What are the Different Clauses in MoA?

The Memorandum of Association is a legal document that serves as the charter for the foundation of a corporation. It is a crucial document since it specifies the legal identity and purpose of the company. A memorandum of association is one of the documents that must be filed with the Registrar of Companies during the formation process in India, according to the Companies Act 2013.  It specifies the fundamental and necessary aspects of a company, such as its name, registered office address, objectives, authorized share capital, and member liability. The MOA defines the scope of the company’s activities and serves as a guide for internal operations. In this article, we will discuss the different clauses in MoA.

The memorandum of association must conform with the Companies Act and include the mandatory clauses stipulated by the Act. As a result, entrepreneurs and business owners must grasp the significance of a Memorandum of Association (MOA) and construct it with the utmost care and attention to detail.

Purpose of MoA

The fundamental objective of the Memorandum of Association is to define a company’s legal identity and scope of activities. It serves as a charter for the formation of the company and outlines the fundamental and necessary features of the company.

The memorandum of association contains information on the company’s name, registered office address, objectives, authorized share capital, and member liability. It also defines the purposes for which the company was established and operated.

The MOA ensures clarity and transparency to the company’s stakeholders, including investors, shareholders, creditors, and regulators, by outlining these essential components. It helps to ensure that the company is run in compliance with the law and acts as a guide for the internal operations of the company.

Clauses in MOA (Memorandum of Association)

A Memorandum of Association is a legal document that outlines the fundamental and necessary components of a company. According to India’s Companies Act 2013, a memorandum of association must have six necessary elements for the incorporation of a company. These are the clauses in MoA:

• Name Clauses in MoA (Memorandum of Association)

The inclusion of a name clause in a company’s Memorandum of Association is required, as per the Companies Act 2013 in India. It includes the company name and should conclude with either “Private Limited” or “Limited” if the company is share-limited, or “Unlimited” if it is not.

Before the company is incorporated, the Registrar of Companies must approve the name, which must be distinctive. Additionally, the name clause must go by the guidelines established by the Ministry of Corporate Affairs. The company name must not be offensive, infringe any copyright or trademark laws, or be the same as or similar to any name already in use by another company.

• Registered Office Clauses in MoA or Memorandum of Association

The Registered Office Clause is a statutory clause that must be included in a company’s Memorandum of Association. It specifies the company’s registered office address, which is the official address to which all legal notices, communications, and documents will be addressed.

The registered office must be in the same state as the company’s incorporation. The whole address, including the city, district, state, and PIN code, should be included in the Registered Office Clause. Any change in the registered office address must be informed to the Registrar of Companies within 30 days of the change.

• Objective Clause in Memorandum of Association

The objectives and purposes for which the company was founded and is run are outlined in the Objective Clause. The core aims of the company, known as the main objects, and any secondary or supplementary objectives should be explicitly stated in the Objective Clause. Instead of being ambiguous or imprecise, the objects should be precise and unambiguous.

The memorandum of association should also include any incidental or subsidiary purposes required to achieve the primary objectives. Any modifications to the company’s objectives must be agreed upon the shareholders and reported to the Registrar of Companies. The Objective Clause is an important section of the MOA since it outlines the scope of the company’s activities and aids in assessing the legality and validity of the company’s operations.

It also protects stakeholders’ interests by ensuring that the company operates within the legal framework and does not engage in any activities not stipulated in the MOA.

• Liability Clause in MOA

The Companies Act 2013 in India mandates that the Memorandum of Association of a company contain a liability clause, which is a crucial provision. It outlines the members’ obligations if the company incurs debts or losses.

Members’ liability in a corporation limited by shares is capped at the outstanding balance of the shares they own. In contrast, a company limited by guarantee limits its members’ liability to the amount they agree to contribute to the assets of the company if the business is wound up.

The memorandum of association should specify whether the company’s liability is limited or unlimited. It is essential to note that any misrepresentation or misleading statement about the liability clause might have serious legal ramifications.

The Liability Clause is an important section of the MOA because it outlines the scope of the members’ liability and aids in the protection of their assets in the event of any debts or losses incurred by the firm.

• Capital Clause in Memorandum of Association

According to the Companies Act 2013 in India, a company’s memorandum of association must contain the capital clause, which is a crucial provision. It details the maximum amount of capital that the company is permitted to distribute to its shareholders, or the authorized capital of the company.

The authorized capital, the number of shares, and the nominal or face value of each share should all be expressly stated in the Capital Clause. The kinds of shares, such as equity shares, preference shares, or debentures, that the company is permitted to issue should also be specified in the memorandum of association.

The shareholders must approve and notify the Registrar of Companies of any modifications to the company’s authorized capital.

The MOA’s Capital Clause is an essential component since it establishes the maximum capital that the business may raise and aids in assessing its financial stability. Additionally, by guaranteeing that the business does not issue more shares than is permitted, it aids in safeguarding the interests of the shareholders.

• Association Clause in Memorandum of Association

As per the Companies Act 2013 in India, the Association Clause is an essential clause that needs to be present in the Memorandum of Association of a company. It includes the company name, the state where the registered office is located, and the purposes for the formation of the company.

The names, addresses, occupations, and signatures of the subscribers—those who have consented to join the company and become its members—should also be included in the Association Clause. For a private company without share capital, the memorandum of association must be signed by one subscriber, two subscribers for private companies with share capital, and seven subscribers for public companies.

An essential component of the MOA, the Association Clause establishes the company’s legal existence and defines its identity. Additionally, it aids in locating the subscribers who have consented to establish the business and become its members.

What can be altered in a MOA?

The Memorandum of Association is a crucial document that defines a company’s constitution, objectives, and authorities. In some cases, the memorandum of association may need to be amended, such as changing the company’s name, increasing authorized capital, or revising the objects clause to reflect the company’s evolving needs.

The Companies Act 2013 of India states the modification in different clauses of MoA, including

• Name Clause: The MOA’s Name Clause may be amended to change the company’s name.
• Object Clause: This section outlines the company’s goals and authority. It can be changed to incorporate new goals or to reflect the evolving demands of the business.
• Liability Clause: This clause outlines the responsibility of the company’s owners or members. It can be changed to shift the members’ limited liability to unlimited liability, or the other way around.
• Capital Clause: This clause establishes the company’s permitted share capital. It can be modified to change the authorized share capital in either direction.
• Registered Office Clause: This section provides the company’s registered office address. It can be modified to move the registered office to a different address.

Alteration of Memorandum of Association of a Company

The Memorandum of Association is a significant document that establishes a company’s constitution, scope of activity, and powers. However, the memorandum of association may require changes in specific cases, such as changing the company’s name, increasing authorized capital, or revising the objects clause to reflect the company’s evolving needs.

The Companies Act 2013 of India specifies a specific method for changing the MOA, which includes seeking shareholder approval and complying with the Act’s regulations. The following steps are included in the procedure for altering the memorandum of association:

• Convening a Board Meeting: To approve the suggested changes to the MOA, a board meeting should be convened.
• Convening a General Meeting: To get the shareholders’ consent for the suggested modifications to the MOA, a general meeting should be convened.
• Filing of Special Resolution: Within 30 days of the resolution’s passing, a special resolution must be submitted to the Registrar of Companies (ROC).
• Approval of ROC: After carefully examining the special resolution and finding it satisfactory, the ROC will approve for the amendment to the memorandum of association.
• Issuance of Certificate of Incorporation: The ROC will issue a new Certificate of Incorporation that takes into account the changes made to the MOA.

It is critical to note that any changes to the memorandum of association must be made by the terms of India’s Companies Act 2013 and any other relevant laws. Furthermore, the modification should not conflict with the existing provisions of the MOA and should not hurt the rights of shareholders or the general public.

Conclusion

In India, the Memorandum of Association is a crucial document for any company. It acts as a manual for the business’s activities and describes the goals, authority, and constraints of the organization. Any changes made to the memorandum of association must adhere to the rules outlined in the Companies Act of 2013, as the document is open to public inspection. The MOA cannot be used to break the law or to carry out actions that are banned by statute. Companies can assure legal compliance and build a solid basis for their operation by following the rules and principles specified in the MOA.