Companies Act • Official Statutory Text & Practice Guide
Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2013
Section 10 of Companies Act: Effect of memorandum and articles
Official Bare Act Text
Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary
1.Subject to the provisions of this Act, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the memorandum and of the articles.
2.All monies payable by any member to the company under the memorandum or articles shall be a debt due from him to the company.
Statutory Defined Terms in this Section:(Click any term for official legal definition)
Section 10 creates a binding statutory contract between the company and its members, and among the members inter se, enforcing the covenants contained in the registered memorandum and articles.
Substantive Scope & Reach: Subject to the provisions of the Act, the memorandum and articles, when registered, bind the company and the members thereof to the same extent as if they had been signed and sealed by each member and contained covenants on its and his part to observe all the provisions of the memorandum and articles.
Sub-Section (2) Provision: Sub-section (2) clarifies that all monies payable by any member to the company under the memorandum or articles shall be a debt due from him to the company, enforceable through ordinary recovery and summary proceedings.
Key Landmark Precedents:
Hickman v. Kent or Romney Marsh Sheep-Breeders' Association [1915] 1 Ch 881: The court established that the articles create a binding contract between the company and its members in their capacity as members, but do not create an enforceable contractual right between the company and an outsider or member in an external capacity.
V.B. Rangaraj v. V.B. Gopalakrishnan (1992) 1 SCC 160: The Supreme Court held that private restrictions on share transfer agreed between shareholders in a private agreement are unenforceable unless incorporated into the Articles of Association.
Legal Commentary:
Section 10 enforces internal corporate democracy and contractual discipline. The statutory contract created under Section 10 operates exclusively in respect of membership rights—such as voting, dividends, and notice of meetings. It cannot be used to enforce employment contracts or outside rights against the company. Crucially, as recognized in subsequent jurisprudence, where articles mirror shareholder agreements, Section 10 provides the statutory foundation for specific performance of shareholder covenants.
Legal Commentary & Landmark Judgments: Section 10
Section 10 creates a binding statutory contract between the company and its members, and among the members inter se, enforcing the covenants contained in the registered memorandum and articles.
Section 10 enforces internal corporate democracy and contractual discipline. The statutory contract created under Section 10 operates exclusively in respect of membership rights—such as voting, dividends, and notice of meetings. It cannot be used to enforce employment contracts or outside rights against the company. Crucially, as recognized in subsequent jurisprudence, where articles mirror shareholder agreements, Section 10 provides the statutory foundation for specific performance of shareholder covenants.