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Memorandum of Association: Everything You Need To Know

In this guide, We will look at what is Memorandum of Association, Definition, Why It is needed, Steps to Alter the MOA, and (Contents)Clauses of Memorandum of Association.

What is Memorandum of Association (MOA)?

Everything has a set of rules and regulations, set objectives, and goals. Similarly starting a company also has guidelines and rules that it needs to be followed. Everything about a company is recorded in a formally documented form. The company cannot perform anything beyond what has been mentioned. This official document is known as Memorandum of Association.

Definition:

Memorandum of Association can be defined as a legal document defining the reason behind the formation of any company. It mentions the rules and conditions of a company. These rules and regulations basically govern the business. Any action of the company which exceeds what has been mentioned in the Memorandum of Association will be strictly considered void. Here if any alteration is needed then the Central Government needs to approve it.

Memorandum of Association should have the followings:

  1. The name of the Company.
  2. Name, address, qualification, and details of the members are required.
  3. The objective, goals of the company.
  4. Everything about the Partnership should be made clear so that confusion doesn’t happen in the near future.

Clauses of the Memorandum of Association (MOA).

The Memorandum of Association covers 6 major clauses, they are:

1. Name

MOA aids in providing protection against any company to register with the same or similar name.

2. Situation

Memorandum of Association states the location where the registered office of the company is situated as it is compulsory to mention the address of the registered office of the company in the Memorandum of Association. Register office of the organization is the official place where major communication and works are done.

3. Object

It mentions the guidelines of operations of the company. It protects the interests of the shareholders. The objective should be logical enough to be justified.

4. Liability

States the liability of each member in the business.  It also mentions the amount each member is responsible to contribute to the assets of the company during its closure.

5. Capital

It mentions the amount of capital with which the company starts and also the capital sharing ratio of each partner if it is in partnership form.

6. Association

This clause states that members signing the MOA forms an association, in case of a public company it needs to be signed by 7 or more members, and if it is a private company it needs to be signed by 2 or more members, which needs to be proven by the witness.

Can a normal public see the Memorandum of Association of a company or business?

Yes, this document is available to the public. If any individual wants to be in any type of contract with the company they can simply ask about the Memorandum of Association of the respective organization. Only thing is that a fee might be needed, which if paid shall not restrict any individual to have the Memorandum of Association, only if they want to be a part of a contract with the company.

Why is Memorandum of Association needed?

To answer a general question on why it is important, few points are mentioned below:

  1. This particular document governs the working of the entire organization. No organization, under any circumstances, has the authority or right to work against it.
  2. It aids in understanding what role each partner plays in the business. Their ratio of sharing profit and loss, to what extent they are liable to the assets and liabilities of the company.
  3. All the details of the partners are mentioned in it – name, address, and also their basic information are also mentioned here.
  4. It serves as a link between the company and the stakeholders. Both organizations and the stakeholders come to know about each other through the Memorandum of association.

Altering The MOA:

Altering the name:

If a company wants to change its name then it can be done by either of the 2 ways:

  1. By passing a special resolution.
  2. By obtaining the approval of the Central Government.

If the company wants to change the name mentioned in the Memorandum of Association then this will fall under clause Section 13. On the other hand, if any rectification is needed in the name then the change will come under Section 16, which means approval of the Central Government is required.

Availability of proper Financial Reports, Annual Returns, the fulfilment of all the required documents during the time of filing with Registrar, and repaying the matured deposits, interest on deposits or debenture, debentures will augment smooth way to change the name of the company.

Altering the Objective:

For this, the organization needs to publicize the details of the objective in various languages where one shall be in English and other in the regional language in the company’s registered office and also on the official website of the company.

Steps to Alter the Memorandum of Association:

  1. Issuing notice all the directors of the company for a Board Meeting, stating the agenda of it.

  2. In the Board meeting, the resolution of alteration must be passed and approval needs to be got for the alteration.

  3. A notice stating the date, venue, and time for a general meeting is issued

  4. In the General Meeting, the resolution is to be passed, and approval for altering the Memorandum of Association is done.

  5. Within the 30 days of the passed resolution, ROC needs to be filled with all the required documents.

With this, it can be concluded that the Memorandum of Association, is a very important component of any company to start. It serves as the basis of its working.

Also Read: How to Calculate Company Valuation [Full Guide]

Sohini Mazumder
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Sohini Mazumder

Sohini Mazumder, from Kolkata, currently doing undergrads in Economics. She is more enthusiastic about learning new things.

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