Question

Define Memorandum of Association and explain its importance.

Answer 1

According to Section 2(56) of the Companies Act 2013, the “Memorandum” refers to the memorandum of the company as drawn up initially during the formation of the company or as changed periodically to carry out any action as per any other law of the Act.

Memorandum of Association is a document of prime importance for a company. It depicts the objectives, extent of authority, competency, liabilities and legal rights of the company. The Memorandum acts as a legal code or constitution for a company and regulates the relationships between the company and its shareholders, investors, beneficiaries and other members.