDUM OF ASSOCIATION

Saying that a company's memorandum of association serves as its constitution would not be an overstatement.
It is the document that establishes the company's framework, and its articles give the fundamental elements of
the charter.2. It is fairly well established that the articles of association and memorandum form a contract
between the company and its members insofar as they assign obligations or rights to the members as
members, but not insofar as they assign obligations or rights to the members in other capacities, such as
directors.4 If we examine The Companies Act, 2013 (henceforth referred to as the "Act"), Section 2(56),
According to its definition, "memorandum" refers to a company's memorandum of association as initially drafted
or as amended from time to time in accordance with this Act or any prior company law. Although
the precise meaning and nature of the term "memorandum" cannot be inferred from this definition, Section 4 of
the Act gives us access to the memorandum's clauses, which are covered in more detail in the section that
follows. Since the memorandum's terms create the foundation for the company's constitution, it is essential that
they comply with the laws that regulate businesses. The corporation must stay within the parameters
established by the memo, just as a state is not allowed to exert its authorities beyond those delineated by the
constitution. In the historic Ashbury Carriage & Iron Co. Ltd. case, Lord Cairns drew the clearest definition of the
phrase memorandum of association. The memorandum of association of a company establishes the limitations
on the powers of the company. It comprises both affirmative and negative language (V. Riche 6). Your lordship
made the following proclamation in this passage. It declares, in the positive, the scope and extent of the vitality
and authority granted to the organisation by law, and, in the negative, that nothing may be done outside of that
scope. In general, memorandums of association are used for the following reasons. It allows creditors,
shareholders, and anybody else doing business with the company to know What variety of activities it engages
in and what its capabilities are.7. A prospective shareholder has the ability to ascertain the intended use of his
funds by the company as well as the level of risk associated with his investment.8 Similarly, anybody interacting
with the business—for example, a supplier of goods or money—will be aware of whether the transaction he
plans to conduct with it is consistent with its goals and does not go beyond them.9. Through its objects section,
the agreement also regulates the company's business operations and management behaviour.

Object of registering a Memorandum of Association or MOA

An important document that includes all of the company's information is the memorandum of association. It
controls how the business and its stakeholders interact. The Companies Act, 2013's Section 3 highlights the
significance of memoranda when it comes to company registration. It specifies that: 1. A public company must
have seven or more members; 2. a private company must have two or more members; and 3. a one-person
company only needs one member.In each of the aforementioned situations, the parties involved ought to sign a
memorandum prior to registering the business with the Registrar. Therefore, in order to register a corporation, a
Memorandum of Association is required. The Memorandum of Association and Articles of Association of the
company must be properly signed by the subscribers and submitted to the Registrar in order for the company to
be incorporated, according to Section 7(1)(a) of the Act. Furthermore, a memorandum contains other items.
Firstly, it gives shareholders information about the company prior to purchasing shares. This aids in the
shareholders' decision on the amount of money they will provide to the business.

2. It disseminates information to all parties interested in collaborating with the business.

Format of Memorandum of Association
Section 4(5) of the Companies Act states that a memorandum should be in any form as given in Tables A, B, C,
D, and E of Schedule 1. The Tables are of different kinds because of different kinds of companies.

Table A – It is applicable to a company limited by shares.

Table B – It is applicable to a company limited by guarantee and not having a share capital.

Table C – It is applicable to a company limited by guarantee and having a share capital.

Table D – It is applicable to an unlimited company not having a share capital.

Table E: This applies to an infinite business with share capital

.
I. It is necessary to print, number, and divide the message into paragraphs. Additionally, the company's
subscribers should sign it.
An example of a company limited by shares memorandum An enterprise called XYZ Private Limited is
based in Punjab and produces security equipment. It wishes to file an application with the Registrar of
Companies. The corporation must first subscribe to a memorandum in order to be registered. The following will
be the format of XYZ Private Limited's Memorandum of Association: (The form in Table A will apply to XYZ
Private Limited since it is a corporation limited by shares.)
Shareholder-owned companies under the Companies Act of 2013 Declaration of Association
I. XYZ Private Company
1. The company is called XYZ Private Limited. (Name-Specific Clause)
2. Punjab will be the location of the company's registered office. (Clause of Registered Office)
3. The following are the reasons the company was founded (Object Clause):
(a) The company's goals upon incorporation are as follows: I. To continue the business of manufacturing,
converting, changing, designing, and producing security systems.
II.To deal in, purchase, sell, or serve as an agent for the import or export of any equipment connected to
security.
1. II. To do business as buyers, sellers, traders, agents, and dealers in order to acquire the
aforementioned items.
(b) The following items are essential to advancing the goals listed in section 3A:
1. To produce and market boxes, packaging materials, branding, weighting, grading, and marketing for
various security device types and related electronic components.
2. To draft, create, accept, approve, discount, execute, issue, bargain, assign, and handle checks, drafts,
and bills of exchange in any other way
 3. All other negotiable or transferable documents, including warrants, railway receipts, debentures, bonds,
bills of lading, and promissory notes.
4. To combine with another business or businesses.
5. To buy out or combine with another business.
5. To begin a cooperative venture with any other business.
6. In the case of a winding up, to distribute any of the company's property among the members in
kind or in specie, according to the Companies Act's restrictions.
7. To make an application for, submit a bid, buy, or otherwise obtain any contracts, subcontracts,
licences, and concessions for or in connection with the business or objects stated above, or any of
them, and to take on, carry out, dispose of, or otherwise account for the same.
The member(s) have limited responsibility, which is capped at the amount owing on any outstanding shares that
they own. Liability Clause: The company's share capital is 70,00,000 rupees, split into 2000 shares valued at
3500 rupees apiece. (Capital Clause) We, the many individuals whose names and addresses are subscribed,
desire to be incorporated under the terms of this memorandum of association, and we each consent to obtaining
the number of shares in the company's capital indicated against our names:
2.

Names, addresses, No. of shares taken Signature, names, addresses,

descriptions and by each subscriber Signature of descriptions and occupations of witnesses
occupations of subscriber
subscribers

Signed before me:

A.B. of…Merchant ………….. Signature………………….

Signed before me:

C.D. of…Merchant ………….. Signature………………….

Signed before me:

E.F. of. ..Merchant ………….. Signature………………….

Signed before me:

G.H. of…Merchant ………….. Signature………………….

Signed before me:

I.J. of…Merchant ………….. Signature………………….

Signed before me:

K.L. of…Merchant ………….. Signature………………….

M.N. of…Merchant ………….. Signed before me:

 Signature………………….

Total shares taken: 1400

7.
I, whose name and address are given below, am desirous of forming a company in pursuance of this
memorandum of association and agree to take all the shares in the capital of the company
(Applicable in case of one person company):
Name, address, description and Signature of Signature, name, address, description and
occupation of subscriber subscriber occupation of witness

Signed before me:

A.B Merchant Signature………………….

8. Shri/Smt , son/daughter of , resident of aged years shall be the nominee in the

event of death of the sole member (Applicable in case of one person company)

Dated the day of

Content of Memorandum of Association

Section 4 of the Companies Act, 2013 states the contents of the memorandum. It details all the essential
information that the memorandum should contain.

Name Clause
1. The company name is stated in the first clause. The corporation may choose any name. Nonetheless,
there are requirements that must be met.
2. As per Section 4(1)(a): 1. "Limited" ought to appear in a firm's name if it is a publicly traded company.
For instance, "Robotics Limited" will be the registered name of the publicly traded firm "Robotics."
3. 2. The phrase "Private Limited" ought to appear in the name of a corporation if it is private. "Secure" is a
private firm, and "Secure Private Limited" will be its registered name.
3. Section 8 companies are not subject to this requirement. Section 8 companies: what
are they? The name "Section 8 Company" comes from Section 8 of the 2013 Companies Act.
It talks
about businesses that were founded to advance social welfare, education, research, commerce, the arts, sports,
and religion, among other things. While Trust and Societies and Section 8 corporations are comparable, Section
8 companies enjoy greater legal standing and recognition.
4. What kind of names are prohibited?
The name mentioned in the memo cannot be:
1. The same as the name of another company;
2. Too similar to the name of existing company

5. Rule 8 of the firm (Incorporation) Rules, 2014 states that a firm's name will not be recognised even if it
includes designations such as "Limited," "Private Limited," "LLP," "Company," "Corporation," "Corp,"
"inc," or any other type of designation to set it apart from the name of another
company. For example, Precious Technology Limited and Precious Technology Company are the
same if no suffix or plural is used to distinguish the names. Examples: Greentech solutions are
interchangeable with other green technologies. Colours Technology is the same as Colour Technology
if additional punctuation, letter case, or type is used.
Example: Wework and We.work are the same. Names have different tenses. For example, Ascend
Solutions and Ascended Solutions are the same.

6. if the name has phonetic alterations or deliberate spelling errors. Examples: Greentek
and Greentech are the same. DQ and DeeQew are the same. • Designations
connected to the internet, such as.org and.com, are used.For example, Greentech Solutions Ltd. and
Greentech Solutions.com Ltd. are the same company.
Exception: If the current firm approves the name through a board of resolution, it won't be ignored.
• Modify the word combination's order.
For example, Shah Builders and Contractors is the same as Shah Builders and Contractors.
1.
2. The name includes a registered trademark.
3. The name includes any word or words which are offensive to a section of people.
4. Name which is identical to or too nearly resembles the name of an existing Limited Liability
Partnership.
Furthermore, statutory names such as the UN, Red Cross, World Bank, Amnesty International etc. are also not
allowed to be chosen.

Names which in any way indicate that the company is working for the government are also not allowed.

Reservation of a Name
According to Section 4(5)(i) of the Act, the Registrar has 20 days to reserve a name for the Company after
obtaining the necessary paperwork. If the application is submitted by an already-
 existing business, the name will be reserved for 60 days following the application date if it is approved. Within
these sixty days, the company should be incorporated using the reserved name. If incorrect information is
discovered after a name reservation has been made. Then two situations come up.
1. Should the business not have been formed. In this situation, the Registrar has the authority to revoke the name
reservation and charge a fine of Rupees one million.

2. Should the business have been incorporated. In this instance, the Registrar has three choices after learning the
company's justifications. These are
• If he is happy, he can grant the business three months to adopt an ordinary resolution changing the name.

• He has the option to file a petition for the company to be wound up or to have the name removed from the
Register of Companies.
According to Rules 8 and 9 of the Company (Incorporation) Rules, 2014, Form INC-1 should be used to submit
the application for name reservation under Section 4(4).

Registered Office Clause

A company's registered office establishes its country of origin and judicial jurisdiction. It serves as both a place
of abode and a communication hub for the business. The Registered Office of the firm is discussed in
Section 12 of the Companies Act of 2013. It is sufficient to indicate the name of the state in which the firm is
located prior to the company's incorporation. However, the business must indicate the precise address of the
registered office following formation. The location must then be confirmed for the company within 30 days of its
incorporation.
It is required of all businesses to change their name and address of the company's registered office is displayed
outside each location where business is conducted. If the business is run by just one person, the phrase "One-
person Company" should appear in brackets beneath the company's attached name. Any changes to
the Registered Office location must be reported to the Registrar within the allotted time frame.
.

Object Clause
The Act's object clause is described in full in Section 4(c).The most significant section of the Memorandum of
Association is the Object Clause. It outlines the reason behind the company's formation. The primary objects
and items that are required to achieve the stated objects—also referred to as incidental or supplementary
objects—are both included in the object clause. As per Section 6(b) of the Companies Act, 2013, the declared
objects should be clearly defined and
legitimate.
by restricting the company's range of authority. The following are protected by the object clause: Owners of
shares: The operations that the company will carry out are expressly stated in the object clause. This makes it
easier for the shareholders to understand how their money will be used by the business.
Creditors: It guarantees the creditors that the company is operating within the parameters set forth in the
clause and that no capital is at danger. Public Interest: The object clause restricts the range of issues
the business can handle, making it illegal for the business to diversify its operations.
.

Doctrine of Ultra Vires

If the company operates beyond the scope of the powers stated in the object clause, then the action of the
company will be ultra vires and thus void.

Consequences of Ultra Vires

1. Directors' Liability: It is the directors' responsibility to make sure that the company's cash is
solely utilised for the intended purposes. In the event that the capital is misappropriated for a
purpose not specified in the memorandum, the directors shall bear personal liability.

2. The Company's Ultra Vires Borrowing: A bank will not be able to recoup the amount if it makes a
loan to the Company for a purpose that isn't specified in the object clause

3. The corporation's Ultra Vires Lending: A loan made by the corporation for an ultra vires purpose
qualifies as ultra vires lending.
4Void ab initio - The company's Ultra Vires actions are regarded as null and void from the start.

5. Injunction - Any shareholder may utilise an injunction as a remedy to stop the firm from engaging in
ultra vires conduct.
Liability Clause
The Liability Clause shields the shareholders from being held individually accountable for the company's
failure, giving them legal protection. Limited liabilities come
in two varieties: Limited By Shares: A corporation limited by shares
is defined in Section 2(22) of the Companies Act, 2013. The only expense for shareholders in a corporation with
a share limit is the cost of the shares they have subscribed for. Their liability will be restricted to the amount they
have not paid for the shares in the event that the firm fails for whatever reason. Limited By Guarantee:
As stated in Companies Act of 2013, Section 2(21).Rather of having shareholders, a business limited by
guarantee has members. These members agree to contribute to the company's assets when it is wound up. The
members guarantee a certain sum for which they will be
held accountable. Charities and other non-profit organisations typically have a structure
of corporations limited by guarantee.

Capital Clause
It details the entire capital of the company's shares as well as their allocation among the shares. how the capital
is allocated among various types of shares. Shares may be either preference or equity shares.
As an example: The company's share capital is eighty million rupees, split into three thousand shares, each
worth four thousand rupees.

Subscription Clause
Who is signing the memorandum is stated in the Subscription Clause. Every subscriber needs to specify how
many shares they are purchasing. The memorandum must be signed by the subscribers in front of two
witnesses. A minimum of one share must be subscribed to by each subscriber.

Association Clause
The memorandum's subscribers declare in this section that they wish to create an association and affiliate
themselves with the business.

Alteration, Amendment & Change in Memorandum of Association under Companies Act, 2013.

According to Section 2(3) of the Act, "alter" or "alteration" refers to any modifications, omissions, or substitutes.
A corporation can only make changes to the memoranda that are
allowed by the Act. By adopting a special resolution, the firm may amend the terms in the memorandumin
accordance with Section 13.
A formal decision made during a meeting is called a resolution. Resolutions come in two varieties: regular and
special. A special resolution is one that needs to be approved by at least two thirds of the members. The Central
Government must also provide written consent for any changes made to the terms.
There are several reasons why a memorandum might be altered. The modification is possible if,
1. Facilitates the organization's ability to do business more efficiently;
2. Aids in the accomplishment of goals;
3. Aids in the organization's merger or acquisition;
4. Aids in the completion of any project.

Alteration of Memorandum
 There are distinct processes for changing the memorandum's clauses.
1. Modification of the Name Clause: A specific resolution is needed in order to change the company's
name. The copy is forwarded to the registrar following the passing of the resolution. The application for
a name change must be submitted in Form INC-24 together with the required costs. A new certificate of
incorporation is issued following the name change.
2.Modification of the Registered Office Clause: To modify the company's Registered Office, submit an
application in Form INC-23 together with the required fees to the Central Government.
The Central Government's consent is required if the business is moving its Registered Office.
 The Central Government must resolve the issue in 60 days and make sure that all parties involved in
the business have approved the location move.
• Modification of the Object Clause: A unique resolution must be approved in order to modify the object
clause. The authorities must validate the modifications. The record
 which, along with a printed copy of the amended memorandum, attests to the changes made by
authority, should be submitted to the Registrar. If the business is publicly traded, the change
must be announced in the newspaper in the city where its registered office is situated. The company's
website must also note the modifications to the object clause.
• Modification of the Liability provision: The Memorandum's Liability provision cannot be changed without
the written approval of each and every member of the business. The directors of the firm may have
unlimited liability by changing the liability provision. Regardless, the shareholders' responsibility cannot
be infinite.

By passing a special resolution and providing a copy of the resolution to the Registrar of Companies, changes
to the liability provision can be made.
Change to the Capital Clause: An ordinary resolution may be used to change a company's capital
clause.
In addition to increasing its approved share capital, the firm may also:
1. Convert shares into stock;
2. Consolidate and divide all of its shares;
3. Cancel shares that have not been subscribed for;
4. Reduce the share capital of the shares that have been cancelled. Within 30 days of the resolution
being passed, the revised Memorandum of Association must be turned in to the Registrar.
DOCTRINE OF ULTRA VIRES

The Latin expression beyond vires is made up of the terms ultra, which means beyond, and vires, which means
power. Therefore, an extra vires act is an action taken outside one's authority or power. The early nineteenth
century saw the emergence of this theory. The ultra vires doctrine was created by the courts to guarantee that
corporations only used their authority to carry out their stated goals and everything ancillary to them. The courts
concluded that a corporation lacked the legal ability to act contrary to its objectives and that any such activity
was, in theory, unlawful since the statute compelled the firm to incorporate a declaration of its objectives in the
memorandum of organisation. A corporation is established under a general statute or special charter that
specifies what the corporation may accomplish and how it may do it. or by implying that it might not take further
actions.The authority of corporations as used by their directors or trustees to run their business is usually the
subject of questions concerning the applicability of the notion of supra vires. It was formerly believed that not
even all shareholders could ratify an ultravires act. However, it was later decided that a business could engage
in activities that were logically related to its declared goals. It is obvious that a business needs a highly
comprehensive memorandum of association, one that is painstakingly written to include information about the
company's near-term prospects. That being said, there is ongoing debate on the legal ramifications of
supra vires transactions.
EFFECTS OF THE DOCTRINE OF ULTRA VIRES

The question that naturally arises when a company's objects forbid it from acting in a way that is outside of its
jurisdiction is: What would happen if the transaction went through despite the objects' restrictions? The courts
have determined the solution to this question through the application of the doctrine of ultravires.The court has
applied the concept on the following common grounds: the contract was invalid, the corporation lacked the
authority to make it, and the party dealing with the corporation was charged with notice of the corporation's
limitations. What would happen in the event of an ultravires transaction is the question that remains unresolved.
Let's attempt to respond to this query:-
1) IMPACT ON A DIRECTOR'S LIABILITY IN A CORPORATION If a director goes above
their authority or engages in an ultra vires transaction, they will be held personally accountable
for the ensuing consequences unless the company's members approve the transaction. This is the case
because a corporation with restricted objects cannot grant its directors or other agents the power to instruct the
company to engage in any transaction that is not intended to further or attain those objects, or that is only
tangentially related to doing so. .) INJUCTION This is the privilege that this doctrine bestows on a company's
shareholders or members. Any member may file a motion with the court for an injunction relief on the grounds
that the business is engaging in an ultra vires transaction. The court may give such an injunction based on the
merits of the case. DISPUTE ABOUT TRANSACTIONS If someone enters a transaction on behalf of the firm
without having the legal authorization to do so, the company has the right to reject it. However, there is one
caveat to this rule: if the firm's board approves the transaction, it becomes legally enforceable against the
company. The board, which effectively has the power to decide whether or not to commit the company to a
contract, will have the last say over the third party.
CONCLUSION –

The Companies Act of 2013 has undergone several recent revisions that impact the memorandum of
association, as we have seen. The only objects clause has been added in place of the necessity for
supplementary and other objects, however this has no bearing on the scope of the ultra-vires doctrine. Third
parties that participate in good faith but lack understanding of the company's objectives are the only ones who
are vulnerable, as demonstrated by the discussion that there is no basic rule laying the basis for ultra-vires
transactions. Legislative protection for those legitimate third parties has not been granted by the legislature.
Similar to England, following the 1972 and 1989 amendments, the legislature expressly gave third parties acting
in good faith the statutory protection. Although the legislature was anticipated to provide the same level of
protection, it did not.