INTRODUCTION: When a person incorporates a company, the Memorandum and Articles of Association are the legal documents that must be created. A company’s connection with outsiders is defined by its Memorandum of Association. It also includes the names of all shareholders, the number of shares they own in the company, and the address of the firm’s registered office.
When an entrepreneur decides to incorporate his business, he must adhere to specific norms and regulations. Legally, forming a corporation is thought to be a daunting task. It is simply due to a large number of paperwork and forms involved. It is also thought to be a time-consuming task. However, officially registering a business is critical. It offers your business a legal identity and makes it more trustworthy. Certain paperwork is required when starting a company, and forming such documents typically necessitates legal guidance. A Memorandum and Articles of Association must be written as part of this process. But what exactly are a memorandum and articles of organization, and what do they contain? This article provides answers to these questions.
MEMORANDUM OF ASSOCIATION: It is a document that is required at the time of the company’s incorporation and can be referred to in the future. It is regarded as the corporation’s charter. It is submitted to the Registrar of Companies together with other documentation.
The following clauses are included in the Memorandum of Association:-
Name clause– The name clause contains the company’s name.
Situation clause– The location of the registered office is specified in the situation clause. If the registered office has not yet been determined, it is included together with the information for the temporary office.
Object clause– The aim and vision of the company for which it is created are contained in this phrase.
Capital clause– The capital clause contains information about the company’s share capital.
Association clause– The subscribers who have subscribed for the company’s shares are referred to as the “association clause.” It should also give information about the witness (who was present at the moment of the subscribers’ appointment).
Liability clause– The nature of the Company’s liability is defined by the liability clause. It does not matter if it is a limited or unlimited liability corporation.
All of the specifics, it might be assumed, are provided in the clauses. It is also worth noting that the object clause encompasses all of the company’s future endeavors. If the firm intends to enter a certain field of operation after registration, the facts must be explicitly stated in the Memorandum of Association. The update is performed by submitting the MGT-14 form. It is a public document that anybody involved with the company has access to. It does not matter if it is the stockholders, creditors, or anyone else.
It is critical that the corporation adheres to its Memorandum of Association. The Object clause contains all of the company’s outlines and functioning arrangements, which should be properly observed.
ARTICLE OF ASSOCIATION: It is a document that lays out the rules under which a business runs. It specifies how a corporation will operate in order to attain its goals. It covers the entire process, from the appointment of directors to the companies’ financial and marketing strategy. Marketing plans are optional since they are prone to modify over time (in near future). It can be regarded as the company’s rule book. As a result, the rules must be followed to the letter. For anyone affiliated with the company, they are a public document. However, because it is an internal rule book, they solely affect company employees. Clauses are also used to report it. All clauses together define the company’s operation, that is, the procedure to be followed in detail.
The Memorandum is the most important document, whereas the Articles of Association are secondary. The Articles of Association deal with the company’s internal affairs, whereas the Memorandum deals with both the company’s internal and exterior concerns. A sample of both publications can be found on the MCA website.
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