Friday, September 22, 2017

Memorandum of Association and Article of Association

[1] Memorandum of Association and [2] Article of Association are the documents which define duties, rights and remedies of the Company with the outsiders and vice-a-versa. 

They also define duties, rights and remedies of the Company with their members and vice-a-versa. Both the documents are dwelt at length in Companies Act 2013 as up dated from time to time, and also there are Case Laws (Court Rulings) shedding more light on these documents. Here is the table giving the comparison of the both the documents.

Memorandum of Association (MOA)
Articles of Association (AOA)
Section as per Companies Act 2013
Section 2(56) of the Companies Act, 2013.
Section 2(5) of the Companies Act, 2013.
What it defines
MOA is a document that contains all the fundamental information which is required to be submitted before Registrar Of Companies for the Registration of the company. It defines the relations and responsibilities with outsiders dealing with the Company.

 It contains:

      - Name Clause

-      Address (of the Regd Office) Clause

     - Associate Clause

-      Object Clause.
-      Liability Clause
-      Capital Clause
-     Subscription

The AOA is the document that contains the rules and regulations pertaining to internal administration of the company. It defines the relations and responsibilities with the members and between the members inter se. It defines various aspects of : Shares, Directors’ Appointment, Meetings, Accounting, Auditors, Voting, Rights and Protection of Minority Share Holders, Distribution of Dividend, Common Seal, etc.
Importance for Incorporation of the Co.
Memorandum of association is required at the time Registration of the Company. It must be registered with Registrar of Companies.
Article of association is not required for at the time of Registration of Company. A company limited by shares need not register its articles, in such a case table A applies.
Access to Public
Public document
Public document
The modification or revision in the MOA can be made after passing the special resolution at the Annual General Meeting / Extra Ordinary General Meeting with prior approval of the Central Govt.
Alterations in articles of association are done simply by passing the special resolution at the Annual General Meeting/Extra Ordinary General Meeting.
Effective Date of the amendment
Amendments can take effect only prospectively (i.e. after the date of approval of the Amendment) and not retrospectively.
Amendments can take effect retrospectively (i.e. it can become effective from the date which has already passed before the amendment was approved) if the amendment itself provides for retrospective effect.

It defines the objects, scope, powers and area of operation of the company. A company must act within what is stipulated in MOA. Acting beyond these will be ultra vires for the Company.

It defines rules and regulations for the internal administration and management of the company. It describes the right, responsibilities, powers, duties, etc of the members along with information regarding the accounts and audit of the company.

In case of any conflict between the two, MOA takes precedence.

In case of any conflict between the two, MOA takes precedence as the AOA emanates from MOA.

Ultra Vires Acts
Acts beyond the powers defined in MOA are ultra vires and void entailing serious implication for the Company and the outsiders connected in such acts. Such acts cannot be ratified even by the share holders.
Acts beyond the AOA are simply irregular but not void. It can be ratified by the share holders with due process.

Format and Content
Company Law prescribes the format and content of MOA as under:
-must be printed
-must be divided in paragraph
-paragraph must be numbered
-must be signed by at least 7 persons (in case of Public Ltd Co) and at least 2 persons (in case of Private Ltd Co) in the presence of a witness.
No stipulation under Company Law.
Presumption of Constructive Notice
Law presumes that a person dealing a company is deemed to have knowledge about the rules laid down in MOA of the Company as it is a Public Document available for inspection on payment of nominal fees to Registrar of companies.
Presumption of Constructive Notice is presumed by law as similar to MOA.

21st Sept, 2017.

Friday, September 15, 2017


Language is the most important means of communication. Amongst various languages a person learns during life time, mother tongue is rightfully credited as a repository of culture. Common mother tongue conjures up intuitive feeling of fraternity, nationalism, affection, and sense of belonging. However, with increasing globalization, international trade, computerization and particularly, with the increasing trend of “looking west” amongst young generation in our country, English language has assumed a great importance. Some of us might label English language as vestige of British Empire but it is a fact that it spreading its tentacles too far, too deep, too fast in all walks of life. 

Whatever tag we attach to English, it is a stark reality that “average” educated Indians are bothered with their poor knowledge of English though their poor knowledge of mother tongue itself might not be bothering that much. This trend is seen in most of the countries, particularly, in all developing countries.

Why English is so important?

1. Numbers of speaker and Nos of countries:

One can observe from the table given below that amongst the top most spoken languages in the world, English ranks at 2nd Number but when its geographical spread is factored in, it is merits the top notch. 

Speakers (in Millions)
Total Speakers
Nos of Countries where English is spoken (as native or second language)
as Second Language

Though, English ranks 2nd in terms of speakers and Chinese language is gaining importance on international arena, English is and will be the “lingua franca” of the world. If you are looking beyond your country, you have to be proficient in English. There are about 196 countries in the world. Of these, 90 countries use English as their native or second language and 53 countries as their Official Language. 

2. Universal Acceptability:

English Language is the commonly used language for International Trade, Politics, Travels, Sports, Scientific Research and Education. The countries where English is even not the second language offers university education in English to attract international students.

3. Better Prospects for job in own country:

A person with better fluency in English has better opportunities for job in home country, particularly where English is a second language. Besides, research has proved that better English also fattens the pay packet. In all the countries, where English is the language of commerce and administration, person with fluent English are sought after. 

4. Overseas Education and job:

For migration to developed English speaking countries, for education or job, proficiency in English is more important than the applicant’s performance in his college education. In fact, at times poor knowledge of English becomes obstacle for otherwise a brilliant youth to migrate. Some countries where English is even not a second language, offers degree courses in English. This vouches for the importance of English in international arena. 

5. Store House and Engine of Knowledge:

English Language is the Store House of literature and scientific knowledge and engine that carries the latest research across the countries. Maximum books, magazines, journals, research papers, news papers, etc are published in English. International TV Channels relay their progarmmes mostly in English.

6.  Cobweb of Digital World:

Given above are the traditional reasons which you will find quite convincing but the latest entrant in the subject matter deserves more consideration than all others put together: Our omnipresent, omniscient, omnipotent friend called Information Technology. Of all the content hosted on internet, 52.00% content is hosted in English language. Mr Runner Up, the Russian language content, is only 6.60%, very very far behind without any hope to come up in vicinity in the ladder. English language is dominating the digital field without any apparent challenge in near future, though other languages are popping up on the net. As such, English will rule the roost forever as it has no challenge even from the most spoken Chinese language which represents only 2% web content. World has witnessed unimaginable capabilities of Information Technology and yet more to come. These all will be delivered through various software, apps, tools, programmes, Internet of Things, Social Media Channels, Artificial Intelligence (and Terms yet to be coined) mainly in English. 

7. Easy to learn:

Easiness of learning any foreign language depends upon how closely the mother tongue of the learner is related with the language to be learnt. This closeness is derived from the origin of both these languages from the same language family. English language and all the Indian languages originate from Indo-European Language Family. As a result, for an Indian, learning English is easy. Belonging to this family, there are 430 languages spoken in most of the developed countries. Besides, a person who knows English can easily learn other European languages easily.

8. Dynamic and Progressive:

English language is flexible in its approach to adopt and assimilate new words and styles from other languages. This character of the language makes it richer and more adaptable to new words, technical jargons and terminology. In each new edition of the Oxford Dictionary, more than 1000 new and approved words are added in it. Burgeoning channels for communication through various platforms of internet and telephony, young generation is exploiting this flexibility of English language to the extent possible. 

9. Role of English in our freedom struggle:

Our great leaders like Mahatma Gandhi, Jawaharlal Nehru, Vallbhbhai Patel, Bal Gangadhar Tilak, Gopal Krishna Gokhale and Subhash Chandra Bose were never hesitant to use English though they all loved and respected vernacular languages. By the 1920s, English language became language of resurgence of nationalism, and political awakening amongst the educated Indians. The great social reformer Raja Ram Mohan Roy suggested that English education would propagate liberal thinking. English was planted during colonial era of Britishers. Our great leaders made them quit our mother land but their legacy of English language is flourishing, and it is not without reasons. 

10. Propagation of our scriptures and heritage:

The objective of this write-up is to highlight the importance of English language in a multilinguistic county like ours and not to glorify English language. It is important to note that English language helped our gifted orators and authors to make our scriptures and heritage known beyond the shores of India, in the land “Seven Seas Away”.

11. In search of a National Language:

There are 22 recognized official languages in India. Efforts for giving Hindi (written in Devnagari script) the status of National language have not materialsed. It is difficult to summarize the Official Act here. In brief, English Language enjoys the same status for all the official purposes of the Central Government. More importantly, looking to the aversion of some States towards Hindi, the status of English language is not going to diminish, at least in the current century.