Section 13 sets out the contents of the Memorandum.

The document must contain the

following clauses: (I) the name clause, (2) the registered office clause, (3) the objects
clause, (4) the liability clause, (5) the capital clause, and (6) the association clause or
subscription clause. We shall now consider each of these clauses in detail.
1. The name clause :
Under this clause the corporate name of the company is stated. Any suitable name can be
chosen by a company; subject, however, to the following restrictions:
(a) The word "Limited" or "Private Limited" must be the last word in the name of every
'public or private company limited by shares respectively. There is, However, one
exception to this rule as provided in Section 25 of the Act, which permits charitable
companies formed to promote art, science, religion, etc., (prohibiting the payment of
dividends and applying all the profits to the promotion of their objects) under a license
granted by the Central Government, to register with limited liability, but without the
word "limited" as part of its name. In the case of companies limited with guarantee, the
name should end with these words. In the case of unlimited companies, only the name is
to be given. It should be noted that the inclusion of the word "company" is not essential
in the proposed name of the company.
(b) As per Section of the name chosen must not be undesirable in the opinion of the
Central Government. The Act does note state what names shall be considered undesirable
and as such gives very wide discretion to the Central Government. Ordinarily a name is
considered undesirable and therefore not allowed if it is either:

• too identical or similar to the name of another existing company or firm (whether
registered or unregistered) so as to lead to confusion (British Vacuum Cleaner Co.
vs. New Vacuum Cleaner Co. Ltd., 1907). The reason for this rule is that the
reputation of a company may be injured, if a new company adopts an allied name;
or

• misleading, e.g., suggesting that the company is connected with a government

department or any municipality or other local authority, or that it is an association
of a particular type, e.g., "Cooperative Society", "Building Society", when this is
not the case.
If, however, through inadvertence or otherwise, a company is registered by an almost
.identical name, the court will grant an injunction restraining it from using the name. An
injunction will not be granted, however, to prevent the use of purely descriptive word
with a definite meaning and in common use. Thus, in Aerators Ltd. vs. Tolling the
plaintiff was not granted an injunction restraining the defendant from using the name of
Automatic Aerators Ltd., because both companies were manufacturers of apparatus for
the instantaneous automatic aeration of liquids under distinct patents.
Once the name is chosen and the company is registered in that name, Section 147
requires that it, along with the address of registered office, must appear on the outside of
every office or place of business (though inside the building) of the company in a
conspicuous manner in one of the local languages and on all cheques, bills, letters,
notices and other official publications, etc., of the company.
2. The registered office clause.
The second clause of the memorandum must mention the State in which the registered
office of the company is to be situated [Sec. l3(l)(b)]. This is required in order to fix the
domicile of the company, i.e. the place of its registration. Domicile must be distinguished
from residence. While domicile is the place of its registration, residence is the place of its
management and control, i.e., where the board of directors meets (Damiler Co. Ltd. vs.
Continental Tyre Rubber Co.}.
3. Although the actual address of the registered office of the company is not required to
be stated in the memorandum, every company must have specified premises in a town
fixed as its registered office either from the day on which it begins to carry on business or
as from the 30th day after the date of its incorporation, whichever is earlier [Sec. 146(1)].
Notice of the situation of the registered office and of every change therein is to be given
to the Registrar for record within 30 days of incorporation or date of change, as the case
may be [Sec. 146(2)]. Usually the notice of the situation of registered office is filed at the
same time as the memorandum.
The importance of the registered office is that it is the address of the company where all
communications and notices are to be sent and where register of members, register of
debenture holders, register of charges, minute books of general meetings etc., are kept.
3. The objects clause.
It is the most important clause .of the memorandum because it sets out the objects or
varies of the company. A company is not legally entitled to do any business other than
"that specified in its objects clause. This rule is meant to protect first, the know the
purpose for which their money is to be employed and can be sure hat their money is not
going to be restricted for an unknown activity or project and secondly, the public at large,
who deal with the company, can at once know the extent of company's powers and
whether a particular transaction which is to be entered into with them is ultra vires the
company or not. Moreover, the fact that the company's capital cannot be spent on any
project outside the objects clause of the company gives a feeling of security to the
creditors.
Although the subscribers to the memorandum are free to choose the objects of the
proposed company, the following points should be kept in mind while drafting the objects
clause of a company:

• The objects of the company must not be illegal, e.g., to carry on the business of
lottery.

• They must not be against the provisions of the Companies Act, such as buying its
own shares (Sec. 77), declaring dividend out of capital, etc.

• They must not be against public policy, e.g., to carry on trade with an enemy
 country.

• They must be stated clearly and definitely. An ambiguous statement like

"company may take up any work which it deems profitable" is meaningless.

• They must be quite elaborate also. Not only the main objects, but the subsidiary or
incidental objects too should be stated because it is very difficult to alter them.
The narrower the objects expressed in the memorandum, the less is the
subscriber's risk, but the wider such objects the greater is the security of those
who transact business with the company. It is, therefore, of utmost importance
that the objects clause be drafted with the greatest care.
After the passing of the Companies (Amendment) Act, 1965, the objects clause of a
company, to be registered after the amendment, i.e., after 15th October 1965, must be
divided into two sub-clauses:

• The main objects. Under this sub-clause the main objects to be pursued by the
company on its incorporation and objects incidental or ancillary to the attainment
of the main objects must be stated.

• Other objects. Under this sub-clause other objects of the company not included in
the above clause must be stated [Sec. 13(l)(d)].
In the case of 'non-trading companies' the objects clause should also mention the names
of those States to whose territories the objects of a company will extend. The main
objects shall be pursued by the company immediately on its incorporation. But if a
company wishes to start a business included in other objects, it shall have to obtain either
the authority of a special resolution or an ordinary resolution and Central Government's
sanction. Similarly, when an existing company [i.e., a company in existence before the
commencement of the Companies (Amendment) Act, 1965] wants to commence any new
business, which though included in its objects, is not closely related to the business which
it has been carrying on at the commencement of the Amendment Act, it shall also have to
pass either a special resolution or an ordinary resolution together with Central
Government permission.
In addition to the above, the secretary or a director must file with the Registrar, a decla-
ration that the requirement as to resolution, etc., has been complied with. It must,
however, be observed that by virtue of this provision additional protection has been
provided to the shareholders of the company because now the management cannot risk
the, capital of the company in entirely new projects, without giving any notice to them,
under the pretext of pursuing objects subsidiary or incidental to the main objects.
Implied powers Further, apart from the powers expressly provided in the objects clause, a
trading company has also certain implied powers. These are: (i) to borrow money; (ii) to
act by agents; (iii) to compromise disputes; and (iv) to mortgage or sell land. In general it
may be said that a company authorized by its objects clause to carry on the business of
making and selling cotton textiles would possess implied powers for the purpose of
carrying on that business, to purchase or take on lease premises for factories, warehouses,
offices and shops, to engage employees, to borrow money and so on; because all these
matters are fairly incidental (naturally attached) to the carrying out of the company's main
objects.
4. The liability clause :
The clause states that the liability of members is limited, to the amount, if any, unpaid on
their shares. If the memorandum so provides, the liability of the directors may be un-
limited (Sec. 322). If it is proposed to register the company limited by guarantee, this
clause will state the amount which every member undertaking contribute to the assets of
the company in the event of of its winding up. A company registered with unlimited
liability need not give this clause in its memorandum of association.
5. The capital clause :
Every limited company (whether limited -by shares or whether limited by guarantee),
having a share capital must state the amount of its share capital with which the company
is proposed to be registered and the division thereof into shares of a fixed denomination,
in this clause. It is usually expressed as follows: "The share capital of the company is Rs
10,00,000 divided into 1,00,000 shares” of Rs 10 each.''
This capital is variously described as "registered", "authorized" or "nominal" capital and
the stamp duty is payable on this amount. There is no legal limit to the amount of share
capital or of each share. It may be any amount running into crores of rupees and the
denomination of each share may be rupee one or rupees one thousand. The amount of
authorized capital should be sufficiently high so that further issue of shares may easily be
done to finance the expanding business. It is optional for a company to state the divisions
of the authorized capital into different glasses of shares, if any, and the rights of various
classes of shareholders in this clause. Usually such details are described in the articles of
the company.
Note that an unlimited company having a share capital, is not required to have the capital
clause in its memorandum. In the case of such a company Section 27 (1) provides that the
amount of share capital with which the company is to be registered must be stated in the
articles of association of the company.
6. The association or subscription clause.
Under this clause we have the declaration of association", which is made by the
signatories of the memorandum under their signatures duly attested by witness that they
desire to be formed into a company and that they agree to the purchase qualification
shares, if any. Each subscriber must take at least one share.
The statement reads as follows: "We, the several persons whose names and addresses are
subscribed, are desirous of being formed into a company in pursuance to the
Memorandum of Association and we agree to take the number of shares in the capital of
the company shown against our names," There must be at least seven signatories in case
of a public company and at least two in case of a private company. The subscribers
usually act as first directors of the company. In the case of a company which is limited by
guarantee or is having unlimited liability, and which has no share capital, the legal
provision regarding the purchase of at least one share by each subscriber does not apply.
Above mentioned clauses are referred to as the compulsory clauses of the memorandum
as per Section 13. Other provisions relating to Managing Director or Manager, etc., may
also be given in the memorandum but they can be altered in the same manner as the
articles of the company
2 Company registration in India is regulated by the Companies Act, 1956
and is administered by the Ministry of Corporate Affairs (MCA - www.mca.gov.in)
through the Offices of Registrar of Companies (ROC) in each State.
CompaniesInn simplifies the company registration process and you follow the Simple
Steps to register your company/LLP anywhere in INDIA for your venture.

STEP 1: Selection of Business Form

Company
Company is an association of persons registered under the Companies Act 1956. It has a
legal personality separate from the persons who own or manage it. India we have two
types of companies available for registration, Private Limited Companies and Public
Limited Companies. You can see more information regarding companies in our website.
LLP (Limited Liability Partnership)
This is a new business form in India started registration from 1st April 2009. Limited
Liability Partnerships (LLPs) are commercial vehicles which combine the features of
partnership and company form of business. This Business Form is more suitable for
service sector, consulting and small entrepreneurs. You can see more information
regarding companies in our website.

STEP 2 : SELECT A BUSINESS NAME

Selection of business name is crucial for the image of your venture. You select a name
which reflects the business you plan. Ensure selected name satisfy name guidelines of
Ministry of Corporate Affairs, Government of India. To see name guidelines, see
www.companiesinn.com.

STEP 3 : ADDRESS OF REGISTERED OFFICE AND NAME OF

THE STATE
Mostly, people select home state for registration. Some entrepreneurs raise question
whether registering in one state will get advantage over other. A registered company/LLP
can operate in any state. No special registration or formalities required for doing
business. The additional requirement is to get local registration of VAT, municipal
registration etc will be applicable for that state.
STEP 4 : SELECTION OF OBJECTS / ACTIVITY
Every entrepreneur approaching CompaniesInn have some idea of his/her future business
plan. The only requirements are objects selected shall have relation with the name
selected in Step 1. Do not select different objects like technology business and vegetable
business. In the form provide details of your objects in clear terms which help us to
understand your requirements.

STEP 5 : CAPITAL OF YOUR COMPANY/LLP

Authorised Capital or the Registered Capital is the upper ceiling limit a company can
issue shares and raise capital from the shareholders.
The minimum capital required for registration is INR 1,00,000 for private company and
INR 5,00,000 for public company. Also be in mind more capital attract more fees payable
to government for registration.
Incase of LLP, its contribution by the designated partners and there is no minimum
amount requirement for contribution.
You can check the registration fees for different level of capital for Company /LLP at
www.companiesinn.com

STEP 6 : SELECT DIRECTORS /DESIGNATED PARTNERS

Company
A company is managed by directors appointed by shareholders. You can appoint
directors who need not be a shareholder of your company. Only qualification to become a
director is he should have an approved DIN number.
Directors Identification Number (DIN) is an identification number issued by the Ministry
of Corporate Affairs to a director or a prospective director of a company. Here, you give
DIN number if your prospective director have one or mail/fax his/her Identity Proof and
Address Proof.
Minimum directors required for a private limited company is two and public company is
three. If you intent to appoint more than three persons as directors. Your can mail the
details separately to info@companiesinn.com
LLP (Limited Liability Partnership)
LLP is managed by Designated Partners, appointed by LLP agreement. Like companies,
they also required to take DIPN (Designated Partners Identification Number).

STEP 7 : PROMOTERS DETAILS

The minimum number of promoters required for registering a private limited company is
TWO, public limited company is SEVEN and LLP two . Promoters can be individuals,
companies registered in India, companies registered outside India, LLPs.
STEP 8 : DIGITAL SIGNATURE CERTIFICATE
Now in India, the document filing with the Ministry of Corporate Affairs is in electronic
mode and the documents so filed have to be signed with a Digital Signature Certificate
issued by an Approved Certifying authority in INDIA.