Memorandum of Association

The Memorandum of Association sets down the constitution of a company containing certain fundamental matters. It is a basic document for the very existence of the company. Every Company must have its own Memorandum of Association. The MOA is the charter of the company which defines and limitsW the powers of a company for the information of the public at large. The purpose of the Memorandum of Association is to display the permitted range of activities of a company for the guidance of shareholders, creditors and others. When you are incorporating your Company, proper advice must be taken to form a proper Memorandum of Association to safeguard yourself and your business in the long term.

What is a MOA Full Form and Definition?

The MOA full form is a “Memorandum of Association”, which is a legal document serving as the charter of the company. It is prepared during the company formation and registration process and defines the relationship with shareholders while outlining the objectives, powers, and limitations of the company. The MOA establishes the company's authority, specifies the activities it can undertake, and sets the terms under which it operates. As a foundational document, it provides the organisational structure, serves as the bedrock of the company’s legal framework, and includes all laws and regulations governing its interactions with the outside world.

Objectives of Memorandum of Association

The objectives of the memorandum of association are multi-dimensional as it is a crucial document of the company. It plays an important role in legal, operational and company interaction with stakeholders. Here are the essential objectives of MoA,

Defines the Company’s Scope: Specifies the range of activities the company can engage in, ensuring that the company operates within its legal boundaries.
Establishes Company’s Legal Identity: The MoA serves as the foundational document that legally recognizes the company's existence and operations.
Outlines Shareholder Rights: Clearly states the rights, duties, and obligations of shareholders, establishing a transparent framework for shareholder interactions.
Limits Company’s Powers: Specifies the limitations on the company’s activities to prevent it from exceeding the powers granted by the Memorandum.
Company Name and Registered Address: Lists the official name of the company and its registered office, establishing the legal jurisdiction under which the company operates.
Defines the Liability of Members: States whether the liability of shareholders is limited or unlimited, offering clarity on their legal responsibilities.
Capital Structure: Details the authorized share capital, number of shares, and types of shares issued, laying the groundwork for future financial operations and decisions.
Governing Rules and Regulations: Acts as a manual for the company, detailing the laws and guidelines for internal operations, including the rights of directors and officers.

Significance of a Memorandum of Association (MoA)

A company is formed when individuals unite with a shared objective. Typically, the primary goal of establishing a company is to generate profits, making it fundamentally business-oriented. As mentioned above, an application must be submitted to the Registrar of Companies (ROC) to register a company, accompanied by specific documentation. The company's Memorandum of Association (MoA) holds great significance among the essential documents needed for registration. Simplify Company Registration with Expert Assistance – Contact Our Specialists Today!

Defining the Company's Foundation

A Memorandum of Association (MoA) is a company's official guidebook. It's a legal paper put together while a company is starting up and getting registered. This paper explains how the company works with its owners and outlines its primary goals. The company is only allowed to do what the MoA talks about.

Setting Limits for Company Actions

Think of the MoA as a border for what the company is allowed to do. Anything the company does outside of this border doesn't count and isn't allowed. The MoA is like the base on which the company stands. It describes the whole plan for how the company is built.

The Crucial Role of MoA in Company Registration

As mentioned above, The Memorandum of Association (MoA) is a vital document encompassing essential information about the company. According to Section 3 of the Act, a company can come into existence when the following individuals show their agreement to the MoA:

Seven or more members of a public company
Two or more members of a private company
A single member for a One Person Company (OPC)

Company registration hinges on preparing the MoA and its endorsement by the minimum number of subscribers as specified above. Therefore, the MoA is a mandatory requirement for the registration of all companies.

Revealing Company Information

The Memorandum of Association is a paper that anyone can read. By paying a fee to the ROC, you can access it. This paper helps owners, people who lend money, and anyone who works with the company. They can learn about what the company can do before they decide to get involved. People considering investing in the company can read the MoA to determine if it's a good idea.

Who can Subscribe?

The following persons can subscribe to the Memorandum:

Individual
Foreign citizens and Non Resident Indians
Minor (courtesy a natural guardian)
Company incorporated under the Companies Act
Company incorporated outside India
Society registered under the Societies Registration Act, 1860
Limited Liability Partnership
Body corporate incorporated under an Act of Parliament or State Legislature

Subscription to MOA

Every subscriber needs to affix his signature, and a person must bear witness to it. The witness must write his /her name, address, description and occupation. If the signature of the subscriber or witness is in any other language other than English, an affidavit must be filed declaring that the signature is the actual signature of the subscriber/witness. In certain cases, the subscriber may authorize another person to affix the signature by granting a power of attorney to the concerned person. The subscriber or the agent, should also write his/her name, address, description and occupation in the presence of at-least one witness. Under the new MCA Forms, eMOA must be submitted with Digital Signature of the subscribers.

Memorandum of Association (MoA) Format

The format of a Memorandum of Association (MoA) is the classification of five different tables involving the particular categories of a company. Companies must choose a suitable table based on their business nature. We have provided the MoA format - table (A-E) below,

Table A: It applies to companies with share capital, detailing the capital structure and shareholders' rights and obligations.
Table B: It is Used by companies limited by guarantee without share capital, outlining members' liability based on their guarantee and governance structure.
Table C: It is for companies limited by guarantee with share capital, combining features of both share capital and guarantee-based liability structures.
Table D: It is relevant for unlimited companies without share capital, specifying members' unlimited liability and company governance.
Table E: It is for unlimited companies with share capital, incorporating aspects of both share capital and unlimited liability for members.

Contents of the Memorandum of Association

The Memorandum of Association comprises the following clauses:

Name Clause: Rule for naming companies

In the Name Clause of the MOA, a specific rule is set for naming companies. Private limited companies' names should conclude with 'Private Limited.' Conversely, for government companies, the term 'Limited' is used at the end of their names. However, companies under Section 8 of the act have different naming rules. These companies can be recognized by specific terms such as:

Association
Federation
Foundation
Confederation
Forum
Chamber
Council
Electoral trust.

Registered Office Clause: Defining Company Location

The Registered Office Clause pinpoints the precise state where the organization's registered office is situated. It holds significant importance in clearly identifying the branch of the registered office where the organization completed its registration process. This clause ensures transparency about the company's official location.

Object Clause: Defining Purpose and Activities

The Object Clause within the Memorandum of Association clarifies the organization's mission and intended activities. If there's a change in activities and operations after a certain period, the organization's leader must alter the company's name within six months. Please do so to avoid a violation of regulations. This clause ensures that the company's activities align with its stated purpose and reflect any changes that might occur over time.

Capital Clause: Detailing Shareholders' Investments

The Capital Clause of the Memorandum of Association focuses on the capital contributed by multiple shareholders within a company. This clause requires information about the share amounts held by individual shareholders and outlining how they established their regulations. It's a section that sheds light on the financial investments made by shareholders and the company's ownership structure.

Liability Clause: Clarifying Member Responsibilities

The liability Clause is another crucial part of the Memorandum of Association. It requires explaining the extent of liability held by members within the firm, which can be limited or unlimited. If the company operates with limited liability by shares, the MOA must specify the share amounts held by shareholders and whether these shares have been paid for or remain unpaid. These details are to be clearly stated in the MOA. The MOA specifies that all contributors share equal rights for companies limited by guarantees. This clause also holds significance during the winding-up process of a company. It ensures that both assets and liabilities, including expenses incurred during the dissolution of the firm, are distributed equally among contributors.

Association Clause: Expressing the Company Owner's Vision

The Association Clause is the final, yet not less important, section of the Memorandum of Association. Within this clause, the exact vision and objectives of the company's owner should be articulated. This clause encapsulates the core ideals and aspirations that the owner envisions for the company's journey and impact. It serves as a reflection of the owner's guiding principles and ultimate goals for the organization.

Particulars to be Mentioned in MOA

Rule 16 of the Companies (Incorporation) Rules, 2014, specifies that the following particulars of every subscriber to the Memorandum shall be filed with the Registrar:

Name (including surname and family name), and recent photograph affixed and scanned with MOA and AOA.
Name of the father/mother.
Nationality.
Date of Birth.
Place of Birth.
Educational qualification.
Occupation.
Income-tax permanent account number.
Permanent and current address.
Email address.
Contact number.
Fax number (optional).
Two ID proofs, out of which PAN card is mandatory.
Any residential proof, not older than two months.
Proof of nationality, if the subscriber is a foreign national.
If the subscriber is a current director or promoter of a company, particulars such as designation (whether a director or a promoter), along with the name and corporate identity number of the firm.

If the subscriber to the Memorandum is a body corporate, then the following particulars must be filed with the registrar:

Corporate identity number of the company or registration number of the body corporate.
Global location number, which is used to identify the location of the legal entity. (Optional)
The name of the body corporate.
The registered address of the business.
Email address.
If the body corporate is a company, a certified true copy of the Board resolution specifying the authorization to subscribe to the memorandum of association of the proposed company, and to invest in the proposed company. The particulars, in this case, should also include the number of shares to be subscribed by the body corporate; as well as the name, address and designation of the authorized person.
If the body corporate is a limited liability partnership or partnership firm, the particulars to be included are; a certified copy of the agreed resolution, the number of shares proposed to be subscribed in the body corporate and the name of the authorized partner.
With respect to a foreign body corporate, particulars like the copy of certificate of incorporation of the foreign body corporate and the address of the registered office.

Amendment of MOA

Amending the Memorandum of Association (MOA) becomes necessary when any of the following changes occur:

A modification in the business name
Alterations in the registered office location
Changes to the object clause of the business
Adjustments in the authorized capital of the business
Alterations in the legal liabilities of business members

Articles of Association (AOA of Private Limited Company)

The document containing the Articles of Association (AOA) of a company is a business document; hence it has to be construed strictly. It regulates domestic management of a company and creates certain rights and obligations between the members and the company. The Articles of Association are in fact the by-laws of the company according to which directors and other officers are required to perform their function as regard the management of the company, its accounts and audit. Every company limited by guarantee or an unlimited or a private limited company is required to register its articles along with the memorandum of association. Section 31 vests companies with power to alter or add to its articles. A company cannot divest itself of these powers. Matters as to which the memorandum is silent can be dealt with by the alteration of article. The alteration must be effected by special resolution.

Difference Between Articles of Association (AoA) and Memorandum of Association (MoA)

A Memorandum of Association (MoA) outlines the company's main goals and external relationships, and Articles of Association (AoA) govern internal rules, like meetings and management.

Aspect	Memorandum of Association (MoA)	Articles of Association (AoA)
Nature	The MoA is the company's foundational document.	AoA are the company's internal rules and regulations
Alteration	Altering the MoA is complex and requires shareholder approval and legal compliance.	Altering AoA is more straightforward, requiring approval from the board and shareholders.
Scope	It outlines the company's main objectives and limits.	It governs the company's internal management and operations.
Contents	It includes the company's name, registered office, objectives, liability, and capital clauses.	It covers meeting rules, director appointments, powers, share transfers, etc.
Purpose:	It defines the company's external relationships and fundamental structure.	It guides the company's internal operations and procedures.