What does registration of companies entail?

  

Date Posted: 4/11/2012 9:31:34 AM

Posted By: sashoo  Membership Level: Silver  Total Points: 382

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REGISTRATION OF COMPANIES
Promoters of a company or founder members must submit various documents to the registrar of companies so that they are allowed to register themselves as business entities. These items include:

1. Memorandum of association.
2. Articles of association.

1. MEMORANDUM OF ASSOCIATION
It is an official standard form provided by the registrar of companies where the promoters of the company have got to fill in the spaces provided. They have to give the following particulars:

i) Name of the company with limited as the last word.

ii) Country or town in which the company will have a registered office.


iii) Nominal authorized capital of the company. This is where by promoters of the company have to attach a bank statement showing that they have contributed the minimum amount required to start a particular type of business.

iv) A statement that shows that the liabilities of the members are limited.

2. ARTICLES OF ASSOCIATION
Articles of association defines the relationship of the members of the company or deals with internal affairs of the company. It is normally drafted by the promoters of the company hence it is not a standard form, but the promoters have to adhere to some specified laid down rules.

Thus, Articles of Association has got to do with the following:

(a) Procedure for handing general meetings as well as voting rights. Voting is done on the basis of one-share-one-vote. This is usually done during general meetings which are held once a year.

(b) Classes and rights of share-holders. Classes of share-holders include ordinary share-holders, preferential share holders etc.

(c) It deals with the issue and transfer of shares.

(d) It specifies qualifications, duties and powers of directors to be.

(e) It deals with borrowing, dividend issues and reserve policies.

(f) It deals with appointing qualified auditing firms to audit the books of Accounts.

DIFFERENCES BETWEEN MEMORANDUM OF ASSOCIATION AND

ARTICLES OF ASSOCIATION
1. Memorandum of Association deals with the relation of the company with the outsiders whereas Articles of Association governs the relation of the members or the company's share-holders among themselves.

2. A Memorandum of Association can only be amended by law whereas Articles of Association can be altered simply by a resolution of the shareholders.

3. A Memorandum of Association is a standard form provided by the registrar of companies whereas an Article of Association is a manuscript drafted by the promoters of a company.

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