To establish and maintain or procure the establishment and maintenance of any contributory or non-contributory pension or superannuation, provident or gratuity funds for the benefit of and give of procure the giving of the gratuities pensions, allowances, bonuses or emoluments of any persons who are or were at any time in the employment or service of the company or any company which is a subsidiary of the Company or is allied to or associated with the Company or with any such subsidiary company or who are or were at any time Directors or officers of the Company or any other company as aforesaid and the wives, widows, families and dependents of any such persons and also to establish and subsidise and subscribe to any institutions, associations, club or funds calculated to be for the benefit of or advance aforesaid and make payments to any such persons as aforesaid and to do any of the matters aforesaid, either alone or in conjunction with any such other company as aforesaid. We the several persons, whose names and addresses are subscribed, are desirous of being formed into a Company in pursuance of this Memorandum of Association and we respectively agree to take the number of shares in the Capital of the Company set opposite to our respective names. It also contains the powers of the company within which it can act. It may be of the following nature. Meaning of Articles of Association The Articles of Association can be seen as a rule book within a company.
The Authorised Share Capital of the Company is Rs. As opposed to Articles of Association, is not required to be filed with the registrar, although the company may file it voluntarily. It comprises of all the necessary details regarding the internal affairs and the management of the company. For instance, a redemption right does not relate to a share, if the matter has not been stated in the articles of association a so-called redemption clause. If not mentioned in the articles of association, according to the Limited Liability Companies Act, the notice must be issued in private limited liability companies no later than one week prior to the date of the general meeting, or the special date of registration stated in the articles of association, and no earlier than two months prior to the date of the general meeting or the registration date.
The MoA is a document prepared for the Sometimes, it is called the charter of the company other times, it is just called a memorandum. These two are the most important documents that has to be drafted while forming a company. It is subject to the conditions contained in the memorandum of association. In case the share capital has been defined as minimum and maximum capital, it can be increased and decreased within these limits without a need to amend the articles of association. The articles demonstrate obligations, rights, and powers of individuals, who are endowed with the responsibility of running the organization and administration. In contrast, the acts done beyond the scope of artciles can be ratified by unanimous voting of all shareholders. Chief Executive Officers, Managers, Company Secretary or Chief Financial Officers 28 Subject to the provisions of the Act,— i A chief executive officer, manager, company secretary or chief financial officer may be appointed by the Board for such term, at such remuneration and upon such conditions as it thinks fit; and any chief executive officer, manager, company secretary or chief financial officer so appointed may be removed by means of a resolution of the Board.
State the liability of each member. The subscription clause basically lists down the motives of the shareholders behind the incorporation of the company and also states that the subscribers are agreeing to take up shares in the company. If the company intends to use its company name in two or more languages, the names in other languages must be stated in the articles of association. It guides all relations within and outside the company by laying guidelines and rules for the same and all the subordinate documents and agreements follow from it. The articles of association set out how the company is run, governed and owned.
Moreover, it can only be amended by a difficult procedure in the Annual General Meeting with the knowledge of the Central Government. Although legislation is silent about how precise the definition of the field of activity needs to be, inexact and unnecessarily extensive definitions should be avoided. The number of shares allotted to each members are mentioned. When someone found a company two important documents Memorandum of Association and Articles of Association are always there. Thus, an entrenchment clause is the one which makes certain amendments either impossible or difficult.
The power of alteration of articles conferred by sec 31 is almost absolute. To compensate for loss of office of any Managing Director or Directors or other officers of the Company within the limitations prescribed under the Companies Actor such other statute or rule having the force of law and to make payments to any person whose office of employment or duties may be determined by virtue of any transaction in which the Company is engaged. To sell, mortgage, exchange, grant licenses and other rights improve, manage, develop and dispose of undertakings, properties, assets and effects of the company or any part thereof for such consideration as may be expedient and in particular for any shares, stocks, debentures or other securities of any other such company having main objects altogether or in part similar to those of the Company. Such objectives are further described in the memorandum. Importance of Articles of Association Under sec 36, the memorandum and the articles when registered, shall bind the company and its members to the same extent as if it had been signed by them and had contained a covenant on their part that the memorandum and the articles shall be observed. Further, the articles of association of a particular company are also bound to observe the memorandum of association of the company as the articles are subordinate to the charter which is the memorandum of the company as well as any other company law in force at that time. The Seal 76 i The Board shall provide for the safe custody of the seal.
The companies can frame its articles of association as per their requirement and choice. As between members inter se the articles constitute a contract between them and are also binding on each member as against the other or others. Any provision, as opposed to a memorandum of association, is invalid. The clause also specifies the amount of contribution of agreed upon for each individual participant in case the company is closing or winding up. Entrenchment The articles of association may contain entrenchment provisions. On the contrary, articles of association govern the relationship between the company and its members and also between the members themselves.
For instance, it may be the purchase of a business along with that all assets, liabilities, pending contracts, rights, privileges and goodwill attached to it. It is prepared for the persons inside the company, i. As much as possible, the promoters must refrain from any additions, changes, alterations or deletions in the model articles provided by the act. In case a particular business area has not been covered in the object clause of the MoA and may be desired at a later date, it can be added in the Memorandum when desired. Proceedings at General Meetings 43 i No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business. In absence of these two documents a company can never be registered in any country, nor can work for a single day.
To pay out of the funds of the company all costs, charges and expenses of and incidental to the formation and registration of the company and any company promoted by the company and also all costs, charges, duties, impositions and expenses of and incidental to the acquisition by the company of any property or assets. Liability Clause — It specifies the liabilities of each member of the company. Capital Clause — It lays down the total capital of the company. Name of the society, 2. Objects Clause Objects Clause constitutes the main body of the memorandum.