Page 233 - DMGT407Corporate and Business Laws

Corporate and Business Laws

Notes The company’s activities are confined strictly to the objects mentioned in its memorandum
and if they go beyond these objects, then such acts will be ultra vires.

In case a company is about to undertake an ultra vires act, the members of a company can
get an order of injunction from the court restraining the company from going ahead with
the ultra vires act.

The liability of a member of a company cannot be increased unless the member agrees in
writing. The consent of the member may, however, be given either before or after the
alteration.
Section 17 empowers a company by a special resolution duly confirmed by the Central
Government, to alter the objects or to change the place of its registered office from one
State to another.
If the proposed name of a company differs from the name of an existing company merely
in the addition or subtraction of word like New, Modern etc., then the new name should
not be allowed.

Any name for the proposed company which connotes government participation or
patronage is considered undesirable unless circumstances justify.

9.6 Keywords

Capital Clause: This clause deals with alteration of share capital.
Liability Clause: A clause in the memorandum of association that states the nature of liability of
the members.
Memorandum of Association: The document that governs the relationship between the company
and the outside and one of the documents required to incorporate a company.
Objects Clause: The objects clause defines the objects of the company and indicates the sphere of
its activities.
Public Company: It means a company which is not a private; has a minimum paid-up capital of
` 5 lakhs.

Ultra Vires: The Company’s activities are confined strictly to the objects mentioned in its
memorandum and if they are beyond these objects, then such acts are known as ‘ultra vires’.

9.7 Review Questions

1. Define memorandum of association and state its contents.

2. State the rule laid down in ‘Ashbury Railway Carriage Co. vs. Riche’s case.
3. Explain the various clauses included in the memorandum of:
(i) A limited company and
(ii) An unlimited company.
4. Discuss the legal significance of the different clauses in the memorandum of association.

5. Describe the steps to be taken by a company to effect changes in the location of its registered
office from:
(i) One place to another place in the same city;

(ii) One city to another city in the same state;

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