Section 4: Memorandum
This section is for outlining the requirements and restrictions for a company's memorandum, including its name, objectives, liability, and share capital.
Penalty
(5)(a) if the company has not been incorporated, the reserved name shall be cancelled and the person making application under sub-section (4) shall be liable to a penalty which may extend to one lakh rupees;
The section, clause by clause
What the section says
In plain terms
(1)The memorandum of a company shall state—
The company's memorandum must state its name, the state where its registered office will be, its objectives, the liability of its members, and other necessary details, including the amount of share capital and division of shares if it has a share capital.
(1)(a)the name of the company with the last word “Limited” in the case of a public limited company, or the last words “Private Limited” in the case of a private limited company:
provisoProvided that nothing in this clause shall apply to a company registered under section 8;
(1)(b)the State in which the registered office of the company is to be situated;
(1)(c)the objects for which the company is proposed to be incorporated and any matter considered necessary in furtherance thereof;
(1)(d)the liability of members of the company, whether limited or unlimited, and also state,—
(1)(d)(i)in the case of a company limited by shares, that liability of its members is limited to the amount unpaid, if any, on the shares held by them; and
(1)(d)(ii)in the case of a company limited by guarantee, the amount up to which each member undertakes to contribute—
(1)to the assets of the company in the event of its being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company or of such debts and liabilities as may have been contracted before he ceases to be a member, as the case may be; and (B) to the costs, charges and expenses of winding up and for adjustment of the rights of the contributories among themselves;
(1)(e)in the case of a company having a share capital,—
(1)(e)(i)the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount and the number of shares which the subscribers to the memorandum agree to subscribe which shall not be less than one share; and
(1)(e)(ii)the number of shares each subscriber to the memorandum intends to take, indicated opposite his name;
(1)(f)in the case of One Person Company, the name of the person who, in the event of death of the subscriber, shall become the member of the company.
(2)The name stated in the memorandum shall not—
The company's name cannot be identical or too similar to an existing company's name, or be offensive, undesirable, or constitute an offence under any law.
(2)(a)be identical with or resemble too nearly to the name of an existing company registered under this Act or any previous company law; or
(2)(b)be such that its use by the company—
(2)(b)(i)will constitute an offence under any law for the time being in force; or (ii) is undesirable in the opinion of the Central Government.
(3)Without prejudice to the provisions of sub-section (2), a company shall not be registered with a name which contains—
A company cannot be registered with a name that suggests a connection with the government or uses certain words or expressions without the Central Government's approval.
(3)(a)any word or expression which is likely to give the impression that the company is in any way connected with, or having the patronage of, the Central Government, any State Government, or any local authority, corporation or body constituted by the Central Government or any State Government under any law for the time being in force; or (b) such word or expression, as may be prescribed, unless the previous approval of the Central Government has been obtained for the use of any such word or expression.
(4)A person may make an application, in such form and manner and accompanied by such fee, as may be prescribed, to the Registrar for the reservation of a name set out in the application as—
A person can apply to reserve a name for a proposed company or a name change for an existing company, in a prescribed form and manner, with a fee.
(4)(a)the name of the proposed company; or
(4)(b)the name to which the company proposes to change its name.
(5)1[(i) Upon receipt of an application under sub-section (4), the Registrar may, on the basis of information and documents furnished along with the application, reserve the name for a period of twenty days from the date of approval or such other period as may be prescribed:
The Registrar can reserve a name for 20 days or a prescribed period, and if incorrect information was provided, the reserved name can be cancelled, and a penalty of up to 1 lakh rupees can be imposed, or the company can be directed to change its name or face other actions.
provisoProvided that in case of an application for reservation of name or for change of its name by an existing company, the Registrar may reserve the name for a period of sixty days from the date of approval.]
(5)(ii)Where after reservation of name under clause (i), it is found that name was applied by furnishing wrong or incorrect information, then,—
(5)(a)if the company has not been incorporated, the reserved name shall be cancelled and the person making application under sub-section (4) shall be liable to a penalty which may extend to one lakh rupees;
(5)(b)if the company has been incorporated, the Registrar may, after giving the company an opportunity of being heard—
(5)(b)(i)either direct the company to change its name within a period of three months, after passing an ordinary resolution;
(5)(b)(ii)take action for striking off the name of the company from the register of companies; or
(5)(b)(iii)make a petition for winding up of the company.
(6)The memorandum of a company shall be in respective forms specified in Tables A, B, C, D and E in Schedule I as may be applicable to such company.
The company's memorandum must be in a specified form, as applicable to the company, from Tables A, B, C, D, and E in Schedule I.
(7)Any provision in the memorandum or articles, in the case of a company limited by guarantee and not having a share capital, purporting to give any person a right to participate in the divisible profits of the company otherwise than as a member, shall be void.
Any provision in the memorandum or articles of a company limited by guarantee, without a share capital, that gives a person a right to participate in profits otherwise than as a member, is void.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Ins. by Act 1 of 2018, s. 3 (w.e.f. 9-2-2018).
- 1. Subs. by Act 1 of 2018, s. 4, for clause (i) (w.e.f. 26-1-2018).
This section refers to
Referred to by
Search the whole Act, or ask it a question, in the interactive browser.
Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.