Clauses of Memorandums

The memorandum of association contains the following clauses −

The Name Clause

●      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.

Registered Office Clause

●      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.

Object Clause

●      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.

Liability Clause

●      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.

Capital Clause

●      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.

Association 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.

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