## Section 4 — Memorandum of Association
### Conceptual Understanding
- Base document for formation of company (MoA + AoA = Constitutional Document).
- Content must comply with the Companies Act, 2013.
- Contains objects beyond which the company's actions cannot go.
- Public document u/s 399 — every person dealing with the company is presumed to have knowledge of its contents.
- Shareholders must know the purposes for which their money can be used and the risks taken.
- Departure from MoA = ultra vires act.
### Mandatory Clauses of the MoA
| Clause | Content |
|---|---|
| Name Clause | Company name with suffix 'Limited' or 'Private Limited'\* |
| Registered Office Clause | State in which Registered Office is situated |
| Object Clause | Objects for which company is being incorporated + incidental matters |
| Liability Clause | Whether liability of members is limited / unlimited\\ |
| Capital Clause | (For company with share capital) Amount of registered SC, divided into shares of fixed amount + number of shares each subscriber takes |
| Nominee Clause | (For OPC only) Name of nominee |
\* Exception: Government Companies & Section 8 Companies are NOT required to use 'Ltd' / 'Pvt Ltd' suffix.
\\ Liability Clause states that liability is limited to:
- Unpaid amount on shares (in company limited by shares); OR
- Amount upto which member undertakes to contribute on winding up (limited by guarantee).
### Name Clause — Prohibited Names
The name in MoA shall NOT:
- (a) Be identical with or too nearly resemble the name of an existing company under this Act or previous Acts;
- (b) Be such that its use would:
- (i) Constitute an offence under any law in force; OR
- (ii) Be undesirable in the opinion of the CG (power delegated to RoC).
### When does a Name 'Resemble' an Existing Name?
| Type of Difference | Example |
|---|---|
| Plural / Singular | Flower vs. Flowers |
| Spacing between letters / punctuation | A B C Ltd vs. ABC Ltd |
| Different tenses | — |
| Slight variation of spelling | Disc Ltd vs. Disk Ltd |
| Different phonetic spellings | Jay Kay Ltd. vs. JK Ltd |
| Complete translation in Hindi/English | National Service Ltd vs. Rashtriya Seva Ltd |
| Use of www. or .net etc. | SS Ltd vs. SS.com Ltd |
| Order of words similar | Ravi Builders & Teacher Ltd. vs. Ravi Teacher & Builder Ltd |
| Addition of name of place | — |
| Addition / deletion of numerals (unless numeral is a brand) | — |
### Names Requiring Previous Approval of CG (Rule 8B)
Words prohibited unless prior CG approval:
Board, Union, Nation, Central, Federal, Bureau, National, Republic, President, Minister, Governor, Rashtrapati, PM/CM, Authority, Municipal, Panchayat, Commission, Undertaking, Forest Corporation, Development Scheme, Court/Judiciary, Statute/Statutory, Development Authority, Small Scale Industries, Financial Corporation, Khadi & Village Industries Corporation, 'Scheme' with name of Government/State/India/Bharat or resembling Govt schemes.
Also, names suggesting patronage of CG / SG / local authority require prior CG approval.
### Application for Name Reservation
- Form: SPICe+ / RUN.
- Resubmission allowed within 15 days if there is any defect.
### Reservation Period
| Stage | Period |
|---|---|
| New Company | 20 days from approval |
| Existing Company (change of name) | 60 days from approval |
### Rule 9A — Extension of Reservation (New Companies)
| Extension | Fees |
|---|---|
| Another 20 days (Total 40 days) | Rs. 1,000 |
| Further 20 days (Total 60 days) | Rs. 2,000 |
| 40 days in one go (Total 60 days) | Rs. 3,000 |
Application must be made before expiry of the original 20 days.
### Consequence of Reservation Obtained by Wrong Information
| Situation | Consequence |
|---|---|
| Company NOT yet incorporated | Cancel reserved name + Applicant liable for penalty upto Rs. 1 lakh |
| Company already incorporated | Registrar may, after giving company an Opportunity of Being Heard (OOBH): (a) direct company to change name within 3 months after passing OR; OR (b) take action for striking off name from register; OR (c) make a petition for winding up |
### Other Points
- MoA shall be in forms specified in Tables A, B, C, D, E of Schedule I (as applicable to type of company).
- For a company limited by guarantee without share capital — any provision in MoA/AoA giving any person a right to participate in divisible profits otherwise than as a member is VOID.
- CG directed RoC to ensure names are not in contravention of the Emblems and Names (Prevention of Improper Use) Act, 1950.