Basic Legal Documents: 1. Name Clause
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ihsan278Basic Legal Documents: 1. Name Clause
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ihsan278BASIC LEGAL
DOCUMENTS
There are three basic legal of documents
1) Memorandum of Association
2) Articles of Association
3) Prospectus
1) MEMORANDUM OF ASSOCIATION
Memorandum of Association is the basic documents of a joint stock
company it is known as the Charter of the Company. Since it is the
constitution of the company; if therefore define as confines the powers of
a company.
Contents of Memorandum
The memorandum of association of a company limited by share must have following
clauses
1. Name clause
It is a legal requirement that a company must state the name of the
company. A company may select any name but it should not resemble
the name of any other company. If should also not certain the words
like king, queen, emperor, government bodies UNO; WHO etc.
2. Situation clauses
It is also known as domicile clause. A company is requird to state the
name of the province in which the office is situated. It is also necessary
to give the exact address and name of the city where the company is
located. This clause has the following advantages.
3. Object clause
This clause is the essence of the memorandum. If clearly defines the
sphere of the company’s activities. It indicates a series of objects for
which the company is started. Any business activity carried outside the
territories specified in the object clause of memorandum is ultra vires
and void.
4. Liability clause
This clause shows the nature of the liability of the member. In case of a
company limited by share the liability of a member is limited to the
nominal value of shares held by him. In case of a company limited by
guarantee.
2) ARTICLES OF ASSOCIATION
Meaning: Articles of association is a legal documents second in
importance to memorandum of association.
The articles of association are the regulations or by which govern the
internal organization and conduct of a company.
Contents of Memorandum
(1)Amount of shares capital issued, transmission of shares.
(2)Rights of shareholder regarding voting dividend of shares.
(3)Rules regarding issue of share and debentures.
(4)Procedure as well as regulations in respect of making calls on share
(5)Manner of transfer of share
(6)Rules regarding appointments in directors managing .
(7)Number, qualification, remuneration power etc.
(8)Declaration of diligence
(9)Convening and conduct of meetings with reference to notice .
(10) Rules regarding the forfeiture and surrender of shares
(11) Matters relating to account and audit
(12) Rules regarding the sanding up of the company.
3) PROSPECTUS
This notice advertisement or other documents inviting offers for the
subscriptions to the share capital of the company is called prospectus.
Only public companies can issue a prospectus
(1)To bring to the notice the public that a new company has been
(2)To convince those who have saving to invest about the genuineness
of the company and itd futures prospectus.
(3)To keep an authenticated record of the conditions on which the
capital has been raised .
(4)To secure that the directors of the company accept responsibility for
the statements in the prospectus.
1. Brief history of prospectus. It includes
(i) Brief history if company
(ii) The main objects of the company.
(iii) The location of the plane.
(iv) Information about project plant and its machinery raw materials
etc
(v) Economics justification and marketability if the goods to be
produced
2. Capital stature.
(i) Share capital of the company
(ii) Basis of allotment of shares.
(iii) Facilities available to nonresident Pakistanis for purchase of
share etc
3. Financial information.
(i) Auditors reports
(ii) Shareholders
(iii) Auditors certificate on share capital
4. General information
(i) Appointment of chief executive
(ii) Election of directors
(iii) Powers of directors
(iv) Borrowing power of the directors
(v) Transfer of shares
5. Board of directors
(i) Under this head, the names , address, and occupation of the board
of directors is given
6. Interest of directors
(i) Interest of directors in dividends and others benefits
(ii) Remunerations to be paid to the chief executive, directors and the
secretary.