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Memorandum of Association (MOA)

Memorandum of Association (MOA)

Last Updated : May 26, 2023, 4:47 p.m.

The companies are formed with an association of people holding a common purpose and aim to solve society’s problems. Every company must be officially registered at the Registrar of Companies (ROC) by submitting the required documents. Among the list of documents is an MoA or Memorandum of Association. The article introduces the readers to the concept of the same. 

What is MoA?

A Memorandum of Association is a legal document known as the company’s charter. It constitutes the information and specifications of the company concerning its reason for foundation and legal information. It specifies the area of operation, the extent of activities, the objectives of the company, the company’s relationship with shareholders and laws and regulations for interaction with the world.

The actions or activities beyond the stated ones are considered ‘ultra vires’ and subsequently void. The Memorandum of Association comprises the company’s structure and detailed and organised form. Additionally, MoA is a public document available to the requesting authority or organising on paying prescribed fees to the ROC. It is provided for a clear understanding of the company’s area of action and expertise and its limitations for dealing with creditors, shareholders, merging companies and other parties. 

The Memorandum of Association is open to alterations occasionally, and the changes are officially recognised. The Indian constitution covers it under Section 399 of the Companies Act, 2013. Minimum 2 subscribers should sign MoA if the company is a private limit, while it requires 7 in the case of a public limited company. Though MoA is not mandatory in the US, the limited liability companies residing in the Netherlands, France, the UK and other companies must prepare and submit the document. 

What is MoA Format?

Five forms define the MoA or Memorandum of Association for different business types. The suitable Memorandum of Association or MoA must be printed, divided into paragraphs and numbered along with the sign of subscribers as stated in the previous section. These are covered by Schedule 1 under Section 4(5) of the Companies Act, 2013. The format suitable for different business types is depicted as follows: 

  • Table A: Suitable for companies with a share capital 
  • Table B: Suitable for a company lacking a share capital and limited by guarantee
  • Table C: Suitable for a company with share capital and limited by guarantee
  • Table D: Suitable for an unlimited company lacking a share capital 
  • Table E: Suitable for an unlimited company with share capital.

Are There Specific Clauses of the Memorandum of Association?

There are six broad clauses: name, registered office, liability, object, capital clause, and association. The contents of clauses or content of the Memorandum of Association or MoA are discussed as follows: 

Name Clause

As evident, it indicates the company’s name, which should be unique and not misleading. Private companies must be accompanied by ‘Private Limited’ at the end. Public companies must add ‘Limited’ at the end of their company name. For instance, ‘XYZ Private Limited’ or ‘XYZ Ltd’.

Registered Office Clause

It requires the addition of the State of the location of a registered company. The clause is significant in determining the ROC jurisdiction. The companies get around a maximum of 30 days to state the company’s precise location to the Registrar of Companies post commencement or incorporation of the company. 

Liability Clause

This clause will inform the liability of company members. Unlimited company indicates unlimited liability. The shares limited company will have liability based on unpaid share amount. Similarly, the guaranteed limited company will have the liability of members according to the contributed amount. 

Object Clause

Object in the object clause refers to its objectives. These are to be stated into three sub-categories, main, incidental and other objectives. The main objective indicates the company’s main business, thus referring to the method of capital utilisation. Incidental refers to supporting objects in alignment with the main objective; other objectives are the remaining ones from the mentioned two.

Capital Clause

The capital clause will contain information on the amount of maximum permissible capital and its division into a fixed number of shares. The capital clause is the authorised or nominal capital of the company. 

Association Clause

It refers to the association agreement between the memorandum-signing parties.

Alteration Clause

The alteration is permissible and covered under separate clauses. 

Alteration of Name

It requires passing and sending a copy of the resolution and a specific fee amount. The companies will receive the updated incorporation of the certificate after successful name alteration.

Alteration of Registered Office

It includes an address change mandating a fee. The alteration will be possible only with the shareholder’s and the government’s consent.

Alteration of Liability Clause

It requires every company member’s written permission, evident in special resolution. It must be forwarded to the Registrar of Companies to incorporate the alteration.

Alteration of Object Clause

The change in the object clause also requires a special resolution with the authority’s consent. The new objectives and an additional document verifying the change in the objective are required for submission to ROC.

Alteration of Capital Clause

The capital clause will pass after the ordinary clause. The permissible changes include increasing nominal or authorised value, converting fully paid-up shares into stocks and reconversion into the former. Other possible alterations include sub-division of the shares and division or consolidation of any number of the share capital into higher share values compared to existing ones. 

FAQs

1. What are the advantages of a Memorandum of Association?

The Memorandum of Association or MoA showcases the company’s scope, objectives and activities, which is beneficial for investors to clearly understand their investment, the company’s powers, structure and rights.

2. Are there any disadvantages of the Memorandum of Association?

There are no significant disadvantages of the MoA formation. Though it is time-consuming, it is beneficial in the long run. It may limit the companies’ activities and expansion, which is again possible through alteration clauses.

3. Who can be the MoA subscribers?

The eligible MoA subscribers include individuals, minors via natural guardians and limited liability partnerships via authorised partners. NRIs and foreign citizens, companies by their representative and corporate body can also subscribe to the MoA.

4. Which companies can not have MoA?

The LLP or Limited Liability Partnership company under the Liability Partnership Act, 2008 must present the LLP deed, thus exempting them from MMemorandum of Association moaoA preparation.

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