What is Memorandum of Association?
Memorandum of Association (MOA) is the charter of the company by which the structure of the company is built. The MOA describes the basic identification details of a Company such as name of the company, situation of registered office of the company, business objects of the company, nature of business liability of promoters and Name and address of initial subscribers to the Memorandum of Association.
Memorandum of Association is one of the Primary incorporation documents of a Limited Company. Memorandum of Association is generally referred in short ad MOA. MOA is the charter of the company by which the structure of the company is built.
Format of Memorandum of Association
Under the Simplified Proforma for Incorporating Company Electronically (SPICe) Incorporation Filing process, the Ministry has specified a pre-defined format for Memorandum of Association in Form No.33 – SPICe - MOA.
The following are the contents of Memorandum of Association:
Clause I - Name Clause
The name of the Limited company shall end with the word "Limited", in the case of a public limited and “Private Limited”, in the case of a private limited company. In case of a One Person Company, the name shall end with the words “(OPC) Private Limited”.
The name of a Non-Profit Company or Section 8 Company, the name need not contain the words Limited or Private Limited.
Change of Company Name requires amendment of name clause in Memorandum. Company can change its Name by following the procedures in the Companies Act.
Clause II - Situation Clause
Situation clause of Memorandum of Association contains the State under which the Registered Office of the company is situated and / Registrar of Companies under whose jurisdiction the Registered office of the Company is situated. The respective registrar of companies shall have the jurisdictional authority over the regulatory compliances of the company.
Office of Registrar of Companies are situated in almost all the States in India. There are few States such as Maharashtra and Tamilnadu has two jurisdictional office s of ROC. The north eastern states such as Assam, Meghalaya, Manipura, Tripura, Mizoram, Nagaland & Arunachal Pradesh has only one office of ROC. Also States. Such as Andhra Pradesh, Telangana and Bihar, Jharkand has only one ROC office at present.
When a Company is Shifting the Registered Office outside the jurisdiction of present Registrar of Companies, this clause is required to be amended and the details of new State / Registrar of Companies has to be replaced in Memorandum of Association.
Clause III- The Object Clause
This clause mentions about the business objects for which the company is incorporated and any other matter ancillary to the main object.
The objects of the company should be in consonance with the name of the company. In other words, the object of the company should be in accordance with the activity words in the name of the company.
For eg. XYZ Technologies Private Limited must have some kind of technology related business objects. It should not have business related to builder and developers. In case company wants to add a totally unrelated activity as objects, it is advisable to change the name also to cater the broader objects. In that case a XYZ Enterprises Private Limited would be a better choice.
Objects clause of Form No.33 is divided to 2 parts.
A. Main Objects: The objects to be pursued by the company on its incorporation: These objects are referred as Main objects of the company, for which the company is incorporated.
B. Ancillary Objects: Matters which are necessary for furtherance of the objects specified in Main Objects. These objects are referred ancillary objects of the company that are to be carried to achieve the main objects.
Company can amend objects clause of MOA or add additional objects subject to compliance of process under Companies Act. Also note addition or amendments of certain objects such as finance and insurance, the company has to obtain prior permission from the respective regulatory authorities.
Clause IV- The Liability Clause
The liability clause states the liability of the members; whether limited or unlimited and the liability. These will differ for different categories of companies.
a. in case of a company limited by shares, is limited to the amount unpaid on the shares held by them; and
b. in case of a company limited by guarantee, is limited to the amount up to which each member undertakes to contribute in the event of winding up
This clause cannot be amended unless the company gets converted from one category to another category.
Clause V - The Capital Clause
The capital clause states the Authorised Capital of Company and its bifurcations as to different categories of shares, its face value and number of shares.
Authorised Capital or Registered Capital of a company is the upper limit of capital that a company can issue shares and collect money from shareholders. Company registration fee is payable to ROC and will be calculated on the basis of Authorised Capital.
Increase of Authorised Capital of Company requires amendments to the Capital Clause. Also, this clause can be altered for bifurcating existing capital to different categories, adding a new class of shares, consolidate, subdivide, convert and reduce the share capital to any denomination at a later date.
Clause VI - The Subscription Clause
This Last portion of Memorandum of Association is the share subscription clause. Under this clause, the name and address / details of first subscribers of MOA and number of shares and amount contribute as initial capital of the company are stated.
The subscribers to Memorandum of Associationare are initial shareholders of the company . The subscribes are bound to contribute the agreed capital to the company before commencement of business by the Company.
The subscribers have to sign this clause of Form No.33 – SPICe – MOA, with their digital signature. Also, this subscription clause has to be witnessed by a professional with his/her digital signature.
Changes in Subscription Clause - Is it Possible?
The subscription clause of memorandum cannot be changed / substituted after the incorporation of the company. The names and address / details of first subscribers shall be permanent information on Memorandum of Association of a company.