The Memorandum of Association lays down the scope of activates of a company. It describes the objects and powers of the мебеликомпютриcompany. Anything done by a company outside the scope of memorandum will be treated as ultra virus. Even all the shareholders cannot validate an ultra virus act and make it binding on recopy. Therefore, all those who want to deal with a company must first ensure that the company’s authorizes to entry into the transactions which it wants to have with them. Memorandum of associations a public document and anybody can get a copy on payment f a nominal charge.
The Memorandum of Association is the main document of a company. It defines its constitution and objects. It lays down the fundamental conditions upon which alone the company’s allowed to be formed.
The Memorandum of Association most be divided into paragraphs, numbered consecutively and printed. It must be signed y the seven persons who have agreed to form the company in the presence of at least one attesting witness.
Memorandum of Association contains the following clauses:
Name Clause: In this clause, the name of the company is stated. The name should not be identical or similar to the name of an existing company. It should not conversant connection or link with a government department or local authority. It shod not be objectionable in any other manner. The name of a private company should en with h world ‘Private Limited’ and that of a public company with the world ‘limited’.
Situation Clause: This clause states: (a) the main objects of the company and the objects incidental or ancillary to the attainment of the minuets; and 9b) other objects of the company. The objects of the company must into be contrary to the provisions of any law. They should not be immoral, opposed to public policy or fraudulent.
Liability Clause: In this clause, the liability of members is stated. It indicates t outsiders the extent to which they can hold the members liable for the company’s debts.
Capital Clause: This clause specifies the amount of shrew capital with which the company is to e registered. It also states the division of share capital into shares of fixed denomination. The capital with which a company’s registered is clad Authorized or Registered or Nominal Capital. Accompany can issue only that number of shares which’s authorized by its memorandum of association.
Association or Subscription Clause: In this clause, the subscribes to tee memorandum decor that they are desirous of forming themselves into a company. Each subscriber signs the memorandum in the presence of withes. They also agree to take the number of share mentioned against their names. Each subscriber to the memorandum has to take at least one share.
Memorandum of Association is the constitution or charter of a company. It sets out the limit within which the company must function. It defines the objects and powers of a company The purpose of memorandum is to enable the shareholders, creditors and outsiders who deal with the company to know the permitted range of its activities. A company cannot undertake activities, which are not lasted in its Memorandum of Association. The memorandum is considered the foundation on which a company’s structure is based.
The main clauses of Memorandum of Association age: (i) Name clause, (ii) Registered office clause, (iii) Objects clauses, (iv) Liability clause, (v) Capital clause, and (vi) Association or subscription clause.
The objects clause is the core of the Memorandum of Association. It specifies the objectives of a company in the following order:
The main objects of the company and the objects incidental or ancillary to the attainment of the main objects.
Other objects of the company.
A private company can commence business immediately after incorporation. But public company cans stat its business only after obtaining the Certificate of commencement of Business. In red to get this certificate, the company has to flee the following documents with the Registrar of Companies:
A prospectus or statement in lien of prospectus.
A declaration that shares in cash have been allotted to an amount not less than the minimum subscription as specified in the prospectus.
A declaration that directors have taken up their qualification shares and paid for in cash in the same proportion as other shareholders.
A declaration that no money is or may become liable to be repaid to the applicants by reason of failure to apply for or to obtain permission for the shares to be dealt on any recognized stock exchange.
A return of allotment containing the names sand addresses of shareholders and the number of shares allotted to each.
A statutory declaration signed by a director or secretary of the company stating that all the requirements in respect of commencement of business have been duly complied with.
The Registrar will scrutinize these documents. If he is satisfied, he will issue a certificate certifying therein that the company is entitled to commence business. With the issue of this certificate, the process of formation a public company is complete. The company can start its business form the date mentioned in this certificate.
The certificate of Commencement of Business is a certificate granted by the Registrar of Companies to a public company. It authorizes the company to tart business operations. A private company does not require this certificate.
Minimum subscription refers to the minimum amount of capital which accompany must rise before allotment of shares. It is meant to cover the cost of fixed assets purchased, preliminary expenses, working capital, etc. According to SEBI guidelines, ninety per cent of the issue amount must be raised within 90 days form the date of closure of the issue? Otherwise the company must return infill the amount received on applications within the next 10 days. The purpose of minimum subscription is to ensure that only companies with sufficient capital are allowed to commence business.
Minimum subscription is the amount which, in the opinion of the Board of Directors is the minimum amount to be raised by the issue of shares so as to prove for the following:
the purchase price of any property purchased or agreed to be purchased;
all preliminary expenses, including underwriting commission and brokerage;
repayment of money borrowed by the company for above purposes;
Floatation or capital subscription involves the following steps:
Consent of SEBI: The proposed issue of shares is approved by the Securities and Exchange Guard of India. For this purpose, the company sends a copy of the prospectus to SBI for vetting. Filing of Prospectus: The prospectus is filed with the Registrar of Companies. A company noticing a prospectus has to file a ’statement-in-lieu of prospectuses with the Registrar of Companies. Receipt of Applications: The company issues application forms and copies of the prospectus to intending investors through its rockers, underwriters and bankers, Then filled in application along with money are received by the company’s bankers. Application for Listing: The Company also makes application tone or more stock exchanges for listing of the proposed issue for the purpose of trading. Minimum Subscription: The amount of minimum subscription is specified in the prospectus. It is the minimum amount of capital which must be raids before allotment of shares is done. It is mint for purchase of fixed ashes, working capital initial expenses of the issue of shires. The Co pan must receive a minimum subscription of 90 per cent of the public offer within 60 days the closure of the issue. Allotment of Shares: Applications are scrutinize and shares are allotted to the successful applicants. Money received with applications is refunded to the unsuccessful applicants.
Flotation or capital subscription involves the following steps:
Consent of SEBI: The proposed issue of shares is approved by the Securities and Exchange Guard of India. For this purpose, the company sends a copy of the prospectus to SBI for vetting.
Filing of Prospectus: The prospectus is filed with the Registrar of Companies. A company noticing a prospectus has to file a ’statement-in-lieu of prospectuses with the Registrar of Companies.
Receipt of Applications: The company issues application forms and copies of the prospectus to intending investors through its rockers, underwriters and bankers, Then filled in application along with money are received by the company’s bankers.
Application for Listing: The Company also makes application tone or more stock exchanges for listing of the proposed issue for the purpose of trading.
Minimum Subscription: The amount of minimum subscription is specified in the prospectus. It is the minimum amount of capital which must be raids before allotment of shares is done. It is mint for purchase of fixed ashes, working capital initial expenses of the issue of shires. The Company must receive a minimum subscription of 90 per cent of the public offer within 60 days the closure of the issue.
Allotment of Shares: Applications are scrutinize and shares are allotted to the successful applicants. Money received with applications is refunded to the unsuccessful applicants.
A company comes into existence when it is registered with the Registrar of Companies. Registration or incorporation of a c company involves the following steps:
Approval of Name: First of all, the name of the proposed company is approved from the Registrar of Companies. For this purpose, the promoters fill in a file a Name Availability Form. The company may adopt any name which is not prohibited a does not resemble the name of an existing company.
Application: An application in the prescribed form is submitted to the Registrar of Companies in the State in which the registered office of the company is to be situated.
Filling of Necessary Documents: The following document shave to be filed with the Registrar of Companies along with the application:
Memorandum of Association duly signed by at least two persons in case of a private company and at last seven persons in case of a public company.
The Articles of Association, if any, duly signed by the same persons.
A list and written consent of the persons who have agreed to become directors of the Company.
An undertaking by directors to take up and pay for qualification shares.
Notice of address of the registered office of the company. It may, however, be filed within 30 days of incorporation.
A statutory declaration stating that all the legal requirements of the Companies Act with regard to incorporation have been duly complied with. This declaration may be made by a director. Managing director or secretary of the company or by a praising chartered accountant, an advocate of the High Court of Supreme Courts.
Registration Fee: Along with the documents, necessary filing fees and registration fees at the prescribed rates are to be deposited.
Registration: The Registrar will scrutinize the above documents. If he is satisfied, he will enter the name of he company in his register. After registration, the registrar will issue a certificate of incorporation. This certificate bears the serial number, date of incorporation and the signature and seal of the Registrar. It is a conclusive evidence ha all legal formalities required for the incorporation of company have been duly fulfilled. The company becomes a separate legal entity form the date mentioned in the certificate of incorporation.
Incorporation of a company is the legal process of getting a company registered under the Companies Act. A company comes into existence only when it is registered with the Registrar of Companies.
Certificate of Incorporation is the certificate issued by the Registrar of companies when a company is registered. It is a conclusive proof that all legal formalities required for the incorporation of a company have been duly fulfilled.
Flotation of a company means starting it as going concerns. It involves generation of the required capital and obtaining the certificate of commencement of business.
The term ‘promoter’ means an individual, firm or institution which undertakes to form a company with reference to a given object and sets it going and takes the necessary steps to accomplish that purpose. It is not a terms of law but of business. Tata, Birla, Ambani are well-known promoters in India.
The role of promoters may be described as follows:
Discovery of Business Opportunities: Promoters identify the opportunities which could be undertaken as business concerns. They carry out a preliminary study of the market to judge whether a new product or service will sell. They also consult experts in the field for this purpose.
Detailed Investigation:Promoters conduct detailed examination to judge the prospects and profitability of business proposals. They analyze the probable cost of production, nature of competition in the market, availability of required technology and raw materials,. Expected sales volume, amount of refit expected, etc.
Assembling Resources: Promoters take steps to ensure the availability of necessary capital, materials, machinery, personnel, etc. They enter into contracts with brokers, underwriters, bankers, etc.
Canvassing: Promoters approach the appropriate persons and persuade them to join in the formation of the company.
Launching the Enterprise: Promoters take steps to get the Oman incorporated. They set the necessary documents prepared a filed so that the company is formed and can commence business operations
