Memorandum of Association(MOA) is a public document, and every person who deals with the company is presumed to have a sufficient knowledge of its contents and provisions.
Memorandum of association(MOA) is one of the basic documents of the company. It is known as charter of the company. It sets out the limits outside which company cannot go, Memorandum of association defines the constitution of the company. It contains the fundamental conditions upon which a company is registered.
Definition of Memorandum of association(MOA) is defined under Article [2(1)(22)] of the Companies Act, 2013 states that “Memorandum of association of a company as originally framed for time to time change in provisions of any previous Companies Act or of this Ordinance”
Purpose of Memorandum of Association
- Memorandum of association is the constitution of a company.
- It is the charter which defines the limitations of the power of a company established under law.
- It determines the powers, objects and limits of the companyüIt contains the fundamental conditions under which company must be incorporated.
- It is the foundation on which the structure of the company is based.
- It states that the company can not go beyond its Memorandum.
- It enables the shareholders to know what is the permitted range of enterprise.
- It regulates the external affairs of the company.
Requirements of MoA [under section 19 of companies act, 2013]
- Memorandum must be printed.
- It should be divided into paragraphs.
- Each paragraph should be consecutively (serially) numbered.
- It should be signed by the required number of subscribers (Whereas , in case of public company and one in case of private company).
- Subscriber must sign in the presence of at least one witness.
- Signature of each subscriber must be attested by witness.
- Every subscriber must add his address, description and occupation.
- Witness should write his address, description and occupation.
- Memorandum must be stamped.
Clauses of MoA
- Registered Office
- Liability Capital
The name of the company is its first unique identity. Thus the name clause of the memorandum consists of the authentic, legal and approved name of the company. Company names should not bear any similarities to a company registered with a similar name because many times these companies protect the name of their companies via a Trademark Registration procedure.
Registered Office (Domicile Clause)
The domicile clause comprises all possible details of the registered office of the company. It has the name of the State or Union Territory of the registered office and may and may not have the exact address of the office. It also has the names of the registrars enrolled.
Objects Clause constitutes the main body of the memorandum. It provides a list of all the operations of the company. Every motive and operation the company indulges in must be mentioned in the object clause. Also, any such operation which is not mentioned in the object clause is considered to be beyond the reach of the company.
The objects of a company fall into two categories as prescribed below:
- The proposed objects of the company for which it is being incorporated
- Matters considered necessary in furtherance thereof
Apart from just stating out the objectives of the company the statement of objects in the company’s MoA empowers the people associated with the company with the following benefits
- It gives protection to the subscribers as they have complete knowledge of where their valuable money is being invested.
- Protects the individuals and/ or companies that deal with the concerned company as they have knowledge of the extent of the companies powers.
- The board of directors of the company is restricted from using the funds of the company only to the objects specified in the Memorandum.
Liability Clause mentions the liability of every member of the Company. It simply states that every member of the company has limited liability. The clause also specifies the amount of contribution of agreed upon for each individual participant in case the company is closing or winding up.
This clause mentions the share capital with which the company is registered. In addition to this, the capital clause should also mention the types of shares, the number of each type of share, and the face value of each share.
Private companies and public companies not intended to be listed in the stock exchange may assume any face value depending on a number of factors however, public companies to be listed will have a prescribed face value of the shares.
The last and final clause of the Memorandum of Association is called the subscription clause. The subscription clause basically lists down the motives of the shareholders behind the incorporation of the company and also states that the subscribers are agreeing to take up shares in the company. It also specifies the number of shares taken up by each subscriber. It is all according to the details specified in the MoA Subscriber Sheet.