Memorandum of Association (for a Pakistani Company)

Memorandum of Association

·         The promoters of the company prepare the memorandum of association

·         It is the most important document of the company.

·         It is the charter of the company and defines it s power s and states its objectives.

The mandatory contents of the memorandum of association are as follows:

1. The name clause

The name clause must include:
a ) The word “Limited” as the last word in case of a Public Limited Company.
b) The words “(Private) Limited” as the last words in the case of a Private Limited Company.
c) The words “(SM C-Private) Limited” as the last words of a Single Member Private Limited Company.

2. Registered Office Details

This clause must stat e the address details of the company offices.

3. Object Clause

This is the most important part of the memorandum of association and is to be worded immensely carefully. A company cannot legally take up any business that is not authorised by its object clause. The object clause cannot contain any thing contrary to the provisions of the Companies Ordinance, 1984. It is generally very lengthy and the scope of the company’s activities is widened by including the words “and the doing of all such other things incidental or conductive of the environment of the above objects.”

4. Liability Clause

The clause must include whether the company is limited by share or guarantee. The effect of this statement is in the event if the company is wound up, the members of the company will not be liable to contribute more than the amount, if any, unpaid on their shares, in case of a company limited by shares. In the case of a company limited by guarantee, the members undertake to contribute a specific amount to the assets of the company.

5. Share Capital Clause

The following information is provided in this clause, except for guarantee companies having no share capita l and unlimited companies :

a ) The amount of share capita l with which the company is formed and registered.
b) The division of share capital into shares of fixed amounts.

The memorandum of association must be signed by the subscribers i.e. the first member s of the association.

Company / Business Registration in Pakistan

What is a company?
Company is legally an entity apart from its members, capable of rights and duties of its own, and endowed with the potential of perpetual succession. It is an ‘intricate, centralised, economic, administrative structure run by professional managers who hire capital from the investors”. In other words a company means certain persons registered under the Companies Ordinance, 1984.

The Companies Ordinance, 1984.

This is the most potent statute dealing with the company registration process in Pakistan. Its primary purpose is the promotion of investment and development of economy of Pakistan, and also the healthy growth of the corporate enterprises and the protection of investors and creditors.

Kinds of Companies.
With the increasing complexities of the corporate world, companies take on diverse forms with the passage of time. However, the basic two genres of company remain as follows:

Private Limited Company
Any one or more persons may by subscribing to a memorandum of association for a lawful purpose may form a private company. (The Companies Ordinance, 1984)

Public Limited Company
Any three or more persons may form a public limited company, and any seven or more persons may form a listed public company in the same manner and purpose. (The Companies Ordinance, 1984)

Both the companies stated above might either be limited by share, or guarantee, or unlimited.

Company as a mode of business-Advantage.
Where greater mobilization of capital is required, which the resources of a few persons cannot provide, the formation of a company is advisable as this is the only form of business organization which offers the privilege of limiting of members’ liability for debts of the company.

Why is it important to register a company?
The Companies Ordinance, 1984 strictly lays down that no company shall be formed for the acquisition of gain through its mode of business unless it is registered as a company under the ‘Ordinance’. Hence any person who shall do so in contravention of the provisions of the ‘Ordinance’ shall be liable for the payment of fine which may extend to Rs. 5000 and also for all the liabilities incurred in the business.

(Source: SMEDA)

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