Formation of Joint Stock Company

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Important Document Prepared while Formation of Company

  • Memorandum of Association (MOA)

  • Articles of Association (AOA)

  • Prospectus

Memorandum of Association (MOA)

  • Principal document in the formation of a company.

  • Contains the fundamental conditions which company is allowed to be incorporated or registered.

  • Defines the limitations of the powers of the company.

  • Defines the relationship of the company with the outside world.

MOA usually contains the following six clauses:

  • Name Clause: Contains the name by which the company will be established.

  • Situation Clause: Contains name of the state in which the registered office of the company is or will be situated.

  • Objects Clause: Contains detailed description of the objects and rights of the company.

  • Liability Clause: Contains financial limit.

  • Capital Clause: Contains the proposed authorized capital of the company.

  • Subscription Clause:

    • Name and address of at least seven members in case of public limited company.

    • Two members in case of a private limited company.

Articles of Association (AOA)

  • Contains the various rules and regulations for the day to day management of the company.

  • These rules are also called the bye-laws.

  • Covers various rights and powers of its members, duties of the management and the manner in which they can be changed.

  • Defines the relationship between the company and its members.

AOA of a company generally contain rules and regulations with regard to the following matters:

  • Preliminary contracts

  • Use and custody of common seal

  • Allotment, calls and lien on shares

  • Transfer and transmission of shares

  • Forfeiture and re-issue of shares

  • Alteration of share capital

  • Issue of share certificates and share warrants

  • Conversion of shares into stock

  • Procedure of holding and conducting company meetings

  • Voting rights and proxies of members

  • Qualification, appointment, remuneration and power of Directors

  • Borrowing powers and methods of raising loans

  • Payment of dividends and creation of reserves

  • Accounts and audit

  • Winding up