1. What is Articles of Association?
A document that specifies the regulations for a company's operations.It contains the regulations connected with the internal management of the company. The articles of association define the company's purpose and lays out how tasks are to be accomplished within the organization, including the process for appointing directors and how financial records will be handled.The document must also be duly stamped and signed by signatories to the memorandum and witnessed.
2. What do you mean by Prospectus?
A prospectus contains all essential points which would induce the investing public to apply for shares in the company. A company of the prospectus must be delivered to the Registrar before issuing to the public.
3. What do you mean by Minimum Subscription?
A company can proceed to allot shares only if minimum subscription specified in the prospectus has been collected in each.
4. Explain Statement in Lieu of prospectus:
The promoters raise the entire capital through private arrangement, there is no need to issue a prospectus . However, a statement in lieu of prospectus, the contents of which are similar to a prospectus, must be prepared and filed with the registrar at least three days before allotment .
5. What is Situation Clause?
The state in which a company has its registered office is to be stated here. Exact address within the state need not be given in this clause. It determines the jurisdiction of the registrar of companies and of the court.
6.What do you mean by a Name Clause?
In this clause the name of a company is mentioned to establish its identity. It is the symbol of its existence. Undesirable name to be avoided. It should not imitate another company's name. If it is a public limited company, it should end with the word " private limited".
7. Explain Objects Clause:
This is the most important clause as it state the activities of the company. The objects lay down the maximum permitted range of activities. A company has the power to carry on only those types of business which are included in this clause. Any action beyond the power of the company has no legal effect.
8.What is Liability Clause?
Liability clause states that the liability of members is limited. In the case of a company limited by guarantee, the amount each member undertakes to contribute in the event of winding up, must also be mentioned.
9.What is Capital Clause?
The amount of share capital with which the company is to be registered and its division into shares of fixed amount are also started in the Capital Clause.
10. What do you mean by Association Clause or Subscription Clause?
At least two persons in the case of a private limited company and seven in the case of public limited company must sign the memorandum and agree to take the number of shares shown again their names. Further they also express their desire to form themselves into a company in pursuance to the memorandum of Association.
