Discuss the extent to which the Memorandum of Association and Articles of Association bind

(i) The members to the company;
(ii) The company to the members;
(iil) The members inter se;
(iv) The company to outsiders.
The Memorandum and Articles of Association are two important documents of company. When registered, they bind a 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 (agreement) by the
company and each member to observe all the provisions of the Memorandum and of the Articles (Section 36). Thus, on registration, the Memorandum and


Articles of Association have binding effects on both the company and the members. It follows from the language of Section 36 that the Memorandum and
Articles bind the company to its members, the members to the company. the members to each other in an exceptional case, but they do not bind the
company or its members to outsiders. For the sake of clarity we shall discuss the legal effects of this provision (i.e. Section 36) under the following heads
in detail :
1. The Company is Bound to the Members. The Articles and Memorandum constitutes a contract binding the company to its members in their capacity as
members, and as such a company is bound to follow the provisions of these documents. Toms, a company may be restrained from doing an ultra vies
act by any member, or an act in breach of the Articles or Memorandum which is likely to affect his right or interest. In the case Wood E... Odessa

Waterworks Co., the Articles of the company provided that the directors may, with the sanction of the company at general meeting, declare a dividend to

be paid to the members. A resolution was passed to give members divided in debenture bonds. One of the members filed a suit to restrain the directors

from acling on the resolution. Held, the directors were restrained from doing so on the ground that "to be paid" means to be paid in cash and the

debenture-bond proposed to be issued were not a payment in cash.It must be noted that these documents bind the company to members and vice versa

in respect of their membership rights only and not contractual rights of other kinds.