Company law

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Querist : Anonymous (Querist)

21 October 2012 legal effect of Memorandum and articles?

V K Bajaj

V K Bajaj (Expert)
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22 October 2012 Article of Association and Memorandum of Article is a starting document in incorporate a Company. Without these one cannot form a Company. Both these documents contain the guidelines, provisions, nature of business, Authorized Capital etc. etc.

So A&OA and MOA has complete legal effects.

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Ajay Mishra

Ajay Mishra (Expert)
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22 October 2012 Hi

Section 2(28) of the Companies Act, 1956 defines the term 'Memorandum' to mean the Memorandum of Association of the company as originally framed or as altered from time to time in accordance with the provisions of the Act.
The Memorandum is the charter of a company, which defines the ambit of the operations and the business to be carried on by the company. It is the basic document in the constitution of a company. The main purpose of the Memorandum is to lay down the objects for which a company is formed.

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Ajay Mishra

Ajay Mishra (Expert)
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22 October 2012 Hi

There are two important documents in relation to every company, defining its basic features and internal regulations, which are Memorandum of Association and Articles of Association. The Articles of Association is subordinate to the Memorandum of Association and is a public document. The Articles of Association of a company lays down the rules and regulations for the company's internal management, which provides powers to the company for its management by the Board and authority of the members to regulate the conduct of the company. It establishes a contract between the company and its members and between the members inter se. This contract governs the ordinary rights and obligations incidental to membership in the company. The Articles of Association of the company are 'not law' and do not have the force of law.
Section 2(2) of the Companies Act, 1956 provides that "articles" means Articles of Association of the company as originally framed or as altered from time to time in pursuance of any previous companies law or of this Act, including, so far as they apply to the company, the regulations contained, as the case may be, in Table B in the Schedule annexed to Act No. 19 of 1857 or in Table A in the First Schedule annexed to the Indian Companies Act, 1882 (6 of 1882), or in Table A in the First Schedule annexed to the Companies Act, 1913 (7 of 1913) or in Table A in Schedule I annexed to this Act.
Articles of association are regulations of the company binding on the company and on its shareholders. [V.B. Rangaraj v V.B. Gopalakrishnan (1992) 73 Comp Cas 201 (SC)].
The articles of association merely govern the internal management, business or administration of a company. They may be binding between the persons affected by them but they do not have the force of statute. [Irrigation Development Employees' Association v Government of Andhra Pradesh (2005) 55 SCL 459 (AP)].

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