Question

What is known as a charter of a company?

• A. Memorandum of Association
• B. By laws
• C. Articles of association
• D. Prospectus

Hint:

The MoA is a public document; anybody dealing with the company is expected to have read it, as it outlines the fundamental purpose of the entity.

Answer 1

The Correct Option is A

Concept: A company's charter is its foundational document. It defines the company's scope of operations, its relationship with the outside world, and the limitations of its powers. In company law, this is formally recognized as the Memorandum of Association (MoA).

Step 1: Defining the Memorandum of Association (MoA).
The MoA is the supreme document of a company. It contains the fundamental conditions upon which the company is allowed to be incorporated. It specifies the company's name, registered office address, objects for which the company is formed, the liability of its members, and its authorized share capital.

Step 2: Why it is called the 'Charter'.
It is termed a 'charter' because it sets the boundaries of the company's activities. Any act performed by a company that is outside the scope of its MoA is considered 'ultra vires' (beyond its powers) and is legally void.

Step 3: Distinguishing from Articles of Association (AoA).
While the MoA is the charter defining the external scope, the Articles of Association (AoA) are the internal regulations or 'by-laws' that govern the day-to-day management and internal affairs of the company. equation Corporate Charter = Memorandum of Association equation center Memorandum of Association center