Memorandum: the order of conclusion and features

The memorandum of association is concluded by the participants of the organization in the form of a limited liability company at the stage of its creation. The conclusion of this contract is not a prerequisite for registration and follow-up activities of a legal entity, therefore, the question of conducting this procedure is left to the discretion of the founders.
With the formation of joint stock companies, the possibility of concluding a similar agreement, which is called the agreement on the creation of a company, is provided for. The memorandum of association does not have the status of a constituent document, it is not provided to various state bodies for the implementation by a legal entity of its own rights, and fulfillment of obligations.

How to sign a memorandum of association?

In order to conclude a memorandum of association, the future members of the company must agree on all its basic conditions.Usually, this agreement is signed before the execution of the charter of a legal entity, sometimes the constituent agreement refers to the charter, which supplements and decrypts some of the terms of this transaction.
The main issues that are agreed upon when signing the memorandum of association and are recorded in its text are the conditions for transferring the property of the organization being created, the specifics of participation of founders in this company, the rules for distributing profits and losses, methods of managing the company, and other significant points. After that, the founders draw up a written text of the contract, which is signed by each of them. After reaching an agreement between the parties, the memorandum of association enters into force.

What can be included in the memorandum of association?

Structural articles of incorporation usually include introductory, main and final parts. In the introductory part, the purpose of concluding a contract is indicated, its parties are named, the name and the organizational and legal form of the legal entity being created are given. Also in this block is recorded information about the type of activity and location of the future company.
The main part describes the obligations of the participants, the procedure for the formation of the company's property, the particularities of the formation of governing bodies, the procedure for the distribution of profits and other significant issues. In the final part, the participants agree on the procedure for resolving disputes that may arise in the future, and also determine the conditions for a possible change, termination of the contract thereafter.

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