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The Memorandum of Association

ArticleID 73  
Writer Grace Odinga
Category Personal Article



This is the most important document to be prepared when forming a company. It lies down and defines the powers and limitations of the company. The document governs the relationship of the company with outsiders and any person dealing with the company needs to know its contents.

It contains the following six clauses:

(i) Name clause: This clause states the name of the company ending in “Limited.” The name of the company should not be confused with a name of another existing company. The name should also not give a false idea of the nature of business. Names with political connotations are normally not acceptable.


(ii) Situation clause: This clause states the domicile of the company, that is, where the registered office is situated. It is enough to mention the name of the country only. All official communications would be channeled to the stated place.


(iii) Objects clause: This is the most important clause. It sets out specifically all the aims, objectives and purposes of the proposed company. Once incorporated, the company can operate only within the objects stated in the Memorandum of Association. Any dealings made by the company which are not within the objects laid down in the Memorandum of Association are void by law.


(iv) Capital clause: This clause sets out the share capital the company wishes to have. The total value of all the shares is called the nominal share capital. After the registration is completed, the company can raise this amount by selling shares. It is then referred to as authorized or registered share capital. The following information must also be given in this clause:


(a) Total amount

(b) Types of shares and the units (shares) into which the share capital is divided. The number of units to be shown by each type and

(c) The value of each share in each separate group.

(v) Liability clause: This clause states that the liability of the shareholders shall be limited


(vi) Declaration clause: This clause states the willingness of the promoters to form them into a limited company. This declaration must be signed by at least seven persons (the promoters) in the case of public limited companies and two persons in the case of private limited companies. These persons must agree to take at least one share each. The names, addresses and number of shares taken up by each promoter must also be included.


Memorandum of Association, Business Documents, Owning a Business, Starting a Business
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