Clauses of Memorandums – Business Management

The memorandum of association contains the following clauses −

● A company (being a separate legal entity) must have a name.

● The name of a company should be unique and should not resemble the name of any other company.

● It should not contain words like king, queen, emperor or names of any government bodies.

● A public company is required to have the suffix ‘Limited’ at the end of its name.

● Private companies are required to have the suffix ‘Private Limited’ at the end of their names.

● The name of the company must be painted outside every place where business of the company is to be carried out.

● Every company must have a registered office.

● The location of the office can be intimated to the registrar within 30 days of incorporation.

● With intimation to the registrar, a company can change its place in the same town.

● However, for changing the place of the office in a different town in the same state, a special resolution must be passed.

● To change the location of the office from one state to another, various reforms are needed to be performed on the memorandum.

● It determines the rights, powers and sphere of the activities of a company.

● It should be defined carefully as it is difficult for the clauses to be altered later on.

● The company cannot incorporate any activity, which is not present in the object clause.

● The subscribers to the memorandum choose the object clause.

● Shareholders are protected by the object clause as it ensures that the funds raised for the undertaking will not be used by any other undertaking.

● It states that the liabilities of the shareholders are limited to the value of the shares owned by them.

● The shareholders are liable to pay the unpaid balance of their shares.

● The liabilities of the members may be limited by guarantee.

● It also contains the amount that every member of the company undertakes to contribute to the assets of the company in the event of winding up.

● It states the total capital of the proposed company.

● The total number of shares of each category should be present in the capital clause.

● The exact nature of any special rights and privileges enjoyed by any shareholders must be mentioned in the capital clause.

● The names and signatures to the memorandum of association is contained in this clause.

● At least 7 persons should sign the memorandum in case of public companies.

● At least 2 persons should sign the memorandum in case of a private company.