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?
MOA full form – 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.
Objectives in Registering MoA
The Memorandum of Association is a necessary document that includes the company’s crucial information. Section 3 of the Act states that the company can be formed when the following members subscribe to the memorandum:
- Seven or more members in the case of a public company.
- Two or more members in the case of a private company.
- Only one member in the case of a One Person Company (OPC).
A company can be registered only when the MoA is drafted and it is signed/subscribed by the minimum numbers as provided above. Thus, the MoA of all companies is required for company registration.
Section 7(1)(a) of the Act further provides that a company’s Memorandum of Association and Articles of Association (AoA) must be duly signed by the subscribers for the company to be registered with the ROC. The MoA copy should be given to the ROC while applying for company registration. The ROC can provide the certified copy of the MoA to the public upon payment of the prescribed fees. It helps shareholders in the following ways:
- Allowing shareholders to know about the company before buying its shares and determine the capital they can invest in the company.
- Provide all company information to stakeholders willing to associate with it.
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.
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
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. |
Alteration of MoA
The following changes will lead to the alteration of the MoA:
- Change in the company name
- Change in location of the registered office
- Change in company objects
- Change in the nature of liability of company members
- Change in the maximum limit of authorised capital of the company or division of authorised capital
The process of alteration of the MoA is as follows:
- Hold board meeting: The company must hold a board meeting to approve the alterations to the MOA.
- Hold a general meeting: A general meeting should be conducted to obtain the approval of the shareholders for the alterations to the MOA.
- Filing of a special resolution: A special resolution to alter the MoA should be filed with the ROC within 30 days of the passing of the resolution.
- Approval of ROC: The ROC will scrutinise the special resolution and approve the MoA alteration.
FAQs
Is the MoA required for a startup?
Yes. Every company, whether registered as a private company, public company or one-person company, requires an MoA. Thus, if the startup plans to register as a company under the Companies Act, 2013, the startup must prepare MoA before applying for registration.
What is the liability clause of MoA?
The liability clause provides the extent of liability of the company’s shareholders. It protects the shareholders from being held personally liable for the company’s loss. The liability clause describes whether the company is limited by shares or limited by guarantee. If a company is limited by shares, the shareholders will only have to pay the unpaid share price they have subscribed to in case of a loss. If the company is limited by guarantee, the members give a guarantee of a fixed amount that they will be liable to pay in case of a loss.
Practice area's of B K Goyal & Co LLP
Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A Certificate | FCRA Registration |DGGI Cases | Scrutiny Cases | Income Escapement Cases | Search & Seizure | CIT Appeal | ITAT Appeal | Auditors | Internal Audit | Financial Audit | Process Audit | IEC Code | CA Certification | Income Tax Demand Notice | Psara License | FCRA Online
Company Registration Services in major cities of India
Company Registration in Jaipur | Company Registration in Delhi | Company Registration in Pune | Company Registration in Hyderabad | Company Registration in Bangalore | Company Registration in Chennai | Company Registration in Kolkata | Company Registration in Mumbai | Company Registration in India | Company Registration in Gurgaon | Company Registration in Noida | Company Registration in lucknow
Most read resources
tnreginet |rajssp | jharsewa | picme | pmkisan | webland | bonafide certificate | rent agreement format | tax audit applicability | 7/12 online maharasthra | kerala psc registration | antyodaya saral portal | appointment letter format | GST Search Taxpayer | caro 2020 | Challan 280 | itr intimation password | internal audit applicability | preliminiary expenses | mAadhar | e shram card | aaple sarkar portal | epf activation | scrap business | brsr | depreciation on computer | west bengal land registration | traces portal | Directorate general of GST Intelligence | form 16 | rtps | patta chitta