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. What is in a memorandum of association?
Memorandum of association contains important details about a company, including its name, registered office address, company objectives, capital structure, and list of initial subscribers. It defines the company’s scope, powers, and relationship with the outside world, making it a key company law document.
2. What is the difference between MOA and AOA?
MOA (Memorandum of Association) outlines a company’s fundamental details, objectives, and scope. AOA (Articles of Association) contains the rules for internal management. In short, MOA governs external relations, while AOA establishes internal rules and procedures for the organization’s activities.
3. How to get MOA of a company?
To obtain the MOA of a company, you can request it from the company’s registered office or access official records kept by the company registry authority, where such documents are publicly available. The memorandum of association is a public document under company law.
4. Is MOA mandatory for every company?
MOA is mandatory for every company at the time of registration. It acts as a company’s constitution, providing essential information about its structure, objectives, and powers as required by company law before starting business activities.
5. What are the main clauses of a memorandum of association?
A memorandum of association typically includes these main clauses:
- Name clause
- Registered office clause
- Object clause
- Liability clause
- Capital clause
- Subscriber clause
6. Why is the memorandum of association important?
A memorandum of association is important because it defines the company’s permissible activities, structure, and relationship with outsiders. It protects stakeholders by clearly stating the company’s objectives and limits, reducing misunderstandings and potential legal disputes over business actions.
7. Can the memorandum of association be changed?
Yes, a company can alter its memorandum of association by passing a special resolution and, in some cases, getting approval from authorities. Changes must follow legal procedures, especially when modifying objectives or registered office location, to protect stakeholders’ interests.
8. What is the object clause in the memorandum of association?
The object clause in a memorandum of association lists the main purposes and activities for which the company is formed. It restricts the company from engaging in business outside these specified objects, ensuring transparent and lawful operations.
9. Who are the subscribers in a memorandum of association?
Subscribers to the memorandum of association are the founding members who sign the document during company registration. They agree to take a minimum number of company shares and become the first shareholders as per the company’s capital structure.
10. What is the legal effect of a memorandum of association?
The memorandum of association has a binding legal effect between the company, its members, and outsiders. It ensures the company operates only within its stated objectives and provides legal protection against acts beyond its powers, known as ultra vires.
11. What is the capital clause in a memorandum of association?
The capital clause in a memorandum of association specifies the company’s authorized share capital and its division among shares. For example, if the capital is $500,000$ divided into $50,000$ shares, each share would have a face value of $10$ ($500,000 \div 50,000 = $10$).
