By going through these Maharashtra State Board Secretarial Practice 11th Commerce Notes Chapter 4 Documents Related to Formation of a Company students can recall all the concepts quickly.

Maharashtra State Board Class 11 Secretarial Practice Notes Chapter 4 Documents Related to Formation of a Company

Documents Required For Incorporation Of A Company-

  1. Memorandum of Association
  2. Articles of Association

1. Memorandum of Association:

Definition : “MOA of a company as originally framed or as altered from time to time in pursuance of any provision of any previous Company Law or of this Act.”
(Section 2 (56) — Companies Act, 2013)

Meaning :

  • Primary document of a company states its aims and objectives
  • Describes relationship between the company and outsiders
  • Prepared by the promoters

Signed by:

  • 7 persons – Public Company,
  • 2 persons – Private Company
  • 1 person – One Person Company

Clauses :

  • Name Clause
  • Address Clause
  • Object Clause
  • Liability Clause
  • Capital Clause
  • Association Clause

2. Articles of Association:

Definition : “Articles of Association as originally framed or as altered from time to time in pursuance of any previous Company Law or of this Act.”
(Section 2 (56) — Companies Act, 2013)

Meaning :

  • Subordinate document to MOA
  • It is like Bye-laws of the company
  • Describes powers, rights and duties of Board of Directors
  • Describes relationship between the company and its members and also between members.

Contains :
Rules and regulation for internal management of the Company

Maharashtra Board Class 11 Secretarial Practice Notes Chapter 4 Documents Related to Formation of a Company

Clauses of MOA-

  • Name Clause
  • Subscription Clause
  • Address Clause
  • Capital Clause
  • Liability Clause
  • Object Clause

Maharashtra Board Class 11 Secretarial Practice Notes Chapter 4 Documents Related to Formation of a Company 1

→ Any Act done beyond the power of MOA is called as “Ultra-Vires” i.e. invalid.

Entrenchment of Articles:

Articles (Provisions) which cannot be altered by passing only a special resolution is called Entrenchment of Articles. It requires 9/10th of the majority to alter the provision.

Doctrine of Indoor Management:

It protects the interest of the outsiders, who enters into contract assuming that the company follows all procedures as per MOA and AOA.

Prospectus:

Maharashtra Board Class 11 Secretarial Practice Notes Chapter 4 Documents Related to Formation of a Company 2

Maharashtra Board Class 11 Secretarial Practice Notes Chapter 4 Documents Related to Formation of a Company

Contents of Prospectus-

1. Declaration by Company:

Stating-

  • all provisions of Companies Act, 2013 is complied
  • it does not contain anything contrary to provisions of Companies Act, 2013, Securities Contracts Act, 1956 and SEBI Act, 1992

2. Statement of an Expert:

Statement by –
Company Secretary, Chartered Accountant, Cost Accountant, Valuer,Engineer, etc.

3. Information and Reports:

  • name of the issuing company
  • registered office address
  • number and price of share
  • lead merchant banker
  • registrar to the issue
  • date of opening and closing of issue, etc.

Statutory Requirements For Prospectus-

  • Drafting prospectus with SEBI and making available to the Public and Stock Exchange
  • Signed by all Directors or authorized attorney
  • Registration of Prospectus with ROC
  • Issuing prospectus to Public within 90 days from the date of registration
  • Dating of Prospectus

Maharashtra Board Class 11 Secretarial Practice Notes Chapter 4 Documents Related to Formation of a Company 3

→ Mis-statement in Prospectus means untrue or misleading information given in the prospectus.

Liability In Case of Mis-Statement in Prospectus –

  1. Civil n Liability:
    To pay compensation for loss suffered by investor
  2. Criminal Liability:
    Company or its officers to be fined or imprisoned or both

Word Meaning:

distinction – difference; altered – changed; pursuance – effect of; privileges – benefits; subscriber – member; ultra-vires – act done beyond the legal power; distinct – well defined in existence; constitute – found; emblems – symbol; resemble – same / similar; incorporation – the process of registering a company; domicile – location; immoral – dishonest; contravention – violation / against; incidental – happening by chance; consequential – resulting / thereafter; null and void – not legally considered to be existed; injunction – order; doctrine – set of beliefs; contractual – legal agreement between company and member; authorised – permitted; desirous – intention / need; subordinate – secondary / next to; establishes – builds; arbitration – to settle disputes by negotiation; indemnity – protection; entrenched – unlike to change; elaborate – detailed; accordance – following; proceedings – course of action / steps; disclosures – declaration; abridged – short writing material; prospectus – a printed booklet giving information about company; attorney – legal practitioner; imprisonment – behind the bars / jailed; furtherance – assisting /assistance; mis-statements – wrong information / words; red