Memorandum and articles of association are the documents that are required to establish a company. Prior to establishing we need to be acquainted with necessary things like: “How a Company can be formed?” Steps to be followed one by one during the formation of a Company with Memorandum and Articles of Association:
- The anticipated Company name has to be approved by the registrar of companies officially
- Memorandum and articles of association of articles have to be prepared
- Appropriate persons should be allotted for the subscription of memorandum of association
- Registration fees should be deposited to registrar of companies and make sure we collect receipt of certificate of incorporation
- Business commencement certificate should be collected as well from the registrar of company
Company Formation with Memorandum Articles Association
Categorizations and different types of companies:
Fundamentally a company can be classified into four types:
- Private company limited by shares
- Private company limited by guarantee
- Private unlimited company
- Private limited company
Details should be provided by a Company that is willing to register with the registrar of companies. Required details for a Company to register:
- Details of directors, company secretary and members
- Verifying that company should have a registered office
Procedure to set up a company with respect to the Memorandum of Articles Association:
After submitting all the details to the registrar of companies following are the things to be validated to set up a Company:
- Opting a company name is the primary step to register a company
- Before choosing a company name the following things should be kept in mind:
- Verifying that the company name should not be registered already
- Opting out offence causing names should not be allowed
- Usage of certain words is also guarded
Subsequent to deciding the name of the Company, following are the documents to be submitted to the registrar of companies:
- A memorandum of association
- Articles of association
- Form 10
- Form 12
Memorandum and Articles of Association document should have the following:
- The company name
- The address where the registered office of the company is located
- The objectives of the company
- The name and addresses of the directors of the company
Depending on the type of the company other clauses can be included Memorandum and Articles of Association:
The rules pertaining to the company’s internal affairs are set in this document. The subscribers should sign the company’s articles in the presence of the registrar with the witness attested signatures.
Memorandum and Articles of Association Form 10:
This form contains the details of the first director, secretary and the address of the registered office. The directors of the Company are supposed to give their birth and occupation details, in addition to the details of the directorships they held since the last 5 years.
Memorandum and Articles of Association Form 12:
Form 12 will be signed in the presence of commissioner and it must be signed at the last i.e. after all the registration requirements have been completed. Hence memorandum and articles of association plays a vital role in a company registration process.
Memorandum and Articles of Association Advantages:
- Minimum subscription is not mandatory
- Company’s can effortlessly increase the adequate capital through shares
- These are appropriate for the business persons who have the limited capital
- Even the non resident shareholders are not liable for the supplementary tax on dividends
- Accounts of most of the currencies can be liberally transferable without any exchange control limitations
Memorandum and Articles of Association Disadvantages:
- The payment for the company formation is incredibly high.
- Altering of memorandum is not thus easy.
- The procedure for the establishment and the legal formalities are very complicated.
- The tax payment and the administrative costs are very expensive.
- Private corporation shares cannot be sold to the public.
- Management problem can occur in the case directors fail to manage the company as the sole traders.