Memorandum of Association (MOA) under Companies Act, 2013: A company is that is formed when several individuals come together to achieve a specific purpose. This purpose is usually commercial. Companies are typically created to earn profit from their business activities. An application needs to be filed with the Registrar of Companies (ROC) for incorporating a company. This application is needed to be submitted with many documents. One of the essential documents required to be submitted along with the application for the incorporation is the Memorandum of Association.
- Memorandum of Association Definition
- Meaning of the Memorandum of Association
- The object of registering a Memorandum of Association or MOA
- Memorandum of Association Format
- Sample of the Memorandum of a Company Ltd. by the Shares
- Content in the Memorandum of Association
- What are the Section 8 companies?
Memorandum of Association Definition
Section 2(56) of the 2013 Companies Act defines the Memorandum of Association. It specifies that a “memorandum” implies two things:
- Memorandum of Association as initially framed: A memorandum as initially framed refers to the memorandum of association as it was during the incorporation of that company.
- Memorandum as altered from time to time: This means that all the alterations made in the memorandum from time to time will also be a part of the Memorandum of Association. This section also says that the alterations should be made to pursuance any of the previous company laws or the present Act.
Along with this, according to Section 399 of the 2013 Companies Act, any individual can inspect a document filed to the Registrar of the company in the pursuance of the provisions of this Act. Therefore, any individual who is willing to deal with the company can know about the company via the Memorandum of Association.
Meaning of Memorandum of Association
It is a legal document that describes the need for which the company has been formed. It describes the company’s power and the conditions under which it is operating. It is a document with all the rules and regulations that govern a company’s relations with the world outside.
Every company needs to have a Memorandum of Association that defines the scope of the operations. Once it has been prepared, the company cannot choose to operate beyond the scope of this document. In case the company goes beyond the scope, then the action will be considered ultra vires and void.
It is a base on which the company has been made. The whole company’s structure is detailed in this Memorandum of Association.
This memorandum is a public document. Hence, if an individual wants to enter into any contract with the company, they will have to pay the required fees to the Registrar of Companies (ROC) for obtaining this Memorandum of Association. With the Memorandum of Association, they will get all the company details. It is the responsibility of the individual who indulges in any of the transactions with the company to know about their memorandum.
The Object of registering a Memorandum of Association or MOA
A Memorandum of Association is an important source of documentation that contains all the company details. It supervises the relationship between the company and the stakeholders of the company. Section 3 of the 2013 Companies Act describes the value of memorandum by stating that, for registering a company,
- In the case of a public company, seven or more individuals are needed;
- In the case of a private company, two or more individuals are required;
- In the case of a one-person company, only one individual is required.
In all the above scenarios, the concerned individuals must first subscribe to a memorandum before registering with the Registrar.
Thus, a Memorandum of Association is needed for the registration of a company. Section 7(1)(a) of this Act states that for the incorporation of any company, the Memorandum of Association and the Articles of Association of the company need to be duly signed by its subscribers and filed to the Registrar. Along with this, a memorandum has different objects as well. They are,
- It permits the shareholders to learn about the company prior to buying its shares. This assists the shareholders in deciding how much capital they are going to invest in their company.
- It offers information to all the shareholders willing to get associated with the business in any way.
Memorandum of Association Format
Section 4(5) of the 2013 Companies Act proposes that a memorandum needs be in any form as stated in Tables A, B, C, D, and E of Schedule 1. The Tables are of various kinds because of different types of companies.
- Table A – It applies to a company limited by shares.
- Table B – It applies to a company limited by guarantee and not having a share capital.
- Table C – It applies to a company limited by guarantee and having a share capital.
- Table D – It applies to an unlimited company not having a share capital.
- Table E – It applies to an unlimited company that has a share capital.
The memorandum needs to be printed, numbered, and divided into different paragraphs. The subscribers of the company should also sign it.
Sample of Memorandum of a Company Ltd. by the Shares
ABC Private Limited, a company situated in Delhi, is engaged in the manufacturing of security devices. It is willing to register with the Registrar of Companies (ROC). For registration, this company needs to subscribe to a memorandum initially.
The Memorandum of Association of the ABC Private Limited is going to look like this:
(Since ABC Private Limited is a company limited by the shares, the form given in Table A will apply to it.)
The 2013 Companies Act
Company Limited by the Shares
Memorandum of Association
of the
ABC Private Limited
- The company’s name is ABC Private Limited. (Name Clause)
- The office of the company that has been registered will be situated in the state of Delhi. (Registered Office Clause)
- The object on which the company has been established are (Object Clause):
- The objects that need to be pursued by the company on its incorporation are:
- To carry forward the business of manufacturing, altering, converting, designing, and producing security systems.
- To buy, sell, trade, or act as agents for importing or exporting all the security-related devices.
- To carry on with the business and act as buyers, sellers, traders, and dealers to obtain the above objects.
- Matters that are necessary for the promotion of the objects specified in the clause 3A are:
- To manufacture and deal in the packaging materials, branding, boxes, grading, weighing, and marketing for all different kinds of security devices and various other electronic components connected with it.
- To make, draw, accept, endorse, execute, issue, assign and otherwise deal with the drafts, cheques, debentures, bills of exchange, railway receipts, promissory notes, bonds, bills of lading, warrants, and all other transferable or negotiable instruments.
- To integrate with other companies or company.
- To merge or acquire with another company.
- To begin a joint venture with another company.
- To distribute any of the Company’s property amongst the members of the species or the kind of subject to the provisions of the 2013 Companies Act in the event of winding up.
- Applying for purchase, tender, or otherwise acquire any contracts, subcontracts, licenses, and concessions for or concerning the objects or business herein mentioned or any of them, and execute, undertake, carry out, dispose of, or on the other hand turn to the same account.
- The liability of the company’s member(s) is limited, and this liability is going to be limited to the unpaid amount, in case any, on the shares that they hold. (Liability Clause)
- The share capital of this company is 70,00,000 rupees, which has been divided into 2000 shares of Rs. 3500 each. (Capital Clause)
- We, the several individuals whose names and addresses have been subscribed, are desirous of being formed into any company in pursuance of this memorandum of association, and we agree respectively to take the number of shares into the capital of the company and set against our respective names.
Content in Memorandum of Association
Section 4 of the 2013 Companies Act states that the contents of the memorandum. It details all the vital information that the memorandum needs to contain.
Name Clause
The first clause of the memorandum states the company’s name. The company can choose any name for their business. However, there are some conditions that are needed to be complied with.
Section 4(1)(a) states that:
- If a company is a public company, in that case, the word ‘Limited’ must be there in their name. For example, “Robust,” a public company, its registered name is going to be “Robust Limited.”
- If a company is a private company, in that case, the phrase ‘Private Limited’ must be there in the company’s name. “Robotics” is a private company; its registered name is going to be “Secure Private Limited.”
- This condition is not going to be applicable to the Section 8 companies.
What are Section 8 companies?
Section 8 Company has been named after Section 8 of the 2013 Companies Act. It describes the companies which have been established to promote art, commerce, sports, education, social welfare, research, religion, etc. Section 8 companies are pretty similar to the Trust and Societies; however, they have better recognition and legal standing than the Trust and Societies.