Enhance Your Business with Legally Binding eSignatures in Canada

How to eSign a document: eSignature legality for Memorandum of Understanding in Canada

Once again, thanks for tuning in. What is a memorandum of association? Before we get into it, please give our channel a sub and hit that bell icon to stay ahead of the game. The firm's charter is represented by the memorandum of association (MOA). It's a legal document written during the registration and formation of a limited liability firm to outline the corporation's relationship with its shareholders. Moreover, limited liability is a legal framework for a company where a business loss is limited to the sum invested in a limited liability company (LLC) or partnership. To put it another way, if the corporation fails, the owners' and investors' assets are not at risk. In addition, the firm's constitution is comprised of the Articles of Association and the memorandum of association. However, the MoA sets the barrier beyond which the corporation's actions are not allowed, and the firm is only permitted to engage in those activities stated in the MoA.  The memorandum of agreement makes it easy for shareholders and anybody else who engages with the firm to grasp its core rights and authority. In addition, the MoA's content assists potential shareholders in making the best judgement possible when considering an investment in the firm.  What role does a memorandum play in a business? The significance of the memorandum of association is stated below. • The memorandum serves as the foundation for the firm's whole structure. • It puts forth a firm's written objectives. • It explains the firm's constraints. • It outlines the firm's scope of operations. What is the memorandum of association's provisions? First of all, the Name Clause This clause defines the firm's name, which should not be the same as any other business. However, in a private firm, the term "Private Limited" must be added to the end of its name, and if it is a public corporation, the term "Limited" must be added at the end. So, for instance, if it's a private organisation, it should be called XYZ Private Limited, and if it's a public corporation, it should be called XYZ Ltd. Furthermore, a firm has complete control over the name it chooses. It must not include words such as Emperor, King, Government Bodies, Queen, or names of international organisations such as the World Bank, World Health Organisation, United Nations Organisation, etc. Registered Office Clause. This clause must include the name of the state where the firm's registered office is situated. This will aid in determining the Registrar of Corporations' jurisdiction. The term "registered office" refers to the site where the firm's statutory books, common seal, and other documents are held. Within 30 days of the firm's formation or beginning, the firm must notify the Registrar of Companies of the location of its registered office. Object Clause This clause explains why the firm was founded and included an overview of the firm's operations. The object clause must specify the firm's purpose and indulgence in operations. Any such operation that is not specified in the object clause is regarded to be beyond the firm's grasp. The following three subcategories can be found in the objectives: Liability Clause It outlines the firm's members' liability. If the firm is unlimited, the members' liability is infinite; but, if shares limit the firm, the members' liability is limited to the amount owed on their share. In the case of a firm limited by guarantee, however, the members' liability is limited by the amount each member has pledged to give. Capital Clause  This clause explains the highest sum of money that the firm can raise and the division of capital into stocks. The company will not guarantee more capital than that specified in this clause. If certain stockholders are given privileges or rights, they may be mentioned in this provision.  Subscription Clause  It includes the names and addresses of the initial subscribers. The memorandum's subscribers should take at minimum one share. In a private firm, the minimum number of members should be two, whereas, in a public firm, the minimum number should be seven. As a result, the memorandum of association is the firm's cornerstone and most important paper. Now that you’re up to speed, check out some of our other videos to boost your financial IQ. If you like this info, give us a like, comment, and share. For regular updates, head to our website at kalkinemedia.com. This has been Holly Shields for Kalkine Media.