Memorandum of Association and Article of Association are two different documents needed during formation and running of companies. They are requirement from statutory law with handles companies to secure the interest of company stake holders. The difference between the two is about the purpose of the company and how to run it as stated below.
2. Situation of registered office.
If the company has a share capital amount of capital and number of shareholder. Nominal value of shares in to which it is divided must be enclosed. This is called the Capital clause.
Memorandum of association defines how a company is limited in the business it can legally undertake. Memorandum of association sets out the relationship between company and outside world and must state at least 3 things : -
1. Company Name.-
The company must state its name and be registered as a company. Usually the name ends with co. or company.2. Situation of registered office.
3. Objects of the company.
The object clause is of considerable importance as it tells the prospective members what type of business they are investing in and tells persons intending to deal with the company what are its objects, power and what if any are its limitations. If company through its directors undertakes transactions not within its powers as defined, that transaction is described as ultra vires and is void. Company cannot be held liable for ultra vires acts carried out by its members. Object clause is usually drafted very widely to enable company to do almost anything they wish.Article of Association is the document regulating the rights of its members in the company between themselves and detailing the manner in which the business of company shall be conducted. There are many business manners dealt with in article which are of relevant to the financial members or shareholders are as follows :-
o Share capital and variation of its right.
o Calls on share.
o Transfer transmission and forfeiture of shares.
o Alteration of capital
o Notice and proceedings of meetings
o Vote of members.
o Appointment, powers, duties and removal of directors.
o Annual accounts, profits and dividends.
o Winding up of the company.
Company may alter its article by passing a special resolution and alteration or addition so made is as varied and can be altered in the same way as originally in the articles.
All articles of association can be altered and a provision depriving a company Its powers to alter its article is void. Alteration must be subject to condition contained in memorandum and must be for the benefit of the company as a whole. Any change in articles must be notified to registrar of companies.
o Calls on share.
o Transfer transmission and forfeiture of shares.
o Alteration of capital
o Notice and proceedings of meetings
o Vote of members.
o Appointment, powers, duties and removal of directors.
o Annual accounts, profits and dividends.
o Winding up of the company.
Company may alter its article by passing a special resolution and alteration or addition so made is as varied and can be altered in the same way as originally in the articles.
All articles of association can be altered and a provision depriving a company Its powers to alter its article is void. Alteration must be subject to condition contained in memorandum and must be for the benefit of the company as a whole. Any change in articles must be notified to registrar of companies.
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