Page 1 - Lesson Note 9

SAI INTERNATIONAL SCHOOL

CLASSS XI

SUBJECT: BUSINESS STUDIES,

Forms of business Organization

CH 2 Lesson Notes 9 Documents-MOA, AOA, Prospectus

Important documents used in the formation of company:

1. Memorandum of Association – It is the principal document of a company. No company can be
registered without a memorandum of association and that is why it is sometimes called a life giving
document.

Contents of Memorandum of Association:

1. Name clauses – This clause contains the name of the company. The proposed name should not be
identical or similar to the name of another exiting company.

2. Situation clauses – This clause contains the name of the state in which the registered office of the
company is to be situated.

3. Object clause – This clause defines the objective with which the company is formed. A company is not
legally entitled to do any business other than that specified in the object clause.

4. Liability Clauses – This clause limits the liability of the members to the amount unpaid on the shares
held by them.

5. Capital clause – This clause specifies the maximum capital which the company will be authorized to
raise tough the issue of shares called authorized capital.

6. Association clause- This clause specifies the no of directors of the company and their consent to
become the director of the company.

https://www.youtube.com/watch?v=pakGFma1IJI

2. Articles of Association:

The articles of Association are the rules for the internal management of the affairs of a company the
articles defines the duties, rights and powers of the officers and the board of directors.

Contents of the Article:

1. The amount of share capital and different classes of shares.