The memorandum of association of a company, often simply called the memorandum (and then often capitalised as an abbreviation for the official name, which is a proper noun and usually includes other words), is the document that governs the relationship between the company and the outside. It is one of the documents required to incorporate a company in the United Kingdom, Ireland and India, and is also used in many of the common law jurisdictions of the Commonwealth.
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Requirements
A memorandum of association is required to state the name of the company, the type of company (such as public limited company or private company limited by shares), the objectives of the company, its authorised share capital, and the subscribers (the original shareholders of the company). A company may alter particular parts of its memorandum at any time by a special resolution of its shareholders, provided that the amendment complies with company law.
Capacities
The objects of the company state what a company is permitted to do, and therefore limit its capacity to act. Since 1844, when the first limited companies were incorporated, the objects have become wider and more encompassing so as not to restrict the directors in their day to day trading. In the Companies Act 1989 the term "General Commercial Company" was introduced which meant the company could undertake "any lawful or legal trade or business."
If the company is to be a non-profit making company limited by guarantee, there will be statement saying that the profits shall not be distributed to the members.
Purpose
The MOA is designed to communicate to the public the state of affairs of the company and its purpose of being and operating. This aids various stakeholders of the company (creditors, suppliers, shareholders, etc.) to evaluate the extent of their risk and also possibilities of the company to overcome them at a future date.
1. The prospective shareholders shall know the field in,or the purpose for which their money is going to be used by the company and what risk they are undertaking in making investment.
2. The outsiders dealing with the company shall know with certainity as to what the objects of the company are and as to whetherthe contractual relation into which they contemplate to enter with the company is within the objects of the company.
See also
- Articles of association (law)
- Company (law)
- Constitutional documents
- Table A
- Memorandum of agreement
- Mem and arts
References
External links
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