ZIMSEC O Level Business Studies Notes: Documents used in the formation of companies
- The formation of a company be it a Private Limited or Public Limited company is an involved process
- It is much more complicated than the formation of say a sole trader business
- Before it is incorporated (formed) those intending to form the company have to complete several documents
- These documents include the Articles and Memorandum of Association
Memorandum of Association
- It governs the relationship of the company and the rest of the world.
- It states the name and address of the company,
- its objectives, country of registration and
- the name of the directors.
Articles of Association
- They are known as The Articles of Association
- It is a document which governs the company’s internal operations.
- It details such matters as the name of the company,
- the procedure for calling an Annual General Meeting,
- the voting powers of shareholders,
- the procedure and tenure of directors,
- the responsibilities of directors,
- The objectives of the company,
- classes of shares,
- dividend policies and liquidation procedures.
Certificate of Incorporation
- Once the Registrar of companies is satisfied with the contents of the above documents
- He issues the company with a certificate of incorporation
- It is a legal document indicating that the state government has officially recognized a business or other entity as a corporation.
- It is like a birth certificate to the company to which it is issued.
- Once issued with a certificate of incorporation, a Private Limited Company can start trading immediately.
- A Public Limited Company meanwhile, has to issue a Prospectus.
- A legal document in which a Public Limited Company invites the public to buy shares and invest in the business.
- Once, it has raised enough capital a Public Limited Company is issued with a Certificate of Trading
- This authorizes the business to start trading.
To access more topics go to the O Level Business Notes page.