Memorandum of Association-definition and format of MoA

The formation of a company goes from many steps which start from promotion with the promoters of a company to commencement of business. The memorandum of association and articles of association are the two main documents for the company. The memorandum of association governs the relationship of the company with the outside world and; the articles of association are important to govern the management and other internal affairs inside the company. All the board directors and workers of the company perform their functions within the limits of the Articles of association. Both the documents have their different roles in the company where; the articles of association consider as subordinate to the memorandum of association. So, it should keep in mind that the articles of association should not conflict with the conditions mentioned in the memorandum of association.

Memorandum of Association

A memorandum of association is also known as the MoA of the company. It represents the charter of the company. The MoA of the company is a legal document of a company that is prepared at the time of registration of the company. The MoA of the company describes the main objectives of the company for which the company is being created and the company’s relationship with its shareholders. An MoA of the company creates the boundary for the actions of the company which means, the company work and actions cannot go beyond this boundary created by the Moa of a company.

An MoA of the company helps its creditors and shareholders to deal with the company. They can know the vision of the company, basic rights and powers of the company. Everyone wants to know about the company whenever we want to invest in the company, so the MoA of a company helps such types of people so that they can check all the details of the company and invest their money after getting full knowledge about the company. so let’s talk about the memorandum of association and its contents,

Memorandum of association definition

Section 2(56) of the companies act 2013 give the definition of memorandum of association. The section defines the Memorandum in two types:

• • Memorandum of association of a company as originally framed

An MoA of a company as originally framed means the Memorandum that was created at the time of formation and registration of the company.

• • Memorandum of association of the company altered from time to time

Alteration in memorandum of association in company law from time to time means the alteration made in the MoA is also be the part of MoA. The alteration made in the MoA of the company must be made with the guidance of previous company law of the present companies act.

Both the types of Memorandum of association of a company are legal in the eye of law. The MoA of the company must be side by 7 members in the case of the public limited company and 2 subscribers in the case of the private limited company.

Key points of memorandum of association

• • It defines the power and scope of the company
  • It gives the boundary for the company work and the company cannot go beyond the limits set by this.
  • MoA regulates the relationship of the company with the outside of the company.
  • It is used for the registration process of the company.
  • It contains all the necessary details about the company.
  • MoA talks about the liabilities of the members of the company.

The format of memorandum of association under companies act

The format of the memorandum of association under the companies act depends upon the type of company. There are 5 tables given under the companies act. the person can choose the table according to the types of company. for example, Table A is for the company which is limited by share, Table C is for the company which is limited by guarantee and having a share capital.

Forms of Memorandum of Association

Clauses in memorandum of association

Memorandum of association clauses are divided into 7 parts:

Name clause

The name clause of the MoA of a company specifies the name of the company. The company name should not be the same as the company which is already in existence. It means, the name should not be copyrighted by another person or company.

In the case of the private company, the name of the company should end its name with private limited. For example, Rising Mutant Private Limited.

In the case of a public company, the name should end with limited. For example, Rising Mutant Limited.

Registered office clause

The registered office clause specifies the address of the registered office of the company. During the process of the registration of the company, it is sufficient to give the name of the state where the company is located. But after the formation, the company has to give the exact location of the registered office of the company within 30 days from the formation of the company. The company’s name can be removed by the registrar if the company fails to maintain the permanent address of the registered office.

The company address is used to check the jurisdiction of the company. It becomes easy for the service of summons in any legal case against the company. It has also the names of registrars involved.

Objects Clause of MoA of a company

The clause talks about all the objectives of the company for which the company is formed. It is the main body of the MoA of the company. Every motive and operation of the company must be included in the clause because, any other objective of the company, which is not mentioned in this clause shall consider being beyond the reach of the company. The objectives of the company are divided into three parts:

Main objects- The main business purpose of the company.

Incidental objects- The objects which are ancillary to the attainment of main objects of the company.

Other objects of the company- Any other objectives of the company which are not coved in about two objects or the object which the company may peruse.

Liability Clause

The liability clause talks about the liabilities of the members and boards directors of the company. This clause is used during the process of winding up of a company or any other conditions. The liability clause works in different conditions. In case of,

Unlimited company- The liability of the members will unlimited.

Company limited by shares- in this type, the liability of members will be restricted by the amount unpaid on the shares of the members.

Company limited by guarantee- In this situation, the member will be liable to pay the amount which was agreed by them.

Capital Clause

The capital clause is also known as the nominal capital of the company. It states the total amount of the share capital of a company. It also describes that how it is divided into shares. For example, a company has a share capital of 80, 00,000$ which is divided into 3000 shares of 4000$ each.

Subscription Clause of memorandum of association

The Subscription Clause of the memorandum of association of a company states about the subscribers who are signing the memorandum. It considers the details of each subscriber with the number of shares he is subscribing to. The subscribers sign the memorandum in front of at least two witnesses. The subscribers to the memorandum of association must take at least one share of the company.

Association clause

In this clause, the subscribers of the company make their declaration that they want to associate with this company and build an association.

Difference between memorandum of association and articles of association

Both the documents ie, memorandum of association and articles of association are the necessary documents for a well-established company. These documents are distinguished from each other. Let’s have look at the main difference between memorandum of association and articles of association:

1. 1. The memorandum of association contains all the details which are required for the formation of the company, whereas. Articles of association of a company contain necessary rules and regulations which is used to governs the company.
   2. MoA of a company talks about the objects and powers of the company, whereas, the AoA of the company contains the rules of the company.
   3. MoA of the company is subordinate to the companies act, whereas, the AoA is subordinate to the memorandum as well as the companies act.
   4. If there is any conflict between MoA and AoA of the company, always the MoA of the company shall prevail.
   5. MoA of the company has specified given clause whereas, it the description power of the company to frame the AoA.
   6. The person or group of persons has to submit the MoA to the registrar of the company at the time of formation of the company whereas the AoA is not required to file to the registrar of the company.
   7. The MoA of the company deals with the powers and external affairs of the company with the outside world of the company whereas the AoA deals with the relationship between members and company and it deals with internal affairs of the company.
   8. The alteration in the MoA is possible by passing a special resolution in the annual general meeting of the company and the alteration must be compatible with the companies act. Also, it should be resubmitted to the registrar for checking. whereas the alteration in the AoA of a company is possible by passing the special resolution in the annual general meeting and it has to be sent to the registrar within 15 days of the alteration.
   9. The MoA of the companies set the limit of boundary for the company and, any act done outside this boundary shall be null and void, but, in the case of AoA of the company, it is different. The act done by the company which is beyond the limit of AoA can be rectified through the voting of all shareholders of the company.

FAQ related to MoA of the company

Conclusion

This article talks about the memorandum of association importance. The MoA of a company is a basic and root document for the formation of a company. The company has to submit this document to the registrar of the company so that he can start the inquiry for the formation of the company.

The Moa of a company contains the required information about the company likes its registered office and different powers or the company. All the objectives for which the company is created are also written in the document. It sets the boundary for the working of the company and the company has to work within its limits. Any act done by the company beyond its limits shall be void. It is one of the best documents if a person really wants to know about the company before investing in that company.

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