Section 10 of CA 2013 : Section 10: Effect Of Memorandum And Articles

Explanation using Example

Imagine that Sarah and John are members of a startup called TechAdventures Private Limited. They both have signed the company's memorandum and articles of association upon registration. According to Section 10(1) of The Companies Act, 2013, both Sarah and John are legally bound to follow the rules and obligations outlined in these documents as if they had entered into a formal contract with TechAdventures.

For instance, if the articles of association require that members must contribute to a maintenance fund for company assets, Sarah and John are obligated to pay their share. Under Section 10(2), if John fails to make his payment, the amount he owes becomes a debt that he legally owes to TechAdventures, and the company can take appropriate legal action to recover this debt.