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Memorandum of Association – MoA Format
The Memorandum of Association (MoA) is like the 'Geeta' for a company. Just as there are guidelines and objectives for human beings to follow in life (though humans aren’t bound to follow the 'Geeta'), a company must operate within the boundaries, objectives, and activities mentioned in the MoA when it was incorporated. In this article, we will discuss the objectives, clauses, and content of the Memorandum of Association.
What is MoA?
A Memorandum of Association (MOA) is a fundamental legal document that sets the purpose, authority, and operations of an organization. Basically, it’s a constitution for the company, mainly defining its relationship with the shareholders and guiding how the company should interact with the outer world.
Every company entity is required to have a MoA in place before it can commence operations. The company can only perform activities that are mentioned in the MoA and cannot go beyond the boundaries set in it. If an organization goes beyond those boundaries, it is considered “ultra vires” and is void.
The MOA provides a detailed overview of the company's structure, objectives, and limitations. It is a public document available for inspection by anyone interested in the company's affairs. To obtain a copy, individuals can pay a fee to the Registrar of Companies.
Anyone who is interested in the company and meant to deal with it through contracts, investments, or any other transactions should understand its MoA. It provides transparency and ensures that all the parties involved are familiar with the company’s legal framework and limitations.
Format of Memorandum of Association
The format of the MoA should follow the template specified in Tables A to E of Schedule 1 of the Companies Act, 2013 (Section 4(6)). The company must choose the appropriate table based on its capital structure.
- Table A: Suitable for companies with a share capital.
- Table B: Applicable to companies limited by guarantee but without a share capital.
- Table C: For companies limited by guarantee and having a share capital.
- Table D: Used for unlimited companies without a share capital.
- Table E: For unlimited companies with a share capital.
The MoA should be printed with serial numbers, divided into classified paragraphs, and signed by all the company's subscribers.
Contents of Memorandum of Association
Here is the informations needs to be mentioned in MoA:
Name Clause
This clause in the MoA specifies the company's name, which must not be identical to any other company. The name should also include the company's type at the end. For example, a private company must include "Private Limited" or its abbreviation, "Pvt. Ltd." Similarly, a public company must include "Limited" at the end of its name. For instance, if Tax2win is a private limited company, its name should be "Tax2win Private Limited" or "Tax2win Pvt. Ltd." If Tax2win is a public company, its name should be "Tax2win Ltd."
Registered Office Clause
This clause specifies the state where the company's registered office is located. The Registrar of Companies has jurisdiction over the company based on this location. The company must notify the Registrar of the registered office address within 30 days of incorporation or commencement of business.
Object Clause
The object clause in MoA pencils the specific purposes for which the company is being incorporated. It defines the extent of the company’s activities and sets the boundaries within which it can operate.
Liability Clause
The liability clause in a Memorandum of Association (MOA) specifies the extent to which members of the company are liable for its debts and obligations. It determines whether members have limited or unlimited liability. In a limited liability company, members' liability is typically limited to the unpaid amount on their shares. In a company limited by guarantee, members agree to contribute a specified amount to the company's assets if it winds up. Unlimited companies have members with personal liability for the company's debts. The liability clause is crucial for investors and creditors, as it affects their risk exposure and expectations regarding the company's financial stability.
Capital Clause
The capital clause in a Memorandum of Association (MOA) details a company's financial structure. It specifies the authorized capital, which is the maximum quantity of shares the company can issue. The authorized capital is split into shares of a fixed amount. The capital clause also details the number of shares, share value, and initial shareholders with their allotted shares. This clause is crucial for defining the company's financial framework, informing investors, fulfilling legal requirements, and enabling future growth.
Objectives of Memorandum of Association
The MOA is a vital document that outlines essential company information. According to Section 3 of the Companies Act 2013, a company can be formed only when a certain number of members subscribe to the MOA:
- Public Company: At least seven members.
- Private Company: At least two members.
- One Person Company (OPC): Just one member.
The MOA must be drafted and signed by the required number of members before a company can be registered.
Section 7(1)(a) of the Act mandates that both the MOA and Articles of Association (AOA) must be signed by the subscribers for company registration. A copy of the MOA must be submitted to the Registrar of Companies (ROC) during the registration process.
The ROC can provide a certified copy of the MOA to the public upon payment of fees. This serves several purposes:
- Investor Information: Potential shareholders can learn about the company's objectives, capital structure, and other details before investing.
- Stakeholder Awareness: The MOA provides essential information to stakeholders interested in associating with the company.
Alteration of Memorandum of Association (MoA)
If there are changes in any of the MOA clauses, the document must be amended to reflect these modifications. The following changes necessitate an alteration to the MOA:
- Company Name: Changes to the company's name.
- Registered Office: Changes to the location of the registered office.
- Company Objects: Changes to the company's objectives or purposes.
- Member Liability: Changes to the nature of liability for company members.
- Authorized Capital: Changes to the maximum limit of authorized capital or its division.
The process for altering the MOA involves the following steps:
- Board Meeting: The company must hold a board meeting to approve the proposed alterations.
- General Meeting: A general meeting of shareholders must be conducted to obtain their approval for the changes.
- Special Resolution: A special resolution to alter the MOA must be filed with the Registrar of Companies (ROC) within 30 days of its passage.
- ROC Approval: The ROC will review the special resolution and, if satisfied, approve the alteration to the MOA.
Frequently Asked Questions
Q- How MoA (Memorandum of Association is different from AoA (Article of Association)?
The Memorandum of Association (MoA) and Articles of Association (AoA) are two fundamental legal documents that define a company's structure and operations. The MoA outlines the company's external scope, objectives, and relationship with the outside world, while the AoA governs its internal management and procedures. The MoA is a public document, while the AoA is private. In case of conflicts, the MoA takes precedence over the AoA. Essentially, the MoA sets the boundaries for the company's activities, and the AoA provides the rules for how it operates within those boundaries.
Q- How to write a Memorandum of Association?
The MoA contains the company’s name, registered office address, business activities, authorized share capital, and the names and signatures of the initial shareholders, known as subscribers. It also defines the company's objectives, powers, and restrictions, which guide the company’s operations.
Q- How to get MOA and AoA of a company?
The MOA and AOA of a company are maintained by the Registrar of Companies and are available in the public domain. You can search for these documents online through the MCA21 system and obtain a copy. If you need to verify specific details, you can download the documents from there or request a certified copy from the ROC by paying the required fee.
Q- Who all can subscribe to the MoA?
Subscribers to the MoA can include the company's initial shareholders, promoters, and any other individuals or entities involved in incorporating the company.
Q- Does all types of companies require MoA?
Limited Liability Partnerships (LLPs) in India do not require a Memorandum of Association (MoA). They are governed by a Partnership Deed, a document that serves a similar purpose but is tailored to the specific structure of an LLP.
