Overview of Memorandum of Association
The memorandum of association acts as the foundation of every company. It explains all the rules and bubbles powers of the owner in your systematic formal representation. It has a broad scope. As it is very important for every organisation, we will try to understand more about moa. Let us discuss the meaning of the memorandum of association and its aims, features, and many more.
Memorandum of Association of a Company
Memorandum of association of the company deals with all aspects of that particular organisation such as the operations delegation of duties and policies, principles, etc. The memorandum of association of any company is formed or designed by considering the objective of a particular firm. In the year 2013, section 399 of the companies act, designed to form an MOA, which is the public document and needs to get aware of this moa to all employees of an organisation.
What is Meant by MOA?
The memorandum of association definition explains that all the powers and the rights should be mentioned in this public document and no one should depart from the contract as well as not to Violet the rules and regulations specified in the moa. If anyone violates, they can be termed as ultra vires of the company and immediately can void them. This is the simple and straight away definition of the memorandum of association of any company. It is completely under legal survival. All the papers are strictly verified and are tested by the moa in company law.
Types of MOA
Based on their form, there are five main types of memorandum of association and they are as follows:
Table A - if shares end up limiting a company.
Table B - if a guarantee limits a company.
Table C - if a guarantee along with share capital limits a company.
Table D - if it is an unlimited company.
Table E - if it is an unlimited company and has a share capital.
Contents of MOA
The contents of the memorandum of the association consist of different clauses. Each clause plays a vital role in the organisation. Let's see all the classes in a detailed manner as given below,
Name Clause:- the name clause of moa specifies that the titles of all the private limited companies should end with 'private limited'. On the other hand, the titles of all the government companies should end with 'limited'.
The companies under section 8 of the act, may need not to follow these rules. These companies can be identified by certain words like-
Association
Federation
Foundation
Confederation
Forum
Chamber
Council
Electoral trust.
Registered Office Clause- indicates the state of the registered office where the organisation is located exactly. It is very important to specify the branch of the registered office where the organisation got registered.
Object Clause: this segment of the memorandum of association explains the motto of the organisation and its activities. After a few months if there is a change in activities and operations, then the head of the institution needs to change the name of that organisation within 6 months. Otherwise, it will become an offence.
Capital Clause: it concentrates on the capital invested by two or more shareholders of one company. We need to furnish the information regarding the amounts of share between the shareholders and how they formulated their rules etc. in the memorandum of association.
Liability Clause: it is another important class of memorandum of association. Here we need to explain the liability of the members either limited or unlimited in the firm.
If the company is limited by shares, it needs to specify the amounts held by the shareholders and whether they are paid or unpaid. All these aspects need to be mentioned clearly in the MOA.
If the company is restricted by guarantees, the Moa specifies that all contributors with a bonus have equal rights. Even during the winding up of a company, both assets and liabilities which include all the expenses while demolishing the firm need to be distributed equally.
Association Clause: It is the last but not least, class of the memorandum of association. Here one should mention the exact idea and goal of the owner of the company.
Amendment of MOA
If any of the following changes take place, then it means that the memorandum of association needs to be amended:
If an alteration takes place in the name of business.
If any changes happen in the office of registration.
If an alteration takes place in the object clause of the business.
If an alteration takes place in the authorised capital of the business.
If any kind of adjustments are made in the legal liabilities of the business members.
The procedures to be followed for making any types of amendments in the memorandum of association have been mentioned in the 13th clause of The Companies Act, 2013.
Conclusion
Hence it is clear that the memorandum of association is the fundamental public agreement of all kinds of organisations that involves the operational activities, rights, powers, etc. From the definition of a memorandum of association, we can understand that it is important to check the format and all clauses without any fail. And the memorandum of association of your company should be verified and attested by the moa of company law.
FAQs on Memorandum of Association: Definition and Importance
1. Explain the format of the memorandum of association?
The format of the memorandum of association is clearly explained under section 4 of the companies act, 2013. The format of MOA should be represented in tabular forms. And it consists of 5 tables which start from A to E. Each table represents the form of moa for different kinds of organizations. It is as follows-
If the company is limited by shares, one can use Table A as a form for the memorandum of association.
If the company is restricted by guarantee and doesn't have any share capital, then we can use table B as a form for the moa.
If the company is limited by guarantee and having some share capital, then table C is used as a form for the moa.
Table D is a form for the memorandum of association for the companies which are unlimited with no share capital.
If the unlimited company also has a certain share capital, then it is necessary to take table E as a form for moa.
2. What are the prerequisites for the submission of moa?
Before submitting the memorandum of association, it is important to follow certain checkpoints. They are as follows-
First, the owner needs to take the print out of respect to the form of a memorandum of association.
One should publish all the information only by dividing it into equal paragraphs.
All the pages should be in sequential order. It awards confusion as well as wastage of time.
It is necessary to have at least one witness to verify all the signatures and to attest them.
Enter all the particulars like objects, witnesses, shares, addresses, etc without any fail.
We should make sure that two people need to sign if the company is limited, one needs to sign if it is a one-man company and it requires seven people to sign on the other companies.
3. What is the significance of the memorandum of association?
The memorandum of association places a significant role for every company. It specifies all the operational activities, legal issues, objectives, amount of the capital, addresses, signatures, witnesses, etc. And it is also verified and attested by the MOA of company law. The company's act of 2013 explains the format, classes, objectives of the memorandum of association.
As it is under the surveillance of law, the chances of malpractices are very less. Also, everything will be transparent to all the new employees along with the old staff. It also helps if any unfortunate things like deaths or accidents may be caused, the new management can take up the duties and understand the policies by referring to this memorandum of association.
4. Define memorandum of association. What is its importance?
The memorandum of association of a company is considered to be a very important document, i.e., it is said to be the charter of the company. This legal document is prepared when the given company is being built and registered so as to define the objectives upon which the company is being based as well as its relationship with the shareholders.
The importance of memorandum of association is as follows:
It is the fixed charter of a company which helps to regulate the company’s relation with the world in general.
It determines the area of operation: the MOA tends to provide the company with a specific list of activities that it is allowed to undertake. This means that any operation that isn’t included in this list will be void.
It determines the company’s relationship with outsiders: the outsiders include the shareholders, stakeholders, and creditors; the MOA is responsible for dispersing the necessary information to them as it represents the range of the particular organisation or enterprise and its overall scope and power.
The basis of incorporation: for the memorandum of association to get incorporated, it needs to be filed with the registrar of the company.
5. State the difference between MOA and AOA.
The difference between memorandum of association and article of association is as follows:
MOA | AOA |
It describes the power, scope, and objects of a company. | It describes the rules of a company. |
It cannot be amended. | It can be changed. |
It is subordinate to the Companies Act. | It is subordinate to the memorandum. |
It tends to include six definite clauses. | It can be drafted according to the needs and requirements of the company. |
It is compulsory for all companies. | A public share company can make use of Table A instead of AOA. |
6. What are the mandatory clauses of a company’s memorandum of association?
The mandatory clauses of a memorandum of association of a company are as follows:
Name clause: this tends to specify that the names of all private limited companies should end with “private limited” and those of a government company should end with “limited”.
Registered office clause: it specifies the state of the registered office where the organisation tends to be located.
Object clause: this tends to give information regarding the aim of the organisation along with its activities.
Liability clause: it explains the liability of the members, whether it is limited or unlimited in the particular firm or organisation.
Capital clause: it tends to focus on the capital that is invested by two or more shareholders of a company.
Association clause: this asks the individual to mention the exact goal of the owner of the company.
One-person company clause
Other than these compulsory clauses, additional clauses can be added as and if required.
7. What is the companies Act, 2013?
The Companies Act, 2013 is a form of Parliamentary Act on Indian Company Law which tends to regulate the process of affiliating, authorising, and disintegrating of a particular company whilst laying stringent rules regarding the roles and responsibilities of the director, board members, stakeholders, creditors, investors, and other members of the company.
8. What are the prerequisites for the submission of MOA?
Before submitting the memorandum of association, it is important to follow certain checkpoints. They are as follows-
First, the owner needs to take the print out of respect to the form of a memorandum of association.
One should publish all the information only by dividing it into equal paragraphs.
All the pages should be in sequential order. It awards confusion as well as wastage of time.
It is necessary to have at least one witness to verify all the signatures and to attest them.
Enter all the particulars like objects, witnesses, shares, addresses, etc without any fail.
We should make sure that two people need to sign if the company is limited, one needs to sign if it is a one-man company and it requires seven people to sign on the other companies.
