Overview of MoA

An organization is created when a group of individuals band together to accomplish a common goal. This is normally for a commercial reason. Companies are typically created to benefit from their operations. A business must be incorporated by applying with the Registrar of Companies (ROC).

This submission must be accompanied by a variety of papers. The MoA [full form Memorandum of Association] is one of the most important papers that must be presented with the incorporation application.

What is MoA?

The Memorandum of Association is a legal document that explains why the organization was founded. It establishes the company’s authority and the terms under which it works. It is a manual that includes all of a company’s laws and regulations for its interactions with the outside world.

Any business must have a Memorandum of Association that specifies the extent of its activities. The organization cannot work outside the limits of the document until it has been prepared. If the corporation goes beyond its authority, the activity would be deemed supra vires and therefore null.

It is the cornerstone upon which the business is built. The Memorandum of Association lays out the company’s entire organization.

The memorandum is open to the media. Thus, all that is expected of an individual who wishes to enter into contracts with the corporation is to pay the required fees to the Registrar of Companies and receive the Memorandum of Association. He will learn all of the company’s information from the Memorandum of Association. It is the responsibility of everyone who does business with the firm to be aware of its memorandum.

MoA Format

A memorandum may take any of the forms mentioned in Tables A, B, C, D, and E of Schedule 1 under Section 4(5) of the Companies Act. Because of the various types of businesses, the tables are of various types.

Table A – It applies to a corporation with a share capital.

Invest in elss funds

Table B – It applies to a limited-by-guarantee corporation that does not have a share capital.

Table C – It applies to a company with a share capital that is protected by a guarantee.

Table D – It can be used by any unrestricted corporation that does not have a share capital.

Table E – It can be used by any unrestricted company with a share capital.

The company memorandum should be typed, counted, and broken down into chapters. It can also be signed by the company’s customers.

Objectives in Registering MOA

The Memorandum of Association is a crucial document that includes much of the company’s information. It controls the company’s interaction with its stakeholders. Section 3 of the Companies Act of 2013 states that a memorandum is required for the registration of a corporation.

  1. Seven or more employees are expected in the case of a public company.
  2. Two or more people are expected in the case of a private company.
  3. Only one person is expected in the case of a one-person business.

Before registering the corporation with the Registrar, the involved parties may first agree to a memorandum.

As a result, a Memorandum of Association is required for company registration. According to Section 7(1)(a) of the Act, a company’s Memorandum of Association and Articles of Association must be properly signed by the subscribers and registered with the Registrar to be incorporated. In addition to this, a memorandum contains other things. There are the following:

  1. It helps shareholders to learn more about the business before purchasing stock. This aids shareholders in determining how much money they can put into the venture.
  2. It informs all partners that are interested in collaborating with the firm in some way.

Clauses of the Memorandum of Association

Name Clause: This section determines the company’s name. The company’s name should not be the same as that of another business. Even, since it is a private entity, the term “Private Limited” should be included at the top. In the case of a public corporation, the term “Limited” should be added to the end of its name.
Registered Office Clause: The name of the state in which the company’s registered office is located is specified in this clause. This aids in determining the Registrar of Companies’ authority. Within 30 days of the company’s incorporation or commencement, the company must notify the Registrar of Companies of the site of its registered office.
Object Clause: This clause specifies the purpose for which the corporation was formed. The following three subcategories can be included under the objectives:

Main Objective – States the main business of the company

Incidental Objective – These are the objects that aren’t directly related to the company’s core goals.

Other objectives – Any other goals that the organization may achieve that aren’t covered in (a) and (b) above (b)

Liability Clause: It specifies the company’s members’ responsibility. In an unrestricted company, the members’ liability is unlimited, while in a company limited by shares, the members’ liability is limited by the balance outstanding on their share. The members’ responsibility in a corporation limited by guarantee is limited by the amount each partner has agreed to pay.
Capital Clause: This provision specifies the overall amount of capital that a corporation can obtain, also known as the authorized/nominal capital. This also illustrates how such a large sum of money is divided into a set number of shares.

Memorandum of Association – FAQs

Q1. What is a Memorandum?

A memo (abbrev. : memo; from Latin memorandum est, “It must be remembered”) is a type of written message that may be found in a business setting. A memo is usually used for internal correspondence in industry, while letters are typically used for external communication.

Q2. What does the MoA begin with?

It starts with the full name of the firm, as well as the fact that it was incorporated under the Companies Act of 1956.

Q3. What is the liability of MoA?

Only limited companies are required to establish a memorandum of association. As a result, one of the most relevant provisions is added: the members’ responsibility is capped. Shareholders’ liability is limited to the amount of money they have put into the firm.

Q4. What is the name clause?

This section determines the company’s name. The company’s name should not be the same as that of another business. If it’s a private corporation, the term ‘Private Limited’ should be included at the end.

Q5. Who can subscribe?

Individuals – The memorandum may be signed by an individual or a group of individuals.

Foreign nationals and non-resident Indians – Rule 13(5) of the Companies (Incorporation) Rules states that a foreign citizen must have his signature, address, and proof of identification notarized to subscribe to a company in India.