Memorandum of Association
Updated: Nov 13, 2021
Definition of MOA
Memorandum of Association (MOA) is a term used to define the Company's charter by which the Company's structure is constructed. The MOA is a legal document prepared during the formation and registration process of a company. This document defines the relationship of the Company with shareholders. It also specifies the objectives for which the Company has been formed. The 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 Company's actions cannot go.
Memorandum of Association helps the shareholders, creditors, and any other person dealing with the Company know the Company's fundamental rights and powers. Also, the contents of the MOA help the prospective shareholders make the right decision while thinking of investing in the Company. MOA must be signed by at least two subscribers in case of a private limited company and seven members in a public limited company.
The MOA describes the basic identification details of a Company, such as the name of the Company, location of the Company's registered office, business objects of the Company, nature of business, liability of promoters, and details of directors/board members, its shareholders, etc. For a limited company, the Memorandum of Association is one of the Primary incorporation documents.
MOA – Applicable Table
Before preparing the MOA. Based on the type of company to be incorporated, the appropriate Table as per Schedule I of the Companies Act, 2013 must be selected. The following is the Table as per Schedule I and the relevant Company:
TABLE – A: MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY SHARES
TABLE – B: MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL
TABLE – C: MEMORANDUM OF ASSOCIATION OF A COMPANY LIMITED BY GUARANTEE AND HAVING A SHARE CAPITAL
TABLE – D: MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY AND NOT HAVING SHARE CAPITAL
TABLE – E: MEMORANDUM OF ASSOCIATION OF AN UNLIMITED COMPANY AND HAVING SHARE CAPITAL
Contents of Memorandum of Association
Memorandum of Association document contains seven clauses, each of which will carry a piece of certain information regarding the Company. The clauses are as follows:
Clause I - Name Clause
The first clause defines the name of the Company. Before registering a company under any name, the name has to be first approved by the registrar of companies.
The name of the Limited Company shall end with the word "Limited." For a public limited company, the name ends with 'limited,' and for a private company, the name ends with a 'Private Limited.' For a One Person Company, the name shall end with the words "(OPC) Private Limited". Non-profit companies need not have their names end with limited.
If a company decides to change its name, then the amendment of the name clause in the Memorandum is a must.
Clause II – Domicile/Situation Clause
The situation clause of the Memorandum of Association gives the information about the location of the Company. The clause contains the State under which the Company's Registered Office is situated and Registrar of Companies under whose jurisdiction the Company's Registered Office is situated. The respective registrar of companies shall have the jurisdictional authority over the regulatory compliances of the Company.
The Office of Registrar of Companies is situated in almost all the States in India. There are few states, such as Maharashtra and Tamilnadu, that have two jurisdictional offices of ROC. The northeastern states include Assam, Meghalaya, Manipura, Tripura, Mizoram, Nagaland, Arunachal Pradesh, Andhra Pradesh, Telangana, and Bihar; Jharkhand has only one office of ROC. An amendment will be required if the Company is shifting the Registered Office outside the jurisdiction of the present Registrar of Companies. The amendment to the clause would need details of the new State / Registrar of Companies to replace the old clause.
Clause III- The Object Clause
Object clause mainly gives information about the Company's business activities. The clause mentions the business objects for which the Company is incorporated and anything ancillary to the main thing.
The main aim here is to confirm that the Company's business activities or objects are according to the name registered in the registrar's office. Giving an example: POQ Consultancy Private Limited is expected to have business activities related to consultancy services. It cannot run an investment scheme, as the name says 'consultancy.' If a company decides to expand in various fields, the title should also be changed to refer to the expanding business.