Question

State the following statement is True or False:

Memorandum of association is the Charter of a company.

• A. True
• B. False

Answer 1

The correct option is A True

An important step in the formation of a company is to prepare a document called Memorandum of Association. It is the Charter of the company and is a very important document as it contains the basic conditions on which the company is incorporated.

The Memorandum contains the name, registered office, main and other objects of the company, liability of the members, and the authorized capital of the company. The main purpose of the memorandum is to limit the scope of activities and powers of the company. Thus, any activities outside the Memorandum are ultra-vires the company. Such an act is not enforceable and directors involve personal liability for it.

Hence the statement is true.