What is Memorandum of Article
Memorandum of article is one of the fundamental documents of a company. It is also described as a key document containing vital details about the company. A memorandum is very important as incorporation of a company is based upon this. Memorandum specifies the most important information about the company i.e. the extent of powers of company. So it is known as charter of the company.
Now let us discuss the two main purpose of memorandum which is explained briefly as follows:-
The first purpose of memorandum is it defines the main objective of the company. For the achievement of which the whole company is formed. By explaining the object clause in memorandum it helps to specify the extent of power of company. It defines the scope of operations of companies under which the company can work. The next purpose of the memorandum is that it acts as a public document. This means that any other person than the member of the company i.e. either a shareholder or a creditor can study the memorandum anytime without getting any permission or fulfilling any formalities. This would help the outsiders to know about the internal working about the company. The third parties are able to judge any operation of the company whether it is within scope of operation or ultra virus the acts of the company.
A memorandum is document which is duly signed by the subscribers and also included the name of at least 1 witness who shall attest the signatures of the subscribers. It is usually in printed form and divided into paragraphs number consecutively. Each paragraph discuss about different clause of company. A memorandum usually contains six clauses i.e. name clause, situation clause, object clause, liability clause, capital clause, association clause. But sometimes it may contain some additional clause also. Any such clause shall not to be deemed to be a condition of the memorandum. Alteration is any such clause may be made in the same way as alteration is made in the articles of association i.e. by passing special resolution. However if thee is any express provision in the act permitting the alteration of such provision in any other manner then they may also altered in such other manner.
A memorandum is a compulsory document. It is usually prepared in the manner prescribed in the schedule 1(Table B, C, D, or E).