Meaning of Memorandum of Association

Memorandum of Association is the most important document of a company. It is the charter or constitution of the company. It lays down the powers and objects of the company as well as the scope of operations of the company beyond which it cannot go.

The basic purpose of Memorandum of Association of a company is to enable its shareholder, creditors and others to know its objects, powers and permitted range of activities.

Contents of Memorandum of Association

The Memorandum of Association contains the following clauses:

1.    Name Clause. Under this clause, the name of the company is stated. Any suitable name ay be chosen subject to the following restrictions:

(i)    The name of a company must end with the word ‘Limited’ if it is a public company and with the words ‘private Limited’ if it is a private company.

(ii)    The proposed name should not convey that it has any patronage of the Government.

(iii)    The proposed name should not be identical or similar to the name of any existing company.

2.    Registered Office Clause. This clause contains the name of the state in which the Registered Office of the company is to be situated. This is required in order to fix the domicile or the place of registration of the company.

Alongwith the name of the state, address of the Registered Office may also be mentioned in the Memorandum. If it is not so mentioned, it may be notified to the Registrar of Companies within 30 days of the incorporation of the company.

3.    Objects Clause. This ma be regarded as the core of the Memorandum. It sets out the objects with which a company is registered. The objects mentioned in the Memorandum lay down the maximum permitted range of activities in which the company may engage and beyond which it cannot go.
The objects clause must specify the objects of the company in the following order:

(i)    the main objects of the company to be pursued by the company on its incorporation and the objects incidental or ancillary to the attainment of the main objects; and

(ii)    other objects of the company not included in the above clause.

4.    Liability Clause. This clause states that the liability of members is limited to the amount which they have agreed to contribute.

5.    Capital Clause. This clause states the total amount of share capital with which a company is to be registered. The division of capital into shares of fixed denomination and the number and types of shares are also mentioned under this clause. Every limited company with shares capital is required to give this clause.

6.    Subscription or Association Clause. This clause contains the names and addresses of subscribers to the memorandum. The subscribers make a declaration under their signatures duly attested by witness that they desire to be formed into a company and agree to take qualification shares, if any. There must be at least seven signatories in case of a public company and at lead two in case of a private company.

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