Section 10: Companies Act- Incorporating companies and compliances in India
Updated: Feb 25
Section 10 of the Companies Act, 2013 deals with the effect of memorandum and articles of association. It provides that the memorandum and articles of association of a company shall, when registered, bind the company and its members to the same extent as if they had been signed by each member and had formed a contract between them and the company.
Relevant case laws and rules related to Section 10 of the Companies Act, 2013 are as follows:
Ashbury Railway Carriage and Iron Co. Ltd v Riche (1875): In this case, the House of Lords held that the memorandum of association of a company is a contract between the members and the company, and that the powers of the company are limited to those set out in the memorandum.
Companies (Incorporation) Rules, 2014: These rules prescribe the procedures for incorporation of companies, including the preparation and filing of the memorandum and articles of association.
Section 4 of the Companies Act, 2013: This section sets out the requirements for the contents of the memorandum of association, including the name of the company, its registered office, its objects, and its authorized share capital.
Section 5 of the Companies Act, 2013: This section sets out the requirements for the contents of the articles of association, including the regulations for the management of the company, the powers of the directors and shareholders, and the rights of the shareholders.
Section 14 of the Companies Act, 2013: This section sets out the requirements for alteration of the memorandum and articles of association, including the approval of the shareholders and the filing of the amended documents with the Registrar of Companies.
Overall, Section 10 of the Companies Act, 2013 recognizes the binding effect of the memorandum and articles of association on the company and its members. It is an important provision that defines the relationship between the company and its members and sets out the legal framework for the operation and management of the company.
The memorandum and articles of association are important documents that set out the constitution of the company and the rights and obligations of its members. The memorandum sets out the main objects and scope of the company's activities, while the articles govern the internal management and regulation of the company. Both documents must be submitted to the Registrar of Companies at the time of incorporation.
The provisions of the memorandum and articles of association are binding on the company and its members, and any action taken by the company or its officers that is outside the scope of the objects and powers set out in the memorandum and articles may be deemed ultra vires and therefore void. The provisions of the articles of association may also be used by members to challenge decisions or actions taken by the directors or other officers of the company.
Section 10 of the Companies Act, 2013 also specifies that any provision in the memorandum or articles of association that is inconsistent with the provisions of the Act shall be void. This ensures that the provisions of the Act take precedence over any conflicting provisions in the company's constitution.
In addition, Section 10 of the Companies Act, 2013 also provides for the alteration of the memorandum and articles of association. This can be done by passing a special resolution of the members and filing the amended documents with the Registrar of Companies. However, the alteration of the memorandum or articles of association cannot have the effect of converting a public company into a private company, or vice versa, without the approval of the National Company Law Tribunal.
Further, Section 10 also specifies that the memorandum and articles of association shall be open to inspection by any member of the company, free of charge. This ensures transparency and accountability in the operation of the company and enables the members to monitor the actions of the directors and officers.
Section 10 is closely related to other provisions of the Companies Act, 2013, such as Sections 4 and 5, which set out the requirements for the contents of the memorandum and articles of association, and Section 14, which provides for the procedure for the alteration of the memorandum and articles of association.
By Siddharth Dalmia
the StartUp Sherpa
+91-9971799250
dalmiasiddharth1994@gmail.com
