Chapter 2: Memorandum of Association

Question 1

Name Clause

Answer 1

Name of company with following last word:
- Public Co: “Limited

• Private Co: “(Private) Limited”
• Single Member Company “(SMC-Private) Limited”
• Guarantee Ltd “(Guarantee) Limited”
• Unlimited: “Unlimited”

Question 2

Registered Office Clause

Answer 2

Province or part of Pakistan not forming part of a province
(in which registered office is to be situated)

Question 3

Principal line of business Clause (4)

Answer 3

“Principal line of business” means the business in which substantial assets are held or likely to be held or substantial revenue is earned or likely to be earned by a company, whichever is higher.

1. Principal line of business will be mentioned in MOA
2. It shall be matching with its name
3. A company may:
   - carry on any lawful business or activity
   - do any act or enter into any transaction connected to it
   which is necessary in attaining its business activities.
4. A company shall not engage in a business which is:
   - Prohibited by any law for the time being in force in Pakistan; or
   - Restricted by any law, rules or regulations
   (unless necessary license, registration, permission or approval has been obtained)

Question 4

Principal line of business definition (2)

Answer 4

the business in which:

• substantial assets are held or likely to be held or
• substantial revenue is earned or likely to be earned by a company,
  whichever is higher.

Question 5

Liability Clause

Answer 5

Company Limited by Shares > “Liability of the Members is limited”

Company Limited by Guarantee > ‘Liability of the members is limited’.

An additional sentence is also added to clarify the extent of liabilities of the members of that company in the event of its being wound up.

Unlimited Company >
“Liability of the Members is unlimited”

Question 6

Authorised Share Capital Clause (4)

Answer 6

Amount of share capital with which Co proposes to be registered, and the division into shares of a fixed amount

• Every subscriber of MOA is required to take at least one share
• Each subscriber shall write opposite to his name the number of shares he has agreed to take
• For company limited by guarantee, this clause shall not be included if company has no share capital

Question 7

Undertaking Clause

Answer 7

The company shall add an undertaking, as may be specified by SECP

Question 8

Subscription Clause (3)

Answer 8

Subscribers shall
- Write their names addresses and other required particulars
- Write THE SENTENCE.
- Sign MOA in presence of at least one witness (witness shall also write his particulars)

Question 9

Subscribers THE SENTENCE: (5)

Answer 9

1. We, the several persons whose names and addresses are subscribed
2. are desirous of being formed into a company
3. in pursuance of the memorandum of association
4. we respectively agree to take the number of shares in the capital of the company
5. set opposite our respective names

Question 10

Printing and signature of MOA & AOA (3)

Answer 10

1. MOA and Articles shall be
    Printed
    Divided into paragraph numbered consecutively
    Dated
2. Signed by each subscribers giving following details in presence of a witness (who shall attest signature and add his particulars also):
   - Present Name in full
   - Occupation
   - Nationality
   - Usual residential Address
   - Others particulars as may be prescribed
3. Every Co, upon request and payment of a prescribed amount by its member, shall supply within 14 days a copy of MOA & AOA of the company

Question 11

Effect of memorandum and articles (2)

Answer 11

• All moneys payable by a subscriber against the shares subscribed shall be a debt due from him and be payable in such time, manner and conditions as may be specified by SECP
• Any violation of directions given by Registrar shall be an offence liable to penalty