A group of seven friends decided to jointly set up a
public company in a rural area where the people were
facing a serious unemployment problem. All of them
jointly selected a place where the comapny's
registered office would be situated. Along with it,
with the advice of business specialists , it was also
decided what procedure would be followed for the
issue and allotment of shares . All the friends wanted
to have recognition and it was felt that the very name
of thecompany would become a reason for its
recognition . After a detailed discussion , the
company's name was decided as Trimurti Ltd. Then,
they jointly completed all the formalities of the
formation of the company.
Identify and explain the two important documentswith
clauses used in the formation of the company quoting
the lines from the above para which helped you
identify these documents.
Answers
Answer:The two important documents used in the formation of the company are :
(i) Memorandum of Association
" All of them jointly selected a place where the company's registered office would be situated ". (Situation Clause)
"After a detailed discussion , the company's name was decided as Trimurti Ltd." (Name Clause)
Memorandum of Association is the principal documents of a company . No company can be registered without a Memorandum of Association ,and that is why it is sometimes called a life-giving document .
Memorandum of Association defines the powers and objects of the company as well as the scope of operations of the company beyond which it cannot operate .
(ii) Articles of Association
".... it was also decided what procedure would be followed for the issue and allotment of shares ."
The Articles of Association are the rules for the internal management of the affairs of a company .
The articles define the duties , rights and powers of the officers and the board of directors . The rules contained in the Articles of Association are subsidiary to the Memorandum of Association.
Explanation: