Definition:

As per section 2(28) of the companies Act 1956 “Memorandum of Association means the Memorandum of Association of a company as originally framed or altered from time to time in pursuance of any previous company laws or of this Act”.

As such this definition does not state exactly the scope, use, and importance of memorandum in a company.

• Lord Cairns observed that – “The memorandum of association is a charter and defines the limits of the powers of a company. The memorandum contains the fundamental conditions upon which alone the company is allowed to incorporate”.
• Lord Macmillan states that – “The purpose of the memorandum is to enable the shareholders, creditors and those who deal with the company to know what is its permitted range of enterprise”.

Meaning:

In simple words, the Memorandum of Association of a company means

• a basic or fundamental primary document of a company.
• a charter or constitution of a company
• no company can be incorporated without the Memorandum of Association.
• It lays down the range of its activities.
• It is a public document and can be inspected by those who deal with the company.

Features of Memorandum of Association:

The following are the features of the Memorandum of Association:

• Memorandum of Association states the nature of business activities to be conducted by the company.
• It informs about the scope of activities of the company.
• It is prepared by promoters of the company.
• It is signed by at least 7 persons in the case of a public company and 2 persons in the case of a private company.
• It is submitted to the registrar of companies for registration.
• All companies must prepare their own Memorandum of Association.
• It defines the relationship between the company and outsiders.
• It is an unalterable charter of the company.
• It is a public document.