Definition : Memorandum of Association

A company's memorandum of association, often simply called the

memorandum, is the document that governs relations between the company
and the outside world. It is one of the documents required to incorporate a
company.
A document that regulates a company's external activities and must be drawn up on
the formation of a registered or incorporated company. As the company's charter it
(together with the company's articles of association) forms the company's constitution.
The memorandum of association gives the company's name, names of its members
(shareholders) and number of shares held by them, and location of its registered office.
It also states the company's (1) objectives, (2) amount of authorized share capital, (3)
whether liability of its members is limited by shares or by guaranty, and (4) what type
of contracts the company is allowed to enter into. Almost all of its provisions (except
those mandated by corporate legislation) can be altered by the company's members by
following the prescribed procedures. The memorandum is a public document and may
be inspected by anyone, usually at the public office where it is lodged. Called articles of
incorporation in the US.


The 20247,3/:241,884.,943 oI a company, oIten simply called the 20247,3/:2 , is the
document that governs the relationship between the company and the outside. It is one oI the
documents required to incorporate a company in the United Kingdom, Ireland, India,
Bangladesh, Pakistan and Sri Lanka, and is also used in many oI the common law jurisdictions oI
the Commonwealth.
Requirements
hile it is still necessary to Iile a memorandum oI association to incorporate a new company, it
no longer Iorms part oI the company`s constitution and it contains limited inIormation compared
to the memorandum that was required prior to 1 October 2009. The Companies (Registration)
Regulation 2008 in Iact included pro-Iorma Memoranda.
It is basically a statement that the subscribers wish to Iorm a company under the 2006 Act, have
agreed to become members and, in the case oI a company that is to have a share capital, to take
at least one share each. It is no longer required to state the name oI the company, the type oI
company (such as public limited company or private company limited by shares), the location oI
its registered oIIice, the objects oI the company, and its authorised share capital. Companies
incorporated prior to 1 October 2009 are not required to amend their memorandum. Those details
which are now required to appear in the Articles, such as the objects clause and details oI the
share capital, are deemed to Iorm part oI the Articles.
S\SUities
The memorandum no longer restricts what a company is permitted to do. Since 1 October 2009,
iI a company's constitution contains any restrictions on the objects at all, those restrictions will
Iorm part oI the articles oI association.
Historically, a company's memorandum oI association contained an objects clause, which limited
its capacity to act. hen the Iirst limited companies were incorporated, the objects clause had to
be widely draIted so as not to restrict the board oI directors in their day to day trading. In the
Companies Act 1989 the term "General Commercial Company" was introduced which meant
that companies could undertake "any lawIul or legal trade or business."
Pur\[se
The memorandum oI association records the agreement oI the Iirst subscribers to Iorm a
company under the 2006 Act, to become members and, in the case oI a company that is to have a
share capital, to take at least one share each.


O A company's Memorandum of Association must contain several clauses.
Name and DomiciIe CIauses
O The Name clause and Domicile clause record the name and address of the registered
company.
-ects CIause
O The Objects clause defines the company's purpose and objectives and records the powers
of the company and the scope of business it might conduct in the future.
CapitaI and Lia-iIity CIauses
O The Capital clause discloses the value of the firm and the intended amount of shares capital
to be registered by the firm. The Liability clause usually states that shareholder liability is
limited to the amount of shares held by each member.
$u-scription CIause
O The Subscription clause provides the names, addresses and amount of shares assigned to
each member of the firm as well as a declaration from the members stating their agreement
to form a company.
1name Clause
Accordlng Lo Lhls we have Lo sLaLe Lhe name of 90.425,3 A company may adopL any name buL lL
should noL be ldenLlcal Lo Lhe name of an exlsLlng company reglsLered wlLh Lhe reglsLrar of Lhe
company

2 SlLuaLlon Clause
As Lhe name lndlcaLes lL descrlbes Lhe dlfferenL slLuaLlons 1hls clause a company musL have a reglsLered
offlce aL whlch all Lhe communlcaLlons and noLlces are Lo be addressed 1he memorandum wlll only
sLaLe Lhe name of Lhe provlnce where offlce ls slLuaLed and noL Lhe address where offlce ls slLuaLed
3Cb[ecL Clause
1hls ls Lhe mosL lmporLanL clause ln Lhe memorandum lL clearly deflnes Lhe sphere of Lhe companys
acLlvlLles

4LlablllLy Clause
1hls clause of memorandum conLalns Lhe declaraLlon LhaL Lhe llablllLy of Lhe shareholders ls llmlLed Lo
Lhe exLenL of Lhe value of shares held by Lhem
3CaplLal Clause
1hls clause ls requlred Lo speclfy Lhe amounL of share caplLal wlLh whlch Lhe company proposes Lo be
reglsLered and secondly Lhe dlvlslons of LhaL caplLal lnLo shares of a flxed amounL
6SubscrlpLlon Clauses
1hls clause conLalns a sLaLemenL by Lhe subscrlbers LhaL Lhey are eager of formlng Lhemselves lnLo a
company and agree Lo have a number of shares wrlLLen agalnsL Lhelr respecLlve names Anonymous
The main objects Ior which the company is Iormed are listed in this sub-clause. It must be
observed that an act which is either essential or incidental Ior the attainment oI the main objects
oI the company is deemed to be valid, although it may not have been stated explicitly in the sub-
clause.
Other objects: Objects not included in the main objects could be stated in this sub-clause.
However, iI a company wishes to undertake a business included in this sub clause, it has to either
pass a special resolution or pass an ordinary resolution and get central government`s approval Ior
the same.
Registered oIIice clause: This clause contains the name oI the state, in which the registered oIIice
oI the company is proposed to be situated. The exact address oI the registered oIIice is not
required at this stage but the same must be notiIied to the Registrar within thirty days oI the
incorporation oI the company.
Capital clause: This clause speciIies the maximum capital which the company will be authorized
to raise through the issue oI shares. The authorized share capital oI the proposed company along
with its division into the number oI shares having a Iixed Iace value is speciIied in this clause.
Association clause: In this clause, the signatories to the Memorandum oI Association state their
intention to be associated with the company and also give their consent to purchase qualiIication
shares.