## Section 10 – Effect of Memorandum and Articles

### Binding Effect (Section 10(1))

Subject to the provisions of the Act, the MoA and AoA, when registered, shall bind:

The company AND
Its members,

to the same extent as if respectively signed by them, and as containing covenants on their part to observe all the provisions of the MoA and AoA.

### Monies Payable by Members (Section 10(2))

All monies payable by any member to the company under MoA/AoA shall be a debt due from him to the company.

(This means the company can recover calls in arrears from members as if it were recovering a loan.)

### Who is bound to whom?

Party	Bound to	Notes
Company → Members	YES	Company is liable to members under MoA/AoA
Members → Company	YES	Members are liable to company under MoA/AoA
Members → Members	NO	Members are NOT liable to each other directly under MoA/AoA
Company → Outsiders (under MoA/AoA)	NO	MoA/AoA does not create rights for outsiders

Worked example

### Example 1

Example (Company recovering calls): A shareholder owes ₹50,000 as calls in arrears on partly-paid shares. The company can recover this amount as a debt due from him under Section 10(2) — analogous to loan recovery.

### Example 2

Example (Member-to-member): Mr. A and Mr. B are both members of XYZ Ltd. The AoA provides that members must give first refusal to other members before transferring shares to outsiders. Mr. A transfers without offering to Mr. B. Mr. B cannot directly sue Mr. A under MoA/AoA — because members are not bound to each other. (Mr. B would have to involve the company.)

⚠️ Common exam mistakes

Believing MoA/AoA creates contractual rights between members directly — they do not.
Forgetting Section 10(2) — unpaid calls become a debt recoverable from members.
Assuming MoA/AoA can create enforceable rights for outsiders — outsiders are strangers to this 'contract'.

Bare-Act text Section 10 · Companies Act, 2013 · click to expand

Section 10: (1) Subject to the provisions of this Act, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the memorandum and of the articles. (2) All monies payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.

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