Chapter 2 (Memorandum & Articles) Flashcards
What is the Memorandum of Association and what is its significance?
The Memorandum of Association is a fundamental document for any company.
It serves as the company’s constitution, defining its relationship with the outside world, its internal structure, and the scope of its operations.
What are some of the key clauses typically found in a Memorandum of Association?
Memorandum of association includes name clause, registered
office clause, principal line of business clause, liability clause,
authorized capital clause (for companies limited by shares) and
undertaking or subscription clause.
It includes implied borrowing powers of
company and should be printed, signed and dated.
What is the purpose of the Name Clause in the Memorandum of Association?
With words “Limited,” etc.
What does the Registered Office Clause specify in the Memorandum?
Province or Islamabad.
What is included in the Principal Line of Business Clause?
- Match with the name.
- The business in which company’s majority assets are held or which is the major revenue stream.
(whichever is higher)
How does the Liability Clause define the extent of members’ liability?
Limited by share, or Limited by guarantee + Extent.
What details are covered in the Authorized Capital Clause?
Authorized + Division + Subscribers.
What does the Undertaking or Subscription Clause ensure regarding the formation of a company?
Undertaking to form a company.
Which types of names require the approval of the Commission for a company?
Name showing patronage/connection with:
1. Head of State.
2. Federal Govt. or Provincial Govt.
3. Foreign Govt. or international organization.
4.Corporation set up under any Federal or Provincial law.
5. Modaraba management company.
6. Business requiring a license.
What are the criteria for prohibited names under the Memorandum?
- Identical.
- Inappropriate.
- Offends religious feelings.
- Contains words prohibited by the Commission.
What is the procedure to change the name of a company by itself?
–Reserve name.
–Special resolution.
–Apply to the Registrar.
–New Certificate.
–Old name with New name for 90 days (on every office/document).
What is the process of change of name by Registrar?
- Issues order after
opportunity of hearing. - Company rectifies (within 30
days), or Registrar selects and
issues new Certificate
Change of registered office but not registered office clause
Notify Registrar within 30 days of incorporation.
Notify change to Registrar within 15 days.
Also shift physical record (to new Registrar).
What steps must be followed to change the Registered Office Clause?
- Special Resolution.
- Application to Commission. Commission makes an order (considering the interest of members/creditors).
- A copy of the order to Company and Registrar.
- Within 30 days of the order, file altered memorandum + order to Registrar. (Order void after 30 days, however, Commission may extend).
- Registrar issues a certificate.
- Transfer physical record.
What happens if the order to change the Registered Office is not filed within 30 days?
The order becomes void unless extended by the Commission.
What is the definition of a Principal Line of Business?
Business with substantial assets or revenue, whichever is higher.
What steps are involved in changing the Principal Line of Business Clause?
- Special Resolution.
- Also change name, if necessary.
- Within 30 days, file altered memorandum to Registrar.
- Registrar issues certificate
What are the steps taken if registrar wants to change name of a company?
Issues order after an opportunity of hearing.
Company rectifies (within 30 days), or Registrar selects and issues a new certificate.
What are the requirements for a company to display its name?
- COI at every place of business.
- Name and incorporation number (in English & Urdu) outside the Registered Office and every place of business.
- Name (in English & Urdu) on seal.
- Name and other particulars on official documents.
What are the general contents of the Articles of Association?
- Business
- Transfer/ Transmission of shares, and its Form
- Alteration of capital
Voting and other rights attached to different classes of shares, and other securities - Notice and Proceedings of General meetings
- Voting of members
- Proxy Instrument
- Number of directors, their powers, and duties
- Proceedings of directors’ meeting
- Disqualification of directors and filling of vacancies
- Minute books
- Dividend and Reserves
- Accounts
- The seal
- Indemnity
- Winding up
How can the Articles of Association be altered?
- Special Resolution.
- Approval of 3/4th of affected class (if necessary).
- File altered articles within 30 days.
When is it mandatory to register the Articles of Association?
- Company limited by guarantee or unlimited company –> Required.
- Company Limited by Shares –> Register Articles or Adopt Table A.
(Table A applies if articles are not registered or silent on a content.)
What is the role of Table A for companies limited by shares?
It applies if articles are not registered or silent on a content.
What are the requirements for providing copies of the Memorandum and Articles to members?
To member within 14 days on payment of a fee.
What is the effect of incorporation of a company?
- MOA/AOA binding on the company and members.
- Subscribers pay money within 30 days of incorporation; otherwise, allotment of shares is canceled, and names are removed.
What is the binding effect of the Memorandum and Articles on the company and its members?
MOA/AOA binding on the company and members.
What is the order of overriding documents in case studies?
Companies Act > Memorandum > Articles > Resolution.
Why is the Commission’s approval required to change the Registered Office Clause?
Approval of Commission is required to change the Registered Office Clause so that rights of members and creditors are not affected.
What restriction applies to private companies regarding the issuance of shares?
A private company cannot issue shares to the general public.
