Which document sets out the relationship between the company and the public and outlines its objectives and authorized share capital?

Which document sets out the relationship between the company and the public and outlines its objectives and authorized share capital?

• A. The Articles of Association
• B. The Certificate of Incorporation
• C. The Directors' Report
• D. The Memorandum of Association

Answer: (D)

The memorandum of association defines how the company relates to the outside world and what it is authorized to do. It sets out the company’s objectives (the scope of its activities) and the authorized share capital, which is the maximum amount of capital the company can raise by issuing shares. This information is what outsiders—customers, suppliers, lenders, and the public—need to know to understand the company’s purpose and its formal financial limits. Other documents have different roles. The Articles set out internal rules for running the company and the rights of members, the Certificate of Incorporation is the legal document proving the company’s existence, and the Directors’ Report provides performance information to shareholders.

The memorandum of association defines how the company relates to the outside world and what it is authorized to do. It sets out the company’s objectives (the scope of its activities) and the authorized share capital, which is the maximum amount of capital the company can raise by issuing shares. This information is what outsiders—customers, suppliers, lenders, and the public—need to know to understand the company’s purpose and its formal financial limits.

Other documents have different roles. The Articles set out internal rules for running the company and the rights of members, the Certificate of Incorporation is the legal document proving the company’s existence, and the Directors’ Report provides performance information to shareholders.