Patanjali is a brand that has grown tremendously in the past few years and is placed among the...
Memorandum of Association or MOA is a corporate document which is filed with the Registrar of Companies during the incorporation of a company. It comprises of the fundamental conditions under which the company is allowed to operate. In this article, we shall discuss certain essential aspects of the MOA under Companies Act 2013.
According to Section 2 of the Companies Act, 2013, memorandum refers to the memorandum of association (MOA) of a company as framed originally or altered from time to time in pursuance of the previous company law or of this Act.
MOA is an essential corporate document that outlines the company laws under which a company operates. It involves several clauses which define certain critical aspects under the provision of the Companies Act 2013. These clauses are listed below:
Now let’s discuss each of these one by one.
The company’s name should be provided under this clause. The name of the company should not be similar in any manner to a company that already exists. Further, some of the names cannot be used in the names of the company in any way. A private company should have the word Private Limited, and the word limited must be at the end of every public limited company.
When a company is incorporated, it runs a specific business and have a specific objective. The object clause states the business which the proposed company will commence after its incorporation and that too in detail. Under the companies act 2013, only the main objects and other objects that are ancillary to main objects are covered. A Company that does any other business apart from this can lead to closure of business. In case of certain businesses such as loan and capital funding, specific approvals are required from different authorities such as RBI. In order to commence insurance business, approval from IRDAI is needed.
In this clause, the name of the state is mentioned where the company’s registered office is located. The company is required to intimate the registered office location to the registrar within 30 days from the incorporation date in case the permanent address of the company is not provided. This clause is vital as the correspondence for the company shall be sent to this address. Therefore once a company is registered, it must have a registered office until the company is wound up.
This clause provides the liability of company’s members. The liability may be limited or unlimited. It means that when the company is winding up, in case of a company with limited liability, members must pay an amount up to the nominal value of shares taken by them however, in case of a company with unlimited liability, members must pay without any limit for the debt or payment that the company must pay.
Capital clause provides the authorized capital of a company and the total number of shares with the value of per share. It is the limit up to which a company can raise its capital amount. It may be noted that there is no limit for amount of authorized capital a company can have in India according to the Companies Act 2013.
This clause contains the names and the address of the first subscribers. The subscribers of the memorandum are required to take minimum one share. As per the Companies Act 2013, the minimum number of members is 2 if it’s a private company and 7 if it’s a public company and 1 in case of a One Person Company.
According to Section 13 of Companies Act 2013, MOA can be changed or altered anytime however, there are few conditions that must be complied with before making such alteration or change.
This section governs the process and conditions for making any change in the MOA. Further, the clauses that can be altered are as follows:
However, these are also supported by other section in order to give effect to respective changes.
The significance of MOA under Companies Act 2013 can be deduced through the following:
The difference between the two is laid down in the table made below:
|MEMORANDUM OF ASSOCIATION||ARTICLES OF ASSOCIATION|
|It explains the relationship of the company with the outside world.||Regulation of the internal affairs of the company.|
|Defined under section 2(56) of Companies Act, 2013.||Defined under section 2(5) of the Companies Act, 2013.|
|It contains objects of the company.||It contains all rules of the company.|
|Approval of Central Government is needed for alteration.||Approval of Central Government is not needed for alteration.|
|Forms of the Memorandum of Association (MOA) are in Tables A, B,C,D,E of Schedule 1.||Forms of Articles of Association (AOA) are in Tables F,G,H,I,J of Schedule 1.|
|Acts ultra vires to memorandum are void & cannot be made legitimate by the ratification of shareholders.||Acts ultra vires to the Articles may be made legitimate by ratification of the shareholders.|
|The memorandum must not be in contravention to the provisions of Companies Act, 2013.||The articles must not be in contravention to the memorandum.|
MOA under Companies Act 2013 is a fundamental document for formation of any company. As mentioned earlier, a company cannot be incorporated without this document. It can be referred to as the constitution of the company along with the Articles of Association.
Read our article:An In-depth Analysis of the Master Service Agreement