Memorandum of Association – All You Need To Know

The MOA (Memorandum of Association) is a legal instrument describing a company’s guiding principles. It was written at the time of registration and subsequently revised to reflect changes. Serving as the company’s constitution, the MOA must draft with the highest clarity and precision.

The MOA outlines the long-term goals and operational zones that will be covered. Additionally, it serves as the company’s last resort for resolving internal managerial difficulties.

Format of MOA

Table A – It applies to a corporation limited by shares.

Table B – It applies to corporations limited by guarantees without share capital.

Table C – It applies to businesses with share capital that are limited by guarantee.

Table D – It is relevant to public companies without share capital.

Table E – It applies to any share capital corporation, regardless of size.

The message needs to be printed, numbered, and divided into paragraphs. Additionally, it must include the company’s shareholders’ signatures.

Contents of MOA

Name clause

It is essential to state the name (identity) of the business correctly. Also, mention whether the company is public or private. The name shouldn’t be connected to or sound similar to an existing company.

Registered Office Clause

The name of the State in which the company’s registered office is located is specified in this section. It assists in determining the Registrar of Companies’ legal authority. 

Object clause

The corporation is constrained to its own self-imposed MoA objectives. The business should state its Main objectives as well as Incidental and other objectives.

The company’s primary goals are listed in the major objects. The items that decide whether the primary objectives are attained are included in the incidental objects. The Other objects section lists the company’s future incorporation goals or its subsidiary goals.

Liability clause

It demonstrates the responsibility of the company’s members. Guarantees or shares may restrict it.

Capital clause

The MoA should include information on the company’s authorized capital and the value of all assets (now owned or to be acquired by the company in the future. It consists of the sorts of shares that would create from the capital and how they would handle those in the event of capital appreciation or depreciation.

Nominee clause

Only in the case of One Person Companies is the nominee clause relevant. Mention the name of the person who will join the company if the subscriber passes away under this section. The subscriber and the nominee must be Indian citizens and Indian residents.  

Objectives of MOA

Only those activities listed in the MOA are permissible for a corporation to engage in. In other words, the Memorandum of Association specifies the limit that the company’s actions may not go beyond.

The MOA makes it easier for shareholders, creditors, and anyone else doing business or interacting with the organization to understand its responsibilities and goals. Additionally, the MOA contents assist potential shareholders in making the best choice when investing in the business.

Importance of MOA

For the following reasons, the MOA is crucial:

• It outlines the boundaries of the company’s power established by the Act.
• It serves as the foundation for the entire organization’s structure.
• It outlines the breadth of the company’s activity. While outsiders are unaware of the type of job the company is permitted to perform, investors are aware of how they will spend their money.
• It is the company’s most important legal framework document.
• It is a document that explains the company’s goals and serves as its charter.

Alteration of MOA

After receiving approval from the MCA (Ministry Of Corporate Affairs), the business must alter each version of the Memorandum of Association. 

After gaining the MCA’s clearance, the company may start new business operations. To avoid penalties, be sure to adhere to all rules and regulations.

The business must update MCA by submitting the forms on an ongoing basis as needed, such as when the registered office or capital expenditures are changed. If not, the organization and the defaulting officers will be held accountable for the fine.

Conclusion

With the Memorandum of Association, the firm can be founded. Hence it is a crucial document. It is a document that details the company’s whole organizational structure. The document specifies the range of operations that the firm engages in and includes precise information about how the organization operates.