The memorandum of association of a company is a document that governs the relationship of a company with the outside world. It is one of the most important documents needed for the incorporation of a company.
The Memorandum of Association is considered as the constitution of a company. It provides the foundation to the structure or the building of the company. The memorandum of association is defined as a company’s charter. It defines the limitations of a company’s powers.
Particular parts of the memorandum can be altered by the company whenever and however required.
The memorandum of association enables shareholders, creditors and investors to know the permitting range of the company.
It regulates the company’s external affairs.
The memorandum of association comes with its own importance −
The memorandum of association contains the following clauses −
Every company must have a registered office.
The location of the office can be intimated to the registrar within 30 days of incorporation.
With intimation to the registrar, a company can change its place in the same town.
However, for changing the place of the office in a different town in the same state, a special resolution must be passed.
To change the location of the office from one state to another, various reforms are needed to be performed on the memorandum.
The contents of the Memorandum of Association are detailed out below.
Shareholders must know the field of business in which their money is going to be used and the risks involved in the investment.
Outside allies of the company must also know the objects of the company.
The memorandum of association should be divided into paragraphs and should be numbered consecutively before printing.
At least one witness should be present while a subscriber signs the association.
The Memorandum of Association should be in the form B, C, D, or E tabular form in accordance with the Companies Act, 1956.
The following clauses should be included in the Memorandum of association of each and every company.
The word “limited” or the word “private limited” are required to be added as suffixes at the end of the name of a public company or a private company respectively.
The main objectives of the company.
The objectives auxiliary to the main objectives of the company.
In case of a company having its capital in shares,
Each subscriber shall take at least one share and shall write his name opposite to the number of shares he takes.
A company limited by guarantee should ensure that each member contributes a certain sum to the assets of the company.
If a transaction is made by a Director beyond the power of a Director but within the power of the company, the shareholders can rectify it in a general meeting.
Any irregularities can be cured by the consent of the shareholders, if the act is within the reach of the company.