Meaning and Scope of Memorandum of Association


The entire detail of a company’s structure is present in Memorandum of Association (MoA). MoA is a public document, and anyone can get it by paying the prescribed fees to the Registrar. A company is formed generally for a commercial purpose. For incorporating a company one of the fundamental documents that is required to be submitted is the MoA. It contains details like operations, delegation of duties, policies, etc.

What is Memorandum of Association (MoA)?

MoA is the legal document that contains the rules and regulations that defines powers of the company and the way to deal with the outside world. Section 2(56) of the Companies Act, 2013 defines memorandum as – “means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act”.

Additionally, according to Section 399 of the Companies Act, 2013 any person can inspect MoA of a company by paying the prescribed fees to the registrar of the company. MoA defines the scope of a company’s operation, and the company cannot operate beyond this.

Importance of MoA

MoA is the document which provides the essential details of the company along with its relationship between the company and its shareholders. Section 3 of The Companies Act, 2013 penlights the importance of MoA by stating that for the purposes of registration of a company-

  • For a public company, minimum number of seven or more people are required

  • For a private company, minimum number of two or more people are required

  • In case of a one-person company, a single individual is required.

In all of the above scenarios, before the registration of the company with the registrar one should subscribe to a memorandum, hence it the first essential document to be filed.

According to Section 7(1)(a) of the Companies Act, 2013 for the company to get incorporated, Memorandum of Association and Articles of Association of the company is required to be signed by the subscribers and to be filed with the Registrar. MoA should have other objects too, they are-

  • Capital Investment − MoA lets the shareholders to decide whether to purchase the shares of the company or not. It allows the shareholders to know about the company and this helps them to determine how much capital is to be invested in the company.

  • Association with the Company − MoA provides essential details of the company which a shareholder must know before any kind of association with that company.

Format of MoA

Section 4(5) of the Companies Act, 2013 stipulates that a memorandum should be in the form as given in Tables A, B, C, D, and E in Schedule 1. There are different kind of Tables for different kinds of companies. 

Table

Explanation

Table A

For a company limited by shares

Table B

For a company limited by guarantee without the share capital

Table C 

For a company limited by guarantee with a share capital.

Table D

For an unlimited company without a share capital.

Table E

For an unlimited company having a share capital. 

The memorandum should be duly signed by its subscribers and to be printed, numbered and into paragraphs.

Contents of MoA

Following are the major contents of MoA −

  • Name Clause − According to the name clause in the memorandum of agreement, all private limited corporations’ names must end in “private limited.” On the other hand, all government-owned businesses should have the word “limited” at the end of their names.

  • Registered Office Clause − specifies the location of the organization’s registered office. It is crucial to identify the location of the organization’s registered office branch

  • Object Clause − This section of the memorandum of association’s describes the organization’s mission and its operations. If activities and operations change after a few months, the head of the organisation must alter the organization’s name within six months. If not, it will be considered a crime

  • Capital Clause − It focuses on the money that two or more shareholders of one firm have invested. They must include information in the memorandum of association about the shares held by the shareholders, how they came up with their regulations, etc. 

  • Liability Clause − Another significant clause in the memorandum of association is this one. Here, they must describe the restricted or unlimited responsibility of the firm’s members. If the company is limited by shares, it must state how much each shareholder owns and whether they have been paid. All these details must be stated out in the MOA. The MoA stipulates that all contributors with bonuses have the same rights if the corporation is constrained by guarantees. Assets and obligations, which include all costs associated with dismantling the corporation, must be allocated equally even during the winding up of a business.

  • Association Clause − It is the memorandum of association’s final but not least class. One has to specifically state the proprietor of the company’s idea and objective here

Amendments to MoA

The MoA need to be amended if any of the following happens-

  • If there is a change to the business’s name.

  • If there are any alterations to the office of registration.

  • If there is a change to the business’s object clause.

  • If any changes are made to the legal liabilities of the members

  • If the authorised capital of the company is changed.

Conclusion

A Memorandum of Association is a crucial document for the creation of a company. It is the company’s charter. A corporation cannot be formed without a memorandum. The company’s constitution is comprised of the memorandum and the Articles of Association. A corporation cannot be registered unless it has a MoA. It assists anyone interested in entering into a contractual connection with the firm in learning more about the company.

Frequently Asked Questions

What is a Memorandum of Association (MOA)?

The Memorandum of Association (MOA) is a legal document that outlines the fundamental objectives, scope, and powers of a company. It serves as the foundation upon which a company is incorporated and defines the company's relationship with the outside world.

What are the key components typically found in a Memorandum of Association?

A Memorandum of Association includes essential details such as the company's name, registered office address, objectives, authorized capital, liability of members, and information about the initial shareholders.

How does the Memorandum of Association define a company's objectives?

The MOA defines the main and ancillary objects that the company aims to pursue. Main objects are the core activities the company will engage in, while ancillary objects support or are related to the main objects. The MOA restricts the company from pursuing activities beyond those mentioned.

Can the objectives mentioned in the Memorandum of Association be changed later?

Yes, the objectives can be altered after the company's incorporation. However, any change requires approval from the shareholders through a special resolution and subsequent approval from the regulatory authorities.

Can the Memorandum of Association be altered freely after the company's incorporation?

No, alterations to the MOA are subject to legal regulations. Changes require the approval of shareholders through a special resolution and also necessitate compliance with the Companies Act and obtaining approval from regulatory authorities.

How does the Memorandum of Association relate to the Articles of Association?

While the MOA outlines the company's fundamental characteristics and objectives, the Articles of Association (AOA) lay out the internal rules, regulations, and procedures for managing the company. The two documents together form the constitution of the company.

Is the Memorandum of Association a public document?

Yes, the MOA is a public document and can be accessed by anyone. It is filed with the Registrar of Companies during the incorporation process and is available for public inspection at the company's registered office and on the Ministry of Corporate Affairs website.

Updated on: 16-Oct-2023

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