LL.B. (Three Years) Sem 4 Company Law Apr 2025 Question Paper with Solutions

For full marks, cover: what the memorandum is (section 2(56) of the Companies Act 2013), its nature (charter, public document, binding under section 10); its contents clause by clause (section 4(1) to (7)); memorandum and articles distinguished; Ashbury and Lakshmanaswami Mudaliar on why the objects matter; alteration under the 2013 Act: the general rule (section 13(1), special resolution) and the procedure clause by clause: name (sections 13(2), (3), 16), registered office (sections 12(4), (5), 13(4) to (7)), objects (sections 13(1), (8) to (10)), liability (section 18), capital (sections 61, 64, 66), with the common filing and registration steps; a table; a conclusion.

Part A: the memorandum

Meaning. The memorandum of association is the document that sets out a company's constitution in relation to the outside world. Section 2(56) defines it as the memorandum "as originally framed or as altered from time to time", under this or any earlier companies Act.

Its nature.

3. The objects clause (section 4(1)(c)). It states the objects for which the company is incorporated, and any matter considered necessary in furtherance of them. This is the most important clause, because it fixes what the company may lawfully do.
4. The liability clause (section 4(1)(d)). It states whether the members' liability is limited or unlimited. In a company limited by shares, liability is limited to the amount unpaid on their shares. In a company limited by guarantee, it states the amount each member undertakes to contribute on a winding up.
5. The capital clause (section 4(1)(e)). In a company with share capital, it states the amount of capital with which the company is registered. It also states its division into shares of a fixed amount. It also states the number of shares the subscribers agree to take, at least one share each.
6. The nominee clause (section 4(1)(f)). A One Person Company names the person who will become its member if the subscriber dies.
7. The subscription clause. The subscribers sign the memorandum and state the shares each will take (section 4(1)(e)(ii)).

Why alteration matters. An act outside the memorandum is void. In Ashbury Railway Carriage and Iron Company v. Riche, (1875) LR 7 HL 653, a contract beyond the objects could not be ratified even by every shareholder. In A. Lakshmanaswami Mudaliar v. Life Insurance Corporation of India, AIR 1963 SC 1185, a donation outside an insurance company's objects was held ultra vires, and the directors had to restore it. So a company that wants to change course must first change its memorandum, by the procedure the Act lays down.

Part C: alteration of the clauses under the Companies Act 2013

The general rule (section 13(1)). Except for capital, which section 61 governs, a company may alter its memorandum by special resolution, after following the procedure in section 13.

1. Name.

1. Special resolution, and the Central Government's written approval (section 13(2)). No approval is needed where the only change is adding or deleting "Private" on conversion.
2. The new name must satisfy section 4(2) and (3).

1. A special resolution (section 13(1)).
2. If public issue money is unused, the details must be published in two newspapers and on the website. Dissenting shareholders must be offered an exit (section 13(8)).
3. The Registrar registers the alteration and certifies it within thirty days of filing (section 13(9)).
4. The alteration has no effect until registered (section 13(10)).

4. Liability. A company may convert itself into a company of another class, for example from unlimited to limited, by altering its memorandum and articles (section 18).

5. Capital.

1. If the articles allow, the company may alter its capital by resolution in general meeting (section 61). It may increase it, consolidate or sub-divide shares, convert shares into stock, or cancel untaken shares.
2. Notice goes to the Registrar within thirty days, with the altered memorandum (section 64).
3. A reduction needs a special resolution and the Tribunal's confirmation, after creditors are protected (section 66).

Conclusion

Conclusion. The memorandum is the company's charter (section 2(56)). Under section 4 it states the name, the State of the registered office, the objects, the liability of members and the capital. A One Person Company also names a nominee. An act beyond the objects is void (Ashbury, Lakshmanaswami Mudaliar). It is altered by special resolution under section 13, with the Central Government's approval for a change of name or State. The objects need the safeguards of section 13(8) and registration, and capital follows sections 61 and 66.