What do you understand by “memorandum of association” of company. (2017)
Category : Law of Property And Easement
The Memorandum of Association is a document which sets out the constitution of a company and is therefore the foundation on which the structure of the company is built. It defines the scope of the company’s activities and its relations with the outside world.
The first step in the formation of a company is to prepare a document called the memorandum of association. In fact, memorandum is one of the most essential pre-requisites for incorporating any form of company under the Act. This is evidenced in Section 3 of the Act, which provides the mode of incorporation of a company and states that a company may be formed for any lawful purpose by seven or more persons, where the company to be formed is a public company; two or more persons, where the company to be formed is a private company; or one person, where the company to be formed is a One Person Company by subscribing their names or his name to a memorandum and complying with the requirements of this Act in respect of its registration.
To subscribe means to append one’s signature or mark a document as an approval or attestation of its contents.
According to Section 2(56) of the Companies Act, 2013 “memorandum” means the memorandum of association of a company as originally framed and altered from time to time in pursuance of any previous company law or this Act.
Section 4 of the Act specifies in clear terms the contents of this important document which is the charter of the company. The memorandum of association of a company contains the objects to pursue which the company is formed It not only shows the objects of formation but also determines the scope of its operations beyond which its actions cannot go. “THE MEMORANDUM OF ASSOCIATION”, observed Palmer, “is a document of great importance in relation to the proposed company”.
FORM OF MEMORANDUM OF ASSOCIATION
Section 4(6) of the Companies Act, 2013 provides that the memorandum of association should be in any one of the Forms specified in Tables A, B, C, D or E of Schedule I to the Act, as may be applicable in relation to the type of company proposed to be incorporated or in a Form as near thereto as the circumstances admit.
(i) The Form in Table A is applicable in the case of companies limited by shares;
(ii) the Form in Table B is applicable to companies limited by guarantee not having a share capital;
(iii) the Form in Table C is applicable to the companies limited by guarantee having a share capital;
(iv) the Form in Table D is applicable to unlimited companies not having a share capital;
(v) the Form in Table E is applicable to unlimited companies having a share capital.
A company shall adopt any of the model Forms of the memorandum of association mentioned above, as may be applicable to it.