Certificate of incorporation. Image credit elavator-and-escalator.com

Certificate of incorporation. Image credit elavator-and-escalator.com

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.

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.

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