During the formation of a Limited Liability Company, the following procedures must be followed-

  1. The first step is to get the promoters; they are individuals who conceive he idea of a company and undertake to fulfill all legal requirements of the venture.
  2. The following documents will be filled with the registrar of companies. These are memorandum and article of association and statement of nominal capital.
  3. The document are stamped and logged with the registrar of companies for verification
  4. When the registrar of companies receives and approves the necessary documents the registrar issues a certificate of incorporation.

Memorandum of Association

The memorandum of association contains the external rules of the company, it refers to the object and power of the company and how it intends to deal and interact with the outside world; it contains the following

  1. The name of the company and the word limited liability at the end.
  2. The registered office.
  3. The object of the company.
  4. The declaration that the liability is limited.
  5. The amount of the authorized capital

Articles of Association

This is a document which states the internal regulations of a limited company.it contains the regulations which govern the internal management of the company affairs.the following are found in the article;

  1. The right and responsibilities of the shareholder.
  2. The duties and power of the directors.
  3. How directors may be appointed.
  4. The right and duties of the members as between each other and the company.
  5. The procedure for accounting and auditing of the company’s book etc.

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SS2 Financial Accounting Third Term: Company Formation