1. MEMORANDUM OF ASSOCIATION (MOA):
The Memorandum of Association is the principal document in the formation of a company. It is called the charter of the company. It contains the fundamental conditions upon which the company is allowed to be incorporated or registered. It defines the limitations of the powers of the company. The purpose of memorandum is to enable the shareholders, creditors and those who deal with the company to know what is its permitted range of activities or operations. It defines the relationship of the company with the outside world.
The Memorandum of Association usually contains the following six clauses:
(a) Name Clause: It contains the name by which the company will be established. As you know, the approval of the proposed name is taken in advance from the Registrar of the companies.
(b) Situation Clause: It contains the name of the state in which the registered office of the company is or will be situated. The exact address of the company’s registered office may be communicated within 30 days of its incorporation to the Registrar of Companies.
(c) Objects Clause: It contains detailed description of the objects and rights of the company, for which it is being established. A company can undertake only those activities which are mentioned in the objects clause of its memorandum.
(d) Liability Clause: It contains financial limit upto which the shareholders are liable to pay off to the outsiders on the event of the company being dissolved or closed down.
(e) Capital Clause: It contains the proposed authorised capital of the company. It gives the classification of the authorised capital into various types of shares, (like equity and preference shares) with their numbers and nominal value. A company is not allowed to raise more capital than the amount mentioned as its authorised capital. However, the company is permitted to alter this clause as per the guidelines prescribed by the companies Act.
(f) Subscription Clause: It contains the name and address of at least seven members in case of public limited company and two members in case of a private limited company, who agree to associate or join hands to get the undertaking registered as a company. It contains a declaration by persons who are desirous of being formed into and agree to subscribe to the number of shares mentioned against their names.