Law Audience's Blog

I. ABSTRACT:

This article is aimed at explaining the concept of “Memorandum of Association”.  It is a legal document which is made for the process of a company which defines the relationship with its shareholders. It is approachable to the general public and outlines the name of the company, address of the registered office, shareholder’s name and their dispersal of shares.

II. WHAT IS COMPANIES ACT:

It is an act of the Indian Parliament which synchronize the various factors i.e. company’s incorporation, Liquidation of company, directors etc.[1] This act is divided into 29 chapters which keep 470 sections and 7 schedules.[2] This act substituted the previous act i.e. The Companies Act, 1956 partly after getting the consent of the President of India on 29 August 2013. It came into operation on 12 September 2013. Few changes are done like the maximum number of members in private companies is increased from 50 to 200. A new concept of One Person Company is added.

It is the most significant document for a company. It represents the legal rights, objects, liabilities and capability of a company. At the time of incorporation of a company, it is a very necessary document. At the time of registration, it must be signed by the founder members. It provides the various aspects like the company’s name, the aim of forming, the liability of the members etc. It is a type of adviser to all the entrepreneurs. Basically, it expresses the objects of the company. As per the Memorandum of Association, the whole business is established. The activities which are not mentioned in the Memorandum cannot be exercised by the company and it can exercise only those powers which are mentioned in it. 

III. CONTENTS OF MEMORANDUM OF ASSOCIATION:

According to the Companies Act, the following clauses must be mentioned in the Memorandum of Association which is as follows:-

• NAME CLAUSE: In this clause the name of the company should be mentioned. A company is allowed to choose any name but the condition is that it should not be similar to that company which is already registered. It cannot these words such as Queen, Emperor, King and the name of bodies of the Government. The word “Limited” will be used in case of the Public Company and the word “Private Limited” will be used in case of Private Company.

• SITUATION CLAUSE: In this clause the state in which the registered office of the company is situated should be mentioned.[3] The registered office basically means where the statutory books of the company, common seal etc. are kept. It is the duty of the company to inform about the registered office to the registrar within 30 days from the date of incorporation of the company. 

• OBJECT CLAUSE: This clause mentions the object of the company for which it is formed. After that, it is difficult to alter this clause. Therefore, it is significant that the promoters should make this with proper attention. This clause also specifies business for which the company may take part in the future. This clause should contain the foremost objectives. 

• LIABILITY CLAUSE: This clause mentions the member’s liability in the company.[4] It can be limit by guarantee or by shares. In the case of unlimited liability this clause can be eliminated. 

• CAPITAL CLAUSE: This clause specifies the maximum amount of capital that can be accessed by company.[5] In this clause the distribution of capital into shares is mentioned. If any special rights are made in behalf of the shareholders then it will be mentioned under this. The company cannot acquire more capital than mentioned in the clause. 

• SUBSCRIPTION CLAUSE: In this clause the name and address of the first subscribers. They have to take at least one share.[6]

IV. PARTICULARS OF MOA:

According to the Rule 16 of the Companies (Incorporation) Rules, 2014 these following particulars should be filed with the Registrar are as follows:-

• Name which includes surname as well as name of the family and recent photo which is scanned with AOA and MOA.
• Date and place of Birth.
• Occupation
• Qualification
• Nationality
• Address
• Contact Number
• Email Id
• Id proof
• Proof of Residence

V. FORM OF MEMORANDUM:

The Memorandum of Association should be framed in according to the forms which are mentioned in various tables under Schedule 1 of the Companies Act, 2013.

• Table A is for the companies which are limited by shares.
• Table B is for those companies which are limited by guarantee and no authorised share capital.
• Table C is for companies limited by guarantee but it has authorised share capital.
• Table D is for unlimited companies and no share capital
• Table E is for unlimited companies but it has share capital.

VI. WHY MEMORANDUM OF ASSOCIATION IS NECESSARY?

It is necessary because it allows the various people such as investors, creditors, shareholders and other members to know about the motive of the company for which it is made. It also tells about the activities in which the company can be involved. It allows them to learn about the objectives of the company.

VII. SUBSCRIPTION OF MEMORANDUM:

For the incorporation of the company the members in case of a public limited company are 7 or more and in the case of a private company it is 2 or more and in the case of one person company it is one which should subscribe their names to the memorandum. It is a process of attaching their signature to the document for the aim of approval of the contents.

VIII. WHO CAN SUBSCRIBE?

These are the following person who can subscribe to the Memorandum which is as follows:-

• Any individual
• Minor
• Company which is incorporated in India
• Company which is incorporated outside India.
• Society which is registered
• Limited Liability Partnership

IX. SUBSCRIPTION TO MOA:

Every subscriber needs to attach his signature and a witness is also necessary for it. The witness has to give these details such as his address, name, occupation etc. If the signature of witness and the subscriber is done in any other language then an affidavit needs to be filed which will declare that it is the actual sign of them. If the sign is done by any other person on the behalf of the subscriber then he also has to provide all the details and it should be done in presence of at least one witness. 

X. ALTERATION IN MEMORANDUM OF ASSOCIATION:

The Memorandum of Association has to be amended in the following circumstances:

• Alteration in name of the business
• Change in registration of office
• Alteration in the object clause
• Alteration in the authorised capital
• Any adjustments which is done in the members liability

XI. CONCLUSION:

Through this article, the author wants to conclude that the Memorandum of Association is a very important document for the company. It has to be maintained by the company because it advises the company on various aspects. It also helps in managing and administration of affairs in the company. That is why it is mandatory to make this document by every company. It forms a necessary part in the incorporation of a company. It should be made with proper attention. If any alteration is done then the company has to follow a legal procedure which is mentioned under the act.

[1] Companies Act 2013, Wikipedia (2018), https://en.wikipedia.org/w/index.php?title=Companies_Act_2013&oldid=870459221.

[2] Id.

[3]6 Clauses of the Memorandum of Association Under Section 13 of Companies Act, World’s Largest Collection of Essays! Published by Experts (2013), http://www.shareyouressays.com/knowledge/6-clauses-of-the-memorandum-of-association-under-section-13-of-companies-act/112335.

[4] Memorandum of Association | Meaning | Contents of MOA, Money Matters | All Management Articles (2016), https://accountlearning.com/memorandum-of-association-meaning-contents-of-moa/.

[5] Id.

[6] Id.