Memorandum is a key document containing vital details about the company. It is the foremost important document as regards incorporation of the corporate cares. This is the foremost fundamental document of the corporate specifying the foremost important information concerning the corporate. Therefore, memorandum is additionally called because the charter of the corporate.
No company can be registered without a memorandum. It is one of the main documents that are required to be filed with the Registrar at the time of registration of the company.
CONTENTS OF MEMORANDUM:-
1) NAME CLAUSE
The first clause of the memorandum has got to state the name of the proposed company, as company being a legal person should have a reputation because name of an organization is the symbol of its existence. There are certain things which should be kept in mind while deciding on a company’s name like no company can be registered with a name which in the opinion of a Central Government is undesirable and it should not be identical with the name of another registered company.
Secondly, whatever be the name of the company, if the liability of the members is limited, the last word of the name must be “Limited” and in the case of a private company “Private Limited”.
If a company desires to change its name, then it can be done by passing a special resolution and with the approval of the Central Government signified in writing.
A person may make an application to the Registrar for the reservation of a name for his proposed company or the name to which the company proposes to change its name. Upon receiving such an application, the Registrar may reserve the name for a period of 20 days from the date of approval or other prescribed period. In case of an application for reservation of name or for change of its name by an existing company, Registrar may reserve the name for a period of sixty days from the date of approval. If it is found that the name was applied furnishing wrong or incorrect information, then the reserved name may be cancelled in case the company has not been incorporated. If in such a case, the company has been incorporated, the Registrar will give an opportunity of hearing to the company and may take any of the following actions:
a. Either direct the company to change its name within a period of three months after passing an ordinary resolution;
b. Take action for striking off the name of the company from the register of companies; or
c. Make a petition for completing of the corporate .
2) REGISTERED OFFICE CLAUSE
The second clause of the memorandum must specify the State in which the registered office of the company is to be situated and this should be done within thirty days of incorporation or commencement of business, whichever is earlier. Registered office should be capable of receiving and acknowledging all communications and notices as may be addressed to it under sub section.
Section 12 of the businesses Act, 2013 lays down the supply regarding registered office of company- it states that on and from fifteenth day of the incorporation of a corporation, the company should be capable of receiving and acknowledging all communication and notices as may be addressed to it. It also lays down the manner in which the name of the company should be affixed or engraved.
3) OBJECT CLAUSE
the third and the most important clause of a memorandum must state the objects for which a company is proposed to be established. It is essential that the public who subscribes for its shares should know clearly what the objects are for which they are investing.
In the case of companies which were alive immediately before the commencement of the businesses (Amendment) Act. 1965, the thing clause had simply to state the objects of the corporate. But in the case of a company to be registered after the amendment, the objects clause was required to state separately:
Main Objects- under this clause, the company had to state their main objects and objects incidental to the attainment of the main objects.
Other Objects- under this, other objects had to be stated by the company which is not included in the above.
4) LIABILITY CLAUSE
The Liability Clause provides legal protection to the shareholders by protecting them from being held personally liable for the loss of the company. If the corporate is restricted by shares, the liability that every member faces are often no quite the face value of shares that he or she holds. If it is a company that’s limited by guarantee, this clause must define what proportion liability each individual company member holds. If it’s a vast company, this particular clause wouldn’t be included within the MOA.
5) CAPITAL CLAUSE
The capital clause lists information about the entire capital held by the proposed company. This amount is called the company’s authorized capital. Companies aren’t permitted to gather extra money than the quantity listed under authorized capital. The way the capital is split into equity share capital and preference share capital also must be listed within the capital clause. The number of shares the corporate puts in equity share capital and preference share capital, alongside their value, must be included within the MOA.
6) SUBSCRIPTION CLAUSE
The Subscription Clause states who are signing the memorandum. Each subscriber must state the amount of shares he’s subscribing to. The subscribers have to sign the memorandum in the presence of two witnesses. Each subscriber must subscribe a minimum of one share.
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