What is a 'Memorandum of Association'? Briefly explain its clauses.

Explanation

A Memorandum of Association (MoA) represents the charter of the company. It is a legal document prepared during the formation and registration process of a company to define its relationship with shareholders and outsiders.

Clauses

1.Name Clause: This clause specifies the name of the company. The name of the company should not be identical to any existing company.


2.Registered Office Clause: This clause specifies the name of the State in which the registered office of the company is situated.

3.Object Clause: This clause states the objective with which the company is formed.

4.Liability Clause: It states the liability of the members of the company. In case of an unlimited company, the liability of the members is unlimited whereas in case of a company limited by shares, the liability of the members is restricted by the amount unpaid on their share.

5.Capital Clause: This clause details the maximum capital that a company can raise which is also called the authorized/nominal capital of the company. This also explains the division of such capital amount into the number of shares of a fixed amount each.