Memorandum of Association
The memorandum of association is one of the most
important document for company formation. It is just like charter or
constitution of the company. It defines all the rules and regulation of the
company for legal formalities and procedures. It is also provides information
of capital ,liability of shareholder , a nature of business, objectives and
other external rules and regulations. Section 18 of company act 2063 contains
the following matter in the memorandum of associations.
a. name of company
b. the address of the registered of the company
c. objectives of the company
d. the acts to be carried out to accomplish the
objectives of the company
e. the figures of authorized capital and the figure of
share capital to be issued by the company for the time being and the figure of
capital undertaken to be paid by the promoter of the company
f. the types of shares of the company, the rights and
power inherent in such shares, value of each share and number of different
types
g. the restriction ,if any on the purchase or transfer
of shares
h. terms and condition of payment of share amount
i. provision of limited liabilities of share holders
j. other necessary documents
Article
of association
Articles of association are the document of the
internal management of the company. the contain rules ,regulations and bye-laws of the company for its
systematic management. The company should manage the business activities,
internal structure and internal control system on the basis of rules and
regulations mentioned in articles of associations. They are subordinate to
memorandum of association. It provides framework to maintain internal control
to gain defined objectives.
According to section 20(ii) of company act 2063, the
company articles of association contain the following contents :
1.procedure of convening the general meeting of the
company and notice to be given for such meeting
2.proceeding of general meeting
3.number of directors, provision of alternative
director ,if any and tenure of directors
4.provision relating to the minutes of decisions of the
general meeting and the board of directors and duplicate copies and inspection
thereof
5.if a person has to subscribe shares to become a
director of a company , minimum number of shares
6.in the case of public company, qualification and
number of independent directors
7.power and duties of board of directors and the
managing directors
8. authority of directors and delegation of authority
9.lien of shares
10.different class of shares and the rights , power and
restrictions attached to such shares
11.provision relating to calls on shares and forfeiture
of shares
12.provision relating to transfer of shares
13.use of company’s seal in its transaction , if it is
to be used
14.matters on the buying back of shares by the company
15.appoinment of a company secratery
16. amalgamation of the company
17.accounts ,books of account and audit of the company
Prospects
Prospectus is the profile of public limited company and
provides past and present information and also future policies and programs of
the company. Generally it is issued to the public while issuing shares and
debentures. In other words , it is an invitation to the general public to
subscribe the shares and debenture s of the company.
According to section 23 (1) of the company act 2063
,the prospects should involve the following contents.
a.The objectives of the company, the main point
mentioned in the memorandum and articles of association, and the place where
such memorandum and articles of association can be obtained.
b.minimum number of shares must be subscribed in order
to qualify for the post of directors and salaries,allowances
c.particulars of cash payment obtain or to be obtained
by the promoters or directors of the company in form of remuneration
d.arrangement relating to bonus shares
e. arrangement ,if any, for reserving shares for
shareholder employee or any other person.
f. a biographic introduction of directors
g. reasons and justification for adding premium
h. arrangement relating to representation in the board
of directors of shareholders
i. reasons for obtaining loan by debenture
j. brokerage on shares and debenture
h. amount needed for business and the estimated
k. the balance sheet and profit and loss account of the
company and the place where these can be inspected
l. in case of new company ,particulars of preliminary
expenses incurred in case of its establishment
m. specific rights of preference shareholders and
restriction them
n. other
necessary documents
