Memorandum of Association (MOA)
The Memorandum of Association or MOA of a company defines the constitution and the company’s scope of power. In simpler words, the MOA is the foundation on which the company is built. MOA is a legal memorandum prepared during the registration process of a company.
The scope of this content includes the following topics
A company can undertake only those activities that are mentioned in the Memorandum of Association. As such, the MOA lays down the boundary beyond which the actions of the company cannot extend.
MOA helps the shareholders, creditors and any other person dealing with the company to know the objectives and powers of the company. In addition to this, M0A contents help the prospective shareholders in taking the right decision while investing in the company.
According to Section 4 of the Companies Act, 2013, companies must draw the MOA as specified in Tables A-E in Schedule I of the Act. The company shall adopt a Table applicable to it as there are various tables for different companies. Here are the details of the forms:
- Table A: MOA Form of the company limited by shares.
- Table B: MOA Form of the company limited by guarantee and not having a share capital.
- Table C: MOA Form of the company limited by guarantee and having a share capital.
- Table D: MOA Form of an unlimited company.
- Table E: MOA Form of an unlimited company and having share capital.
The following clauses are mandatory in an MOA:
Name Clause in the MOA provides protection against subsequent company registration in the same or closely similar name.
- The name of the Public Limited Company must have the word ‘Limited’ as the last word.
- The name of the Private Limited Company must have the words ‘Private Limited’ as the last words.
- For the companies formed under Section 8 of the Act must include one of the following words, as applicable:
- Electoral Trust, etc.
Registered Office clause
It must particularly specify the address in which the registered office of the company will be situated.
It must specify the objects for which the company has been formed. Moreover, if a company changes its activities which are not reflected in its clause, then it can amend its clause within 6 months of changing its activities. This clause can be further divided into three sub-categories:
a) Main Objective: This states the main business of the company.
b) Incidental Objective: These are the objectives ancillary to the attainment of the main objectives of the company.
c) Other objectives: Any other objectives that are not covered in above (a) and (b) which the company may pursue.
This clause specifies the liability of the members of the company, whether limited or unlimited. Also,
- For an unlimited company – It should specify the liability of the members is unlimited.
- For a company limited by shares – it should specify whether the liability of its members is limited to any unpaid amount on the shares that they hold.
- For a company limited by guarantee – it should specify the amount agreed by each member to contribute to the assets at the time of winding up.
This clause is valid for those companies having share capital. This clause specifies the maximum amount of capital a company can raise. In simpler words, it states the maximum limit of authorised capital or nominal capital divided into the shares of fixed amounts. Further, it must state each member names and the number of shares against their names.
This is the last clause of MOA which must clearly specify the desire of the subscriber to form a company.
- Divide the MOA (Memorandum of Association) into paragraphs and number the pages in sequence and print it.
- Ensure that at least 7 members sign it in case of public limited company, 2 in the case of a private limited company and 1 in case of a One Person company.
- Have at least one witness to attest the signature.
- Enter details about the signatories and witness like address, description, occupation, etc.
- MOA can be subscribed by the company through its agent.
- A minor cannot sign an MOA. However, the guardian of a minor, who subscribes to the MOA on his behalf, will be deemed to have subscribed in his personal capacity.
- Apart from the mandatory provisions mentioned above, companies can attach additional provisions as required.