Is mking membrs by tking money & pying them 2 make mmbr ryt?

This query is : Resolved

Sushant Mahajan (Querist)
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22 October 2013 If a company wants to do business of taking money to make members and organizing quiz for the members and pay them for the correct answers.

Along with this, the company pays the members commission for further making members and continue the membership tree?

Is doing this business valid and if it is what should be the objects mentioned in the MOA?

Please reply.

Ajay Mishra

Ajay Mishra (Expert)
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23 October 2013 Dear Sushant’

Kindly Confirm

What is the Main Business of such company.

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Sushant Mahajan

Sushant Mahajan (Querist)
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23 October 2013 Sir

the main business is making money by organizing quizzes only. The entire amount received will be shown in profit and loss a/c. The expenses will be that of commission and prize money distribution.

Ajay Mishra

Ajay Mishra (Expert)
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23 October 2013 As per my views company can do business and make monies.

Sushant Mahajan

Sushant Mahajan (Querist)
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23 October 2013 Thank You sir.

One more help sir,

what should be the legal language of the objects to be mentioned in Main object in MOA?

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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01 August 2024 The business model you're describing—taking money from members, organizing quizzes, paying prizes for correct answers, and paying commissions for recruiting new members—has legal and regulatory considerations. Such a model can easily resemble a multi-level marketing (MLM) scheme or even a pyramid scheme, both of which are heavily regulated and often restricted or illegal in many jurisdictions.

To ensure legality, the business should primarily focus on the quiz and competition aspect, with clear and transparent rules about membership fees, prize distributions, and commission payments. The emphasis should be on the value provided through the quizzes rather than recruitment-based earnings.

### **Drafting the Main Objects in the MOA:**

Here's a suggested format for the Main Objects clause to reflect the business activities legally and clearly:

### **Main Objects Clause:**

#### **Primary Objectives:**

1. **To organize and conduct quizzes and competitions:**
- "To organize, promote, and conduct quizzes, competitions, and other knowledge-based contests for members and the general public."

2. **To provide membership services:**
- "To provide membership services that include the opportunity to participate in quizzes and competitions, offering educational and entertainment value to members."

3. **To distribute prizes:**
- "To award prizes, incentives, and other recognitions to winners and participants in the quizzes and competitions conducted by the company."

#### **Ancillary Objectives:**

1. **To manage a membership platform:**
- "To develop, manage, and maintain a platform for the registration, participation, and engagement of members in quizzes and competitions."

2. **To handle financial transactions:**
- "To manage the financial aspects related to membership fees, prize distribution, and other monetary transactions necessary for conducting the business activities."

3. **To remunerate for participation and referrals:**
- "To remunerate individuals for their participation in quizzes and competitions and to compensate members for referring new members, ensuring all activities comply with applicable laws and regulations."

### **Important Considerations:**

1. **Regulatory Compliance:** Ensure that the business model complies with laws regulating MLM, direct selling, and gaming/quiz competitions. This may involve consulting with legal experts or regulatory bodies.
2. **Transparency and Fairness:** The business operations should be transparent, with clear terms and conditions for membership, quiz participation, prize distribution, and commission payments.
3. **Avoiding Pyramid Scheme Structure:** The business must avoid any structure that could be construed as a pyramid scheme, which is illegal in many jurisdictions. The focus should be on the value provided through quizzes and competitions rather than recruitment-based earnings.

### **Sample Main Objects Language:**

"The objects for which the company is established are:

1. To organize, promote, and conduct quizzes, competitions, and other knowledge-based contests for members and the general public.
2. To provide membership services that include the opportunity to participate in quizzes and competitions, offering educational and entertainment value to members.
3. To award prizes, incentives, and other recognitions to winners and participants in the quizzes and competitions conducted by the company.
4. To develop, manage, and maintain a platform for the registration, participation, and engagement of members in quizzes and competitions.
5. To manage the financial aspects related to membership fees, prize distribution, and other monetary transactions necessary for conducting the business activities.
6. To remunerate individuals for their participation in quizzes and competitions and to compensate members for referring new members, provided all activities comply with applicable laws and regulations.
7. To do all such other things as are incidental or conducive to the attainment of the above objects."

### **Conclusion:**

When drafting the MOA for a business involving quizzes and memberships, it is essential to use precise legal language that accurately reflects the business model while ensuring compliance with legal regulations. Consulting a legal professional is advisable to ensure that all aspects of the business are covered and comply with applicable laws.

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