Memorandum of Association under Section 2 Societies Registration Act

The memorandum of association is a society's founding document, the equivalent of a company's memorandum and the first thing the Registrar reads. Section 2 of the Societies Registration Act, 1860 fixes its contents in a single sentence: the name, the objects, and the particulars of the first governing body. Everything else about the society lives in the rules filed with it. Because registration, the scope of lawful activity, tax exemption and the alteration procedure all hang on this document, drafting it well is the most consequential step in forming a society.

1. The text and its three requirements

• The name identifies the society in every later dealing: registration, property, suits and bank accounts. The 1860 text contains no name restrictions, but State amendments commonly bar a name that duplicates an existing registered society or uses restricted words, and the Emblems and Names (Prevention of Improper Use) Act, 1950 bars the names and emblems it schedules.
• The objects must fall within section 1 read with section 20, or the State list where it is wider. The objects clause fixes what the society may do; activity outside it is open to challenge by members, by the Registrar under State powers and by the tax authorities.
• The governing body particulars anchor the Act's machinery: property vests in the governing body under section 5, suits are brought by its designated officers under section 6, and the annual list under section 4 updates the same information year by year.

Figure 1: What section 2 puts into the memorandum

2. Memorandum and rules distinguished

The Act deliberately splits the founding documents in two. The memorandum states what the society is; the rules and regulations state how it works, covering membership and subscriptions, general meetings, elections to the governing body, powers of office bearers, funds, accounts and dissolution. The copy of the rules filed with the memorandum must be certified as correct by at least three members of the governing body, a small formality that examiners like because the number is specific. The distinction matters in practice: objects can be altered only through the section 12 procedure, while rules change by whatever method the rules themselves lay down.

Figure 2: The two founding documents side by side

3. Drafting and filing in practice

• Subscription. Seven or more persons competent to contract subscribe their names to the memorandum. Minors cannot be subscribers, though State practice differs on their admission as ordinary members later.
• Filing. The memorandum and certified rules are filed with the Registrar with the prescribed fee; in Uttar Pradesh and several other States the registered address and additional declarations are also required.
• Scrutiny. Registrars examine the objects against the permitted purposes, check the name against the index, and may invite objections under State procedures before registering.
• State additions. Uttar Pradesh requires every change in the rules or the address to be intimated within 30 days, certified by three governing body members, and requires a copy of the memorandum with changes, the current certified rules and the balance sheet to accompany the annual list.
• Consistency. The memorandum, the rules, the signboard, the PAN and the bank account should carry the same name; mismatches are the commonest cause of trouble with registrars, banks and the tax department.

Figure 3: A drafting checklist for the founding documents

4. Quick Revision

1. Seven competent subscribers sign the memorandum.
2. The objects clause fixes the boundary of lawful activity.
3. Three members certify the rules filed with the memorandum.
4. Memorandum and rules change by different procedures.
5. State amendments add requirements; read the local text.

5. Frequently Asked Questions

What happens if a society acts outside its objects?

The Act itself prescribes no penalty, but consequences follow from elsewhere. Members can sue to restrain the governing body, since the objects are part of the contract of membership. Under State laws with inquiry and cancellation powers, activity contrary to the objects is a ground for the Registrar to call for explanations, and in serious cases to cancel registration after a hearing. Income applied outside the objects endangers tax exemption, and donors or grantors whose funds were given for the stated objects can insist on their application to those objects. The remedy the society itself should take is to alter its objects under section 12 before, not after, the new activity begins.

Is a defect in the memorandum fatal to registration already granted?

Not ordinarily. Once the Registrar has certified registration, the registration stands until it is cancelled or set aside under a power the applicable law confers; the certificate is treated as good against collateral attack, and third parties dealing with the society are not expected to audit its founding papers. A misdescription of a governing body member, or a curable omission, is set right by filing the corrected particulars. Where, however, registration was obtained by fraud, or the objects were outside the Act altogether, State provisions modelled on the Uttar Pradesh amendments allow cancellation after notice, and a court can examine the question in a properly framed proceeding.

Can the memorandum and rules be in conflict, and which prevails?

Conflicts happen, usually after years of piecemeal rule amendments. The working principle, borrowed from company law, is that the memorandum prevails: the rules exist to carry the objects into effect and cannot enlarge them, so a rule authorising activity outside the objects is of no effect, and a rule inconsistent with a provision of the memorandum gives way to it. Within their own field, though, the rules govern, and a court will read the two documents together and reconcile them where it fairly can. The sound practice is to amend both documents in the same exercise and file the full updated set with the Registrar.

6. Related Topics and Provisions

• Rules and regulations of a registered society
• Registration under section 3
• Societies eligible for registration: section 20
• Alteration of purposes under section 12
• Annual list under section 4
• Property of a society: section 5