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:
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.
Registered Office Clause
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.
MOA (Memorandum of Association) describes the powers and objects of the company, the AOA (Article of Association) defines its rules.
Is it mandatory to sign the MOA?
It is mandatory for every company to print its Memorandum of Association and have it signed by each of its members. You must also mention the address, occupation and shares held by each member of the company.
Can all clauses of a MOA be altered?
All clauses of Memorandum except Capital clause can be altered by following the provisions of Section 13 of Companies Act, 2013 by passing special resolution.
A Public Limited Company is a separate legal business entity having limited liability. The securities of a Public limited company are traded on a stock exchange. In order to register as a Public Limited Company, the company must have a minimum of 3 Directors and 7 Shareholders. And should also have Rs 5 Lakhs as Paid-up Capital.
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Under entity type select Public Limited Company. You don’t need to add CIN since it for existing registered companies. Enter the proposed name make sure it is not similar to the existing name.
Fill in the required information.
Click on the Auto check. Further, if the name matches an entry in the database, it will show an error. Once the proposed name is error-free, you need to pay a minimum amount of Rs. 1000 run the similarity test and to reserve the name.
If the proposed name is approved by the Ministry. You will receive a notification about the same on your registered email address.
Download all the forms of incorporation on MCA Website.
File Form INC-12 also known as SPICe form.
For application of licence for Public Limited Company.
Can a salaried person become director of company ?
Yes, there is no legal hurdle. However employment agreement may have some restriction.
What are the primary requirements for a public limited company?
Following are the primary requirements of Public Company: – The minimum number of shareholders must be 7. – File accounts within 6 months of the year-end. – The minimum Paid-up share capital must be Rs. 5 lakhs. – The minimum number of Directors is 3.
Can an NRI/Foreign National be a director in Public Limited Company? and If Yes, then what are the conditions for the same?
Yes, an NRI or Foreign National can also be a shareholder or director in a Public Limited Company of India. However, for becoming a director, such a person must possess the DIN issued by MCA.
Memorandum of Association (MOA) is a document that contains all the fundamental data which are required for the company incorporation. Articles of Association (AOA) is a document containing all the rules and regulations that govern the company.
The step of Memorandum of Association (MOA) and Articles of Association (AOA) comes in when you wish to take your business as a separate entity and register it as a private or public limited or if you are incorporating it.
Memorandum of Association (MOA)
The MOA is considered as the supreme document of the Company. The MOA has to be drafted very carefully as the AOA also has to comply with MOA. Moreover, the Company cannot go against anything that is mentioned in the MOA.The Memorandum of Association (MOA) has the following information in it:
Name Clause – Name of the registered entity (Business/Company name)
Object Clause – Aims and objectives of the Company
The Association Clause – Information about its first shareholders and number of shares allocated to each of them
The Capital Clause – Share capital, minimum paid-up capital, etc
The Liability Clause – Clause about its limited liability. State the liability of each member
Articles of Association (AOA)
The Articles of Association (AOA) is to draft the rules and regulations that the company has to follow and the layout of the internal management of the Company.
Moreover, AOA should be drafted in such a way that it should not violate anything that is mentioned in the MOA. The AOA sets the structure under which the Company is to be administered. The following are the points that are to be described in the AOA:
Allocation of shares and the manner that how shares have to be handled
Voting rights of members
List of Intellectual Property Rights
Procedure to elect the Chairman and his voting rights
List of Directors, including first of directors or directors for life, their appointment, remuneration, qualifications, powers, and proceedings of Board of Directors’ meetings
Dividends and reserves (Dividing the profits)
Alteration in Capital
General Meetings and proceeding at General Meetings
Board of Directors and their powers
How accounts and Audits will be managed
How the Company can be dissolved
AOA is the next important document after the MOA.
Thus, review your Board Meeting Minutes immediately after the meeting. When your board meeting minutes are complete and finish, make sure to distribute it to board members as soon as possible.
Once the members approve minutes by vote during the board meeting, they become part of the official record of the organization.
Further, It’s important to keep copy of all minutes in one place.
MOA describes the powers and objects of the Company, whereas, AOA defines the rules.
How do I get the MOA and AOA from the Company?
You can get the certified MOA & AOA of any Public or Private Company through the MCA portal.
Can we alter the MOA and AOA?
Yes. The MOA and AOA can be altered under the following situations: – Change in the name of the Company. – Change of registered office of the Company. – Changes in Object Clause of the company. – Change in the authorized capital of the company. – Change in the liability of the members of the company.