memorandum of association

Definition
798 A document that regulates a company's externalactivities and must be drawn up on
the formation of a registered or incorporated company. As the company'scharter 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 ofshares held by them, and location of its registered
office. It also states the company's (1) objectives, (2) amount ofauthorized share capital, (3)
whether liability of its members is limited by shares or by guaranty, and (4) what type
ofcontracts 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 apublic document and may be inspected by anyone,
usually at the public office where it is lodged. Called articles of incorporation in the US.

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.

What is a Memorandum of Association?
This document sets out:

the company's name,
where the registered office of the company is situated (in England, Wales or Scotland);
and what it will do (its objects).

The object of a company may simply be to carry on business as a general tradingcommercial company. Other
clauses to be included in the memorandum depend on the type of company being incorporated. We will advise you
on this if necessary. Our standard memorandum covers most business types so you will be able to trade without
restriction, however you should take professional legal advice if concerned.

What are the Articles of Association?
This document sets out the rules for the internal running of the company, governing the rights and duties of the
members of a company among themselves. Articles deal with internal matters such as general meetings,
appointment of directors, issue and transfer of shares, dividends, accounts and audit.


Memorandum and articles of association are the documents needed to form a company. Before we discuss
further about them let us know how a company can be formed.
Company FormatIon wIth |emorandum ArtIcles AssocIatIon:
ollowing are the steps by which a company can be formed:
O The proposed company name should be approved by theregistrar of companies.
O Secondly, the memorandum and articles of association of articles should be prepared.
O Suitable persons should be appointed for the subscription of memorandum of association.
O #egistration fees should be deposited to registrar of companies and receipt of certificate of incorporation should be
collected.
O Business commencement certificate should be collected from the registrar of company.
O emorandum of association of a company
O emorandum of association sample
O emorandum of association template free
O emorandum and articles of association form
Company FormatIon wIth |emorandum ArtIcles AssocIatIon, ClassIfIcatIons and Types of companIes:
Basically the company can be classified into four types:
O !rivate company limited by shares
O !rivate company limited by guarantee
O !rivate unlimited company
O !rivate limited company
A company who wants to register with the registrar of companies should give the following details:
O etails of directors, company secretary and members.
O That company should have a registered office.
!rocedure to set up a company as per the |emorandum of ArtIcles AssocIatIon:
Once all the details are provided to the registrar of companies the following procedure should be done to set up
a company:
O The first and foremost step to register a company is to choose a company name.
O Before choosing a company name the following things should be kept in mind:
O The company name should not already exist in the registry.
O The names which are likely to cause offence should not be allowed.
O The use of certain words is also restricted.
Once the name is decided then the following documents should be given to the registrar of companies:
O A memorandum of association.
O Articles of association.
O orm 10.
O orm 12.
|emorandum and ArtIcles of AssocIatIon
|emorandum of AssocIatIon:
This document should contain
O The company name.
O The address where the registered office of the company is located.
O The objects of the company.
O The name and addresses of the directors of the company
epending on the type of the company other clauses can be included in the memorandum.
|emorandum and ArtIcles of AssocIatIon:
The rules regarding the company's internal affairs are prescribed in this document. The subscribers signed the
company's articles in front of the witness which are ultimately delivering to theregistrar. These witnesses also
attest the signatures.
|emorandum and ArtIcles of AssocIatIon Form 10:
In this form the details of the first director, secretary and the address of the registered office is required. Also the
directors have to give their birth and occupation details, as well as the details of the directorships they held within
the last five years.
|emorandum and ArtIcles of AssocIatIon Form 12:
orm 12 must be signed at the last when all the registration requirements have been completed and this form is
signed in the presence of commissioner.
So memorandum and articles of association play an important role in company registration process.
|emorandum and ArtIcles of AssocIatIon Advantages:
O inimum subscription is not required.
O Company's can easily raise the sufficient capital through shares.
O These are appropriate for the business persons who have the limited capital.
O ven the non resident shareholders are not responsible for the additional tax on dividends.
O Accounts of any currency can be freely transferable without any exchange control restrictions.
|emorandum and ArtIcles of AssocIatIon 0Isadvantages:
O The expenses for the company formation are very high.
O The alteration of memorandum is not so easy.
O The procedure for the establishment and the legal formalities are very complicated.
O The administrative costs and the tax payment are very high.
O In the private company shares cannot be sold to the public.
O The problem of management occurs when directors are not able to manage the company as the sole traders do.

Articles of association
From Wikipedia, the free encyclopedia
(Redirected from Articles of association (law))
For the articles adopted by the First Continental Congress in 1774, see Continental Association.
The term ,7ticIes of ,ssoci,tion of a company, or ,7ticIes of inco75o7,tion, of an American or Canadian
Company, are often simply referred to as ,7ticIes (and are often capitalized as an abbreviation for the full
term). The Articles are a requirement for the establishment of a company under the law of ndia, the United
Kingdom and many other countries. Together with the memorandum of association, they constitute the
constitution of a company. The equivalent term for LLC is Articles of Organization. Roughly equivalent terms
operate in other countries, such as esellschaftsvertrag in Germany, statuts in France, statut in
Poland,
[1]
, Jeong-gwan in South Korea.
The following is largely based on British Company Law, references which are made at the end of this Article.
The Articles can cover a medley of topics, not all of which is required in a country's law. Although all terms are
not discussed, they may cover:
the issuing of shares (also called stock), different voting rights attached to different classes of
shares
valuation of intellectual rights, say, the valuations of the PR of one partner and, in a similar way
as how we value real estate of another partner
the appointments of directors - which shows whether a shareholder dominates or shares equality
with all contributors
directors meetings - the quorum and percentage of vote
management decisions - whether the board manages or a founder
transferability of shares - assignment rights of the founders or other members of the company do
special voting rights of a Chairman,and his/her mode of election
the dividend policy - a percentage of profits to be declared when there is profit or otherwise
winding up - the conditions, notice to members
confidentiality of know-how and the founders' agreement and penalties for disclosure
first right of refusal - purchase rights and counter-bid by a founder.
A Company is essentially run by the shareholders, but for convenience, and day-to-day working, by the
elected Directors. Usually, the shareholders elect a Board of Directors (BOD) at the Annual General
Meeting (AGM), which may be statutory (e.g. ndia).
The number of Directors depends on the size of the Company and statutory requirements. The
Chairperson is generally a well-known outsider but he /she may be a working Executive of the company,
typically of an American Company. The Directors may, or may not, be employees of the Company.
n the emerging countries there are usually some major shareholders who come together to form the
company. Each usually has the right to nominate, without objection of the other, a certain number of
Directors who become nominees for the election by the shareholder body at the AGM. The Treasurer and
Chairperson is usually the privilege of one of the JV partners (which nomination can be shared).
Shareholders may also elect ndependent Directors (from the public). The Chair would be a person not
associated with the promoters of the company, a person is generally a well-known outsider.
Once elected, the BOD manages the Company. The shareholders play no part till the next AGM/EGM. The
Objectives and the purpose of the Company are determined in advance by the shareholders and the
Memorandum of Association (MOA),if separate, which denotes the name of the Company, its Head-
Office, street address, and (founding)Directors and the main purposes of the Company - for public access.
t cannot be changed except at an AGM or Extraordinary General Meeting (EGM) and statutory allowance.
The MOA is generally filed with a 'Registrar of Companies' who is an appointee of the Government the
country. For their assurance, the shareholders are permitted to elect an Auditor at each AGM. There can
be nternal Auditors (employees)as well as an External Auditor.
The Board meets several times each year. At each meeting there is an 'agenda' before it. A minimum
number of Directors (a quorum) is required to meet. This is either determined by the 'by-laws' or is a
statutory requirement. t is presided over by the Chairperson, or in his absence, by the Vice-Chair. The
Directors survey their area of responsibility. They may determine to make a 'Resolution' at the next AGM
or if it is an urgent matter, at an EGM. The Directors who are the electives of one major shareholder, may
present his/her view but this is not necessarily so - they may have to view the Objectives of the Company
and competitive position. The Chair may have to 'break' the vote if there is a 'tie'. At the AGM, the various
Resolutions are put to vote.
The AGM is called with a notice sent to all shareholders with a clear interval. A certain quorum of
shareholders are required to meet. f the quorum requirement is not met , it is canceled and another
Meeting called. f it at that too a quorum is not met, a Third Meeting may be called and the members
present, unlimited by the quorum, take all decisions. There are variations to this among companies and
countries.
Decisions are taken by a show of hands; the Chair is always present. Where decisions are made by a
show of hands is challenged, it is met by a count of votes. Voting can be taken in person or by marking the
paper sent by the Company. A person who is not a shareholder of the Company can vote if he/she has the
'proxy', an authorization from the shareholder. Each share carries the number of votes attached to it. Some
votes maybe for the decision, others not. Two types of decision known as the Ordinary Resolution and a
Special Resolution.
A Special Resolution can be tabled at a Director's Meeting. The Ordinary Resolution requires the
endorsement by a majority vote, sometimes easily met by partners' vote. The Special Resolution requires
a 60,70 or 80% of the vote as stipulated by the 'constitution' of the Company. Shareholders other than
partners may vote. The matters which require the Ordinary and Special Resolution to be passed are
enumerated in Company or Corporate Law . Special Resolutions covering some topics may be a statutory
requirement.
Some of the articles are shown in the Nestle S.A. or Nestle Ltd or a Nestle AG
[2]
.
n the United Kingdom, model articles of association, known as Table A have been published since
1865.
[3]
The articles of association of most companies particularly small companies are Table A, or
closely derived from it. However, a company is free to incorporate under different articles of association, or
to amend its articles of association at any time by a special resolution of its shareholders, provided that
they meet the requirements and restrictions of the Companies Acts. Such requirements tend to be more
onerous for public companies than for private ones.
The Companies Act 2006 received Royal Assent on 8 November 2006 and was fully implemented on 1
October 2009. t provides for a new form of model articles of association for companies incorporated in the
United Kingdom. Under the new legislation, the articles of association will become the single constitutional
document for a UK company, and will subsume the role currently filled by the separate memorandum of
association.
[4]