MOA (Memorandum of Association) is most important documents in the company because it defines; inter alia, what company can do. It draws the boundaries to company’s activities. The memorandum of association is also called the charter of the company as it is the company’s principle document.
Objects of the private limited company or public limited companies are embodied in the MOA. Normally promoters want to include everything under the objects of the company while drafting MOA regardless of the main activities of the company.
MOA of the company is a public document which means that any person can check it. Therefore, you have to observe utmost care while drafting various clauses under MOA.
There is some contour which has been engraved under the Companies Act, 2013 stating that Memorandum of Association of the company has to be drafted as per Table – A,B,C,D and E in schedule-1. Sometimes it is advisable that if a company is going for listing then it must get its MOA vetted by the stock exchanges to comply with the listing’s norms.
MOA is like a “Lakshman Rekha” because company can not go beyond what has been included in MOA, and if a company go blindly to do act which is beyond the power of the company then those acts are considered as illegal (“ultra vires“), even that shareholders can not make those act good after passing resolution.
Have a glance at clauses of Memorandum of Association of the company:
- Name Clause: It states that the name of the company with the last word “Limited” in the case of a public limited company, or the last words “Private Limited” in the case of a private limited company;
- 2. Registered office clause: It states that the State in which the registered office of the company is to be situated;
- Object clause: It states that the objects for which the company is registered and any other matter which are important to achieve the main objects of the company.
- 4. Liability Clause: It states that the liability of members of the company, whether limited or unlimited.
- Share Capital clause: It states that the amount of shares capital with which the company is to be registered and division thereof into shares of a fixed amount.
- Subscriber clause: It states that the number of shares which the subscriber to the memorandum agree to the subscriber which shall not be less than one.
All the above clauses define the relationship of the company with an outsider. Whenever any person deals with the company then MOA is the first document which he looks at to know whether the company has requisite power to enter into the deal.
Due to the sanctity of Memorandum of association (MOA), this must be drafted by the legal professional like Company Secretary who has dual knowledge law and industry.
