Memorandum of Association

Introduction

MOA or Memorandum of Association is the charter of a company. It is a type of legal document and represents the company and its values and organisation. It is created during the formation of the company and formulated through the registration process. It defines the various responsibilities that the company has towards its shareholders while also laying down the number of shares held by the subscribers to the memorandum. It also lays down the objectives of the company. The company has to work and conduct its business per the particular MoA it has created.  The Memorandum of Association, therefore, contains various business boundaries. 

Memorandum of Association

A Memorandum of Association is a legal document that is made during the emancipation and registration of the company. The Memorandum of Association contains aid to shareholders and investors in making the correct decisions regarding investing. 

Format of MoA

Memorandum of Association is drawn up in the format as mentioned in Table A to E of Schedule I of Companies Act, 2013. This depends on the type of the Company.

Memorandum of Association Clauses

There are various clauses provided in the Memorandum of Association are: 

• Clause of Capital – This clause represents in the memorandum of association the maximum capital that can be raised by the company. This is known as nominal capital or authorised capital. It also provides divisions of nominal capital into the number of shares
• Clause of Name – The name clause states the company name. The name should be completely original and must not be taken by any other existing company. For a private company, the name would have ‘Private Limited’ at the end. For example, PLC Private Limited. For a public limited company, the name to be added at the end is ‘Ltd’. For Example, PLC Ltd
• Clause of Registered Office- This is a clause that essentially names the geographical location and jurisdiction under which a given company falls. The document mentions the State within which the company is registered
• Clause of Liability – This type of clause represents the various responsibilities of the company members. In those forms of business organisation where there is unlimited liability like Corporations, the members are not very liable. In the case of a company that has guaranteed, the members have liability which depends on the amount each member contributed
• Clause of Object – This type of clause states what the objectives of the company are and why this company has formed. This clause can be further subdivided into three categories which are the main objective, incidental and other objectives

AoA and MoA

AoA refers to the Articles of Association, which is a set of documents that define how the Board of Directors can be held responsible to the company’s shareholders. It practically acts as a constitution for the company as it lays down the responsibilities and duties of the directors. AoA is a regulatory management document of internal affairs while MoA is a charter concerned with external affairs. 

Conclusion

A Memorandum of association is therefore an essential corporate document for the functioning of the company. Provides clarity and surety. It oversees the regulatory external affairs. MoA is a complementary document to articles of association or AoA. It falls under many common jurisdiction laws in countries such as India, the United Kingdom, Ireland, Nigeria, Bangladesh, and Sri Lanka. It also complies with the Commonwealth.