flowchart LR
A["Constitutional <br> Processes of a Company"] --> B[Meetings]
A --> C[Memorandum of Association]
B --> B1["General Meetings <br> (Members)"]
B --> B2["Board Meetings <br> (Directors)"]
B --> B3[Committee Meetings]
B --> B4["Creditors' Meetings"]
B1 --> B1a[Annual General Meeting]
B1 --> B1b[Extraordinary General Meeting]
B1 --> B1c[Class Meeting]
C --> C1[Name Clause]
C --> C2[Registered Office Clause]
C --> C3[Object Clause]
C --> C4[Liability Clause]
C --> C5[Capital Clause]
C --> C6[Subscription Clause]
%% Style
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class A,B,B1,B1a,B1b,B1c,B2,B3,B4,C,C1,C2,C3,C4,C5,C6 dark;
3 Meetings of a Company and Memorandum of Associations
ImportantLearning Objectives
By the end of this chapter, the reader will be able to:
- Identify the principal types of company meetings under the Companies Act, 2013, including general meetings, board meetings, committee meetings, and creditors’ meetings, and locate the statutory authority for each.
- Apply the rules on notice, quorum, voting, resolutions, and minutes under Sections 101, 103, 114, and 118 of the Companies Act, 2013 to a typical annual general meeting and board meeting.
- Explain the legal nature and constitutional function of the memorandum of association as defined in Section 2(56) and Section 4 of the Companies Act, 2013.
- Distinguish the six mandatory clauses of the memorandum and describe the procedure for altering each.
- Apply the doctrine of ultra vires as developed in Ashbury Railway Carriage and Iron Co. Ltd. v. Riche (1875) and Lakshmanaswami Mudaliar v. Life Insurance Corporation of India (1963) to a contract that exceeds the company’s stated objects.
3.1 Introduction
A company, having no physical body of its own, can act and decide only through processes that the law constructs for it. Two of those processes occupy the foundational position in corporate governance. The first is the meeting, through which members and directors deliberate and take decisions in their collective capacity. The second is the memorandum of association, the constitutional document that defines the company’s identity, the scope of its business, and the boundary of its powers.
The two topics are connected. The memorandum determines what the company may do; the meeting determines whether and how the company will do it. A company that wishes to alter its name, change its registered office, expand its objects, increase its authorised capital, or vary the rights of a class of shareholders must do so through a meeting in which the members pass a resolution of the kind specified for that change. The memorandum is the document; the meeting is the procedure. Together they constitute the formal constitutional life of the company.
This chapter takes up both topics in turn. The first half covers the types of meetings recognised under the Companies Act, 2013, the legal requirements for convening and conducting them, and the kinds of decisions taken at each. The second half covers the memorandum, its statutory definition, its six clauses, the procedure for alteration, and the doctrine of ultra vires that polices the boundary the memorandum creates.
3.2 Meetings of a Company
A meeting, in corporate law, is the formal convening of members or directors of a company for the purpose of deliberating and resolving matters within their respective competence. The Companies Act, 2013 distinguishes meetings of members, meetings of directors, meetings of committees of directors, and meetings of creditors, each with its own purpose, procedure, and statutory authority.
NoteA Working Definition of a Company Meeting
A meeting is a coming together, at a stated time and place, of two or more persons who are entitled to be present, for the purpose of transacting business of a kind for which the meeting has been called, and where the decisions taken are recorded in writing as resolutions and minutes. The presence of these elements, lawful authority to convene, due notice, a quorum, an agenda, and a record, distinguishes a meeting from an informal gathering with no legal effect.
3.2.1 General Meetings of Members
A general meeting is a meeting of the members of the company. The Companies Act, 2013 provides for two principal kinds of general meeting and one specialised kind.
NoteAnnual General Meeting (Section 96)
Every company, other than a One Person Company, must hold an annual general meeting (AGM) each year. The first AGM must be held within nine months of the close of the first financial year. Subsequent AGMs must be held within six months of the close of each financial year, and the gap between two AGMs must not exceed fifteen months. The AGM is the principal forum at which the members consider the audited financial statements, the report of the board and the auditors, the declaration of dividend, the appointment and remuneration of directors and auditors, and any other ordinary business set out in the notice.
For example, Infosys Limited holds its annual general meeting in June or July each year, at which the audited financial statements for the year ending 31 March are laid before the members for adoption, the dividend recommended by the board is declared, the retiring directors are reappointed, and the statutory auditors are confirmed.
NoteExtraordinary General Meeting (Section 100)
Any general meeting other than an AGM is an extraordinary general meeting (EGM). An EGM is convened to transact special business that cannot wait until the next AGM. The board may call an EGM on its own initiative, or it must call one on the requisition of members holding not less than one-tenth of the paid-up share capital carrying voting rights. If the board fails to call the requisitioned meeting within twenty-one days of the requisition, the requisitionists themselves may call the meeting within three months from the date of the requisition.
EGMs are typically used for time-sensitive corporate actions such as approval of a scheme of merger or amalgamation, alteration of the memorandum or articles, increase in authorised share capital, issuance of new equity, or removal of a director.
NoteClass Meeting (Section 48)
A class meeting is a meeting of a particular class of shareholders, typically convened where a corporate action would vary the rights attached to that class. Section 48 requires the consent of the holders of not less than three-fourths of the issued shares of that class, given by way of a special resolution at a separate meeting of the holders of the issued shares of that class, before the rights of the class can be varied.
Class meetings are commonly held for preference shareholders, for holders of differential voting rights shares, and for holders of debentures, where their respective contractual or statutory rights are proposed to be modified.
WarningThe Statutory Meeting Has Been Abolished
A common misconception, often perpetuated by older textbooks, is that every newly incorporated public company must hold a statutory meeting within six months of incorporation. The statutory meeting was provided for by Section 165 of the Companies Act, 1956. The Companies Act, 2013 has not retained this requirement. Statutory meetings are therefore no longer required in India and any reference to them in current practice is anachronistic.
3.2.2 Board Meetings (Section 173)
A board meeting is a meeting of the directors of the company. The day-to-day governance of the company, the strategic direction it takes, and the major decisions that fall outside the routine management of the executives are taken at the board level.
Section 173 prescribes the minimum frequency of board meetings. Every company must hold the first board meeting within thirty days of the date of incorporation. Thereafter, the board must hold a minimum of four meetings each year, with the gap between two consecutive board meetings not exceeding one hundred and twenty days. A One Person Company, a small company, a dormant company, and a Section 8 company that is not a public company are required to hold only two board meetings each year, one in each half of the calendar year, with a gap of at least ninety days between them.
TipBoard Meetings Set the Strategic Tempo of the Company
The board meeting is not merely a procedural formality. It is the principal forum at which the strategic direction of the company is set, the performance of the executives is monitored, the financial statements are approved before being placed before the members, and the formal corporate actions that will subsequently be put to the members at a general meeting are first proposed. The quality of governance in any company is, in large measure, a reflection of the quality of its board meetings.
For example, the board of HDFC Bank Limited holds quarterly board meetings at which the unaudited quarterly results are reviewed and approved before publication, the credit and risk reports are tabled, the strategic priorities are reviewed, and the recommendations of the audit, risk, nomination and remuneration, and stakeholder relationship committees are considered.
3.2.3 Committee Meetings
The Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 require listed and large public companies to constitute several mandatory committees of the board. The principal committees are as follows.
The audit committee, constituted under Section 177, comprises a minimum of three directors with a majority of independent directors and is chaired by an independent director. Its functions include recommendation of the appointment of the statutory auditor, examination of the financial statements before they are laid before the board, oversight of internal financial controls, and review of related-party transactions.
The nomination and remuneration committee, constituted under Section 178, recommends to the board the appointment, remuneration, and removal of directors and senior managerial personnel.
The stakeholders relationship committee, also under Section 178, considers and resolves the grievances of security holders.
The corporate social responsibility (CSR) committee, constituted under Section 135, formulates and recommends the company’s CSR policy and the activities to be undertaken under it. CSR is taken up in detail in Chapter 4.
3.2.4 Creditors’ Meetings
Creditors’ meetings are convened in two principal contexts. The first is in connection with a scheme of compromise or arrangement under Sections 230 to 232 of the Companies Act, 2013, which requires the approval of three-fourths in value of the creditors or class of creditors present and voting. The second is under the Insolvency and Bankruptcy Code, 2016, in which the committee of creditors is the principal decision-making body during the corporate insolvency resolution process and approves the resolution plan by sixty-six per cent of voting share.
3.2.5 Notice, Quorum, Voting, and Resolutions
The validity of any meeting depends on compliance with the rules on notice, quorum, voting, and resolutions. These rules are not technicalities; they are the procedural guarantees that distinguish a lawful corporate decision from an arbitrary one.
NoteNotice of Meeting (Section 101)
Section 101 requires a general meeting to be called by giving not less than twenty-one clear days’ notice in writing or through electronic mode. The notice must specify the place, date, day, and hour of the meeting and contain a statement of the business to be transacted. A general meeting may be called at shorter notice if consent in writing or by electronic mode is given by not less than ninety-five per cent of the members entitled to vote at such meeting.
A board meeting must be called by giving not less than seven days’ notice in writing to every director (Section 173(3)).
NoteQuorum (Section 103)
For a general meeting, the quorum prescribed by Section 103 is as follows:
- For a private company, the quorum is two members personally present.
- For a public company, the quorum is:
- five members personally present, where the total number of members on the date of the meeting is not more than 1,000;
- fifteen members personally present, where the total number of members is more than 1,000 but not more than 5,000;
- thirty members personally present, where the total number of members exceeds 5,000.
For a board meeting, the quorum is one-third of the total strength of the board or two directors, whichever is higher (Section 174).
NoteResolutions (Section 114)
A resolution is a formal decision taken at a meeting. Section 114 distinguishes two principal kinds of resolution.
An ordinary resolution is one passed by a simple majority, that is, the votes cast in favour exceed the votes cast against. Ordinary resolutions are sufficient for routine matters such as the adoption of accounts, declaration of dividend, appointment of directors in the ordinary course, and appointment of auditors.
A special resolution is one passed by not less than three-fourths of the votes cast. Special resolutions are required for matters of constitutional significance, including the alteration of the memorandum or articles, change of name, change of registered office from one state to another, reduction of share capital, buy-back of shares, and the variation of class rights.
A unanimous resolution may also be required by particular provisions of the Act, such as those relating to a related party transaction in a specified class of company.
NoteMinutes of Meeting (Section 118)
Section 118 requires every company to cause the minutes of every general meeting and every board and committee meeting to be prepared and entered in the minute books within thirty days of the meeting. Each page of the minute book must be initialled or signed and the last page authenticated by the chairperson. Minutes once recorded are deemed to be evidence of the proceedings of the meeting.
3.2.6 Comparative Summary of Meetings
NoteSummary Table: Types of Meetings under the Companies Act, 2013
| Type of Meeting | Who Attends | Principal Purpose | Statutory Authority |
|---|---|---|---|
| Annual General Meeting | Members | Adoption of accounts, dividend, auditor and director appointments | Section 96 |
| Extraordinary General Meeting | Members | Special business that cannot wait for the next AGM | Section 100 |
| Class Meeting | Holders of a particular class of shares | Variation of class rights | Section 48 |
| Board Meeting | Directors | Strategy, financial review, corporate actions for member approval | Section 173 |
| Audit Committee Meeting | Audit committee directors | Auditor recommendation, financial controls, related-party transactions | Section 177 |
| Nomination and Remuneration Committee | Committee directors | Director and KMP appointment and remuneration | Section 178 |
| CSR Committee | Committee directors | CSR policy and activities | Section 135 |
| Creditors’ Meeting (Scheme) | Creditors | Approval of compromise or arrangement | Sections 230–232 |
| Committee of Creditors (IBC) | Financial creditors | Approval of resolution plan in insolvency | Insolvency and Bankruptcy Code, 2016 |
3.3 The Memorandum of Association
The memorandum of association is the constitutional document of the company. It defines the identity of the company, the scope of its activities, and the limits of its corporate power. Every other document and decision of the company, including the articles of association, board resolutions, contracts with third parties, and shareholder resolutions, takes effect within the boundary the memorandum creates.
3.3.1 Statutory Definition and Function
NoteSection 2(56), Companies Act, 2013
Section 2(56) defines the memorandum:
“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 is inclusive: it captures both the memorandum as it stood on incorporation and the memorandum as it has been altered. Every alteration is therefore part of the memorandum from the date on which the alteration takes effect.
NoteLord Cairns in Ashbury Railway Carriage and Iron Co. Ltd. v. Riche (1875)
Lord Cairns described the function of the memorandum:
“The memorandum is, as it were, the area beyond which the action of the company cannot go; inside that area the shareholders may make such regulations for their own government as they think fit.”
The metaphor of the memorandum as the area of corporate activity has shaped the common law treatment of corporate capacity ever since. A company may act freely within the area defined by its memorandum; it cannot act at all beyond that area, and any act so taken is ultra vires and void.
The memorandum performs three principal functions. First, it serves as the charter of the company, the document by which the company is constituted. Second, it serves as a public notice to all persons dealing with the company, defining the scope of the activities they may safely contract for. Third, it serves as a contract, both between the company and its members and between the members inter se, governing the basic terms of their association.
3.3.2 The Six Clauses of the Memorandum (Section 4)
Section 4 of the Companies Act, 2013 prescribes the contents of the memorandum. Every memorandum must contain six mandatory clauses, set out below.
Name Clause
The name clause specifies the name by which the company will be known. The name must end with the word “Limited” in the case of a public company, or with the words “Private Limited” in the case of a private company. A One Person Company must indicate the words “(OPC)” in brackets following its name. A Section 8 company is exempt from these suffix requirements. The proposed name must not be undesirable, must not be identical with or too closely resemble the name of an existing company, and must not contravene the trademark law.
For example, “Reliance Industries Limited” is the registered name of a public limited company; “Zoho Corporation Private Limited” is the registered name of a private limited company; “Ranjana K Foundation (Section 8)” is the registered name of a not-for-profit company licensed under Section 8.
Registered Office Clause
The registered office clause specifies the state in which the registered office of the company is to be situated. The actual address of the registered office is communicated to the Registrar within thirty days of incorporation under Section 12. The state in which the registered office is situated determines the territorial jurisdiction of the Registrar of Companies and of the National Company Law Tribunal for matters relating to the company.
For example, “The registered office of the company will be situated in the State of Karnataka” is a typical registered office clause for a Bengaluru-based company.
Object Clause
The object clause specifies the purpose for which the company is incorporated. Section 4(1)(c) provides that the memorandum must state the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof.
The object clause is the most consequential clause of the memorandum, since it is the boundary against which the doctrine of ultra vires is applied. A company that engages in an activity outside its stated objects acts beyond its corporate capacity, and the resulting transaction is void ab initio.
TipHow to Draft an Object Clause That Endures
A frequent error in early-stage drafting is to confine the object clause to the founder’s immediate business plan. A company that incorporates “to manufacture solar panels” and that subsequently expands into solar engineering and consultancy will then have to alter its memorandum, with all the cost and procedure that entails. A more durable approach is to draft the object clause widely enough to encompass the natural evolution of the business, while remaining specific enough to inform members and creditors of the principal activities. A well-drafted object clause typically opens with the main objects, identified by reference to the principal business, and follows with the matters considered necessary in furtherance of those main objects.
Liability Clause
The liability clause states the liability of the members. In a company limited by shares, the clause states that the liability of the members is limited to the amount, if any, unpaid on the shares held by them. In a company limited by guarantee, the clause states the amount that each member undertakes to contribute on a winding up. In an unlimited company, the liability of the members is unlimited.
Capital Clause
The capital clause specifies the amount of authorised share capital with which the company is to be registered, and the division of that capital into shares of a fixed amount. Companies that do not have a share capital, such as a guarantee company without share capital or a Section 8 company without share capital, omit this clause.
For example, “The authorised share capital of the company is ₹10,00,000 divided into 1,00,000 equity shares of ₹10 each” is a typical capital clause.
Subscription Clause
The subscription clause is the declaration by which the founders of the company subscribe to the memorandum and agree to take the number of shares set against their respective names. The subscription clause is signed by each subscriber in the presence of at least one witness who attests the signature.
NoteComparative Summary of the Six Clauses
| Clause | Function | Statutory Basis |
|---|---|---|
| Name Clause | Identifies the company by its registered name with the appropriate suffix | Section 4(1)(a) |
| Registered Office Clause | Specifies the state of the registered office, fixing jurisdiction | Section 4(1)(b) |
| Object Clause | Defines the scope of corporate activity and the boundary of corporate capacity | Section 4(1)(c) |
| Liability Clause | States the liability of members in case of shares, guarantee, or unlimited | Section 4(1)(d) |
| Capital Clause | States the authorised share capital and its division into shares | Section 4(1)(e) |
| Subscription Clause | Records the founding subscribers and the shares each agrees to take | Section 4(1)(f) |
3.3.3 Alteration of the Memorandum
The memorandum may be altered, but only by the procedure that the Companies Act, 2013 prescribes for each clause. The procedure varies with the gravity of the alteration.
The name clause may be altered by a special resolution of the members and with the prior written approval of the central government, except where the alteration consists only of the addition or deletion of the word “Private” on conversion between the public and private forms (Section 13).
The registered office clause may be altered to move the registered office within the same city by a board resolution alone; to move it from one city to another within the same state, by a special resolution and the approval of the Registrar; and to move it from one state to another, by a special resolution and the approval of the central government, with notice to creditors and to the Registrars of both the existing and the proposed states (Section 13(4)).
The object clause may be altered by a special resolution. Where the company has raised money from the public through a prospectus and has any unutilised amount, additional procedural safeguards apply.
The liability clause cannot be altered to increase the liability of any member without the written consent of that member.
The capital clause may be altered by an ordinary resolution to increase the authorised capital, by a special resolution to reduce capital subject to confirmation by the Tribunal, and by other procedures for consolidation, sub-division, or cancellation of shares (Sections 61 to 66).
3.3.4 The Doctrine of Ultra Vires
The doctrine of ultra vires, literally “beyond the powers”, holds that a company has no capacity to act beyond the powers conferred on it by its memorandum. Any act that is ultra vires the memorandum is void ab initio and cannot be ratified, even by the unanimous consent of all the members.
NoteAshbury Railway Carriage and Iron Co. Ltd. v. Riche (1875): The Foundational Authority
The company was incorporated with objects “to make and sell, or lend on hire, railway carriages and wagons; and to carry on the business of mechanical engineers and general contractors”. The directors entered into a contract to finance the construction of a railway in Belgium. The contract was approved by all the members. The House of Lords nevertheless held the contract void, on the ground that financing a railway construction was outside the company’s stated objects, and that an ultra vires contract could not be made valid by the consent of all the members.
The case established three propositions: that a company has only the capacity that its memorandum confers on it; that an act outside that capacity is void; and that void acts cannot be ratified, even unanimously.
NoteLakshmanaswami Mudaliar v. Life Insurance Corporation of India (1963)
The directors of an Indian insurance company resolved to make a payment of ₹2 lakh to a charitable trust formed for the promotion of education in commerce. The Supreme Court of India held that the payment was ultra vires the company’s memorandum, since the company’s objects did not authorise charitable donations of that kind. The case affirmed the application of the ultra vires doctrine in Indian law and remains a leading authority on the limits of corporate capacity.
WarningUltra Vires the Memorandum, Ultra Vires the Articles, and Ultra Vires the Directors
The single phrase ultra vires is sometimes used loosely to describe three different legal situations. Ultra vires the memorandum is an act outside the company’s corporate capacity altogether; the act is void and cannot be ratified. Ultra vires the articles is an act within the company’s capacity but outside the procedure laid down in the articles; the act may be ratified by the company in general meeting. Ultra vires the directors is an act within the company’s capacity but outside the authority delegated to the directors; the act may also be ratified by the members. Only the first is a true ultra vires problem in the historical sense.
3.4 Case Studies
3.4.1 Case Study 1: The 2009 Satyam Extraordinary General Meeting
In late 2008, the board of Satyam Computer Services Limited approved a proposal to acquire Maytas Properties and Maytas Infra, two property and infrastructure companies in which the founder Ramalinga Raju and his family had substantial interests. The acquisition was announced on 16 December 2008 but withdrawn within twelve hours after a strongly negative reaction from institutional shareholders. The episode forced the board to reconsider its governance, and in January 2009 the founder confessed in writing to a long-running fraud, leading to government supervision of the company and to the convening of extraordinary general meetings to ratify the rescue acquisition by Tech Mahindra Limited.
The Satyam episode illustrates several features of the meetings regime. The withdrawal of the Maytas acquisition was a vivid demonstration of the institutional shareholder voice exercised through the EGM mechanism. The subsequent rescue, structured through a court-supervised process and ratified at general meetings, demonstrated the role of meetings in legitimising corporate actions of a constitutional kind. The meetings did not, of course, prevent the underlying fraud, but they were the procedural channel through which the corporation reconstituted itself.
Discussion Questions
- What does the rapid withdrawal of the Maytas acquisition tell us about the practical influence of institutional shareholders at, or in anticipation of, an EGM?
- To what extent should EGMs be the principal forum for shareholders to discipline a board that has lost their confidence?
- What changes to the notice and disclosure requirements for general meetings have been introduced since 2009 in response to episodes such as Satyam?
3.4.2 Case Study 2: The Object Clause and the Tata–Mistry Dispute
In late 2016 the chairman of Tata Sons Private Limited, Cyrus Mistry, was removed by the board, leading to a prolonged litigation that touched, among other things, the scope of the company’s objects, the rights of minority shareholders under the articles, and the proper relationship between the holding company and its operating subsidiaries. While the principal proceedings turned on questions of oppression and mismanagement under the Companies Act, 2013, the underlying constitutional documents, the memorandum and the articles of Tata Sons, were repeatedly invoked by both sides.
The case is a useful illustration of the lasting significance of constitutional documents drafted long before the disputes that eventually invoke them. The drafting choices made at the time of incorporation, including the breadth of the object clause and the rights of particular classes of members, may determine the outcome of disputes decades later. The episode also illustrates the role of the National Company Law Tribunal and the National Company Law Appellate Tribunal, eventually the Supreme Court, in interpreting and applying these documents.
Discussion Questions
- To what extent should the constitutional documents of a holding company anticipate disputes between the holding company and its operating subsidiaries?
- Where the memorandum and the articles point in different directions, which document should prevail, and why?
- What lessons does the Tata–Mistry dispute offer for the drafting of object clauses and for the protection of minority shareholders?
Summary
| Concept | Description |
|---|---|
| Types of Company Meetings | |
| Annual General Meeting (s. 96) | The mandatory annual meeting of members at which accounts, dividend, auditor and director appointments, and other ordinary business are transacted |
| Extraordinary General Meeting (s. 100) | Any general meeting other than the AGM, called by the board or on requisition of members holding at least one-tenth of paid-up voting capital, for special business |
| Class Meeting (s. 48) | A separate meeting of holders of a particular class of shares, required for the variation of class rights and approved by a three-fourths majority |
| Board Meeting (s. 173) | A meeting of the directors held at least four times a year, with no more than one hundred and twenty days between consecutive meetings |
| Audit Committee (s. 177) | A board committee with a majority of independent directors that oversees auditor appointment, financial reporting, internal controls, and related-party transactions |
| Nomination and Remuneration Committee (s. 178) | A board committee that recommends the appointment, remuneration, and removal of directors and senior managerial personnel |
| CSR Committee (s. 135) | A board committee that formulates the CSR policy and recommends the activities to be undertaken under it |
| Creditors' Meeting (ss. 230–232, IBC) | Meetings of creditors held for approval of a scheme of arrangement under the Companies Act or a resolution plan under the Insolvency and Bankruptcy Code |
| Procedural Rules for Meetings | |
| Notice (s. 101) | Twenty-one clear days' written or electronic notice for general meetings, seven days' notice for board meetings, with shorter notice possible on prescribed consent |
| Quorum (s. 103) | Two members for a private company, and five, fifteen, or thirty members for a public company depending on member count, personally present |
| Ordinary Resolution (s. 114) | A resolution passed by a simple majority, sufficient for routine matters such as adoption of accounts and ordinary appointments |
| Special Resolution (s. 114) | A resolution passed by at least three-fourths of the votes cast, required for matters of constitutional significance such as alteration of the memorandum |
| Minutes of Meeting (s. 118) | Written record of the proceedings of every general, board, and committee meeting, prepared and signed within thirty days, deemed evidence of the proceedings |
| The Memorandum of Association | |
| Memorandum of Association (s. 2(56)) | The constitutional document of the company as originally framed or as altered from time to time under the present or any previous companies legislation |
| Function of the Memorandum | Serves as the company's charter, as public notice of its scope, and as a contract between the company and its members and among the members themselves |
| The Six Clauses of the Memorandum | |
| Name Clause (s. 4(1)(a)) | Specifies the registered name of the company with the appropriate suffix and conforms to the Act, the rules, and the trademark law |
| Registered Office Clause (s. 4(1)(b)) | Specifies the state in which the registered office is to be situated, fixing the territorial jurisdiction of the Registrar and the National Company Law Tribunal |
| Object Clause (s. 4(1)(c)) | Defines the purpose and scope of corporate activity and is the boundary against which the ultra vires doctrine is applied |
| Liability Clause (s. 4(1)(d)) | States the liability of members as limited by shares, limited by guarantee, or unlimited, as the case may be |
| Capital Clause (s. 4(1)(e)) | Specifies the authorised share capital with which the company is registered and its division into shares of a fixed amount |
| Subscription Clause (s. 4(1)(f)) | Records the founding subscribers and the shares each agrees to take, signed in the presence of at least one attesting witness |
| Alteration and the Ultra Vires Doctrine | |
| Alteration of the Memorandum (s. 13) | Each clause is altered by a procedure prescribed for it, ranging from board resolution for office shifts within a city to special resolution and central government approval for inter-state shifts |
| Ultra Vires Doctrine | An act outside the corporate capacity defined by the memorandum is void ab initio and cannot be ratified, even by unanimous member consent |
| Ashbury v. Riche (1875) | House of Lords authority that established the ultra vires doctrine and held that an act outside the objects clause is void and not capable of ratification |
| Lakshmanaswami Mudaliar v. LIC (1963) | Indian Supreme Court authority that applied the ultra vires doctrine to a charitable donation by an insurance company that had no such object in its memorandum |