The Memorandum is considered as the prime document in company formatio

1.	The Memorandum is considered as the prime document in company formation. Give three reasons to justify this statement.
Answer» The Memorandum of Association is the most important document of a company. It defines the objects and powers of a company and the company’s relationship with the outside world. It is the most essential document for a company due to the following reasons: • Informing the name, address, object, capital and liability of the company to outsiders is very important as it builds trust and confidence among investors. • It lays down the objects and scope of activities of the company. It also states the limits up to which a company can move. • The provision of this document cannot be changed without passing a special resolution (75% majority). In certain cases, the changes can be made by seeking permission from the company Law Board or Central Government.

The Memorandum is considered as the prime document in company formation. Give three reasons to justify this statement.

Answer»

The Memorandum of Association is the most important document of a company. It defines the objects and powers of a company and the company’s relationship with the outside world.

It is the most essential document for a company due to the following reasons:

• Informing the name, address, object, capital and liability of the company to outsiders is very important as it builds trust and confidence among investors.

• It lays down the objects and scope of activities of the company. It also states the limits up to which a company can move.

• The provision of this document cannot be changed without passing a special resolution (75% majority). In certain cases, the changes can be made by seeking permission from the company Law Board or Central Government.

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