activities which are illegal or contrary to public policy

The objects clause must not include activities which are illegal or contrary to public policy. Nor should any object be included here which conflicts with any
provision of the Indian Companies Act. Thus if the objects include a clause which permits the company to buy its own share, it will be ultra vires (i.e.
invalid) as such activity is prohibited under the Companies Act. Finally, it is essential that the objects and powers must be expressed in a clear and
unambiguous language. The object clause determines the scope of its activity beyond which a company cannot go.
4. Liability, Clause. The clause contains the nature of liability of the compan)'. I n case the company is limited by shares, the liability clause must state that
,the liability of the members shall be limited to the nominal value of shares held by them. In case of a company limited by guarantee. the liability shall be Ii.
noted to the amount lavish he has agreed to contribute in the event of its liquidation. A company registered with unlimited liability need not give this clause

in its Memorandum.
5. Capital Clause. The capital clause in the Memorandum of a company, having a share capital, must state the amount of the share capital with which the
company is to be registered and the division thereof into shares of a fixed amount. The denomination of each share should be Rs. 10 or Rs. 100 in case of

equity share and Rs. 100 in case of preference share. However. the company following depository system may issue equity shares in any denomination
Press release of SEBI dated 11.6.1999]. This is the maximum amount of share capital that the company is authorized by the memonmdum to raise.
Hence it is called the "authorized'. 'registered' or 'nominal capital'. Each subscriber to the Memonmdu1l1 must take the qualification shares which shall not

be less than one, and write the number of shares taken by him opposite his name. It may be noted here tbat a limited company having share capital may
have only two. kinds of share capital, liz., equity share capital and preference share capital.Subscrilltion or Association Clause. Tiles clause contains the

names of signatories to the Memorandum and it reads like this:
"We. tile several persons whose names and addresses are subscribed, are desirous of being formed into a company in pursuance of the Memorandum
and we respectively agree to take the number of shares in the capital of the company set opposite our respective names."
The M A should be signed by at least seven persons in the case of a public company and by at least two persons in the case of a. private