What is a ‘Memorandum of Association’? Briefly explain its clauses.
Memorandum of Association defines the objectives of the company. No company can legally undertake activities that are not contained in its Memorandum of Association. As per section 2(56) of The Companies Act, 2013 "memorandum" means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or this Act”.
The Memorandum of Association contains different clauses, which are given as follows:
(i) The name clause: This clause contains the name of the company with which the company will be known, that has been already been approved by the Registrar of Companies.
(ii) Registered office clause: This clause contains the name of the state, in which the registered office of the company is proposed to be situated.
(iii) Objects clause: This is probably the most important clause of the memorandum. It defines the purpose for which the company is formed. A company is not legally entitled to undertake an activity, which is beyond the objects stated in this clause.
(iv) Liability clause: This clause limits the liability of the members to the amount unpaid on the shares owned by them.
(v) Capital clause: This clause specifies the maximum capital which the company will be authorised to raise through the issue of shares. The authorised share capital of the proposed company along with its division into the number of shares having a fixed face value is specified in this clause.
The Memorandum of Association must be signed by at least seven persons in case of a public company and by two persons in case of a private company
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