Memorandum of Association
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The Memorandum of Association is a legally binding document drafted during the company’s registration process, substantiating and defining the shareholders’ roles and the organisation’s objectives. A memorandum of association reflects the company’s covenant to be adhered to. An MoA specifies the company’s direction as it covers the action it is set to take and the boundaries around which it conducts its operations.
A memorandum of association enlightens the shareholders, creditors and people associated with the company about the rights and obligations of the company. It also provides the roadmap to the potential investors with the company on the goals and objectives and the operations the organisation would make to honour them. The minimum number of signatories of an MOA varies based on the company’s nature. An MoA of a Private Limited Company is required to be signed by at least two subscribers, whereas a public sector company must have at least seven members.
What is MoA?
The MoA or Memorandum of Association is a legal document that states the company’s objectives and provides a detailed synopsis to the shareholders and creditors regarding the composition of the partnership. The Memorandum of Association serves as a blueprint for the company at the time of incorporation regarding the boundaries of its operations.
What is the MoA Format
Under Section 4(5) of the Companies Act, a company’s memorandum of association can select from the forms featured in Table A, B, C, D, and E of Schedule 1. Each table caters to the requirements of different types of businesses.
Table A: Applicable to Corporations with share capital
Table B: Applicable to limited-by-guarantee corporations where there is an absence of share capital.
Table C: Applicable to a company with share capital safeguarded by a guarantee.
Table D: Employed by an unrestricted company where the share capital is absent.
Table E: Employed by an unrestricted company where the share capital is present
It is to be noted that the memorandum of association of a company must be accurately typed and meticulously segmented into chapters for a clearer understanding of the reader.
Objectives in Registering MOA
The Memorandum of Association is a document that provides all the information regarding the operations and objectives of the company. The memorandum entails the company’s relationship with its shareholders. As per Section 3 of the Companies Act, a memorandum must facilitate a corporation’s registration.
- In the case of a public company, seven or more members.
- In the case of a private company, two or more members.
- In the case of a sole proprietorship, one person is required.
All the parties involved with the business must agree to the memorandum drafted before initiating the registration process.
For a company to be incorporated, all the subscribers must sign the drafted MOA and methodically submitted to the registrar. The memorandum of association of a company also services objectives such as:
- Providing insight to the investor inclined to purchase a share of the company.
- Acknowledges the partners of the firm with involvement with the firm.
Clauses of the Memorandum of Association
The following contents are featured in an MoA of a company.
Name Clause:
As the name suggests, the name clause concerns the company’s name. It is to ensure that the name of another registered business is varied. It is important to mention ‘private Limited’ if the company is private.
Registered Office Clause:
This clause regarding the state where the company’s office is situated clarifies the jurisdiction of the company’s registrar. The company must notify the registrar of companies of their registered office address within 30 days of the date of incorporation.
Object Clause:
This clause states the objective of the company that can be segmented into three categories.
- Primary Objective: refers to the core objectives of the company.
- Incidental Objective: refers to the objective instrumental in supporting the company’s main objectives.
Other Objectives: Objectives related to the company but are not featured in those mentioned above.
Liability Clause:
Concerns with the liability of the members of the company. Liability of a company limited is limited as per the composition of shares of the shareholders, unlike unlimited liability, where the liability on the shareholder is unlimited. The liability of the members is limited to the amount invested in the company in case of a guarantee.
Capital Clause:
This clause refers to the maximum capital the company is allowed to raise, also known as the nominal capital of the company. It also provides information on the composition of capital in terms of shares.
Can a Memorandum of Association (MOA) be Altered?
Yes. A company can modify their Memorandum of Association under Section 13 of the Companies Act, 2013. The following steps are to be implemented to conclude an alteration in MoA.
- Intimate the Board of Directors with a Notice for a meeting. It is to be noted that the notice shall reach the directors seven days before the scheduled meeting date.
- The company is then required to hold a meeting with the Board of Directors, where the members must evaluate and discuss the pros and cons of the alteration proposed.
- The authorised personnel is then required to draft a notice that shall be sent to shareholders, members and auditors of the company regarding their attention in the General meeting.
- The company is required to contest elections regarding the proposed alteration in the Memorandum of Association. The resolution for alteration must be passed after the votes in favour are three times the votes against it.
- The company’s registrar must file the resolution with the ROC within a month.
What Provisions or Sections Govern the Alteration of the Memorandum of Association (MOA)?
Under Section 13 of the Companies Act 2013, a company can make alterations to the following clauses of its MoA.
- Name Clause
- Situation Clause
- Object Clause
- Capital Clause
Forms to be Filed for Alteration of the Memorandum of Association (MOA)?
To conclude the alteration process with their respective MoA, a company can download the form from the official portal of MCA. One can download the documents from the ‘Company Form Download’ section. Direct Link- Download
What if the Company Fails to Comply with the Alteration in the Memorandum of Association (MOA) as per law?
The alteration will stand nullified if a company fails to accurately fill out the forms and honour the provisions. All the formalities must be followed under Section 13 of the Companies Act 2013.
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Frequently Asked Questions (FAQs)
What is a Memorandum?
In legal terms, a memorandum refers to a document entailing all the details and terms of a contract.
What does the MoA begin with?
A memorandum of Association is a document drafted during the company’s registration process, substantiating and defining the shareholders’ roles and the organisation’s objectives
What is the liability clause of MoA?
The liability clause in an MoA gives knowledge of the liability shared by the company’s members.
What is the name clause?
The name clause in an MoA pertains to the company’s name.