Question

    Name the document which is known as the charter of the company whose purpose is to enable the shareholders, creditors and those dealing with the company to know its permitted range of business.

    A MOA Correct Answer Incorrect Answer
    B AOA Correct Answer Incorrect Answer
    C Prospectus Correct Answer Incorrect Answer
    D Certificate of Incorporation Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The business and objects of a company and the rules and regulations governing its management are known by two important documents called 'Memorandum of Association' and 'Articles of Association'. Therefore, for the formation of a company these documents are essential.  oMemorandum of Association - The memorandum of association is the charter of the company. Its purpose is to enable the shareholders, creditors and those dealing with the company to know its permitted range of business. Memorandum of Association of a company contains the following details among others: Name of the company State in which the registered office of the company is to be situated Objects of the company Liability of the members and Share capital and its division. oArticles of Association - Articles of Association are rules and regulations governing the internal management of the company. They define the powers of the officers of the company. Articles of Association are subordinate to Memorandum of Association and it contains the following details among other things: Number of directors of the company Procedure for conducting meetings of the shareholders, board of directors. Procedure for transfer and transmission of shares Borrowing powers of the company Officers of the company and other details.

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