Memorandum of Association (MOA)¶
The Memorandum of Association (MOA) is a cornerstone document in the formation and registration of a company under the Companies Act, 2013. It defines the scope of the company's activities, its relationship with the outside world, and sets out its constitution. This document is a public document and acts as a foundation upon which the company is built.
Meaning and Importance¶
- The MOA is one of the most essential prerequisites for the establishment of a company.
- It outlines the scope of the company's operations and its relationship with external entities.
- Defined under Section 2(56) of the Companies Act, 2013, it is the document that is originally framed and can be altered in accordance with the Act.
- According to Palmer, it is a document of great importance in relation to the proposed company.
Form of Memorandum of Association¶
As per Section 4(6) of the Companies Act, 2013, the MOA must be in a specific form depending on the type of company: 1. Form in Table A for companies limited by shares. 2. Form in Table B for companies limited by guarantee not having a share capital. 3. Form in Table C for companies limited by guarantee having a share capital. 4. Form in Table D for unlimited companies not having a share capital. 5. Form in Table E for unlimited companies having a share capital.
Purpose of MOA¶
- To inform investors about the company's main areas of operation and its scope.
- To define the company's relationship with external stakeholders through its contractual relationships.
Printing and Signing of MOA - Requires the signature of at least seven persons for a public company, two for a private company, and one for an OPC, as stated under section 3(1) of the Companies Act, 2013.
Contents of MOA¶
The MOA contains critical information about the company: - Name of the company - Name of the state where the company is registered - Objectives of the company - Liability of its members - Share capital and its division - Association clause
Clauses in MOA of Company Limited by Shares¶
| Clause | Description |
|---|---|
| Name Clause | Includes application procedure, restrictions on name selection to avoid resemblance with existing companies. |
| Situation Clause | Specifies the state of the registered office and the timeline for informing the Registrar of its establishment or change. |
| Object Clause | Details the main, ancillary, and other objectives of the company as per CA 2013. |
| Liability Clause | States the liability of the members, which can be limited or unlimited. |
| Capital Clause | Outlines the amount of registered capital and the requirement for at least one share subscription. |
| Association Clause | Lists the subscribers and the number of shares they agree to take up. |
The MOA serves as a legal document that lays down the framework within which a company operates. Its provisions ensure that the company's activities are aligned with its stated objectives, safeguarding the interests of its shareholders and the public.
Alteration of Memorandum of Association (MOA)¶
Alteration of the Memorandum of Association is governed by Section 13 of the Companies Act, 2013. This section provides a framework for companies wishing to amend their MOA, which may be necessary to reflect changes in the company's operations, objectives, capital structure, or other fundamental aspects. Here we outline the various alterations permissible under the Act and the procedures involved.
1. Changing the Company's Name (Section 13(2))¶
- A special resolution is required.
- Approval from the Central Government is necessary unless it involves the addition or deletion of the word "private" when converting from a private to a public company or vice versa, in which case no such approval is required.
2. Altering the Situation Clause (Section 13(4) & (7))¶
Change within Local Limits¶
- A board resolution and a special resolution are needed.
- The company must notify the Registrar of the change via Form INC-22 within 15 days.
Change of State within the Country¶
- Approval from the Central Government is required, to be filed using Form INC-23.
- The approval must be registered with the Registrar to receive an updated Certificate of Incorporation reflecting the change.
Change in Jurisdiction of Registrar¶
- Confirmation from the Regional Director is needed.
- The Regional Director must communicate the confirmation to the company within 30 days.
3. Altering its Objects (Section 13(1) & (9))¶
- A special resolution is necessary.
- The company must file the resolution with the Registrar within 30 days of passing, to certify the alteration.
4. Altering its Share Capital (Section 61)¶
- Requires a special resolution.
- The company should file the resolution with the Registrar in Form MGT-14.
5. Reorganizing its Share Capital (Sections 230 to 237)¶
- Alteration of capital clause must be authorized by the Articles of Association.
- If reorganization affects voting percentages through division or consolidation, Tribunal confirmation is mandatory.
- The company must notify the Registrar of the alterations and file a copy of the resolutions passed within 30 days.
6. Reducing its Capital (Section 66)¶
- Needs a special resolution and approval from the Tribunal.
- The alterations made and resolutions passed must be filed with the Registrar within 30 days.
The process of altering the MOA is critical for ensuring that the document accurately reflects the current status and operational framework of the company. It requires adherence to specific procedural steps, including resolutions, government approvals, and timely filings with the Registrar to maintain legal compliance and operational flexibility.
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