Professional Documents
Culture Documents
Memorandum and Articles of Association
Memorandum and Articles of Association
Memorandum and Articles of Association
Formation of a company:
Following are the steps by which a company can be formed:
•The proposed company name should be approved by the registrar of companies.
•Secondly, the memorandum and articles of association of articles should be prepared.
•Suitable persons should be appointed for the subscription of memorandum of association.
•Registration fees should be deposited to registrar of companies and receipt of certificate of
incorporation should be collected.
•Business commencement certificate should be collected from the registrar of company.[1]
Memorandum Of Association:
The memorandum of association of a company, often simply called the memorandum, is a
fundamental document that governs the relationship between the company and the outside
world. It is one of the documents required to incorporate a company. It is thus, the charter of
the company and defines its raison d’etre (i.e., reason for existence).
Requirements of Memorandum:
A memorandum of association is required to state the name of the company, the type of
company (such as public limited company or private company limited by shares), the
objectives of the company, its authorised share capital, and the subscribers (the original
shareholders of the company). A company may alter particular parts of its memorandum at
any time by a special resolution of its shareholders, provided that the amendment complies
with company law.
Purpose:
The MOA is designed to communicate to the public the state of affairs of the company and its
purpose of being and operating. This aids various stakeholders of the company (creditors,
suppliers, shareholders, etc.) to evaluate the extent of their risk and also possibilities of the
company to overcome them at a future date.[2]
Contents of Memorandum:
The MOA of every company, shall contain the following clauses (described as conditions of
the company’s incorporation):
1. The name of the company, with ‘Limited’ as the last word of the name in case of a
public limited company and with ‘Private Limited’ as the last words of the name in
case of a private limited company.
4. In the case of companies (other than trading corporations) with objects not confined to
one State, the States to those territories the objects extend.
6. In the case of a company, having a share capital, the amount of share capital with
which the company is to be registered and the division thereof into shares of fixed
amount.
The Memorandum shall conclude with an “Associate Clause’ which states that the
subscribers desire to form a company and agree to take shares in it.
Articles Of Association:
The articles of association of a company, often simply referred to as the articles, are the
regulations governing the relationships between the shareholders and directors of the
company, and are a requirement for the establishment of a company. They are the rules,
regulations and bye-laws for the internal management of the affairs of the company. They are
framed with the object of carrying out the aims and objects as set out in the Memorandum of
Association. Together with the memorandum of association, they form the constitution of a
company.[3]
Contents of Articles:
Articles usually contain provisions relating to the following matters:
2) Lien of shares.
3) Calls on shares.
4) Transfer of shares.
5) Transmission of shares.
6) Forfeiture of shares.
8) Share warrants.
9) Alteration of capital.
Companies which must have their own Articles(Sec. 26, Indian Companies Act, 1956):
The articles of association shall be signed by the subscribers of the Memorandum and
registered along with it. A public company, may have its own Articles of Associoation. If it
does not have its own articles, it may adopt Table A given in Schedule I.[4]
Advantages:
Disadvantages: