Memorandum of association and its clauses

by • 10/06/2011 • B.COM PART 1 Introduction to BusinessComments (0)1398

Q4-What is memorandum of association? What are its clauses? Explain.

Memorandum of Association
1.   Name Clause  :A company may adopt any name subject to the condition laid down in the Companies Ordinance,1984. The company can adopt any name but there are certain restrictions and the words like Quaid -e- Azam or Muhammad Ali Jinnah etc cannot be used without the special permission of the Government.

3.   Objective Clause: This clause is quite important and must be very carefully drafted as it determines the activities of the company. In the object clause each and every detail of activities of the business to be carried out must be laid down. Once the object clause is completed, it become very difficult to make any amendment. The value of the shares, the allotment money must be given in detail.
4.   Capital Clause: This clause must contain a statement as to the amount of capital with which the company proposes to be registered and the division there of into shares at a certain fixed amount.

A memorandum is a document issued by a company for the guidance of the general public. It is a charter explaining to the public name, address, capital, objectives, and liability of the company. The memorandum of Association must contain the following clauses:

2.   Domicile Clause: Every company must have a registered office. A memorandum must mention the name of the province where the company has its registered office. A company may shift it registered office within the province without any legal implication.

5. Liability Clause: This clause shows that the liability of shareholders of the company is limited to the amount invested by them in the company.

It also means that the liability of the company to pay off its debts is limited to its capital.

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