# Association / Subscription Clause

## Substance of the Clause

In this clause, the subscribers (which may include a body corporate) declare their desire to be formed into a company and agree to take the shares indicated opposite their respective names.

## Statutory Requirements for Subscription

Requirement	Detail
(i) Signature & Attestation	Memorandum must be signed by each subscriber in the presence of at least one witness who must attest the signatures
(ii) Minimum Shares	Each subscriber must take at least one share (if any)
(iii) Number of Shares	Each subscriber must write opposite his name the number of shares (if any) he agrees to take

## Why It Matters

This clause provides conclusive evidence of the intention of the original subscribers to incorporate the company and accept shares — making them the first members of the company on incorporation.

Worked example

### Example 1

Example — Defective Subscription

A private limited company is being incorporated. One subscriber signs the memorandum but no witness attests his signature. Another subscriber forgets to mention the number of shares he agrees to take.

Answer: Both are defective subscriptions:

The first violates the requirement that signatures be attested by a witness.
The second violates the requirement to write opposite the name the number of shares agreed to be taken.

These defects must be rectified before filing with the ROC for incorporation.

⚠️ Common exam mistakes

Forgetting that a body corporate can also be a subscriber.
Assuming more than one witness is required — only at least one witness is mandatory.
Believing the subscriber can take zero shares — each subscriber must take at least one share if the company has share capital.
Omitting the requirement that the number of shares must be written opposite the subscriber's name in the subscription clause itself.

Reference: — Companies Act, 2013 (Section 7 / Schedule)

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Association/Subscription Clause

Worked example

⚠️ Common exam mistakes