public company having share capital commence business

Penalty. If any public company having share capital commence business or exercises borrowing power without the certificate to commence
business, then every person at fault shall be liable to a fine which may. e1end to Rs. 5000 for eve)' day of default. The principle of non-metrification of

pre-incorporation contract by the company is subject to Sections 15 (11) and 19 (e) of the Specific Relief Act. 1903. The combined effect of these

provisions is that where the promoters had made a contract on behalf of the company before its incorporation in the following circumstances, the contract

may be specifically performed by or against the company :
1. The contract is a pre-incorporation contract.
2. It has been made for the purposes one company or it is warranted
by the terms of incorporation of the company.
3. The company has accepted it, and
4. Such acceptance has been communicated to the other party. The term 'warranted by the terms of incorporation' means that it is
within the scope of the company's objectives as stated in. the Memorandum of Ass coition. .
It’ must, however, be remembered that a private company becomes legally bound, the moment it makes a fresh contract l)r ratifies a contract falling within

the purview of Sections 15 (h) and 19 (e) of the Specific Relief Act. 1963 after incorporation. But a public company becomes bound only after getting the
certificate of commencement of business because . Memorandum of Association is one of the documents which has to be filed with the Registrar of
Companies at the time :f incorporation of a company. It contains the fundamental conditions on which the company is to be incorporated. In the words of
Palmer, "It is a document of great importance in relation to the proposed company." No company can be registered without a memorandum of association

and that is why it is sometimes called a life giving document or a charter of the company.
Definition. Under Section 2 (28) of the Act, ;'Memorandum means the memorandum of association of a company as originally framed or as altered from
time to time in pursuance of any previous company laws or of this Act."This definition, however, neither give us any idea as to what a memorandum of

association really is nor does it point out the role which it plays in the affairs of the company. We shall, therefore, examine some better definitions given by

judges.Lord Cairns in the leading case of Asbury Railway Carriage Co. Riche observed that 'The memorandum of association of a company is
its charter and defines the limitation of the powers of a company.