Memorandum Of Association Overview and Format

The Memorandum of Association or MOA of a company defines the constitution and the scope of powers of the company. In simple words, the MOA is the foundation on which the company stands. Memorandum of Association is a legal document which describes the purpose for which the company formation. Furthermore, It defines the powers of the company and the conditions under which it operates. The MOA is a document that contains all the rules and regulations that govern a company’s relations with the outside world.

It is mandatory for every company to have a Memorandum of Association which defines the scope of its operations. Once prepared, the company cannot operate beyond the scope of the document.

Object of registering a Memorandum of Association

• The MOA of a company contains the object for the formation of company. Additionally, It identifies the scope of its operations and determines the boundaries it cannot cross.
• It is a public document according to Section 399 of the Companies Act, 2013. Hence, any person who enters into a contract with the company, the law expects them to have knowledge of the MOA.
• It contains details about the powers and rights of the company, beyond which the company cannot operate.

Contents of the MOA

The following information is mandatory in an MOA:

• Name Clause
  • The name of a Public Limited Company must end with the word “Limited” and likewise, a Private Limited Company must end with the words “Private Limited”. Also, the name selected for the company should not resemble with the name of any existing company.
  • The registered office clause lists the name of the state where the company’s registered office is physically located. It determines the jurisdiction of the Registrar of Companies and which court the company would fall under.
  • It must specify the objects for the company’s incorporation. Further, a company cannot carry out any activity that is not specified in the object clause.
  • The liability clause explains what liability each of the company’s members faces. If the company is limited by shares, the liability that each member faces can be no more than the face value of shares that he or she holds. When a company is limited by guarantee, this clause must define how much liability each individual company member holds. If it’s an unlimited company, this particular clause would not be included in the MOA.
  • The capital clause requires you to state the company’s authorized share capital, the different categories of shares and the nominal value (the minimum value per share) of the shares. You must also mention the list the company’s assets under this clause.
  • The association clause confirms that shareholders bound by the MOA are willingly associating and forming a company. You require seven members to sign an MOA for a public company and not less than two people for a MOA of a private company. You must conduct the signing in the presence of witness who must also append his signature.