Memorandum of Association — SPCC STD 11 Commerce — Question

1. Introduction : The liability clause of Memorandum of Association clarifies the liability of the shareholder of the company. Management cannot increase or decrease the liability of shareholders as per their wish and will. For changes in liability clause provisions of Companies Act need to be observed and written permission of members is also required.
2. Changes in Liability Clause: Liability clause of Memorandum of Association clarifies the liability of the shareholders. The changes in it can be undertaken in the following manner.
(1) It may extinguish or reduce the liability on any of its shares in respect of the share capital not paid up.
(2) A company limited by share capital or limited by guarantee may reduce its share capital by a special Resolution.