The Memorandum of Association or MOA of a company defines the powers of the company. In simple words, the Memorandum of Association is the base on which the company is built. Memorandum of association defines the relation of the company with the rights of the members of the company and also establishes the relationship of the company with its members. The memorandum contains the powers, rights, and benefits of the company. Thus, it is known as a contract of the organization. It is to be treated as the constitution of the company. The company can only hold the activities or actions expressed in the memorandum.
What is Memorandum of Association under Companies Act, 2013?
As per Section 2(56) of the Companies Act,2013 “memorandum” means the memorandum of association of a company as originally framed or as altered from time to time in pursuance of any previous company law or of this Act.
Section 4 of the Companies Act, 2013 deals with memorandum of Association.
· Table A: Form for the memorandum of association of an organisation limited by shares.
· Table B: Form for the memorandum of association of an organisation limited by guarantee and not having a share capital.
· Table C: Form for the memorandum of association of an organisation limited by guarantee and having a share capital.
· Table D: Form for the memorandum of association of unlimited companies.
· Table E: Form applicable to an unlimited company and having a share capital.
Purpose of Registering an MOA
The object of registering a Memorandum of Association is:
- The MOA of a company contains the object for which the company is formed. It identifies the scope of its operations and determines the boundaries which it cannot embrace.
- MOA is a public document according to Section 399 of the Companies Act, 2013. Hence, any person who enters into a contract with the company is expected to have information of the MOA.
- It contains the powers and rights of the company.
Contents of Memorandum of Association
Section 13 of the Companies Act, 2013 states that the Memorandum of the Association of a company must contain the following:
It states that for a public limited company, it must have the word ‘Limited’ and for a private company, the name of the company must have the words ‘Private Limited’ as the last words.
This is not applicable to companies formed under Section 8 of the Companies Act, 2013 who must include one of the following words:
It must specify the objects for which the company is being incorporated or came into existence. Further, if a company changes its activities which are not reflected in its name, then it can change its name within six months of changing its activities.
The company must comply with all name-change provisions mentioned in the Act.
It specifies the liabilities of the members of the company, whether limited or unlimited.
· For a company limited by share:
It specifies if the liability of its members is limited to any unpaid amount on the shares that they hold.
· For a company limited by guarantee:
It specifies the amount undertaken by each member to the contribution to the company like the assets at the time of windup and cost, charges and expenses of wind up.
This clause specifies the measure of offer capital by which the company proposes to be Registered and division thereof into a portion of a fixed sum.
Area of Operation Clause
This clause state or specifies to whose regions the objects of the organization reach.
The name of the State where the Registered Office of the company is arranged. To decide the purview of the court and the Registrar of this organization, it is significant.
The MOA must clearly specify the desire of the subscriber to form a company. This is the last clause.
Printing and the signing of MOA
The Memorandum of Association must be printed and signed by each member as in seven in the case of the public company and two in case of Private Company. It should be signed in front of at least one witness who will attest the sign of subscribers of the memorandum.
In the case of One Person Company, the name of the nominee must be mentioned in the memorandum of association. And in case of death and uncertain event, the nominee will become the member.
Memorandum is basically the constitution of the company. The company can add additional clauses into the memorandum, like rights attached to various classes of shares, if required. Every person subscribing should have knowledge of the memorandum.